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November 21st, 2012

Mortgage rates hover near record lows



Expert resized-HSH SpecialRates on the most popular types of mortgages remained at or near record lows according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages was unchanged, remaining at 3.47 percent. Conforming 5/1 Hybrid ARM rates decreased by two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.63 percent.

“If you’re looking for Black Friday deals and doorbusters, it’s pretty hard to beat the savings you’ll find with a refinance,” says Keith Gumbinger, vice president of HSH.com. “Mortgage rates are holding at or near record lows, presenting a great opportunity to save money month after month for as long as 30 years, far longer than the life of any typical electronic device on sale this week.

“To really rack up savings, you might also consider a purchase or refinance using a loan with a term shorter than the traditional 30 years,” notes Gumbinger. “Chopping years off your loan, building equity faster and becoming mortgage-free sooner are three things to be thankful for in the long run.”

3 reasons to refinance to a shorter term

  1. By going with the shorter loan term, you’ve essentially created “a forced savings plan.”
    “The great thing [about a shorter term] is that it’s a forced savings plan” says Eric Mullis, branch manager and senior loan officer with Intercoastal Mortgage Co. in McLean, Va. “We all could pay our 30-year mortgage in 15 years, but no one does that in real life.”
  2. You pay off your house sooner with a shorter term. “Some clients don’t think about the fact that if they’re eight years into their current mortgage, and they refinance into a 30-year loan, they’re basically starting over at 30 years of payments again,” says Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich. “That means 38 years of mortgage payments. If they opt for a 20-year loan instead, that’s 10 less years of paying a mortgage.”
  3. You save significantly more money over the life of the mortgage. The money you’ll save in interest payments by refinancing a 30-year mortgage to a 20-year mortgage could save you well over $100,000. “One of my clients recently went from a 30-year to a 15-year mortgage,” says Mullis. Her monthly payment increased slightly, but the shorter term “basically saved her $150,000.”

April Dykman contributed to this post.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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