Mortgage Marvel, the industry's leading mortgage rates origination tool, has noted an upward trend for 30 year fixed rate mortgages (FRM) for the week ending February 3, 2011. This activity has been documented in Mortgage Marvel's Mortgage Rate Trend tool that is updated on a daily basis. According to the tracking device, rates for 30 year fixed home loans increased slightly from 4.96% as recorded on January 28 to 5.03%. That activity represents an increase of .09%. The movement is right on track in relation to the prediction made by industry insiders that mortgages rates would exceed the 5% mark by 2011.
Importance of 30 Year FRM
The mortgage industry is flooded with a large variety of products including adjustable rate mortgages, homeloans backed by the Federal Housing Administration and home mortgage options ranging from 10 to 40 years in commitment length. Each one has its own unique traits and attributes, and despite the differences, the traditional 30 year fixed rate mortgage is considered to be the best choice.
Generally, financial experts have encouraged selecting this home loan option. This particular loan opportunity is known as being the most difficult type to receive approval and if a potential borrower does not have the ability to qualify for a 30 year FRM, there is a good chance that they are not truly prepared to manage the financial burden associated with the home buying process. While not all consumers prefer the terms associated with this type of loan, having the proper numbers to qualify is considered to provide an accurate measure of their home buying capabilities.
Mortgage product offerings vary on several factors, however, what mortgage market the loan originated from is the most distinguishing feature. Traditional 30 year FRMs develop from the prime mortgage market and are reserved for consumers with the income, assets and best credit histories possible. The underwriting practices associated with 30 year FRM approval are quite stringent. As a result, those who can prove their credit worthiness are considered to be a low risk for lenders. As a result, borrowers will be rewarded with mortgages featuring market interest rates.
Higher Mortgage Rates a Good Thing
While borrowers may not be pleased with the increasing mortgage rates, the rising rates could stimulate housing market activity. Throughout 2010, historically low mortgage rates became the norm and while some consumers jumped at the chance to secure a first mortgage or refinance an existing loan, others believed that the rates ushered in a new era and expected cheap money to last forever. However, since mortgage rates are finally showing signs of increasing, the movement may issue in a new sense of urgency for consumers looking to get the best rates on their home loans.
When it comes to mortgage interest rates each percentage point increase represents a financial reduction of buying power, as more money will have to be funneled towards interest as opposed to the principal value. Savvy consumers realize that rising rates will weaken their power in the market and those who want the most bang for their buck, may finally take the plunge into home ownership.
Tips For Low Mortgage Rates
If the upward trend of mortgage rates has motivated you to take the plunge into the real estate market, there are some steps to follow in order to ensure you get the lowest rates possible:
- Improve your credit score as the magic number to qualify for the best rates is now above 730.
- While a down payment of 20 percent is healthy, the more money you can put down the better the odds of qualifying for the lowest mortgage rates possible. Additionally, this strategy can also reduce the need for having to pay for private mortgage insurance.
- More mortgage shoppers are going online to score the best rates possible as the process will make comparison shopping a breeze and can eradicate the need for a middleman and their potential hidden agendas.
- Entrust Mortgage Marvel with your mortgages rates search, as our clients have stated that we are better than the competition.
