Fixed mortgage rates have fallen for the second week in a row, this time reaching new records low points. Data released by Freddie Mac in their weekly survey of mortgage rates shows that average 30 year fixed rate pricing dropped to a record setting 3.84% (0.8 points and fees) and 15 year fixed rates on average also set a new record at 3.07% (0.7 points and fees) for the week ending May 3, 2012.
So what does this mean to consumers in the market for a new home?
Low mortgage pricing is excellent news for home buyers. The reduced interest payments can amount to thousands of dollars a year in savings even at low loan amounts. For example the monthly payment on a $200,000 loan at the current rate of 3.84% would be $936.47. Compare that to rates at this time last year (4.71%) and the payment jumps to $1038.48, or $1224.12 a year higher.
Were rates to climb to 6.5% it would mean paying an extra $3932.04 a year.
How can home buyers take advantage of these record low rates? – Check Today’s Rates
Potential buyers who already have a property under contract and have submitted a mortgage application should be able to contact their mortgage representatives to lock in a mortgage rate. Of course there’s no guarantee that pricing won’t drop even further, so consumers should be sure they fully understand the consequences of locking the rate.
Home shoppers who are continuing to look at homes for sale will likely be advised by their mortgage representative to wait until they have an executed sales contract before moving forward with a particular rate. This is because a rate can only be locked for a finite period of time, often thirty or forty-five days, and extending that lock period repeatedly can be costly.
In Other News: Federal Housing Administration Lifts Rule for Ongoing Credit Disputes
The Federal Housing Administration has elected to remove a rule that limited financing options for those individuals who were engaged in ongoing credit disputes of greater than $1,000. According to a recent report on HousingWire.com, the credit dispute requirement went into effect on April 1, 2012. The guideline required that borrowers settle disputes or provide their FHA approved lenders with satisfactory documentation that repayment schedules had been agreed upon.
Combined with an increase in insurance premiums, the Federal Housing Administration enacted the new rule as a means of limiting the risk to its depleted emergency fund. Home builders and FHA’s lending partners believed that the rule would hinder their ability to assist many first time home buyers. The FHA released a letter this past Friday stating that the Administration had revoked the rule.