Archive for the ‘Mortgage Loans’ Category

Contributed by Tim Coutts, President of CB&T Mortgage

While the dust settles from the political arm wrestling over the debt ceiling increase, the downgrade of US debt and the slow pace of economic recovery, a bright spot has emerged – mortgage rates.  Mortgage rates have fallen to historic lows and a refinance could represent a real opportunity to improve your personal financial situation.

The recent fall in the stock market has investors seeking the safety of  US government treasuries.  The increased demand has pushed yields dramatically lower on 10-year treasuries.  Since mortgage rates move in tandem with the yield on 10-year treasuries, we are seeing 30-year mortgage rates near 4% for conventional loans and below 4% for government (VA and FHA) loans.  A refinance of your existing mortgage could substantially reduce your monthly payment.

An attractive alternative for some homeowners is the 15-year mortgage.  The shorter maturity results in a lower rate than a 30-year loan.  Today’s 15-year rates are in the low 3% range.  A shorter maturity and lower interest rate means more of your monthly payment goes to reduce the loan balance.  If your plan is to have your home paid-off by the time you retire, this may be just the product for you.


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Contributed By:  Tim Coutts, President, CB&T Mortgage
Rates Hit Zero?

I happened upon an interesting article in the WSJ Market Watch. What would happen if mortgage rates hit zero? It certainly would entice all the buyers that have come to consider mortgage rates under 5% the norm into making the leap into home ownership. And, could you imagine a $550 payment on a $200,000 loan?

Taking rates to zero or at least close to zero would drum up so much demand in the economy that Title Companies, Mortgage Companies and all other industry related companies would essentially be understaffed and have to start hiring. Can you imagine?

What do you think would happen?

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Credit can be a wonderful thing, but, too much of a good thing can backfire on you. For prospective homeowners, loan approval relies more on your history of debt repayment than on your income or savings.

How do you know if your credit history is healthy? Don’t rely on guesswork. Order a copy of your credit record, preferably three months before applying for a loan. You’ll see where you stand and have time to clear up any errors which may appear in your credit records.

How is credit risk measured? In today’s lending market, most credit reports are automated, relying on a credit “scoring” system that analyzes about 100 variables to gauge the likelihood that the borrower will make on-time payments.

The information measured is gathered from retailers, public records, and sometimes credit applications and bank records. The score analyzes patterns over time, with more recent payment and debt habits holding greater weight.

In the scoring system used by Fair, Isaac—the originators of scoring software—the main criteria and their approximate percentage of importance are: (more…)

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Contributed By:  Tim Coutts, President, CB&T Mortgage
Smaller is better

On August 12th Freddie Mac announced the average 30-year fixed-rate mortgage was just 4.44% – the lowest rate since Freddie began keeping records in 1970. So if you are like me, you might assume that you would be able to lock in a rate around 4.5% at most banks, large or small, and not worry too much about rate shopping.

Well, think again my friends. On average the three biggest banks – Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. – offer rates of 4.66% on 30-year fixed mortgages while some of the smaller regional banks are offering rates .25% to .5 less.

So, why is there such a difference?  The largest factor is because of the consolidation during and after the financial crisis. The big three banks accounted for over half of new mortgage originations during the first half of the year and frankly they don’t have to compete on pricing the same way smaller banks do. (more…)

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Tim Coutts, President of CB&T Mortgage, explains the state of the mortgage industry and the effects of strict underwriting standards.

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