Friday, January 21, 2005

Bad Advise Regarding Shopping Mortgage Rates.

Bad Advise regarding Shopping Mortgage rates.

I recently read an article that started off saying that encourage a person contemplating home financing to shop rates is bad advise. Say What? When you consider that recently overnight rates dipped and that 30 year fixed-rate mortgage averaged 5.67 percent in the week ended Jan. 20, down from last week when it averaged 5.74 percent, I say keeping an eye on rates is a big deal. Shopping rates means becoming aware of what the current rates actually are.

True bad advice is easy to give. But When a very popular MSNBC financial expert wrote an article, published in Yahoo's financial section, which implied if your FICO score is lower than 600, you can expect to pay an extremely high rate of interest on your mortgage, well the truth is the truth. Just don't settle for it.

I do appreciate the writers point saying if you have challenged credit, don't let any "professional advise giver" imply, that you can expect to pay a 9% interest rate on your mortgage. But rate watching is essential to finding a good deal.

The writer goes on to say that little pre application work, you can in fact have a 500 to 600 FICO score and get just as nice an interest rate as someone with a 680 to 750 FICO score on a standard 30-year conventional fixed loan.

But here is the contradiction. He adds that 50% of higher interest rate home buyers could have qualified for a lower interest rate conventional loan product. What? Now we're back to shopping rates? Yes we are.

Your wrap up tells it all. You say to credit challenged home buyers, you can use the FHA loan program to buy your home for far less than any alternative loan program available. Your closing costs typically will be higher, however, your rate will be equal to the prevailing conventional mortgage rate. Here you imply that one should by all means compare rates to what is on the market.

You even go so far as to say opt to pay higer closing costs to get you hands on lower rates. Good advice but what a contradiction. You say shopping rates is a bad idea yet your whole focus is on buying a lower rate.

Folks, focus on your rates and do whatever it takes to get a good one.

Thursday, January 6, 2005

Where Are Mortgage Rates Headed

Overnight and into the early morning mortgage rates should hold at their lower levels.

a Fed official said that while the Committee depends on economic data for guidance, he believes that accommodation can be removed slowly, which is "Fed speak" for gradual rate increases.

The Federal Reserve's accommodative monetary policy is generating "excessive risk-taking" in the financial markets and possibly fueling speculative demand for single homes and condominiums, according to some members of the Fed's interest rate-setting group.

The Market Composite Index, an overall measure of mortgage applications, fell from 677.4 to 605.7 on a seasonally adjusted basis during the holiday week ended Dec. 31, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.