Home Loan Specialists – Texas FHA Mortgage Rate Watch – September 16, 2011

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.09% this week. This represents a decrease of .03% over last week’s average. The average for the 15-year fixed program equaled 3.30%, also a decrease of .03% on the week.

Once again, both of these averages set new lows for 2011.

Bond investors continue watching the developments in the European Union economies. Germany (this week) has pronounced that they would assist Greece with their critical capital needs to add stability to the Euro. The strength of the German economy appears to be the only factor preventing complete disaster for the EU. Despite the lower averages, major lenders have not reacted with lower mortgage rate postings this week.

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%). We continue to advise refinancing candidates to take immediate action if their existing rate exceeds 4.875% on 30-year loans as long as their outstanding balance exceeds $100,000. It remains an ideal time to uproot old 30-year loans and replace them with 15- (or even 10-year) fixed rate programs as long as no more than 5 to 7 years has elapsed since their current loan was closed.

Why Buying Investment Property in Texas Now Makes More Sense Than Ever

By Mike Lesmeister, CRMS, CMPS

In today’s unpredictable economic atmosphere, many investors are struggling with decisions regarding their next move. The stock markets are unstable, yields on bank time deposits and other fixed-income investments are nearing record lows, gold has had a huge run-up that, judging from its historical performance, may not be sustainable, and long-term inflation lurks on the horizon.

In this environment, one option to consider is investing in residential real estate. Contrary to the news that housing values are plummeting and you can’t get a mortgage, many investors have silently made a killing by investing in rental properties. Now, these are not the “flip and get rich quick” schemes you see on cable television, but a long-term strategy of meeting increased rental demand in the Houston area by buying homes at distressed prices and financing them at record low, long-term mortgage rates.

The opportunity here is three-fold; through positive cash flow that can be gained on the difference between rental rates and the debt service on the loan, through the tax advantages real estate offers, and through the long-term appreciation and inflation-hedge real estate represents. Currently, the rent-to-mortgage payment ratio in Houston is just below 1%, meaning that the average rent in Houston should cover mortgage repayment on a 100% financed property.  So, when adjusted for down payment, taxes and insurance, it should not be too difficult to find a property that provides positive monthly cash flow.

Houston remains a strong market for rentals as our relatively strong economy continues to attract workers from other states. This population growth, coupled with the need for housing by immigrants and homeowners displaced due to foreclosure or a previous job loss, creates a significant demand for housing, particularly in areas with good schools. It is not uncommon for newly listed rentals to garner several applications within hours of listing.

Financing rental properties is not as easy as it once was, but for investors with cash available and good credit, it is readily available. Potential landlords should expect a 20-25% down payment, have credit scores over 700, and demonstrate cash reserves equivalent to six months’ worth of housing payments. Interest rates and closing costs are slightly higher than those charged on owner-occupied properties, but not significantly so. At current rates, it would not be unusual for a well-heeled buyer to be able to purchase a $100,000 home with 20% down at an interest rate under 5% over 30 years with closing costs totaling $3,000, excluding prepaid interest, taxes, and insurance. This home in the right area could easily fetch over $1,100 in monthly rent. To search properties that might be suitable for investment, visit www.houstononlinehomefinder.com. To get pre-qualified for a mortgage to purchase investment property or for a rate quote from a BBB-accredited mortgage lender, visit www.HLSTX.com.

Many would argue the timing is right for purchasing investment property in Houston where home prices are very affordable relative to other large metropolitan areas. As the econo

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.12% this week. This represents a decrease of .10% over last week’s average.

The average for the 15-year fixed program equaled 3.33%, a decrease of .06% on the week.  Both of these averages set new lows for 2011.

Mortgage-backed security prices have continued to increase this week as the equity markets throughout the world remain under selling pressure. The eager anticipation surrounding President Obama’s Thursday address on job creation did not carry forward in a positive way to stock market trading on Friday.

Also, this week’s jobs data statistics continued to illustrate a total lack of employment growth in the US economy. Simply put: The American investor has lost faith in stocks and is unshakeable in his resolve to avoid risk .

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%).

Our advice to refinancing candidates is to request a breakeven analysis if their existing rate exceeds 4.875% for 30-year terms and 4.125% for 15 year terms. A very simple tool for this purpose can be found on our website (http://www.HLSTX.com/) under mortgage calculators.

Also, remember to check out our Facebook page for more mortgage and other information!

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.22% this week, unchanged from the previous week’s average.  The average for the 15-year fixed amortization equaled 3.39%.  This average decreased .05% on the week.   Mortgage-backed security prices were largely unchanged through Wednesday of this week but rebounded on Thursday and Friday in response to very deflating jobs data reports.  Today, Home Loan Specialists is posting par rates of 3.875% on 30-year fixed conventional and 3.75% on the 30-year fixed FHA loans.  15-year conventional rates are listed at 3.25%.

This summer we have steadily recommended that buyers and homeowners with an interest in refinancing should take action immediately.  During August rates stayed low as a result of increasing turmoil in the European Union economies.  The perception was that EU bonds are a much less favorable investment than American Treasury bonds. This kept mortgage bond prices high and (therefore) rates depressed.  Although this perception continues to dominate bond trader attitudes, we see its influence diminishing in the face of pending inflationary pressure.

In other words, now is the time to take advantage of these incredibly low rates before the market realizes that all the money our government is printing for wars, stimulus, quantitative easing, and handouts around the world has become unsustainable by the American tax payer without a serious inflationary result.