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Mortgage rates fall to 5.12%

hakrjak

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Schweet man.... I have got some of those rates too, but they are left-over from the last time rates dipped this low. I need things to get closer to 4% to start refi'ing. Looks like a great time to buy if you've got some cash!

Cheers,

- Hakrjak
 

NoMoneyDown

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About a year ago, I was seriously contemplating refinancing an ARM I have into a fixed rate. It was hovering around 7% at the time, I think. I checked it recently and it was at 3.5%, which really surprised me.
 
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hakrjak

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Ditto.... I just had an Arm reset that I had been considering putting on a fixed for several years now. My payment just dropped another $150 per month, which is another $150 per month of cashflow for me now!

Some of us with Arms that played them right are cashing in big time here. A few years ago there was a huge spread between an Arm and a Fixed... Now there is almost no spread, so it will be awhile before I play with Arms again.

- Hakrjak
 

MattThomas

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About a year ago, I was seriously contemplating refinancing an ARM I have into a fixed rate. It was hovering around 7% at the time, I think. I checked it recently and it was at 3.5%, which really surprised me.

Wait, you mean the ARM was at 3.5%, right?

I'd imagine fixed rates would drop THAT far below 5%. It may dip into the 4's (as kurtyordy indicated). With the fed funds rate as low as it can possibly go (0% - 0.25%), I can't see lending rates dropping too much more than they already have. The only way I can see CERTAIN lending product rates drop even more is if the government provides certain subsidies to make mortgage payments more affordable.
 

hakrjak

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I'll go out on a limb here and predict that 30 yr fixed mortgages will bottom around 4.25%

That's the point where I see a revival happening in Real Estate, and the resulting economic activity causing enough growth and inflation to force the rates back up. But not right away -- I'll bet they hang in the 4's for awhile once they get down there....

Anybody else care to throw out a prediction?

- Hakrjak
 
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tbsells

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No predictions. I don't want to join the long list of people eating their words.

But, I talked to my loan officer today and there are USDA rural development loans available for first time homebuyers. Basic criteria are 620 credit score, no money down, no PMI, and todays 30 yr. fixed is at 4.875%!!!!!!!!!! I'm going to call my renters and see if I can turn them into buyers. Then take the proceeds and repurchase at todays lower prices. Rinse and repeat.
 

MattThomas

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No predictions. I don't want to join the long list of people eating their words.

But, I talked to my loan officer today and there are USDA rural development loans available for first time homebuyers. Basic criteria are 620 credit score, no money down, no PMI, and todays 30 yr. fixed is at 4.875%!!!!!!!!!! I'm going to call my renters and see if I can turn them into buyers. Then take the proceeds and repurchase at todays lower prices. Rinse and repeat.

I'd imagine they'd have some requirements before lending out under those conditions, considering it is the USDA, being that they are in the business of farming and agriculture. I'd doubt they'd be willing to lend this out to just anyone, right?
 

AroundTheWorld

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I'd imagine they'd have some requirements before lending out under those conditions, considering it is the USDA, being that they are in the business of farming and agriculture. I'd doubt they'd be willing to lend this out to just anyone, right?

You would be surprised. The USDA Rural Development people are charged with helping improve the quality of life for people that live in rural areas (and "rural areas" isn't what you think).

The economic stimulus package has doled out a ton of money via USDA Rural Development for:

Home Buyers
Developers
Business Owners
Non-Profits

I've spent the last two days researching Rural Development and talking w/ people in the USDA office re: opportunities.
 
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tbsells

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I'd imagine they'd have some requirements before lending out under those conditions, considering it is the USDA, being that they are in the business of farming and agriculture. I'd doubt they'd be willing to lend this out to just anyone, right?

These loans are for first time buyers in rural areas. Not farm and ag loans. I live in a typical Ohio small town. My whole area qualifies. These loans are for homes in town, in subdivisions, and on small parcels of ground. From what I understand its very similar to a typical FHA loan, except 0 down and no PMI.

USDA is expanding its role outside the farm and ag business. It would be worth checking to see if you are in a target area.
 

hakrjak

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No predictions. I don't want to join the long list of people eating their words.

There sure have been a ton of people going around telling anybody who would listen for the past 3 years that Interest rates would be going up soon and they better lock in a fixed rate mortgage. Personally, I've always been luckier doing exactly the opposite of what everybody else is doing, unless there's any actual evidence to justify their usually irrational beliefs.

Cheers,

- Hakrjak
 

MattThomas

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@AroundTheWorld and tbsells: very interesting... I wonder why they are so lenient with their standards, even after everything that has happened?

No doubt that as soon as the secondary mortgage market is fully liquid again, these loans will be traded as securities just like all the other prime and subprime mortgages were...only these potentially risky loans would be government agency backed. It may protect investors but MAY cost the USDA a lot of money if a loan goes bad. Am I missing something?
 

tbsells

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Matt,
I don't think you are missing anything. You make good points and asked good questions. This does sound alot like the dog that has already bit us. Most people learn the after first time to stay away from the biting dog. Our government may not be that smart.

But, for me its a tool. If I can use it to improve my situation I will.
 

MattThomas

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Matt,
I don't think you are missing anything. You make good points and asked good questions. This does sound alot like the dog that has already bit us. Most people learn the after first time to stay away from the biting dog. Our government may not be that smart.

But, for me its a tool. If I can use it to improve my situation I will.

Its funny, I remember reading just a few months ago on the cover of business week: "The Subprime Wolves are Back"...you'd think even a few months ago when Fannie and Freddie had JUST collapsed, we would have learned our lesson even then. But if I guess we hadn't then, then our gov't probably hasn't learn its lesson now.

Agreed 100% that if this is a resource to us, then we should definitely use it as a tool for our own individual situations. :eusa_clap:
 
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tbsells

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Matt,
I just noticed in your profile that you're from Long Island, New York. You should probably disregard my earlier suggestion to see if you are in a targeted area.:smx8:
 

MattThomas

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:)

Still, it is a concern is it appears even our government hasn't fully learned its lesson--BE CAREFUL WHEN LENDING. Just because you can print money doesn't mean you have the right to throw it away :(
 

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