Mortgage 101

After seeing the possibly short term increase in mortgage applications for the first week of the New Year, I'm wondering if you are one of them? After three years of adjustable rate loans dominating the refinance markets, with the so-called "Option Arms" at the top of the list, I certainly hope you opt for fixed rate loans only! The option arms have the nasty potential for deferring interest and adding it back to your principal balance - something you don't need in a housing market that is seeing value declines at an unprecedented rate!

I keep watch on the interest markets on a daily basis, watching the trends and have noticed that 30 year fixed interest rates are dropping. The 10 year note is the benchmark that determines what fixed interest rate mortgages are. To follow the yield on the 10 year note, go to www.lioninc.com - not only will this web site provide you with the yield on the 10 year note, it will also provide you with information on the indexes primarily used for adjustable rate mortgages.

Another factor in the news is what the FOMC (Federal Open Market Committee) will do at their next meeting at the end of January, 2008. Speculation is that a .25% to .50% drop in the Feds interest rate will occur. That may mean lower rates for fixed rate mortgages as well. It's much easier, however, to follow the yield on the 10 year note, since some speculators may anticipate the Fed's rate drop and build it into the yield before the actual drop occurs.

If you are seriously considering refinancing, get started now - the application process may take some time, and you must be ready to act. Once your file is complete and underwriting approved, you can lock in your rate and get rid of those ugly adjustable mortgages.

Please contact me for specific questions about your current mortgage, refinance or purchase money loans. I have over 20 years experience in the mortgage industry and I can help you.