Assurance Financial

If you have been hoping interest rates would drop your prayers have been answered. Interest rates plummeted over half a point last week falling from 6.35 to 5.78. The last time mortgage interest rates fell this fast this quickly was the beginning of 1995 when rates fell from 8.32 to 7.57. Rates have basically fallen following the government takeover of Freddie Mac and Fannie Mae. Below are the rates for the major mortgage products for the last two weeks.

September 18, 2008
30-yr 5.78 15-yr 5.35 5-yr ARM 5.67 1-yr ARM 5.03

September 11, 2008
30-yr 5.93 15-yr 5.54 5-yr ARM 5.87 1-yr ARM 5.21

30 Year mortgage rates fell less this week (.15 points) compared to last week (.42 points). 15 year and 5 year arms both fell about .2 points this week. 1 Year arms which was the only major product to not fall last week fell .18 points this week. The other interesting point is that because interest rates were falling before the Fannie Mae and Freddie Mac takeover (based on rumors of the takeover) rates have fallen an incredible amount (.74 points for 30 year rates) over the last month and a half.

Ok so let’s see what these drops mean as far as a mortgage payment. Using our free mortgage calculator lets look at a payment based on a 200k loan. We will run the numbers based on today’s mortgage rates for today and last week

September 18th
30-yr $1170.96
15-yr $1618.29
5-yr ARM $1157
1-yr ARM $1077.31

September 11th
30-yr $1190.11
15-yr $1638.41
5-yr ARM $1182.43
1-yr ARM $1099.45

So the obvious thing to see here is that the now lower interest rates have had a large effect on mortgage payments. A mortgage with a 30 year interest rate dropped from 1281.28 to 1170.96 (9.1 percent) in the last month and a half. So that brings up the point that it’s probably a good point to start looking at refinancing your mortgage even if you received a mortgage somewhat recently.

So what is in store for the market in the next few weeks? It’s hard to tell but the market is very volatile. One day the stock market drops 400 points because Lehman Brothers goes bankrupt. Then the government proposes to takeover the bad mortgage debt and the market rises. Because of this volatility if you are thinking of refinancing I might lock in to an interest rate now because its hard to know what rates are going to be like in a few weeks.

Escapeso is a real estate company down in Austin Texas. Their website provides information on current mortgage interest rates. They also have a free mortgage calculator

By By Ki Gray and Dane Smith

Many home owners have the need for extra cash to complete home improvement projects, pay for kids college or consolidate credit card debt. Many times these home owners wonder what option is better a traditional refinance vs home equity loan.

Refinance vs Home Equity

Home equity loans offer a great way to tap the equity in your home and turn it into cash without having to do a full fledged refinance or pay the high closing costs that are associated with them.
Home equity loans are available as lines of credit and also normal loans. The home equity loan will function just like a standard mortgage. You close the loans, get your cash and make monthly payments to pay it off.

A HELOC or home equity line of credit functions like a credit card. You have a line of credit that you can use for what ever you chose and you spend it as yo need it. Many HELOC also allow you to pay on the interest only making your payments less expensive.

The only drawback to these types of loans is they do not offer the best refinance home mortgage loans rate when compared to a traditional mortgage.

Standard Mortgage Refinance

The standard mortgage refinance will also allow you to tap the equity in your home and turn it into cash. It will offer the best refinance home mortgage loans rate and also give you terms up to 30 years.

It does have much higher closing costs associated with it but often times they can be rolled right into the loan reducing out of pocket costs. These loans are typically used for large cash requirements

Learn more about Home Equity Loans Loans and when a Cash Out Refinance is a better option for you!

By Darin Sewell