Fixed Rate Mortgages

After several month of continued escalation, mortgage rates have declined. Those who were kicking themselves for missing an opportunity of getting the lowest mortgage rates in decades, once again stand a chance as the current reported rate for a 30-year fixed mortgage has decreased to 5.12% (down from 5.29%).

Mortgage giant, Freddie Mac released the information in a statement earlier today. Although on the surface the number may seem insignificant according to Freddie Mac, if a homeowner refinanced their 1-year old $400,000 mortgage today, the savings would result in about $344 a month. That comparison was made to the average mortgage rate of this time last year which was 6.47%.

This "good for consumer" news was initially fueled by the Federal Reserves actions of buying bonds backed by home loans as a way to lower mortgage rates to jump start the economy. In March 2009, the program spending increased to $1.25 million and focused their efforts on lending giants Fannie Mae, Freddie Mac and Ginnie Mae. The program offered security to the lenders and provided them the ability reduce rates on new loans.

When the first affects of the plan took place in April of 2009, many homeowners were able to refinance at rates below the 5% mark. After the historic lows, the rates started to creep up which made investors concerned about inflation.

What are your thoughts about about the decreased in Mortgage Rates?

When it comes to choosing a mortgage loan, many prospective home buyers hem and haw about which one they should opt for. A fixed-rate loan promises stability and no surprises whatsoever when it comes to the amount of the monthly mortgage payment. It also has the downside of locking you into an interest rate which remains static while interest rates are actually falling, and all around you your friends and neighbors who opted for adjustable rate mortgages (ARMs) are celebrating the fact that their monthly mortgage payments are falling too. Of course, choosing an ARM is risky too because when interest rates rise, so do your mortgage payments - which can really take a bite out of your wallet. In fact, oftentimes a rise in interest rates can make many people with an adjustable-rate mortgage switch over to a fixed-rate mortgage instead - this process known as conversion.

An adjustable-rate mortgage conversion is just what it sounds like: a conversion from an ARM to a fixed-rate mortgage. In more detail, to get a conversion, you simply pay a fee and your ARM officially converts over to a fixed-rate mortgage. One caveat to an ARM conversion as oppose to a fixed-rate mortgage, is that pursuant to the terms of your loan - you may get a new fixed rate, but it could be higher than current rates. In a sense, you have to pay for it. For example, if interest rates are falling to the point that you want to switch to a fixed-rate mortgage, you might not get the current low interest rate that's making you want to convert in the first place. It could end up being a point or even two points higher depending on the nature of your loan.

If you're thinking about converting your ARM to a fixed-rate mortgage, check with your mortgage loan bank to see what their offers are. Make sure you do your homework so you know what you would be getting yourself into. It's also very important to consider your finances - see what we can really afford to pay by looking into all of your monthly expenses.

There's nothing quite like the feeling of deciding to buy your first home. It's a milestone for many people, a sign that you're a grown-up (or at least, are growing up). It's a complicated affair, with all kinds of steps, players, fees, jargon, legalities, paperwork, time, and above all, money....

Recent rate increases in the housing market may be having an effect onthose who want to refinance. As the market stabilizes, it seems to become more difficult for individuals to negotiate themselves into favorablemortgages.

Why Are Rates Rising?

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