Which one to choose: a 15 or 30 year Fixed Rate Arizona Mortgage?
Which one to choose: a 15 or 30 year Fixed Rate Arizona Mortgage?
Arizona: Even though 30-year fixed rate mortgage rates look superbly attractive as they have troughed, 15-year fixed rate mortgage rates are lower than before, averaging 3.27% nationwide with an accompanying 0.8 discount points. One discount point is a closing point tantamount to one percent of your loan amount. These numbers are taken from Freddie Mac’s weekly survey.
This current number is just 0.01% higher than the lowest rate as registered in October 2011.
Hence, if you have been toying with the idea of getting a 15-year fixed rate, there is no better time than now to consult your financial institution.
One advantage that this mortgage offers is that you can save a huge sum of money on your long-term interest costs, as compared to a 30-year fixed rate. Of course, this option takes a lot out of your monthly pay check, and hence is not suitable for all homeowners.
Going by current mortgage rates, for a $100,000 loan:
- 15 – year fixed rate mortgage : $704 principal & interest per month
- 30 – year fixed rate mortgage : $477 principal & interest per month
From this data, it is obvious that applicants pay close to twice the amount every month when they choose to go with a 15-year fixed rate mortgage. However, to look at it in a long term perspective, the homeowner also stands to benefit from this mortgage because he can expect savings of up to $45,000 for a $100,000 loan.
$45,000 is not an insignificant amount; in fact for many of us this is our annual salary. This money could also be used to pay off other expenses such as college tuition, renovation works or be used for investment purposes.
However, not everyone should take up this mortgage.
It can be financially worrying to have to make such a high payment every month. Also, once you sign a 15-year loan term you are locked in for good; unless you get a refinance —and refinances are expensive— your lender will not allow you to change to a 30-year mortgage rate.
Hence, you must exercise great prudence before deciding to apply for a 15-year fixed rate loan. High rewards, sure, but such loans also present high risks.
December 15, 2011 by Eddie Knoell · Leave a Comment
Managing Your Arizona Mortgage: Taxes and Homeowners Insurance
Managing Your Financial Liabilities and Arizona Mortgage 
If you own a house in Arizona, your financial liability is more than just paying off your mortgage. Real estate taxes are applicable to you as well, and you will also have to factor in the cost of your insurance policy premiums.
Making timely payments of your taxes is of paramount importance, because failing to do so will result in your property being seized. Not insuring your property is not an option, because it is a breach of your mortgage contract.
You have two options to make your real estate tax and insurance payments.
First, you can make the payments as and when they are due, which is typically twice a year. The payable amount will vary based on your property’s taxable charges as well as the cost to insure your home. In some cases, this payment can be a fairly huge amount, so be sure to plan your finances well.
Alternatively, you can also bestow your money lender with the authority to make these payments. This is known as “escrowing for taxes and insurance”.
Essentially, you will make a portion of your yearly payment to your lender on a monthly basis. The lender will then safe keep this sum of money in a special account (escrow account), and will proceed to make the payment to the tax authorities and insurance organizations when the payments are due. This is a preferred choice of payment method for lenders because they have the assurance that your bills will be attended to and your homes are always insured.
If you’re looking for some form of monetary incentive or rebate, choose the escrow method.
A simple calculation will determine the monthly sum of money you need to pay to your lender:
1. Determine your property’s yearly tax amount
2. Determine your yearly home insurance premium
3. Take the sum of these two figures and divide by 12.
This final figure is your monthly escrow payment. However, you will need to factor in the requisite interest payment as well. This is a convenient method as your lender will ensure that all your due payments are seen to.
Consult your Arizona loan officer agent to discuss if this is the most appropriate payment method for you.
December 8, 2011 by Eddie Knoell · Leave a Comment
Have Low Arizona Mortgage Rates Stalled Out?
Low Arizona Mortgage Rates: What Action Should You Take?
Mortgage rates have seemingly hit a low. Invoking the results of the Freddie Mac’s Primary Mortgage Market Survey —which is released every week—, the average 30-year fixed rate mortgage is 4.00 percent in the U.S. This number has held steady for the past five weeks.
In the five weeks, rates have seen fluctuation between 3.97 and 4.02 percent, registering 0.7 discount points, inclusive of closing costs. One discount point is equal to one percent of your loan amount. In different states, the closing costs are different.
In order to enjoy the Freddie Mac rate, applicants in Arizona would have to pay a set of administrative charges to the financial institutions or money lenders. The fees are directly proportionate to the loan amount. On top of this, applicants can opt for loans that come with minimal or no fees —paying instead an adjusted fee.
Going by the survey, it is evident that different states observe different interest rates as well as discount points. States in the West Coast have the most affordable rates, although they also come with the highest costs. The converse is true for the East Coast; rates are high but costs are kept low.
This is the most current mortgage rate as categorized by region:
- Northeast : 4.00% , 0.7 discount points
- West Coast: 3.96% , 0.8 discount points
- Southeast : 4.06%, 0.9 discount points
- North Central : 3.97%, 0.7 discount points
- Southwest : 4.04%, 0.7 discount points
Most noteworthy from this information is that all four regions have registered rates that are lower than their 2011 peaks. Ever since April, mortgage rates have been on the decline. For five straight months, the decrease has been constant, and the rates have hit a new low early November.
Since mid November, the rates have stagnated though, and the factors that influence the low rates in Arizona no longer come into play. The economy in America is revving, the situation in Europe is getting better and the housing industry is steadily improving.
What does it mean for you? If you are considering if this is an apt time to refinance, or if higher rates will impact home affordability, the answer is positive. Consult your Arizona loan officer to learn more about your home loan options as mortgage rates are most likely to increase in the next year.
December 7, 2011 by Eddie Knoell · Leave a Comment
Fed Seamingly Proposes New Stimulus Next Week
Encapsulation: the November 2011 Fed Minutes and How it will effect Arizona mortgages
The Federal Open Market Committee has published its November 2011 meeting minutes, and the document sheds details that the committee is split on deciding if a new stimulus will be the panacea U.S. needs to rev its economy.
Every year, a total of eight Federal Open Market Committee meetings are held. Three weeks following the conclusion of each meeting, the Fed Minutes is released to the public. The document is a look into the policy-shaping debates and dialogs that transpired during each meeting.
Comparatively, the Fed Minutes is a more detailed document than the FOMC’s post-meeting press release.
The press release is succinct, and usually comes up to 492 words, whereas the Fed Minutes spans 11 pages, coming up to 7,682 words. The minutes document also comes with charts, thus providing a full picture of the discussion.
Going by the November minutes, the Fed assesswa that:
- Unemployment rate will see a steady decrease for the next two years
- The housing industry is not looking up. Foreclosures are one factor that impedes growth
- For the next 1.5 years, the Fed Funds Rate will be capped at a low rate
Other topics discussed at the meeting include the introduction of the government’s revised HARP program. The Fed believes that this is a timely benefit as homeowners can now gain access to affordable mortgage rates. In the long run, this will have a positive impact on the housing industry as well as the economy.
Discussions at the table would not take Wall Street by surprise, although the Fed did allude to the possibility of bringing in new market stimulus. This is a hot button topic Wall Street will expect FOMC to tackle at the next and final meeting of 2011.
If indeed the Fed were to announce new market stimulus next week, and if the stimulus is in the form of additional mortgage bond purchases, mortgage rates will no doubt decline across Arizona and the rest of the U.S. states. The converse is true: if the Fed rejects the introduction of new stimulus, Arizona mortgage rates will then see an increase.
The next FOMC meeting is slated for next Tuesday, December 13, 2012.
December 6, 2011 by Eddie Knoell · Leave a Comment
FHA suspends lower Arizona mortgage limits through 2012
Good news, FHA has suspended their Arizona loan amount reduction cap that was initiated October 1st 2011. They have reverted back to the pre October 1st 2011 limits through the end of 2012. That is good news for Arizona homeowners looking to use a FHA loan in the range between $271,050 to $346,250. Here is a grid of the Arizona county limits.
|
County |
State |
One-Family |
Two-Family |
Three-Family |
Four-Family |
| APACHE | AZ |
$281,250 |
$360,050 |
$435,200 |
$540,850 |
| COCHISE | AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
| COCONINO | AZ |
$450,000 |
$576,050 |
$696,350 |
$865,400 |
| GILA | AZ |
$325,000 |
$416,050 |
$502,900 |
$625,000 |
| GRAHAM | AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
| GREENLEE | AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
| LA PAZ |
AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
| MARICOPA | AZ |
$346,250 |
$443,250 |
$535,800 |
$665,850 |
| MOHAVE | AZ |
$322,500 |
$412,850 |
$499,050 |
$620,200 |
| NAVAJO | AZ |
$308,750 |
$395,250 |
$477,750 |
$593,750 |
| PIMA | AZ |
$316,250 |
$404,850 |
$489,350 |
$608,150 |
| PINAL | AZ |
$346,250 |
$443,250 |
$535,800 |
$665,850 |
| SANTA CRUZ |
AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
| YAVAPAI | AZ |
$390,000 |
$499,250 |
$603,500 |
$750,000 |
| YUMA | AZ |
$271,050 |
$347,000 |
$419,425 |
$521,250 |
December 5, 2011 by Eddie Knoell · Leave a Comment
More Good news for Arizona real estate – Pending Home Sales higher In October
A spike in Pending Home Sales Index: Yay or Nay?
Trend watchers who are looking for home prices to take a plunge and hit bottom will have to wait —the boat may have come and sailed.
Following three straight months of easing, t he Pending Home Sales Index registered a 10 percent increase in October, leading to speculation that the real estate industry is bouncing right back.
Every month, the National Association of REALTORS® publishes the Pending Home Sales Index. This index reveals the number of homes available for sale in Arizona as well as the rest of the U.S states. The month of October saw the index registering a peak —the highest this year. The reading in April 2010 comes a close second.
Of course, trend watchers would know that April 2010 saw the conclusion of the federal home buyer tax credit.
Home buyers and sellers in Arizona should keep their eyes peeled for the Pending Home Sales Index. While other industry reports such as the Existing Home Sales and New Home Sales reports chart the progress of the past, this index is a good gauge of how the market is doing.
The National Association of REALTORS® also reveals that collectively, sellers close up to eighty percent of homes under contract within a two month period. Others take one or two months longer to seal the deal.
The increase in the Pending Home Sales Index as seen in October is a prediction that the data for Existing Home Sales report will be positive in the last two months of 2011. Other indications such as an increase in homebuilders’ confidence that the market is favorable and that supply of homes has been decreasing (especially something we have seen in the market here in Arizona) will also back this prediction up.
One factor that could impact this however is the industry’s ever increasing contract failure rate. In the month of October, for every three pending home sales, one failed to go into settlement. This is twice the rate in September, and four times the rate just a year earlier. If this trend continues, the Pending Home Sales Index may no longer be a strong indicator of how the industry will fare.
All in all, with expected increase buyer demand as well as a diminishing home supply, prices will likely soar in the new year. Arizona Mortgage rates are also poised to spike, and carrying costs will go up as well.
What can we infer from this information? If you’re looking to purchase a home, you would be well served to get one now.
December 2, 2011 by Eddie Knoell · Leave a Comment
Conforming Arizona Loan Limits Unchanged For 2012
What You Need to Know About Arizona Conforming Mortgages 
What constitutes a conforming mortgage? The term is self explanatory, really, as the mortgage adheres to the stipulations as set by Fannie Mae and Freddie Mac.
The two agencies create underwriting eligibility criteria, enabling underwriters to assess an applicant’s suitability. The approval of the loan requires that the borrowers and the property meet the eligibility criteria.
One of the features of a conforming mortgage is ‘loan size’.
The government annually reviews the maximum allowable loan size based on the average housing cost in Arizona and the rest of the U.S. states. Under the stipulations, only loans that are below this loan size are approved. Loans that are over this amount are termed as ‘jumbo’ loans.
Throughout the 80s, 90s and early 2000s, the value of home units saw a spike, and so did conforming loan limits. It quadrupled, from $93,750 to $417k. In the past five years, though, home prices have seen a decline in the U.S., but the limits had remained the same. This will be the case as well for the coming year.
Next year, the loan limit for the single-family category will hold at $417k for seven years in a row.
Here is the complete lowdown on next year’s conforming loan limits, categorized by unit types:
1-unit: $417,000
2-unit: $533,850
3-unit: $645,300
4-unit: $801,950
It is important to note that some regions observe higher loan limits, as the units fetch a higher price and thus collectively brings up the median sales price. These areas are termed as ‘high-cost’ areas. The loan limits range from the market’s limit and are capped at $625,500. The Arizona mortgage market is not classified as ‘high cost’ and thus the limit is held at $417K.
The Big Apple, the Hawaii islands, Alaska, San Francisco as well as most of the cities in California are high cost areas. In the U.S., there are almost 200 such areas.
You can have access to information regarding loan limits across Arizona and the U.S. states via the Fannie Mae website. Here is the online version of the full county-by-county list.
November 25, 2011 by Eddie Knoell · Leave a Comment
New revisions to HARP will benefit more Arizona homeowners than ever
New revisions to HARP (we’re calling it HARP 2) will benefit more Arizona homeowners than ever
Last week, Fannie Mae and Freddie Mac revealed new updates the government has introduced to the HARP program. What soon ensued in Arizona and the rest of the U.S. states is talk about property refinancing.
HARP is an abbreviation for Home Affordable Refinance Program. With the new revision, HARP 2 will benefit ‘upside down homeowners’ in Arizona when it comes to refinancing their asset, given the current low mortgage rates.
Following its launch two years ago, HARP has benefitted 900,000 homeowners —a humble number compared to the millions of homeowners HARP II will benefit once it comes into effect in December 2011.
To be eligible for HARP 2, borrowers must fulfill four stipulations:
- Fannie Mae or Freddie Mac must provide guarantee to the existing unit
- Fannie Mae or Freddie Mac must have provided security to the existing unit before June 1, 2009
- Applicants must have an unblemished payment history in the past six months
- In the past one year, there must not be a repeated occurrence of a one month arrear in the mortgage payment history
Arizona homeowners will have much to gain once their HARP 2 application is approved.
For 20 Year Fixed terms and less, the Loan-level pricing adjustments are no longer enforced. Any terms that is longer than 20 years have loan-level pricing adjustments that are capped at 0.75.
What does this mean for HARP 2 applicants? Lower mortgage rates, especially for those who boast of credit scores lower than 740. Under the HARP 2, mortgage rates are comparatively lower than the market rate.
Another benefit is that HARP 2 applicants no longer have to wait four years after a bankruptcy declaration or seven years following a foreclosure.
With these two benefits, more Arizona homeowners will be looking at HARP 2.
HARP 2 comprises other terms as well.
- The “unlimited LTV” term is applicable to fixed rate loans lasting no longer than 30 years. ARMs must not exceed 105% loan-to-value.
- Applicants must undergo another qualifying test should their proposed mortgage payment exceed the current payment by 20%.
- Applicants must see tangible benefits from paying a lower mortgage rate
HARP 2 is a one-time application.
Both Fannie Mae and Freddie Mac will adapt the HARP 2 guidelines for their own use. Consult an Arizona mortgage broker today on the full list of HARP eligibility stipulations.
November 23, 2011 by Eddie Knoell · Leave a Comment
This Week – Macro factors to influence performance of Arizona mortgage rates
Macro factors to influence performance of Arizona mortgage rates
Last week, the mortgage markets were stagnant amidst the debt situation in Europe as well as the observation of better economic data in the U.S.
For the week, the rates saw very minor changes and trend watchers in Arizona should not expect any movement this coming week too.
Freddie Mac has stated that conforming 30-year fixed rate mortgages did not register any change for the third consecutive week: 4.000%, observing a 0.7 discount points on average. A one discount point is tantamount to one percent of the loan size. Trend watchers looking at ‘zero-point’ mortgages should expect a mortgage rate above 4.000%. In comparison, loans with one or more points are priced below 4.000%.
With the festive season coming and a shortened trading week, expect a higher probability of mortgage volatility. Rates will no longer be stagnant, and may move away from the 4.000% mark we’ve seen since the beginning of the month. What we do not know if the rates will increase or decrease.
For almost three quarters, we have debated on how the Greece’s events have impacted America’s mortgage market. The correlation: every time Greece comes close to reaching default, our stock markets fall and our bond markets improve. As a result, our Arizona mortgage rates decrease.
Just a week earlier, the same issues came to light in countries such as Italy and Spain. Consequentially, U.S mortgage rates were driven down. However, with reports of a higher sales volume, more positive New Home Sales numbers and elevated homebuilders’ confidence, mortgage rates will most likely inflate in the coming years.
With inflation, the U.S. currency will see a drop in its value, and this will inevitably cause mortgage rates to spike.
Within this week, the following information will be accessible to us:
- Monday : Existing Home Sales
- Tuesday : FOMC Minutes; GDP; 5-Year Treasury Auction
- Wednesday : Jobless Claims; Personal Income and Outlays; Consumer Sentiment
Today, America’s Congress will have to fulfill its mission of consolidating $1.2 trillion to fund the U.S federal budget savings to last for the next decade. If this mission does not succeed, then we can expect stock markets to be adversely impacted and mortgage rates will see a sharp decline.
November 21, 2011 by Eddie Knoell · Leave a Comment
Housing Starts Rising; New Construction Turns The Corner?
New forecast: a boon for the new home construction industry
October was a good month, as the Single-Family Housing Starts registered a four percent increase from September, registering a peak of 430,000 units. This is a new peak in three months.
The term “housing start” refers to breaking ground on a new home.
While this increase had taken several Wall Street analysts by surprise, several tell tale signs from various sources may have long substantiated this forecast.
At the beginning of the week, the National Association of Homebuilders published the Housing Market Index, registering a new peak since May 2010. Homebuilders’ sentiments reveal two things: more positive market conditions as well as the uptick of housing units being sold. For the last 10 years, a rise in homebuilders’ confidence has often signified an increase in housing starts.
This however is not universal. The sales volume in the ‘Single-Family Housing Starts category’ saw variations, based on location. Results were different in all four of America’s regions:
- Northeast Sector : up 10.0% from September
- Midwest Sector: down 4.1% from September
- South Sector : up 11.3% from September
- West Sector : down 10.2% from September
There are two key lessons that new property buyers in Phoenix AZ can take home:
With the increase of new homes being constructed, home supply will inevitably spike and this will bring down prices. This means that many will be able to afford a residence of their own.
The second lesson is that with the boost in builders’ confidence levels, buyers will not be able to negotiate ‘free home upgrades’ or land a great bargain as before.
What to infer from all these? Well, the remaining six weeks of this year will be your best time to invest in new property. Prices are now at the best bargains and arizona mortgage rates are at their lowest. Because most home buyers lay low during the festive season, you will have more luck landing a new construction deal than any time of the year.
A real estate agent will possess in-depth knowledge pertaining to industry trends as well as new construction. Consult with one today to learn more.
November 18, 2011 by Eddie Knoell · Leave a Comment
