Should You Refinance Your Mortgage?

Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They're at levels not seen in 50 years.  For homeowners that missed the Refi Boom of November 2009, it's a second chance.
In this well-presented, 3-minute video from NBC's The Today Show, you'll get tips getting low rates and choosing the best time to lock in.
Some of the topics covered include:

• Why were the experts wrong about rates moving higher this summer?
• How much money can you save with a 1 point drop in your interest rate?
• Should you buy a bigger home now that rates have fallen?

The advice in the piece is matter-of-fact and centered.  There is no cheerleading and the message is honest. Mortgage rates are low and they likely won't stay that way.  If you've been thinking about a refinance, talk to your loan officer as soon as possible.

Markets Ignore The April Jobs Report And It's Good News For Mortgage Rates

On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls report.
More commonly called "the jobs report", Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.
In general, when jobs numbers improve, it's good for stocks and bad for mortgage bonds. It follows, therefore, that conforming mortgage rates in New Jersey rise because rates always move opposite of mortgage bond prices.
Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds.  Mortgage rates fall.
Today, markets are behaving a bit differently.
Despite 290,000 jobs created in April 2010 -- nearly twice the expected amount -- and a 40 percent upward revision of March's numbers, mortgage rates are essentially unchanged.
In a normal environment, rates would be higher.  Today is not normal.
Today is a departure because, for all of the jobs report's import to Wall Street, it's less important to markets than what's happening in Greece right now.
Greece is struggling to meet its debt obligations and its citizens are rioting.
Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are "safe", and mortgage rates will fall.
Indeed, this is exactly what's been happening since the start of April. Mortgage markets have been rallying for 5 weeks.
So, Friday's jobs news is terrific for the economy and mortgage rates should be rising because of it.  But, they're not. Consider taking advantage -- lock in a rate.

Mortgage Rates Spike On The Federal Reserve's January 2010 Meeting Minutes

Mortgage markets reeled Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates in New jJersey are now at their highest levels since the start of the year.

The Fed Minutes is a follow-up document, delivered 3 weeks after an official FOMC meeting. It's a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers' policy decisions.

The Minutes is a terrific look into the Fed's collective mind and, yesterday, Wall Street didn't like what it saw. Specifically, the report disclosed that:

1. The Fed plans to break support for mortgage markets after March 31, 2010
2. Raising the Fed Funds Rate will be a key part of the Fed's strategy to tighten monetary policy
3. The fundamentals behind consumer spending strengthened modestly

Furthermore, the Fed Minutes said that there is a growing risk of "higher medium-term inflation". Inflation, of course, is awful for mortgage rates.

Overall, the Fed's economic optimism appeared stronger after its January meeting as compared to its December one. A stronger economy should lead to better job growth and higher home prices throughout 2010.

Mortgage rates were up yesterday but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more. Therefore, if you're buying a home in the near-term, or know you'll need a new mortgage, consider moving up your time frame.

Every 1/8 percent makes a difference in your household budget.

Retail Sales Dropped In December And Now So Are Mortgage Rates

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The relevance of Retail Sales to home affordability isn't obvious, but it's definitely logical.

Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments.

It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available.

Conversely, the best place to find safety is in the market of government-backed bonds. This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates for people in Philadelphia. Weak economic data puts mortgage bonds in demand.

For rate shopper, this is good news. More demand for mortgage bonds causes mortgage rates to fall. Mortgage rates are lower this morning because Wall Street is shedding some risk.

December's Retail Sales report closes out a year of generally-weak data. 2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago. The other year was 2008.

For home buyers in Philadelphia and around the country, though, today may represent an opportune time to lock a mortgage rate. Housing data is still improving and other economic indicators are showing strength. Soon, Wall Street will shift from a "safe" mentality and move toward risk.

When it does, mortgage rates will rise.

How Mortgage rates Help You buy More House!

Image by woodleywonderworks via Flickr

Comparing July's conforming mortgage rates to today's average rates, there's a 1.5 percent difference in favor of homeowners.

Rate drops like that make big differences in a household budget. Look at these before-and-after payments, based on rates from the chart:

$150,000 mortgage ($144 savings/month)

• July 2008: $958 monthly
• February 2009: $814 monthly

$250,000 mortgage ($240 savings/month)

• July 2008: $1,597 monthly
• February 2009: $1,357 monthly

$350,000 mortgage ($335 savings/month)

• July 2008: $2,235 monthly
• February 2009: $1,900 monthly

Of course, the other side of the story is that while mortgage rates fell through late-2008, the mandatory lender fees that accompanied them rose. That lessened some of the benefits of getting lower rates, but certainly not all of them.

According to recent housing data, buyers are back writing contracts and listed homes are selling quickly. Considering how mortgage rates have led monthly payments lower, maybe it shouldn't be much of a surprise.

(Image courtesy: The Wall Street Journal)