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CONSUMERS ARE TAKING BACK INVESTMENT LOSSES
As activity builds in the Treasury corner the impact is affecting the housing industry for the better. Record mortgage applications, home sales, construction and home refinancing is being reported. In addition to this consumers are seeing ways to recoup market losses.
70% of mortgage applications are reported as from home loan refinancing applicants with a large portion of these opting for conversions from the traditional 30-year fixed-rate mortgage loan to a 15 year fixed or shorter term hybrid adjustable mortgage that carries a fixed-rate for a certain set period and resets each year there-after. Why is the current of mid-to-long term refinancing so strong? Consumers experienced a major loss in retirement income and college fund investments following the stock markets fall March 2006, 2007. They are now eyeing an ideal way to preserve income and use it to recoup
recent investment losses.
HOW TO RECOUP INVESTMENT LOSSES
As stock prices dropped in August, consumers searched assets for funds to buy low and sell high in an effort to
Take back July losses. Many realized that refinancing at today's historically low refinance rates would provide the leverage needed to turn a negative situation into a more prosperous one. Mid-to-Long term hybrid mortgage loan programs allow the consumer to pocket immediate savings for investment purposes such as retirement savings, college savings or to pay down high interest rate debt.
THE HYBRID ARM ADVANTAGE
Hybrid mortgages are gaining popularity as consumers opt for immediate monthly savings. How do they work? They combine the best features of 30 and 15-year fixed-rate mortgages and one-year adjustable-rate mortgages. Rates on these hybrids are as much as 1.5 percentage points lower than rates on 30-year fixed-rate mortgages with more interest rate protection for a borrower than a traditional one-year adjustable-rate loan.
Mid-To-Long Term Hybrid ARM
These products have a fixed interest rate for 3, 5, 7 and 10 years before turning into an adjustable rate mortgage. 5 and 7/1 loans are about a full percentage point below the 30-year FRM rate. That can spell considerable savings over the next seven years, or more.
HYBRID ARM SAVINGS
What kind of savings are we looking at here? A borrower with a 7/1 ARM at 5.5% will save about $7,000 over the first seven years while paying off more principle compared with a 30-year fixed at mortgage 6.5%.
But what if rates rise? Yes rates will eventually rise. But looking at the worse case
scenario, if rates jump 4% by the third year the new rate of 9.5% would take three and a half years to erase the $7,000 savings. By that time, it's likely that the usual rate cycle would present a chance to refinance.
Consumers should consult their mortgage professional to find out if these programs will work best for them. Loan rate shoppers seeking low rates for refinancing or home buying should not delay preparing to lock-in rates at today's lows. To locate local mortgage professionals in your area go to
Money Nest
Refinancing? Find free local home mortgage rate quotes, comparison tools, tips and news for refinancing at today's competitive rates and lowest loan costs at http://www.refinanceloanrates.fimark.net
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