Historically low mortgage rates are allowing homeowners to pay down their mortgages at a faster rate — even if it means a substantial jump in their monthly payments.

Texas home owners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets.

The average rate on a 15-year fixed-rate mortgage is below 4% right now, and having a mortgage rate that starts with a “3″ is attractive for people who can afford it.

Savvy home owners are seeing that a 15 year mortgage is essentially a forced savings account for homeowners, given that the higher payments help pay down the principal at a much quiker rate. Many Texans have reverted to the goal of paying off their house and getting rid of their mortgage.

Doing the Math - Refinancing into a shorter-term mortgage isn’t a strategy for everyone, however.

Choosing a shorter term usually means you’ll get a better rate — and you’ll pay much less interest over the life of the loan — but a shorter timeframe ramps up monthly mortgage payments significantly.

For example, with a 4.5% interest rate on a 30-year fixed-rate mortgage of $200,000, you would have a monthly payment of $1,015, including principal and interest. That same monthly payment jumps to about $1,480 with a 4% interest rate on a 15-year fixed-rate loan.

Of course, if the refinancing borrower’s current 30-year loan has a higher rate, the difference between the monthly payments could be less. Still, you should count on some increase in monthly payments.

Is a 15 year mortgage right for you? Homeowners shouldn’t take on a 15-year fixed-rate mortgage unless they have substantial savings, including at least a year’s worth of living expenses in liquid accounts. Also, it is recommended he recommends having a debt-to-income ratio below 35%. So if you have a gross salary of $5,700 per month, for instance, your monthly debt — including any mortgage payments, taxes, insurance, homeowners-association dues as well as auto and student loans and credit-card debt — would have to be a max of $1,995 to get a 35% ratio.

Option to 15 year mortgage - Make That Extra Payment

Borrowers who don’t meet those standards, or are worried about future loss of income, might be better served taking a longer-term mortgage but making extra payments to the principal to pay off the loan faster.

For instance, if you refinance a $200,000 mortgage into a 30-year loan with a 4.5% rate, and then apply $100 of the savings to the principal payment each month, you’d save $31,700 in interest over the life of the loan. And you would pay off the mortgage in 25 years, instead of 30 years.

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National average for a 30-year fixed loan dips to 4.58%. Mortgage rates have sunk to the lowest level in more than five decades- Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week.

That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors wary of the European debt crisis and the stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track the yields on long-term Treasurys.

On Wednesday, the yield on the benchmark 10-year Treasury note dropped to 2.95 percent. That was the first time it has fallen below 3 percent since April 2009, when the markets were beginning to recover from the financial crisis.

But tighter lending standards and declining home equity have made it difficult for many borrowers to refinance. Many who do qualify have already done so over the past 18 months.  Current Texas mortgage rates

Take advantage of this historic time and refinance your home today! 

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• Mortgage Banker-Broker
• LOW RATES, LOW FEES
• In-House Underwriting & Fast Closings
• Close Loans in 20 Days
• FHA, VA, Conventional, JUMBO

Call today for a Free Good Faith Estimate-  1-800-585-6886
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Mortgage rates are at historic lows -there is no better time to buy a home or refinance than right now!

As of Thursday May 27th 2010, mortgage rates have hit historic lows and fallen to the lowest level of the year. Current European turmoil has caused investors to pour money into the safe haven of U.S. government securities. The average rate on a 30-year fixed rate mortgage dipped to 4.75% this week from 4.875% a week earlier. This is the lowest mortgage rates since early December when rates fell to a record 4.71%.

Concerns over the European debt crisis have sent yields for 10-year and 30-year Treasury bonds to their lowest levels of 2010. Rates on 30-year home loans often rise and fall in line with the 10-year note.

A campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring. Instead, they have dipped. Fears that Greece’s government would default on its debt shook world markets and boosted demand for U.S. Treasury’s.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

REFINANCE NOW!  If your interest rate is currently higher than 6% and you have lived in your home for more than 3 years then please contact us today.   Home homeowners that do refinance typically get to skip one months mortgage payment. Start saving and lock in a low rate today!

Contact Lone Star Financing today to speak to a friendly mortgage consultant 1-800-585-6886

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Rates for 30-year fixed mortgages have fallen to their lowest level in six weeks. The average rate for 30-year fixed-rate mortgages was 4.875% this week, down from last week when it averaged 5.06 percent. A year ago, 30-year fixed rate mortgages averaged 4.84 percent,and many mortgage analysts expected rates to trickle up this Summer, but with real estate still shaky the Fed continues to hold down rates.

Rates dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended at the end of March, but the Fed left the door open to reviving the program if the economy weakens.

The last time rates for 30-year fixed mortgages averaged less than 5 percent was the week of March 25, when they were 4.99 percent.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.

This week, the average rate on a 15-year fixed-rate mortgage was 4.36 percent, down from last week when it averaged 4.39 percent.

Rates on five-year, adjustable-rate mortgages averaged 3.97 percent, down from 4 percent a week earlier. Rates on one-year, adjustable-rate mortgages dipped to 4.07 percent from 4.25 percent.The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 of a point for 30-year, 15-year, and 5-year loans, and 0.6 of a point for 1-year loans.

With rates at 30 year lows and bargain house prices, it’s still a buyer’s market. Current Texas mortgage rates

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Before the conventional mortgage loan market collapsed, approximately 10% of home buyers utilized FHA financing.   Conventional loans were king.  Borrowers who had less than perfect credit and little money down could utilize the FHA programs to purchase a home.  FHA required 3 percent down and the seller could contribute up to 6 percent in seller paid closing costs. A buyer who purchased a $200,000 home with the seller paying 6% in seller paid closing costs needed only $6,000 in down payment and about $1,000 in additional cash to cover buyer paid closing costs.

Today approximately 41% of all loans originated by mortgage banks are issued and insured by FHA. The reason for the sudden use of FHA insured loans is due to the stringent conventional mortgage guidelines and lack of insurability of conventional loans where the buyer does not have 20% for down payment.   Today a buyer who wants to use a conventional loan to purchase a home needs a  680 credit score and the combined housing and credit debt ratio cannot exceed 41 percent of the buyers gross income.

FHA will in some instances allow a higher debt ratio if the borrower has good quality risk factors such as great credit, cash reserves in the bank and job stability. FHA now requires borrowers to be on their current job at least 6 months.
Due to the number of defaults on loans in the past year FHA loans are changing. Today FHA requires only 3.5% down however this will be changing. FHA will require 5% to 10% down when utilizing an FHA loan.  They are taking away the ability for a seller to contribute 6% to assist the buyer to pay closing costs. The seller will be able to contribute up to 3.5%, the same as a conventional loan. Also the upfront mortgage premium is going to be increased from 1.75% to 2.25%.

If you are a home buyer and utilizing FHA now is the time to purchase that home before these changes go into effect! Remember you must be under contract by April 30, 2010 and settle by June 30th, 2010 to also take advantage of the tax credit!

Ryan Collins
Lone Star Financing
13812 N Hwy 183, Ste B4
Austin, TX 78750
Phone - 800-585-6886

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