Mortgage rates are lower than last year and may help you

Posted by Nick Niesen on October 29th, 2010

Mortgage rates are expected to keep dropping in anticipation of the Federal Reserve meeting in the last week of April, as a result of extremely low builder and buyer confidence in the market, and extremely weak housing starts. Everyone is betting that rates will be cut- yet again. This could be good news for people being squeezed by large mortgage payments looking to refinance, or for families who want to reduce their long term interest burden by moving into a shorter term mortgage. However, financial professionals need to be contacted to determine if the benefits of refinancing will override the costs. Often times, lenders require that points, which translate into dollars, be paid, before a loan can be refinanced. Sometimes, this may make any subsequent interest savings negligible, depending on the length of time required to pay off the loan entirely.

Fifteen year fixed rate mortgages may begin to move below 5.4% , almost 50 basis points lower than where they were a year ago. Thirty year fixed rate mortgages are also lower than last year by just over 30 basis points. People looking to get into, or refinance, fixed rate obligations may benefit from more favorable interest rates depending on their lending institution and loan terms. Even though rates are more favorable than last year, individuals may not necessarily be able to benefit from them if their credit history has deteriorated since owning a home.

Often times, moving into a home creates an increase in credit card bills, due to the furnishing of the new home with credit. People put everything from new sofa sets to wallpaper on credit cards, after getting a home, and often don't think about whether or not they will actually be able to service the debt. If this sounds like something you may have done, it is a good idea to examine your credit reports from all of the credit reporting agencies before you go into refinance a loan. Financial institutions are able to collect every ounce of data relating to your ability to pay of debts, and they will use everything legally possible to measure you as a borrowing risk. Make sure that you are able to offer them a low risk client with promising payback potential.

If you are interested in just getting your first home loan, some credit moves that you have made in anticipation of getting a new house may not have been a good idea. If you recently got new credit cards, to pay for new home supplies, that may hurt your credit score. Your credit score takes into account credit inquiries, and credit outstanding relative to credit limits. Depending on your debt load, taking out that new credit card, or maybe two new ones, may have been the worst thing you could have done when it comes to trying to obtain the most competitive mortgage rates.