Several Factors Affect Your Mortgage Rate
Several Factors Affect Your Mortgage Rate
Increase DecreaseAmount of Loan Rates Up
Rates DownLength of Loan Rates Up
Rates DownAdjustable Rate
Rates Down Rates UpDown Payment
Rates Down Rates UpDiscount Points
Rates Down Rates UpClosing Costs
Rates Down Rates UpCredit Quality
Rates Down Rates UpIncome Level Rates Down
Rates UpLock In Period Rates Up Rates Down
The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. The conforming loan limit changes at the beginning of each year.
Shorter loans, such as 20 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.
A larger down payment – greater than 20% - will give you the best possible rate. Down payments of 5% or less should expect to pay a higher rate as you are starting with less equity as collateral. If you've got the cash now and want to lower your payments, you can pay on your loan to lower your mortgage rate. It's a simple concept, really: In exchange for more money upfront, lenders are willing to lower the interest rate they charge, cutting the borrower's payments. Closing costs are fees paid by the lender, if you don’t want to pay all of the closing costs, expect a higher rate which will pay the lender additional interest over the life of the loan.
Credit quality and debt-to-income-ratio affect the terms of your loan through FICO Score. If you have good credit and your monthly income far surpasses your monthly debt obligations, you will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have a credit report, you will not receive the lowest available interest rate.
Treasuries retreated from earlier highs to finish mixed today. In the stock market, the indices struggled but managed to post gains for the day. In late trading, the 10-Year Treasury Note was up by 1/32, holding its yield to 5.06%; the Dow was up by 15.77 points to 11,144.06; and the Nasdaq was up by 13.56 points to 2,193.88. There were no major economic releases today.
The bond market felt some follow-through from yesterday's rally but some profit-taking and pressure from two note auctions next week kept prices in check. Bonds had a winning week with the yield of the 10-Year Note down by 14 basis points (yields move inversely to price).
Stocks had a modest bounce after a string of losses. Falling oil prices helped today as a barrel of light, sweet crude for next month delivery declined by $0.92 on the New York Mercantile Exchange, settling at $68.53. The contract is down by $3.51 for the week. Falling energy prices allow businesses and consumers to spend more money in other areas of the economy.
The Dow edged up for the day by 0.14% but was down for the week by 2.22%. The S&P 500 gained 0.41% today but lost 1.87% on the week. The Nasdaq gained 0.62% today, its first winning session in the last nine. For the week, the index was down by 2.08%.
Next week the economic calendar is relatively light but two Treasury note auctions and the approach of the long Memorial Day weekend will keep the pot stirred. There are no major economic releases slated for Monday or Tuesday. Wednesday brings the report on durable goods orders for last month. Durable goods are defined as items which are made to last three years or more. They are typically production intensive, costly and, therefore, often financed. Consequently, the trend in new orders provides a preview of upcoming production activity and a clue to how the interest rate environment is affecting the process.
March's report said that the seasonally adjusted level of orders rose by 6.1% and the latest factory orders report revised that to an increase of 6.5%, the biggest jump in ten months. Transportation has been a particularly volatile category of durable goods lately. In January, overall orders were down by 8.9%, the largest decline in over five-and-a-half years. This was due to a 29.2% decline in transportation-related orders, a drop due primarily to a 70.1% decline in orders for commercial aircraft. Aircraft orders and, consequently, transportation orders, recovered in February and March. But even excluding the transportation sector, orders were up in March by 3.1%, the strongest ex-transportation gain since last August.
For April, a pull-back of between 0.5% and 1.0% is predicted for the headline number.
Also out on Wednesday morning is the report on new home sales for last month. In March, the Commerce Department said that the seasonally adjusted, annualized pace of new home sales rose by 13.8% to 1.213 million. The rise was the largest since January of 1992 and the sales rate was the highest since last December. But with mortgage rated continuing to climb, a drop of about 5.2% is predicted, bringing the rate down to 1.150 million.
Apart from what the economic reports reveal, the bond market will feel some pressure on Wednesday morning as traders prepare for the day's 2-Year Treasury Note auction. The last four such auctions had a face value of $22 billion and that is expected to be the size of next week's. The deadline for competitive bids is 1:00 PM Eastern Time.
Last month's issue was poorly received. Bids exceeded the offer amount by 2.05 to 1, the lowest bid-to-cover ratio for a 2-Year issue in twelve months. Noncompetitive bids, a gauge of individual investor demand, totaled $968 million, down from $987 million in March, but up from the $921 million average for the twelve auctions preceding last month's. Foreign demand was tepid. Indirect competitive bids (including those from foreign central banks) garnered 24.5% of the issue, down from March's award portion of 34.2% and below the twelve-month average of 33.1%. On Thursday, the jobless claims report will again direct attention to the employment situation. Yesterday's report startled observers with an unexpected 42,000 jump in initial claims to 367,000, the highest reading in seven months. But a two-week shutdown of most government offices in Puerto Rico accounted for most of the move. For this week, a huge drop is anticipated with predictions calling for the claims level to be about 320,000.
A more influential release is likely to be the preliminary report -- a revision of last month's initial estimate -- of gross domestic product (GDP) for the first quarter. GDP is the market value of all final goods and services produced by labor or property in the country in a year's time. Quarterly data is adjusted and annualized and changes from quarter to quarter indicate the strength and direction of the economy. In the advance report, the growth rate was calculated at 4.8%, the strongest reading since the third quarter of 2003. What makes Thursday's release so noteworthy is the fact that last Friday's report on international trade revealed a much smaller trade gap in March than had been anticipated ($62.0 billion versus predictions near $68.0 billion).
The resulting improvement in net exports, a component of GDP, means that the initial growth rate will likely be revised up. Recent predictions call for a bullish reading of 5.6%.
Inflation indicators within the GDP report will also be scrutinized for changes from the initial readings. These include the overall price index, which the initial report said increased by 3.3% in the first quarter, a deceleration from the fourth quarter increase of 3.5%. In the indices known to be closely watched by the Fed, the initial report said the index on personal consumption expenditures (PCE or consumer purchases) rose by 2.0% after a 2.9% increase. Excluding the volatile categories of food and energy, the core PCE price index was also 2.0% following a 2.4% increase in the fourth quarter.
The report on existing home sales for last month will also be released on Thursday morning. The seasonally adjusted, annualized pace of sales had been trending down since last June's record 6.29 million, hitting a two-year low of 6.57 million in January. But the rate rebounded in February to 6.90 million and unexpectedly edged up again in March to 6.92 million. Analysts note that the increases were in response to a decline in mortgage rates in November and December and unseasonably warm weather in much of the country in January. For April, a moderate decline to about a 6.77 million pace is anticipated.
On Thursday afternoon, the Treasury will be conducting its monthly auction of 5-Year Notes. Like the 2-Year offering, last month's 5-year issue met with soft demand. The bid-to-cover ratio was 1.87, the lowest in a year. Noncompetitive bids were relatively solid, though, totaling $159 million, the highest amount in six months. But foreign participation was exceptionally weak. Indirect competitive bids garnered just 20.8% of the issue, the smallest 5-year award portion for the category since June of 2003. The last three issues had a face value of $14 billion and that is the projected size of Thursday's offering.
On Friday, the report on personal income and spending for April will be released and it could provide some downward pressure on the bond market. In the last report, the Commerce Department said that personal income, the fuel for consumer spending, rose by 0.8% in March, but the figure was revised down to 0.5% a few day's later. Personal consumption expenditures (PCE or consumer spending) rose by 0.6%. The average monthly change in both categories has been an increase of 0.5%. For last month, the consensus forecast calls for increases in income and spending of 0.7%.
The last report of the week is the final read on consumer sentiment for the month from the University of Michigan. In the preliminary read, released on the 12th, the overall sentiment index came in at 79.0, the lowest reading since last October when consumers were unnerved by the Gulf Coast hurricanes. With gasoline prices high and stocks falling, analysts do not foresee an improvement for the final reading.
The bond market will be closing early on Friday (2:00 PM Eastern) and all domestic markets will be closed the following Monday. This could create some lift for the bond market since it leaves positions exposed to event risks for a longer period of time. As a defense, traders may move from high risk investment areas to those that offer more safety, such as Treasuries.
10:30 AM EDT : Treasuries are up again this morning while the stock indices are currently narrowly mixed. There are no major economic releases today to provide guidance and none next week until Wednesday. This adds weight to technical considerations.
Observers are eager to see if the stock market can bounce following the deep losses of the last two days. In the bond market, traders may be inclined to cash in on some of yesterday's gains. In addition, the approach of two Treasury note auctions next week may constrain any upside bias.
Stocks may get some lift if oil futures continue their current decline. In recent trading, the price of a barrel of light, sweet crude oil for next month delivery was down by $1.05 to $68.40 on the New York Mercantile Exchange. The decline comes following news that the Organization of Petroleum Exporting Countries (OPEC) does not plan to cut production limits at its next policy meeting on June 1 . . . .
source from : mortgage 101.com
Increase DecreaseAmount of Loan Rates Up
Rates DownLength of Loan Rates Up
Rates DownAdjustable Rate
Rates Down Rates UpDown Payment
Rates Down Rates UpDiscount Points
Rates Down Rates UpClosing Costs
Rates Down Rates UpCredit Quality
Rates Down Rates UpIncome Level Rates Down
Rates UpLock In Period Rates Up Rates Down
The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. The conforming loan limit changes at the beginning of each year.
Shorter loans, such as 20 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.
A larger down payment – greater than 20% - will give you the best possible rate. Down payments of 5% or less should expect to pay a higher rate as you are starting with less equity as collateral. If you've got the cash now and want to lower your payments, you can pay on your loan to lower your mortgage rate. It's a simple concept, really: In exchange for more money upfront, lenders are willing to lower the interest rate they charge, cutting the borrower's payments. Closing costs are fees paid by the lender, if you don’t want to pay all of the closing costs, expect a higher rate which will pay the lender additional interest over the life of the loan.
Credit quality and debt-to-income-ratio affect the terms of your loan through FICO Score. If you have good credit and your monthly income far surpasses your monthly debt obligations, you will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have a credit report, you will not receive the lowest available interest rate.
Treasuries retreated from earlier highs to finish mixed today. In the stock market, the indices struggled but managed to post gains for the day. In late trading, the 10-Year Treasury Note was up by 1/32, holding its yield to 5.06%; the Dow was up by 15.77 points to 11,144.06; and the Nasdaq was up by 13.56 points to 2,193.88. There were no major economic releases today.
The bond market felt some follow-through from yesterday's rally but some profit-taking and pressure from two note auctions next week kept prices in check. Bonds had a winning week with the yield of the 10-Year Note down by 14 basis points (yields move inversely to price).
Stocks had a modest bounce after a string of losses. Falling oil prices helped today as a barrel of light, sweet crude for next month delivery declined by $0.92 on the New York Mercantile Exchange, settling at $68.53. The contract is down by $3.51 for the week. Falling energy prices allow businesses and consumers to spend more money in other areas of the economy.
The Dow edged up for the day by 0.14% but was down for the week by 2.22%. The S&P 500 gained 0.41% today but lost 1.87% on the week. The Nasdaq gained 0.62% today, its first winning session in the last nine. For the week, the index was down by 2.08%.
Next week the economic calendar is relatively light but two Treasury note auctions and the approach of the long Memorial Day weekend will keep the pot stirred. There are no major economic releases slated for Monday or Tuesday. Wednesday brings the report on durable goods orders for last month. Durable goods are defined as items which are made to last three years or more. They are typically production intensive, costly and, therefore, often financed. Consequently, the trend in new orders provides a preview of upcoming production activity and a clue to how the interest rate environment is affecting the process.
March's report said that the seasonally adjusted level of orders rose by 6.1% and the latest factory orders report revised that to an increase of 6.5%, the biggest jump in ten months. Transportation has been a particularly volatile category of durable goods lately. In January, overall orders were down by 8.9%, the largest decline in over five-and-a-half years. This was due to a 29.2% decline in transportation-related orders, a drop due primarily to a 70.1% decline in orders for commercial aircraft. Aircraft orders and, consequently, transportation orders, recovered in February and March. But even excluding the transportation sector, orders were up in March by 3.1%, the strongest ex-transportation gain since last August.
For April, a pull-back of between 0.5% and 1.0% is predicted for the headline number.
Also out on Wednesday morning is the report on new home sales for last month. In March, the Commerce Department said that the seasonally adjusted, annualized pace of new home sales rose by 13.8% to 1.213 million. The rise was the largest since January of 1992 and the sales rate was the highest since last December. But with mortgage rated continuing to climb, a drop of about 5.2% is predicted, bringing the rate down to 1.150 million.
Apart from what the economic reports reveal, the bond market will feel some pressure on Wednesday morning as traders prepare for the day's 2-Year Treasury Note auction. The last four such auctions had a face value of $22 billion and that is expected to be the size of next week's. The deadline for competitive bids is 1:00 PM Eastern Time.
Last month's issue was poorly received. Bids exceeded the offer amount by 2.05 to 1, the lowest bid-to-cover ratio for a 2-Year issue in twelve months. Noncompetitive bids, a gauge of individual investor demand, totaled $968 million, down from $987 million in March, but up from the $921 million average for the twelve auctions preceding last month's. Foreign demand was tepid. Indirect competitive bids (including those from foreign central banks) garnered 24.5% of the issue, down from March's award portion of 34.2% and below the twelve-month average of 33.1%. On Thursday, the jobless claims report will again direct attention to the employment situation. Yesterday's report startled observers with an unexpected 42,000 jump in initial claims to 367,000, the highest reading in seven months. But a two-week shutdown of most government offices in Puerto Rico accounted for most of the move. For this week, a huge drop is anticipated with predictions calling for the claims level to be about 320,000.
A more influential release is likely to be the preliminary report -- a revision of last month's initial estimate -- of gross domestic product (GDP) for the first quarter. GDP is the market value of all final goods and services produced by labor or property in the country in a year's time. Quarterly data is adjusted and annualized and changes from quarter to quarter indicate the strength and direction of the economy. In the advance report, the growth rate was calculated at 4.8%, the strongest reading since the third quarter of 2003. What makes Thursday's release so noteworthy is the fact that last Friday's report on international trade revealed a much smaller trade gap in March than had been anticipated ($62.0 billion versus predictions near $68.0 billion).
The resulting improvement in net exports, a component of GDP, means that the initial growth rate will likely be revised up. Recent predictions call for a bullish reading of 5.6%.
Inflation indicators within the GDP report will also be scrutinized for changes from the initial readings. These include the overall price index, which the initial report said increased by 3.3% in the first quarter, a deceleration from the fourth quarter increase of 3.5%. In the indices known to be closely watched by the Fed, the initial report said the index on personal consumption expenditures (PCE or consumer purchases) rose by 2.0% after a 2.9% increase. Excluding the volatile categories of food and energy, the core PCE price index was also 2.0% following a 2.4% increase in the fourth quarter.
The report on existing home sales for last month will also be released on Thursday morning. The seasonally adjusted, annualized pace of sales had been trending down since last June's record 6.29 million, hitting a two-year low of 6.57 million in January. But the rate rebounded in February to 6.90 million and unexpectedly edged up again in March to 6.92 million. Analysts note that the increases were in response to a decline in mortgage rates in November and December and unseasonably warm weather in much of the country in January. For April, a moderate decline to about a 6.77 million pace is anticipated.
On Thursday afternoon, the Treasury will be conducting its monthly auction of 5-Year Notes. Like the 2-Year offering, last month's 5-year issue met with soft demand. The bid-to-cover ratio was 1.87, the lowest in a year. Noncompetitive bids were relatively solid, though, totaling $159 million, the highest amount in six months. But foreign participation was exceptionally weak. Indirect competitive bids garnered just 20.8% of the issue, the smallest 5-year award portion for the category since June of 2003. The last three issues had a face value of $14 billion and that is the projected size of Thursday's offering.
On Friday, the report on personal income and spending for April will be released and it could provide some downward pressure on the bond market. In the last report, the Commerce Department said that personal income, the fuel for consumer spending, rose by 0.8% in March, but the figure was revised down to 0.5% a few day's later. Personal consumption expenditures (PCE or consumer spending) rose by 0.6%. The average monthly change in both categories has been an increase of 0.5%. For last month, the consensus forecast calls for increases in income and spending of 0.7%.
The last report of the week is the final read on consumer sentiment for the month from the University of Michigan. In the preliminary read, released on the 12th, the overall sentiment index came in at 79.0, the lowest reading since last October when consumers were unnerved by the Gulf Coast hurricanes. With gasoline prices high and stocks falling, analysts do not foresee an improvement for the final reading.
The bond market will be closing early on Friday (2:00 PM Eastern) and all domestic markets will be closed the following Monday. This could create some lift for the bond market since it leaves positions exposed to event risks for a longer period of time. As a defense, traders may move from high risk investment areas to those that offer more safety, such as Treasuries.
10:30 AM EDT : Treasuries are up again this morning while the stock indices are currently narrowly mixed. There are no major economic releases today to provide guidance and none next week until Wednesday. This adds weight to technical considerations.
Observers are eager to see if the stock market can bounce following the deep losses of the last two days. In the bond market, traders may be inclined to cash in on some of yesterday's gains. In addition, the approach of two Treasury note auctions next week may constrain any upside bias.
Stocks may get some lift if oil futures continue their current decline. In recent trading, the price of a barrel of light, sweet crude oil for next month delivery was down by $1.05 to $68.40 on the New York Mercantile Exchange. The decline comes following news that the Organization of Petroleum Exporting Countries (OPEC) does not plan to cut production limits at its next policy meeting on June 1 . . . .
source from : mortgage 101.com
posted by !GOD BLESS YOU! at 01:57
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