Tag Archive | “ARMs”

Freddie Mac: 15-year fixed-rate mortgage at lowest since 1991

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Freddie Mac reported on Thursday, that this week rates on fixed-rate mortgages fell for a third week in a row, and the 15-year fixed-rate mortgage fell to a low that has never seen since records started being kept on the loan in 1991.

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30-year fixed-rate mortgage

The 30-year fixed-rate mortgage averaged 5.04% for the week that has ended on Sept. 17, it has dropped down from 5.07% last week and 5.78% a year ago. The mortgage rate hasn’t been that much lower since the week that has ended on May 28, at that time it averaged 4.91%.

15 year fixed-rate mortgages

15 year fixed-rate mortgages averaged 4.47%, it has dropped down from 4.5% last week and 5.35% a year ago.

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Rise in Mortgage Applications as Rates Fall: MBA

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On Wednesday it has been said by  the Mortgage Bankers Association that large swings in mortgage rates over the past month have shown their result in the form of  “seesaw-like activity” in the volume of refinancing applications that has been filed by homeowners, while there has been a gradual increase in the applications to purchase homes.


According to the MBA’s weekly survey, for the week ended Aug. 14, applications to refinance existing home loans have rose to 6.9%, which is a reversal from the 7.2% drop that has been seen the week before.

There has been a rise in applications to finance the purchase of homes for the third week in a row, which is increasing a seasonally adjusted 3.9% from the week that has ended on Aug. 7.

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US Mortgage Rates Rise in Latest Week -Freddie Mac

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According to a survey that has been released on Thursday by home funding company Freddie Mac , in the latest week, there has been a rise of 0.07 percentage point in the interest rates on U.S. 30-year fixed-rate mortgages.


For the week ending Aug. 13, interest rates on the 30-year fixed-rate mortgage averaged 5.29%, with an average 0.7 point, which has increased from the previous week’s 5.22%.

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Variable Rate Mortgage

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Variable rate mortgage is a relatively new type of Mortgage phenomenon. it is a Mortgage in which payment is made to the lender on variable  Interest rates. For this purpose, different bases are used to calculate interest rate. such as their Cost of Funds indices or Rate provided by London interbank offered rate. mortgage

This type of Mortgage is different from others like Fixed Rate Mortgage, Interest Free Mortgage or Balloon payment mortgage. This Mortgage phenomenon is helpful for both Lender and Borrower, if during loan period interest rate in market rises, it will be profitable for Lender and if interest rate falls, it is beneficial for borrower and vice versa. So it will reduce the possibility of suffering the loss by only Lender or Borrower.

Some important Features of Adjustable or Variable Rate Mortgage are:

  • mort_exp_vrIt has the Adjustment periods facility.  it  means the Period in which payments will be made. The rate of interest is recalculated at the end of this period. and payment schedule is re-adjusted.

  • There is A MARGIN that lenders add to the index rate to determine the ARM’s interest rate.

  • There are Discounts and concessions available. this will reduce the initial payment at below market rate.

There are certain reasons why to choose Adjustable Rate Mortgage :

  • ARMs (Adjustable Rate Mortgage)  generally permit borrowers to lower their initial payments if they are willing to assume the risk of interest rate changes. In many countries, banks or similar financial institutions are the primary originators of mortgages.
  • There is also a term “Option ARM”  which is typically a 30-year ARM that initially offers the borrower four monthly payment options: a specified minimum payment, an interest-only payment, a 15-year fully amortizing payment, and a 30-year fully amortizing payment.

These types of loans are also called “pick-a-payment” or “pay-option” ARMs.

When a Borrower opt this type of loan payment scheme. He pays his minimum  accrued amount under “Option ARM”. he gets temporary relief but his remaining payable amount will be added in his total loan amount which he has to pay at the end of total period of loan. it is similar to BALLOON Payment Mortgage.

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