Mortgage interest rates have fallen for the second straight week to their lowest level in months. As of October 31st the average 30 year fixed mortgage interest rate is 4.1%. This is excellent news for homeowners that had wanted to refinance earlier this year, but have hesitated due to the rate increases of the past six months. Interest rates on 15 year home loans have also dropped to a comfortable 3.2%.
Interest rates started to rise early in 2013 as the Federal Reserve announced they would scale back on the amount of bonds they were purchasing. They have been buying $85 billion in bonds on a monthly basis, and the fear of their decreasing caused interest rates to tick upwards. Simultaneously the housing market started showing more signs of recovery with the highest increase in property values since before the crash.
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The Federal Reserve has continued to purchase $85 billion in bonds per month, in spite of their previous announcement. The speculation is that as job growth has stalled the Fed will continue these purchases through the end of the year. This has surprised investors and caused interest rates to decline, to the benefit of homeowners throughout the country.
Homeowners that want to refinance should do so now before interest rates rise again. As we approach 2014, there will be renewed concerns over the Fed decreasing their bond purchases which will likely lead to continued rate increases, as it has done throughout 2013. Existing homeowners and home buyers have taken advantage of the rate drop and mortgage applications increased by 6.4% for the week of October 25th. The majority of this increase was for refinance applications as people have hurried to apply and lock in the interest rate.
When the amount of mortgage applications increase it becomes more important to work with an experienced mortgage lender that can get your loan approved in a timely fashion.
Process Your Loan Faster with These Documents
• 2 recent pay stubs
• 2 months bank statements
• 2 years tax returns
• Homeowners insurance policy or agent contact information
When you speak with your mortgage banker give them the information off of these documents, along with a copy that they can present to the underwriter. It is also important to sign any documents they give you quickly so your mortgage loan can go through underwriting without being delayed.
There are some home loan programs that do not traditionally require an appraisal, which can further speed up the process. This includes the FHA Streamline Refinance, the Interest Rate Reduction Loan (IRRL) from the VA, and a HARP refinance loan. Contact your mortgage lender today to discuss the various options available to you. Let them know if you have a desired interest rate in mind. If it is available ask for them to lock in your interest rate and to send you the paperwork required to do so. Once your interest rate is locked, it will stay secure for a period of time. Closing your mortgage loan during that time frame, typically 30 days, will ensure that you are protected from any rate changes due to the market fluctuating.
