Have You Ever Thought About What A 'no-cost' Mortgage Means?

You really do pay for what you get, it's just a matter of how and where. You may have no "out-of-pocket" costs, but they are rolled into your loan amount and you DO pay for them. Or, another scenario is your lender pays for them, but you are charged a higher interest rate, so you ultimately pay those costs, and you will end up paying much more for them over time because they are added on to your monthly payment as long as you have that loan. Maybe that works out for you, depending on how long you plan retaining that loan. Just read this article to get a more detailed description of these scenarios.

Property Tax Exemptions from Reassessment

Did you know that in certain California counties you are able to transfer your tax base? A taxpayer who is 55 years of age or older may transfer the Proposition 13 base-year assessment value of his or her principal residence to any replacement dwelling of equal or lesser value in the same county and, sometimes, in another county ( Cal. Rev. & Tax Code § 69.5(a)(1)and (2)). And, you may have up to two years before the sale or two years after the sale of the original dwelling to purchase or construct the replacement property. The catch is, your replacement property must be of equal or lesser value than your sold property. So, if you're thinking of selling your principal residence located in Los Angeles County and moving to Alameda, Orange, San Mateo, Los Angeles, San Diego, Santa Clara or Ventura Counties, you may transfer your tax base to those locations provided all the transfer qualifications are met. Otherwise, the transfer applies if you stay within the same county you're selling in.

Mortgage Rates Leap Up

According to Bankrate.com, the 30-year fixed is overall around 6.5%, and mortages are the highest in 4 years. Fewer people are refinancing than in the last 9 months or so. Buyers sometimes forget that a change in their mortage rate will increase their monthly payment faster than a slight increase in a sales price on a new purchase, depending on the amount involved. Why wait, if you're thinking of a new purchase?

Interest Rate Increase

The trend may be towards yet another rate increase. One-year and five-year adjustable interest rates are looking less attractive when compared wtih the 30-year fixed rate mortgage. The upward pressure on mortgage rates is a downward pressure on home prices. Rates have already edged up, slowing re-fi activity overall.

Lower Rates But Not For Long

People who wait will probably pay for it ... it's better to buy or refinance now rather than outguess the market. These are still historically low rates, and waiting shows every indication of ultimately costing you more. This article, Mortgage rates trickle down, shows a small chart on the effect of rate changes vs. your monthly mortgage. So if you're wanting to buy, don't miss out on an opportunity to save money.

Interest Rates May Rise Quickly?

Expect Alan Greenspan to measure his words, but the message overall is that there will be no more cuts and they will only go up. How much they will go up and how quickly is not known--that depends on inflation, jobs, and the economy. Read here for more.

Interest rates lower

Rates actually lowered, a great opportunity for buyers to keep their payments lower. In case you didn't know, rates vary according to local markets, so if you see a rate quoted on a website it might actually be a national average, not what you would get locally. In Los Angeles area, you can expect a 30-year fixed conforming loan (under $333,700) to be around 6.11% with about .5% in points. But if you have a FICO score over 700, you might find a 30-year fixed at 5.875% at 0 points. See this for a report.

Interest Rates Up Over Time

Rates increased yesterday by 1/4 point, but mortgage rates actually went down a little because the banks had already anticipated the Federal Reserve's increase. According to this article on Bloomberg.com and other sources in the industry, rates will continue to rise, but will be gradual over time. How much time? Only the economy and time will tell.

How High Will Rates Go in June?

With a quiet economic calendar for the early part of the week, mortgage bonds and home loan rates will likely move in response to stocks, geopolitical events and technical factors. Remember that money usually flows back and forth between stocks and bonds, and when one is higher, the other is usually pushed lower and vice versa. Geopolitical events of terror will generally push bonds higher, due to what is called a "flight to quality", as money is pushed into the safe haven of stable bonds. In recent weeks, geopolitical and terrorist activity has not been as influential on market trading as has been seen in the past, as traders are becoming toughened to the continuing news.

Looking ahead, traders now have their minds focused on the Fed's next meeting on June 30, coincidentally the same date as the official hand-over of sovereignty to the new Iraqi government - this will be a very big day. Because inflation is bad for Stocks and bonds, the whole market really wants to "take their medicine", see the Fed raise interest rates, and get it over with. This Fed action will send a clear and strong signal to the markets that they are on top of inflation-related concerns. But will they stick to an expected .25% increase, or make a more aggressive .50% increase? A smaller increase is much more likely, but as we have seen in the past, anything can happen. Prices will likely continue their sideways move until the end of the month when the Fed releases it's decision on interest rates. -- The Mortgage Market Guide, June 21

Gradual Rate Hikes

Alan Greenspan said Federal Reserve officials still believed they could begin boosting short-term interest rates at a "measured" pace. The first increase is widely expected when the Fed's policymaking Open Market Committee meets June 29 and 30, and rates may be raised by about .25 percent. This is part of the "gradual rate hike" that's been referred to in recent weeks, and bear in mind that banks usually anticipate these increases in advance of action by the Federal Reserve, but you may well continue to see more increases before the end of the year.

Rate Increase in Your Future

So with the chatter of a "jobless recovery" diminishing to a whisper...what happens next? Any doubts of the Fed making an increase to short term interest rates have vanished, and it certainly appears inevitable that a .25 to .50% hike will be delivered at the next FOMC meeting scheduled for June 30th. Remember that there are many different types of interest rates, and the Fed manipulates the Federal Funds Rate, an overnight lending rate between banks, not interest rates for mortgages. Many people - including some of the national media - believe that when the Fed "raises rates", there is a direct correlation to rates on first mortgages. Not true. In fact, when the Fed finally does give the Fed Funds Rate a hike, it should ease the inflationary market pressures and surprisingly give Bonds a boost, which would reduce rates on mortgages. -- The Mortgage Market Guide