Home prices may rise soon as more and more people start filling out mortgage application forms. If you’re putting off plans to buy a home, hoping for lower mortgage rates, then now may be time to reconsider.

In a recent Reuters report, consumer demand for housing and refinancing loans rose in the week ended January 6, indicating a potentially bullish market throughout the year.

The Mortgage Bankers Association’s (MBA) mortgage application index, a major gauge of ongoing housing market activity, went up by almost 5 percent last week.

Despite a modest increase of 4 basis points for 30-year mortgage rates (4.7 to 4.11 percent) in the last week of 2011, refinancing applications still grew more than 3 percent while home purchase loan applications rose by a whopping 8.1 percent.

Statistics also show that the share of refinancing in total amount of mortgage loans dropped by 1.1 percent, indicating a strengthening national economy.

The MBA survey covers three-fourths of the entire US housing market.

The Good News and the Bad

Positive development in the housing market serves as a major indicator of the economic improvement, a welcome respite for the average American who has been tormented by a stagnant economy since it crashed in 2008.

However, with the simple law of supply and demand, a constantly increasing number of mortgage applications will inevitably cause another housing boom, which will drive home prices up north.

Citing an earlier post, mortgage rates was already at a historic 60-year low in the last weeks of 2011. However, recent developments indicate that this record may not be broken anytime soon. That is, the 6-month forecast of stable home prices may be cut short.  These figures may go up in no time.

When is the right time?

There are many other factors to take into account before you start filling out forms, such as your current employment situation, your current debts, and other financial contingencies. However, considering the probability of a near-term housing boom, delaying the purchase of a home may translate into higher interest payments, coupled with subsequent increases in real estate prices.

If you need more help in deciding when to buy a home, Paradigm Mortgage Services will be glad to help.

Record low interest rates suggest that now is the best time for mortgage refinancing, says a Wall Street Journal (WSJ) report

Because of economic woes throughout Europe and the United States, investors all over the world have begun to stockpile US Treasury Bills, considered as the safest financial investment on earth. Consequently, this massive trend has severely dampened interest rates on mortgages. (more…)

• Is your interest rate too high?
• Are multiple loans confusing you?
• Are you paying too much monthly?
• Do interest rates fluctuate too much?
• Do you need extra cash for very urgent purposes?

If you answered “yes” to any of these, then refinancing may be right for you. Refinancing a mortgage, or the replacement of a mortgage with a new mortgage that’s under different terms, is a great way to make financial obligation easier to handle. In this article, let’s discuss the most common reasons why people refinance, and see if it is indeed the best way to go. (more…)

The LA Times reports that if a new government mortgage program succeeds, it could make mortgage refinancing easier and “help 1 million to 2 million people get significantly lower monthly payments.”  The mortgage assistance program that the government recently announced isn’t actually brand new. Instead, it would basically be a revised version of the Home Affordable Refinance Program (HARP). Even with such a program, you would be advised to seek the assistance of a mortgage broker because a broker’s expertise can save you time, money and headaches.

Under this new version of HARP, some homeowners who are underwater in their mortgages may be able to refinance their mortgages at the current low interest rates, as long has they are up-to-date on their mortgage payments (meaning they have not missed a payment in the last six months). (more…)

Your credit score is used by mortgage lenders and banks to evaluate your credit worthiness. Credit scores range from 300 to 850. The higher your credit score, the better a credit risk lenders consider you to be and the more likely they feel you will be to pay back your loan. A high credit score significantly improves your chance of being approved for a mortgage loan. A high credit score can also qualify you for a larger loan which can allow you to purchase a more expensive home. But, most importantly, a high credit score qualifies you for the most favorable (i.e., lowest) mortgage interest rates.

The three numbers of your credit score hold tremendous power over your personal buying power. Your credit score affects not only your ability to buy a home; it can also impact your ability to obtain a credit card, get an auto loan, refinance your home or obtain a home improvement loan. In some instances, your credit history can affect your ability to get a job. Numerous businesses now consider applicants’ credit scores as part of their hiring process.

How is your credit score determined? There are three major credit bureaus in the U.S.: Experian, Equifax and TransUnion. Each credit bureau collects borrowing and repayment data about consumers from creditors and lenders which they compile into a credit report that documents your credit history. Your data is then weighted and plugged into a mathematical formula to generate your credit score. Here’s the breakdown credit bureaus use to determine credit scores:

35% Payment history
30% Outstanding debt
15% Length of credit history
10% Number of credit inquiries
10% Types of credit used

Because the credit score computed by each of the three credit bureaus may be somewhat different due to variations in data collected and computation method, mortgage lenders rely on your FICO credit score to make their decisions.

Next time: What is FICO?

If you have already refinanced your home and are tempted to refinance your mortgage again because of the current low rates, this may not be a bad idea, as long as you think it through.

Here are some things to consider:

Cost of refinancing: remember, you will pay closing costs when you refinance your mortgage, so you want to be certain that you are going to stay in your home long enough to make those costs worthwhile. With today’s low rates and with the assistance of a mortgage broker, you can certainly find a rate that will make a difference in your monthly mortgage payments… as long as you remain in your home long enough.

Plus, when you work with Paradigm Mortgage, closing costs are reduced through the Concierge Program. Costs will vary depending upon your loan amount, the type of transaction and where you live. One of our loan officers will be happy to customize a quote for you.

Reason for refinancing: why do you want to refinance? Is it because you think you can really save some money and reduce strain on your budget? Or do you want to refinance to pay bills, like credit card debt? If you chronically overspend, refinancing your home may not be a great idea. If, however, you want to spend the money on something like home improvements that may add value to your property, a refinance can be beneficial.

Refinancing a Second Home: if you have a second home that you want to refinance, you can follow advice geared for people who want to refinance a primary residence. You do have to keep in mind the added costs of owning a second home, such as paying a management company to keep up the property if you are not able to do this yourself. Factor any additional costs into the equation when you look at refinancing a mortgage on a second home.

As mortgage interests rates continue to fall, as a homeowner, you might be wondering if now is a good time to refinance your home.  Each individual homeowner’s situation is different, but there are, in general, several reasons you might want to consider refinancing your mortgage.

If today’s rates are significantly lower than the rates  you are locked into now, refinancing to get the newer lower rate may very well save you a great deal of money in the long run.  In fact, many financial experts advise that if interest rates have dropped more than 1.5 percent from the rate you’re paying now, that you should consult with a mortgage broker to have them assess your individual situation and whether or not a new loan would be right for you.  If you plan to stay in your home for a significant of time, you may easily be able to recoup any up-front refinancing costs and quickly move on to finding more room in your monthly budget.

We live in fast times, and life can get very busy.  Due to this fact, many homeowners decide to wait and put off applying to refinance.  Others might be putting off  refinancing because they find themselves feeling intimidated by the refinancing process. They may feel uncertain about whether they are doing the right thing by refinancing or that they will get the best rates.

If you are a homeowner who can identify with these issues, remember that with current rates falling to all time lows, hesitation may not be the best way to plan for your financial future.  To alleviate intimidation, frustration, and uncertainty, know that there is a solution!   By consulting with an expert mortgage broker you won’t have to “go it alone” through the refinancing process.