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How Long Will the Mortgage Rates be This Low?

There is a lot of talk about mortgage rates going up soon. But what is behind the talk and how likely is it?

Mortgage rates have been at historic lows for some time now. But with every good thing, there is usually an end. With recent “whispers” from the feds, it looks like the low rates might be one of those good things coming to an end.

Ben Bernanke recently announced that the interest rates on short-term bank loans would be the only ones that are raised. However, many experts think this stipulation is going to indirectly raise the interest rates on mortgages which have been so low mainly because of the government’s bailout of companies like Fannie Mae and Freddie Mac.

According to the analysts at the Mortgage Banker’s Association (MBA), the mortgage rates are likely to go up by about a half of a percentage point by the beginning of June. Much of the reason for the speculation is because the feds plan to stop buying mortgage backed securities in the next month or so, which will indirectly lead to higher mortgage rates for borrowers.

After the feds stop buying these securities, it will be up to private investors to buy those securities. Unfortunately, they have not been stepping up to the proverbial plate in order to make that happen. And who can blame them? Bad mortgages were one of the major reasons for the economic distress in the last couple years. Why would private investors want to take a chance in losing their investments by backing mortgages that would cost them thousands or even millions of dollars?

As of today, the mortgage interest rates are remaining steady at about 4.93 percent. That number is according to Freddie Mac. That is nearly a 0.25 percent drop from the average mortgage rates for a 30-year-fixed rate mortgage. For a 15-year fixed-rate mortgage, the current rate is even lower at 4.53 percent. That number, however is up from last week’s calculations of about 4.43 percent.

According to the Motley Fool’s blog, however, the mortgage industry is a complex system that tends to balance itself out so there should be little worry about rising interest rates. However, if things get bad (interest rates above 7 percent), the feds may step back in with some other program to help bring rates back down.

If you haven’t taken advantage of the low mortgage rates yet – either through getting a new home or refinancing your current one – you should take your chance now. This is the best time to do it while lenders are still giving low rates. Don’t wait for the rates to get even lower than they are right now because they probably won’t!

Case-Shiller Index Reading from Dec 2009 Shows Housing Dead in Water

The December 2009 data from the S&P Case Shiller Index shows that housing is pretty much dead in the water. It's not getting worse, but it's also not getting better. The U.S. National Home Price Index fell in the fourth quarter of 2009 but has improved in its annual rate of return, as compared to what was reported in the third quarter.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 2.5% decline in the fourth quarter of 2009 versus the fourth quarter of 2008. This is a significant improvement over the annual rates reported in the first, second and third quarters of the year, at -19.0%, -14.7% and -8.7%, respectively. In December, the 10-City and 20- City Composites recorded annual declines of 2.4% and 3.1%, respectively. These two indices, which are reported at a monthly frequency, have seen improvements in their annual rates of return every month since the beginning of the year.

“As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data. We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December. Similarly, the National Composite fell by 1.1% in the fourth quarter, but rose by 1.6% on a seasonally-adjusted basis.”

Homeowner Terry Hoskins Decides to Demolish House Rather then Let Bank Foreclose - Video

These are the lengths some people will go through to get their house ready for the bank to take it back. This is a unique case involving tax liens, a family feud, and more. But in the end, this guy would rather demolish his house than let the bank have it.

These are the lengths some people will go through to get their house ready for the bank to take it back. Homeowner Terry Hoskins decided he would rather demolish his house than let the bank have it. This is a unique case involving tax liens, a family feud, and more.

More details here.

Five Ways to Boost the Value of Your Home

With the number of potential home buyers looking for new homes these days, it could be the perfect time to sell. Here are some things you can do to improve your home and increase its selling value.

With mortgage rates at a steal these days, there are many people in the market to buy a new home. Whether it is their first home or their tenth home, they are going to be looking for something that catches their eye and looks like it has been cared for and maintained over the years. As such, here are some things you can do to your home if you want to get it ready to put on the market.

Replace the Front Door
One of the first things a potential buyer is going to see is your front door. If it is wooden or simply weathered and worn, it will not make a good first impression. Replace your entry door with a new steel door to give the sense of newness and security to your home. You can get midrange steel doors for about $1200 but you will recoup about 130% of that cost with that simple improvement.

Renovate the Attic
By making the attic into another room, you automatically add a significant amount to your home’s value. It may take about $49,000 to convert the attic into a bedroom or some other type of room, but you will recoup most of that cost by adding that value to your home.

Add a Deck
A wooden deck is a great place to enjoy the spring and autumn breeze or just cool off in the summer months. It can also add about $10,000 to the value of your home. You will probably spend about that much building the deck, depending on its size and quality, but it will help your home sell faster and give it more appeal to potential buyers.

Finish the Basement
It’s hard to sell a home these days with an unfinished basement. Depending on the size of your home and the type of work your basement needs, you could spend about $62,000 finishing your basement and making it into another living area. You may not recoup that much when you sell the home, but making it more appealing and helping it sell faster will save you money in the long run.

Replace the Roof
If you have had your home for many years and you have never replaced the roof, it might be a good time to do it before placing it on the market. Replacing your roof will not only make your home more appealing to buyers, but it will also help ensure that your home is up to code and there are no major leaks in the roof that will cause the home to fail inspection. It’s better to have it fixed before buyers look at it instead of waiting until it fails inspection because then you will be trying to fix it in a hurry and making bad financial decisions along the way.

Mortgage Rates - Average 30-Year Fixed at 10 Week Low of 4.93%

The average rate on a 30-year fixed mortgage dropped to a 10-week low, moving from 4.97% to 4.93% according to data from Freddie Mac. This differs from the BestCashCow averages where the average 30-year fixed mortgage rose from 5.015% to 5.031%. This divergence continues to reflect market uncertainty as 30-year rates vacillate around the 5% range.

The average rate on a 30-year fixed mortgage dropped to a 10-week low, moving from 4.97% to 4.93% according to data from Freddie Mac. This differs from the BestCashCow averages where the average 30-year fixed mortgage rose from 5.015% to 5.031%. This divergence continues to reflect market uncertainty as 30-year rates vacillate around the 5% range.

Averages though won't get you a mortgage and I like to check and see what rate is actually available. Since I live in Massachusetts I checked Massachusetts mortgage rates. Below I compared the best rate I could find on a $200,000 30-year fixed rate mortgage with 0 points:

This Week Last Week

Rate: 4.875% 4.750%

Points: 0 0

Fees: $1,995 $1,995

For the first time in a month, the best rate mortgage rate for this criteria has increased, reflecting the rise in the BestCashCow national average.

The 15-year FRM this week averaged 4.33 percent down slightly from last week when it averaged 4.34 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.12 versus last week's 4.19 percent. The 1-year Treasury-indexed ARM dropped significantly from bit from 4.33% to 4.23%..

Here's what Freddie Mac had to say about the rate situation:

“Mortgage rates eased for the second week, while economic data releases suggest that the housing market may be in a slow state of recovery,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The National Association of Realtors® (NAR) reported that existing home sales rose in 48 states and the District of Columbia between the third and fourth quarters of 2009; 32 states experienced double-digit growth. In addition, 67 metropolitan areas saw positive annual house price growth in the fourth quarter, more than double that in the third quarter, according to the NAR.

Mortgage rates are now hovering close to record lows and homebuyers and for homebuyers who haven't refinanced now is a great opportunity. Many are finding that when they refinance, they can cut their mortgage term down to 15 years, savings tens of thousands of dollars on interest.

The economy's low interest rates may be a saver's pain, but they are a borrowers gain.

Use the BestCashCow rate tables to find the best mortgage rates in your area.

San Diego a Hotbed for Missed Mortgage Payments

The housing crisis has hit hard everywhere. Even San Diego County is not safe from the ill effects of the mortgage problems.

One of the most expensive areas to live in the United States is San Diego County. With the nice weather, beachfront property and sunny skies, many people dream of living here while few are ever able to achieve that dream. But for some San Diego County homeowners, that dream is becoming a nightmare.

About 10 percent of San Diego homeowners are using their mortgage money for other necessities, like gas and food. As a result, that 10 percent is at least two months late on their mortgage payments as of this month. But San Diego isn’t the only area hit by delinquent mortgages in California. In fact, the findings in San Diego County simply reflect the mortgage problem throughout the state and the nation as a whole. In the Golden State, about 11 percent of homeowners are currently behind on their mortgage payments. The recent housing bubble drove up prices on homes and there was a huge development boom. All of these factors combined created a problem of thousands of mortgage borrowers unable to pay their monthly payments and many housing developers had to simply stop their projects and walk away.

The numbers are based on a study conducted by TransUnion, a Chicago-based credit company that tracks home foreclosures, mortgage payments and more. The study also found that the average mortgage debt last year was nearly $380,000 in San Diego while the area’s median price for a home was about $325,000. Many San Diego homeowners are “upside down” in their mortgages, meaning that they owe more on their home than what it is worth. As a result, there are about 60,000 homes in danger of being foreclosed upon this year if mortgage payments are not brought up to date.

The Obama administration is working on helping homeowners who find themselves in this type of financial trouble. With the “Make Home Affordable” program, some people are getting the help they need to get out of this mortgage mess. With mortgage rates as low as they are, some homeowners are looking to refinance at the historically low mortgage rates to get their heads above water and get back on track with their payments. Homeowners who are upside down in their mortgages can also take advantage of the Home Affordable Refinance Program, which is specifically designed for people who cannot sell their house for the amount they owe on it.

How is this housing crisis affecting you and your family? Have you had to resort to extreme measures in order to put food on the table and keep up with your mortgage payments? Or are you sacrificing one for the other? If so, it’s nothing to be ashamed of. Millions of Americans are finding themselves in the same situation.

Obama Administration Pressured to Extend Mortgage Program

The Obama administration has a program that is designed to help homeowners who are in financial trouble. But is it enough?

The Obama administration is under increased pressure to make some changes to the current mortgage relief program as the housing crisis is not showing any major signs of letting up.

The administration’s $75 billion program is designed to pay mortgage lenders to modify mortgages for borrowers who have found themselves in financial trouble. The modifications are designed to lower monthly payments by as much as $500. Unfortunately, according to the U.S. Treasure Department, fewer than 200,000 mortgage borrowers have had any permanent changes to their loans. The program was designed to help as many as four million borrowers by 2012. At this rate, however, the program will not reach its goals nor will it help stabilize the current housing market. According to one credit company, the program would have to prevent more than three million foreclosures this year alone in order to help home prices increase just a bit.

The program, which has been named “Making Home Affordable,” got off to a “slow start,” according to administration officials. They say it can still reach its full potential if given a chance. One of the problems they say is that the lenders did not begin enrolling eligible borrowers into the program until the summer of 2009. That was months after the program was began. By that time, the main reason for foreclosures was the rising unemployment in the United States rather than the risky mortgages that borrowers had. That means borrowers have less money to apply to their mortgage payments, in which case the program has little effect on them.

The administration is under pressure to expand the program so it helps more unemployed borrowers who find themselves in precarious situations. Officials are also under pressure to expand the program to help homeowners who find themselves “upside down” in their mortgages, meaning that they owe more on their loan than what their home is worth. Representative Edolphus Towns of New York is leading the charge to help more homeowners who find themselves in trouble due to unfortunate financial circumstances. He says the program should be more efficient and effective regarding assisting struggling homeowners.

At least half of the homeowners who have received relief under this current program have asked for help because their income dropped as a result of a job loss or some other reason. Unfortunately, many of these people do not qualify for help from the program because they do not have an income. Some of the pressure comes from housing advocates who say some of the money should help those borrowers by offering short-term loans and other financial assistance. They also say borrowers who owe more on their homes than their market value should also receive some type of assistance under the program.

The administration has discussed making changes in the current program, but they have not provided any details as of yet.