The 15-year mortgage: Pros and cons of this home loan option

A 15-year mortgage is the dream home loan for home buyers who can afford the much higher monthly payments and want to shred their mortgage in half the usual time while saving thousands or even tens of thousands of dollars in interest.To make a 15-year mortgage work, you’ll need a reliable income and enough money left after your monthly payment to cover expenses, savings and emergencies.Only about one-in-six borrowers of conventional mortgages have used a 15-year mortgage so far in 2017. No doubt many borrowers shy away from the shorter home loans when they learn that it requires a payment that’s about 50% bigger — around $1,650 a month vs. $1,100 for a similar 30-year loan, for example.A 15-year mortgage will be paid off completely in 15 years if you make all the payments on schedule. These mortgages typically have a fixed rate, which keeps the interest rate and payments the same for as long as you hold the mortgage. Your taxes and insurance payments can change, though.Read on for a look at the pros and cons of 15-year, fixed-rate mortgages and guidance on who should and should not consider one. » MORE: Best 15-year Fixed Mortgage LendersShorter path to full homeownership: Owning a home free and clear is a goal that burns bright for many people. What matters most to them is a feeling of safety from knowing that their home is fully paid off.Build equity faster: A 15-year mortgage, with its lower interest rate and higher payment amount, builds equity faster because you pay down the principal balance quicker.Save money: Lenders are exposed to fewer years of risk on a 15-year mortgage, so they charge a lower interest rate. “That could mean, depending on the institution, a rate that’s anywhere from a half percent to three-quarters of a percent lower than for a 30-year, fixed-rate mortgage,” says Carlos Miramontez, vice president of mortgage lending at Orange County’s Credit Union. A 15-year mortgage also is Continue Reading

Mortgage rates fall to record lows

Average U.S. rates on 30-year and 15-year fixed mortgages dropped to record lows again this week, with the 15-year loan dipping below 3 percent for the first time ever. Low rates have helped brighten the outlook for home sales this year. They have made home-buying and refinancing more attractive to those who can qualify. Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 3.75 percent. That's down from 3.78 percent last week and the lowest since long-term mortgages began in the 1950s. The 15-year mortgage, a popular refinancing option, slipped to 2.97 percent. That's down from 3.04 percent last week. Rates on the 30-year loan have been below 4 percent since early December. The low rates are a key reason the housing industry is showing modest signs of a recovery this year. A drop in rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market, breaking ground on more homes and requesting more permits to build single-family homes later this year. A better job market also has made more people open to buying a home. Employers have added 1 million jobs in the past five months. The unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April. Still, the pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed. Many people are having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling. Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note, which has fallen this Continue Reading

Mortgage rates steady near record lows

WASHINGTON (AP) — The average U.S. rate on the 30-year fixed mortgage was unchanged this week near historic lows, while the average rate on the 15-year loan fell. Low mortgage rates could help strengthen the housing recovery.Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan stayed at 3.53%. That's still near the 3.31% rate reached in November, the lowest in records dating to 1971.The rate on the 15-year fixed mortgage dropped to 2.77% from 2.81% last week. The record low is 2.63%.Cheap mortgages are encouraging more people to buy homes and refinance, trends that could help boost the economy this year.Increased sales are helping push home prices up steadily, which makes consumers feel wealthier and more likely to spend. In addition, a limited supply of houses for sale has created demand for new construction, which has made builders more confident. And when people refinance, that typically leads to lower monthly mortgage payments and even more spending. Consumer spending drives nearly 70% of economic activity.Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can't qualify for stricter lending rules or they lack the money to meet larger down payment requirements.To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.The average fee for 30-year loans ticked up to 0.8 point from 0.7 point last week. The fee for 15-year loans was unchanged at 0.7 point.The average rate on a one-year adjustable-rate mortgage fell to 2.53% from 2.59%. The fee for one-year adjustable-rate loans declined to 0.4 from 0.5 point.The average rate on a five-year adjustable-rate mortgage fell to 2.63% from 2.7% last Continue Reading

Fixed home mortgage rates fall to record lows

Fixed mortgage rates fell to at or near record lows. That's good news for the few who can afford to buy a home or are able to refinance. But the rates have done little to lift the ailing housing market. Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage fell to 4.32 percent this week from 4.39 percent. The 30-year loan hit a record low of 4.17 percent in mid-November. The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to a record low of 3.50 percent, from last week's record rate of 3.54 percent. EXPLORE: Apartments for sale/rent in NYC Mortgage rates tend to track the yield on the 10-year Treasury note. A weakening U.S. economy has led many investors to shift money from stocks to bonds, which are seen as safer bets. That has pushed Treasury yields to historic lows. In theory, low mortgage rates should provide a boost to the troubled housing market. But rates have been below 5 percent for nearly two years and haven't helped home sales much. Rates on the 30-year fixed loan were near 6.5 percent five years ago and higher than 8 percent in 2000. Sales of previously occupied homes fell in June for a third straight month to a seasonally adjusted 4.77 million. The pace is lagging behind the 4.91 million homes sold last year — the fewest since 1997. New-home sales also declined in June and are trailing last year's sales, which were the worst on records dating back nearly half a century. Many people can't take advantage of the low mortgage rates. Banks are insisting on higher credit scores and larger down payments from applicants. Others have too little equity invested in their homes to qualify for loans. Historically low rates have helped fuel another boom in refinancing. Applications jumped nearly 22 percent last week from the week before, according to the Mortgage Bankers Association. Refinancing made up more than 75 percent of all mortgage activity, the group said. That's up from Continue Reading

10 ways to lower your mortgage rate

Buying a home is probably the biggest purchase Americans will ever make. This has been especially true since the late 1990s, where home prices have increased well beyond the national inflation rate.But a home purchase isn't anything to be taken lightly. It's a large financial obligation, and if you aren't aware of the financing options available, it could wind up costing you far more than you'd expect.Controlling your homeownership costs begins with your mortgage and the interest rate attached to that mortgage. The lower you can push your mortgage rate, the less money you'll pay over the life of the loan. With that being said, here are 10 ways you may be able to lower your mortgage rate.The foundation of a low mortgage rate begins with keeping your credit score as high as possible. Lenders look at your credit score as a roadmap to your creditworthiness. A high score could alleviate worries that you'll eventually repay your loan, while a low score could entice lenders to charge you a higher mortgage rate, or not lend to you at all.Though the three reporting credit agencies (Experian, TransUnion, Equifax) tend to be quite secretive about how their scores are calculated, FICO credit scores are calculated as follows:On top of a good credit score, lenders also want to see a consistent and long-tenured work history. If you've been working at the same place for many years and have consistent or growing annual income, lenders will be more likely to give you a home loan with an attractive rate.Conversely, if you've changed jobs multiple times recently, lenders may be more leery of giving you a big loan because your income isn't as reliable. Banks and credit unions will verify your employment status before you make an offer on a home and before the closing date of a home purchase. If you've changed jobs or quit during the closing process, it could jeopardize your ability to get a home loan.One of the smartest moves prospective homebuyers can make is to shop around for Continue Reading

30-year-mortage rate falls below 4% for second time in history

The average rate on the 30-year fixed mortgage fell below 4 percent for just the second time in history. Freddie Mac said Thursday the rate on the 30-year fixed loan fell to 3.99 percent, down from 4 percent last week. Five weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research. The average rate on the 15-year fixed mortgage fell last week to 3.30 percent from 3.31 percent. Five weeks ago, it too hit a record low of 3.26 percent. Mortgage rates track the yield on 10-year Treasury note, which fell this week as investors shifted money into safer Treasurys amid fears Europe's debt crisis could worsen. Low mortgage rates have down little to boost home sales. Rates have been below 5 percent for all but two weeks this year. Yet home sales are on pace to be the lowest in 14 years. RELATED: ‘Underwater homes’ on rise across nation, but NYC stays protected Refinancing activity jumped more than 12 percent last week from the previous week, to the highest level in a month, according to the Mortgage Bankers Association. But refinancing is down 13.5 percent from a year ago and the four-week moving average for purchase and refinancing mortgage applications is down slightly, suggesting the low rates are failing to entice many Americans. High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have. The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent. The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest Continue Reading

Record-low interest rates have New Yorkers rushing to refinance in order to lower monthly payments

There are many things Stephanie Feyne loves about her one-bedroom, prewar apartment on W. 72nd St. on the Upper West Side, starting with the views of Central Park. "It's a lovely haven - a quiet, peaceful, bright, shiny home," said Feyne, a 54-year-old American Sign Language interpreter, who purchased the apartment six years ago with her husband, Clint Bahr, a 56-year-old musician. Soon it will be cheaper, too. With rates dipping below 4.5% on 30-year, fixed-rate mortgages, Feyne and Bahr began the process of refinancing several weeks ago. The move will save them about $400 a month and tens of thousands of dollars over the life of the loan. The lure of record-low rates has New Yorkers speeding along the refi highway. At Equity Now, a mortgage lender in midtown, business in October was double what it was in January. Even some homeowners who purchased their homes in the past year are rushing to get new loans. "I am refinancing clients who took out a mortgage six to nine months ago," said Julian Ashley, a mortgage broker at midtown-based Manhattan Mortgage, who advised Feyne and Bahr. "It's still a no-brainer." While the Mortgage Bankers Association predicts rates will rise next year, relatively cheap mortgages are expected to remain a reality for the near term, especially with the Fed taking steps to try to energize the economy. "As long as the economy stays weak, rates will stay low," said Equity Now's president, Michael Moskowitz. But not everyone who wants to refinance will be able to do so. Equity Now, whose business is largely refis, turns away 20% of its applicants, Moskowitz said. Many get the thumbs down because their income is deemed too low relative to their debts, or because they lack sufficient equity. To be eligible, your mortgage payments, real estate tax, home insurance, credit cards and other debt payments should be no greater than 50% of your gross income, said Matt Hackett, underwriting manager at Equity Now. Securing the very Continue Reading

Before deciding to refinance a home, ask yourself whether the move makes sense for you

Mortgage rates have fallen to historic lows and the Fed is trying to make sure they stay that way, announcing plans to buy $600 billion more in U.S. Treasury bonds in hopes of keeping interest rates low. Rock-bottom rates "will make housing more affordable and allow more homeowners to refinance," Fed boss Ben Bernanke has said. Here are some questions to ask to begin to figure out what makes most sense for you: Q: Is it time for me to pull the trigger? A: I wrestled with that question myself and decided the answer was yes. I'm getting out of a 30-year, fixed-rate mortgage at 4.75% and into a 15-year, fixed-rate loan a full point lower. It makes sense for me because I'm not moving anytime soon, so I'll more than make up the roughly $4,300 I'll pay in closing costs. But these situations are personal, requiring some thinking, discussion and a calculator. Q: Can I get a substantially better rate? A: These days, substantially better doesn't mean as much of a drop as it used to. The rule that said you needed a 2 percentage point difference is long gone. You don't even need 1 percentage point anymore. I'd start looking at a half-point and seriously consider making a move at three-quarters of a point. Falling rates are only one reason refinancing might be a good idea. You could nab better terms if your credit has improved recently. Q: Will rates go lower? A: I wish I knew. Mortgage rates - although closely tied to yields on 10-year Treasurys - do not move in lockstep. On the day after the Fed announcement, I sent a quick email to my mortgage broker: "Where are rates today? If they are falling because of the Fed, can I float my rate down?" He replied that loans had actually repriced slightly higher - the Fed's highly anticipated move was already baked in the cake. Which is why my advice is: If it makes sense to do the deal, do the deal. Don't be greedy. If rates fall significantly lower, you can refinance again. Q: What numbers are important to look Continue Reading

30-year-mortgage rate slips to 4.36% – lowest level since data was tracked

MORTGAGE RATES fell to the lowest level in decades for the ninth time in 10 weeks, as concerns grow that the economy is weakening.The average rate for a 30-year fixed mortgage dropped to 4.36% this week from 4.42% last week, mortgage finance giant Freddie Mac said yesterday. That's the lowest since 1971, when the company began tracking rates.The average rate on 15-year fixed loans dropped to 3.86% from 3.90% the previous week, the lowest on records starting in 1991.Rates have fallen since spring as investors gobbled up Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.The low rates have prompted thousands of borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4% of all new loan activity.Many New Yorkers could benefit financially from refinancing - how can they figure out if they qualify and how the numbers will sort out for them?Read the Your Money section in Monday's Daily News for details, issues to consider and helpful tips on how to get started in refinancing your home loan.Staff and Wire Reports Join the Conversation: Continue Reading

Mortgage rates sink to lowest this year

WASHINGTON — Mortgage rates have fallen to the lowest level of the year as investors poured money into the safe haven of U.S. government securities.The average rate on a 30-year fixed rate mortgage dipped to 4.78 percent this week from 4.84 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the lowest level since early December, when rates fell to a record low of 4.71 percent.Concerns over the European debt crisis have sent yields for 10-year and 30-year Treasury bonds to their lowest levels of 2010. Rates on 30-year home loans often rise and fall in line with the 10-year note.But it's not expected to last. If Europe's woes subside and the U.S. economic recovery stays on track, rates are likely to move higher. That's because traders will move their money back into riskier investments."Strike now," said Greg McBride, senior financial analyst at "If they move quickly against you, it just takes money right out of your pocket."Homeowners appear to be taking notice. Applications to refinance surged this week to the highest level since October 2009, the Mortgage Bankers Association said Wednesday.But mortgage applications to purchase homes fell to the lowest level since April 1997. A major reason for that drop: tax credits expired on April 30.A campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring. Instead, they have dipped. Fears that Greece's government would default on its debt shook world markets and boosted demand for U.S. Treasurys.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.This week, the average rate on a 15-year fixed-rate mortgage was 4.21 percent. That's down from 4.24 percent last week and the lowest level on records dating back to August 1991.Rates on Continue Reading