Currently they are offering a promotional set of adjustable rate mortgages with APR’s as low as 3.20% for three years and 3.60% Read more...]]> If you happen to reside in northern Michigan and are in the market for an adjustable rate mortgage with either a three year or five year reset period, you may have seen the “special offers” advertised by your neighborhood credit union – Northland Area Federal Credit Union.

Currently they are offering a promotional set of adjustable rate mortgages with APR’s as low as 3.20% for three years and 3.60% APR for five years. While these are considered “special” products by Northland FCU, they are actually a smigin above the national average for their respective terms. And just for the record, we’re certainly not trying to bash these promotional offers, but we find it misleading when banks and credit unions advertise rates, APR’s, or APY’s as “promotional” or “special” when they are hardly even keeping up with the national average.

Putting the offers in perspective:

- Today’s national average for 5/1 ARMs sits at 2.77%

- Today’s national average for 3/1 ARMs sits at 2.72%

- Today’s lowest interest rates on 5/1 ARMs in Michigan sit at 2.745% (from our database)

- Today’s lowest interest rates on 3/1 ARMs in Michigan sit at 3.164% (from our database)

The top rates found from our database filtering for Michigan rates only was assuming a loan of $165,000. Any amount above or below this number will likely move the APR and interest rate up or down.

Northland Area Federal Credit Union Adjustable Rates Disclosure:

3/1 ARM - After three years the rate will adjust no more than 2% per adjustment period or 6% over the life of the loan.  These rates are their “as low as rates” based on the 3 year Treasury Bill and adjustments and restrictions may apply.

5/1 ARM - After five years the rate will adjust to no more than 2% per adjustment period or 6% over the life of the loan. These rates are their “as low as rates” based on the 5 year Treasury Bill. Adjustments and restrictions may apply.

First, home equity can be gained in one of two ways – by paying down a Read more...]]> BankVibe.com reader Kendra emailed us this week and asked, “How much equity do I need in my home to refinance with today’s low interest rates?” We’ve seen many variations of this question pop-up as refinance rates sit at such attractive levels, so below is our break-down of what to expect and where to go for refinancing.

First, home equity can be gained in one of two ways – by paying down a principal, or through an increase in property value. You can also look at it as the principal amount paid plus (or minus) change in market value of a property. For example, when housing prices were soaring during the early 2000′s, one may have bought a $200,000 home with 20% down ($40,000) while making interest only payments each month. In this example, let’s say the home’s value rose to $220,000. He or she would then have a home equity of $60,000.

$40,000 (from 20 percent down payment) + $20,000 (increase in home value) = $60,000 in home equity

Conversely, if the home owner made this purchase during the housing collapse, the value of the home may have lost $20,000 rendering it’s value at $180,000. In this situation the home owner would have just $20,000 in home equity.

$40,000 (from 20 percent down payment) – $20,000 (decrease in home value) = $20,000 in home equity

…So How Much Equity Do You Need to Refinance?

That depends on how much you would like to pay in fees and interest.

Lower rates will almost always accompany lower risk borrowers – so people with larger amounts of equity in their home will usually encounter lower fees and APR’s.

As a general rule of thumb, an LTV (loan to value ratio) of lower than 80 percent will usually constitute a low risk borrower. And consequently home owners looking to refinance with an LTV north of 80% will likely face higher fees.

The Loan-to-Value ratio shows the amount of a first mortgage lien as a percentage of the total appraised value of real property. So if a borrower borrows $160,000 to purchase a house worth $200,000, the LTV ratio is $160,000/$200,000 or 80 percent.

Refinancing an Underwater Mortgage:

Its no secret that the market has been flooded with bank owned properties largely stemming from underwater mortgages. And if you’re looking to refinance a home or property that is underwater you have two options involving government-run programs that are designed specifically to assist you.

The first is HARP – the federal Home Affordable Refinance Program. If you meet the criteria for HARP, you may be able to refinance your home for between 105% and 125% of it’s value. Getting into HARP requires that you are not heading towards foreclosure and that you haven’t made any delinquent mortgage payment within the last 12 months.

If you’re not eligible for HARP, your next move would be HAMP – the federal Home Affordable Modification Program. This program is designed for those that are underwater AND have missed mortgage payments within the last 12 months due to financial hardship. Its available through mortgage lenders but subsidized by the federal program. Be prepared to fully disclose and prove your hardship(s) for consideration.

image from allrmc.com.

It appears that popularity in the often controversial “reverse mortgage” is subsiding even as interest rates hover slightly above all time lows. For those that are new to (or researching) these products they are exactly what their name insinuates – the opposite of a conventional mortgage.

They are offered to people over the age of 62 only, which in and of itself has been the center point for a lot Read more...]]>

image from allrmc.com.

It appears that popularity in the often controversial “reverse mortgage” is subsiding even as interest rates hover slightly above all time lows. For those that are new to (or researching) these products they are exactly what their name insinuates – the opposite of a conventional mortgage.

They are offered to people over the age of 62 only, which in and of itself has been the center point for a lot of criticism since the height of their popularity back in 2006-2008. Most of the criticism dealing with age restrictions revolves around the complexity of these ‘equity release’ products and the fact that some lenders have been known to use this to their advantage. They also cost much more to set in motion than a conventional mortgage would. On average new mortgages cost owners roughly $5,000 while the reverse mortgage costs nearly $8k (according to wiki: reverse mortgages).

Basics of a Reverse Mortgage

1) Who should use them?

Anyone or couple over the age of 62 that is strapped for cash. These products should be treated as last resorts. In contrast with a normal mortgage, a reverse mortgage puts money back in the consumers pocket every month by depleting a portion of the equity in one’s home.

2) Which federal organizations back them?

The United States Department of Housing and Urban Development (HUD) manages the federal program. A survey conducted by the AARP was also released in 2006 stating that 93% of all reverse mortgage recipients were at least satisfied with their reverse mortgage experience.

3) How much money can you get?

There are five elements involved in determining the total sum one can receive over the course of the reverse mortgage. 1) Appraised value of property including any maintenance costs. 2) Interest Rate – this is based of LIBOR average or 1 year US Treasury Bill. 3) Your age. The younger you are the less you are eligible to receive (remember it’s only available after the age of 62). 4) How you choose to take your sum. Monthly payments would garner more than one lump sum over the life of the reverse mortgage. 5) Limits and regulations based on HUD restrictions and laws.

Commercialization of Reverse Mortgages

The most notable ally for reverse mortgages as far as marketing these products is concerned is likely former politician/actor/lobbyist Fred Thompson (R). Fred Thompson, former Tennessee Senator (1994-2003), took the senate seat vacated by Al Gore two years prior. He has also played both a politician and lawyer on television (most recently as a prosecutor in Law and Order). Below is one of his many reverse mortgage commercials that are most prominently seen on Fox News but also many other 24 hour news networks.

While Fred Thompson may make for a likable spokesman to the 62+ aged population his only work in the financial world came from his years as a lobbyist. He primarily lobbied for banking deregulation under the Reagan administration and likely wasn’t that significant of a player as his total lobbying income was reported at under $2,000 (according to Wiki: Fred Thompson).

Our Take on Reverse Mortgages

As we mentioned before, these are asset depletion products that should only be used in dire financial situations on par with bankruptcy. Although commercials make them seem stress free, simple and generally beneficial, they often get criticized for their complexity which can lead to predatory lending (especially to an aging population). As for their popularity, Google Trends is showing a significant drop off in interest for these products since their hay days starting back in 2006.

Why is renting normally more profitable than purchasing a home?

The myth that owning a home is a worthwhile Read more...]]> Despite what your traditional business intuition may be telling you, renting a home is generally more profitable than buying one under regular economic conditions. However ‘regular economic conditions’ don’t exist currently (and haven’t for a while now) leading some analysts to suggest that 2012 could be a highly profitable year to purchase a home.

Why is renting normally more profitable than purchasing a home?

The myth that owning a home is a worthwhile investment has been largely exposed through the financial meltdown of 2008, however, housing market analysts have known for quite some time that owning a home isn’t nearly as profitable as the public generally thinks.

The primary factor leading to this misconception is that owning a home forces you to save money. When you take out a mortgage and purchase a home you have essentially required yourself to stash a substantial portion of your income away into an asset. This in and of itself gives off the illusion that you’ve made a smart move, however, when looking at actual home price gains you’ll see that they barely beat inflation. This isn’t even taking into consideration the money you lose on mortgage interest, property taxes and maintenance. So in other words, you could have done much more productive things with your money other than purchasing that home.

If those who rented a home took the difference of their would-be mortgage payment and what they spend on rent and stashed that away into a diverse array of assets such as stocks, bonds, etc., they would more often than not be realizing more in returns on their assets then they would if they simply purchased the property.

Keep in mind, this is assuming ‘normal’ economic conditions.

2012, on the other hand, opens new doors for potential home buyers that in some cases have never been seen before. For one, interest rates on mortgages are at all-time lows in records going back to 1971. Combine this with another record – number of foreclosures on the market – and you’ve got a very unique buying opportunity.

One kicker…

The big “if” on whether you should buy or rent your home in 2012, depends largely on whether or not you plan on staying put for a long enough time. According to this recent study conducted by two financial professors at Florida International University, the magic number in weighing your decision will likely be around eight years. If you’re purchasing a home that you plan on staying in for eight years of longer, then 2012 could prove to be an unrivaled time to jump into the market, however, if there’s a chance you may need to sell before the eight year mark, you may not have allowed for enough time to offset the major up-front expenditures of buying and selling a home – such as tax transfers, home loan application fees, appraisal and realtor’s commission – with the inevitable rebounding of the housing market.

This Read more...]]> If you’re thinking of refinancing your mortgage this year and live in or around the greater Louisville, KY area you may want to shop around for online discount brokers if you’re strictly trying to lower your monthly mortgage payments. We’ve surveyed hundreds of banks and credit unions serving residents of Louisville and surrounding counties in Kentucky and have found that for the most part, online institutions can offer slightly better APR’s.

This trend is consistent with what we’ve been seeing around the country. Generally speaking online discount brokers with no or very few physical branches can offer slightly better deals on mortgage rates due to their lack of overhead expenditures. Fees associated with these brokers, however, may be larger than those associated with local banks and credit unions, so you’ll want to consider that before applying as well.

Lowest Mortgage Rates in Louisville, KY (December 2011):

1. CapWest Mortgage featuring 30 year fixed rate mortgages with APR of 3.883% and $997 in fees assuming a loan amount of $165k. (Available Nationally)
2. GreenLight Mortgage featuring 30 year fixed rate mortgages with APR of 3.975% and $1,995 in fees assuming a loan amount of $165k. (Available Nationally)
3. Fifth Third Bank Mortgage featuring 30 year fixed rate mortgages with an interest rate of 3.750%. They have locations in Flatwood, Louisville and Ashland, Kentucky. (Local Only)
4. Branch Banking and Trust Company featuring a 30 year fixed rate mortgages with an interest rate of 4.00%. They have several locations throughout the state. (Local Only)
5. Citizens National Bank of Paintsville featuring 30 year fixed rate mortgages with an interest rate of 4.00%. They have several locations throughout the state as well. (Local Only)

Mortgage Rate Trends

Mortgage rates are continuing to trend downward this week. The average 30 year fixed rate mortgage is down to 4.0% this week from 4.05% the previous week. 15 year fixed rate mortgages are down as well to 3.30% from 3.37% last week. Mortgage rates are geographically sensitive with Kentucky’s APR’s averaging slightly higher rates than other states.

The lowest rate goes to Fifth Third Bank who’s featuring a 30 year fixed rate mortgage Read more...]]> If you happen to live in Ohio or even the greater Midwest, you have plenty of banks and credit unions ready and willing to provide you with some respectable mortgage rates. During this week’s survey of local banking institutions’ 30 year fixed rate mortgages in Ohio we found a few APR’s sitting below the 4.0% mark.

The lowest rate goes to Fifth Third Bank who’s featuring a 30 year fixed rate mortgage (from their Wilmington, Ohio branch) of just 3.87% assuming a down payment of 20%. If you’re thinking of refinancing your Ohio home, you can also lock in this low rate with Fifth Third Bank with zero origination fees and no points. You can read a review of Fifth Third Bank’s Mortgage services to get consumer feedback on their product(s).

Below are additional 30 year fixed rate mortgages in Ohio with sub 4.0% rates:

(Rates accurate as of December 2011. Visit our mortgage rate center for updated rates and loan specials in Ohio.)

1) State Bank and Trust Company (West Unity, OH) has a 30 year fixed rate mortgage comes with an interest rate of 3.875% assuming 20% down.

2) PNC Bank (Zanesville, OH) has a 30 year fixed rate mortgage comes with an interest rate of 3.875% assuming 20% down.

3) Fearon Financial “Smarter Mortgages” provides an APR of 3.991% on their 30 year fixed rate mortgages.

4) StoneGate Mortgage provides an APR of 3.957% on their 30 year fixed rate mortgages.

Today’s Mortgage Rate Averages

To put the offers above in perspective, average 30 year fixed rate mortgages sit at roughly 4.0% APR this week – down roughly 0.05% from last week.

The average 15 year fixed rate mortgage sits at roughly 3.35% APR this week – down 0.02-0.04% from last week.

If you live in Colorado and you’ve been on the fence over whether or not to refinance your mortgage, these low rates may be the tipping point.

We’ve listed the five best APR’s on 30 year fixed rate mortgages currently available in Colorado below. Four Read more...]]> Over the holiday weekend we were tipped off on some noteworthy 30 year fixed rate mortgages in Colorado by two credit unions that were featuring APR’s under 4.0%.

If you live in Colorado and you’ve been on the fence over whether or not to refinance your mortgage, these low rates may be the tipping point.

We’ve listed the five best APR’s on 30 year fixed rate mortgages currently available in Colorado below. Four of the five come from credit unions and one comes from US Bank’s National Association (Colorado branch). Credit Unions are usually able to offer you slightly lower loan rates however they are typically exclusive institutions with strict eligibility requirements.

Lowest 30 Year Fixed Rate Mortgage APRs Colorado (December 2011):

1) Addison Avenue Federal Credit Union (Englewood, CO) featuring a 30 year fixed rate mortgage with an APR of 3.98% assuming 20% down. 0.625% points and 0.50% in origination fees are included in this loan package.

2) First Technology Federal Credit Union (Loveland, CO) featuring a 30 year fixed rate mortgage with an APR of 3.98% assuming 20% down. 0.625% points and 0.50% in origination fees are included in this loan package.

3) Navy Federal Credit Union (Colorado Springs, CO) featuring a 30 year fixed rate mortgage with an APR of 4.031% assuming 20% down. 0.875% points are included in this loan package.

4) Indiana Members Credit Union (Boulder, CO) featuring a 30 year fixed rate mortgage with an APR of 4.076% assuming 20% down.

5) US Bank (Wheat Ridge, CO) featuring a 30 year fixed rate mortgage with an APR of 4.188% assuming 20% down.