Here we are, January 22 2010, and interest rates are still staying low for Orange County borrowers. Conventional Conforming interest rates have dropped just below 5%, while even FHA and VA rates are staying in the 5% to 5.25% range.
As we get closer to the March 31 expiration date for the Fed Mortgage Backed Securities purchase program, it will be interesting to see what happens with interest rates. The expectation is that rates will go up by 1% by this summer. This is because it is estimated that the MBS purchase program has artificially kept rates down by 1%. Once the program goes away, there will be little to keep rates from going back up.
If Rates go up 1%, How Much will That Effect the Payment on a Mortgage?
As an example, if an Orange County home owner refinances a $100,000 loan to a 5% interest rate, their payment would be $536. The same loan at a 6% rate would carry a payment of $599 per month, or a $63 payment increase. So, using the payment difference of $63 per $100,000, this would mean on a $500,000 loan, the difference in payment would be $315 per month, or $3,780 per year. If that’s not incentive to at least check into whether a refinance makes sense now, rather than later, then you must already have a great interest rate.
Changes to the FHA Loan ProgramWill Also Effect Orange County HomeOwner Payments
HUD announced several changes to FHA loan program that will effect monthly payments. An increase to the Upfront Mortgage Insurance Premium from 1.75% to 2.25% will have some effect, albeit small. Still, there is an extra .5% Mortgage Insurance Premium that will be financed into FHA loans originated after April 5, 2010. This will have an negative effect on the FHA Steamline program, which currently only has a 1.5% UFMIP. That is an extra $2,250 added to the loan on a $300,000 based FHA loan.
VA mortgage interest rates for Orange County borrowers also remain low.
With changes imminent, not is definitely the time to at least check our whether a refinance makes sense.
Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact me for more information about an Orange County, CA home loan. 877-786-4243 x 7.
Contact us for your Orange County Mortgage:
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* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.
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