According to mortgage giant Freddie Mac, home loan rates fell for the 2^nd consecutive week.  The Mortgage Bankers Association reported that conforming, jumbo, VA and FHA rates were lower across the board. Freddie Mac’s report indicated that a fixed rate 30-year mortgages were available at 4.625% for the week ending January 13^th.  A fixed rate 15-year mortgage averaged 4.08 % this week.

Mortgage refinance transactions accounted for over 72% of all home loan applications last week.  The MBA also reported that home loan applications rose 2.2 % in the week ending January 7th, led by a 4.9 % increase in refinancing applications. Applications to buy a home fell 3.7 %.

The GSE mortgage bill also extends the current maximum mortgage limit for the Home Equity Conversion Mortgage Program.  The timely approval is a relief for loan companies who were concerned about possible disruptions in the mortgage market, particularly the “conventional jumbo market.”  The extension expires at the end of September 2011.  Mortgage lenders should enjoy the next year, but many loan companies are privately concerned they may’ve seen their last extension.  The Senate passed the temporary funding bill known as a continuing resolution by a 69-30 vote. The House passed the bill by a relatively narrow margin of 228-194.  Without an extension, the maximum loan limit for Fannie, Freddie and single-family FHA home loans would have dropped to $625,000 on January 1st.

The average rate for fixed 30-year mortgage rates dropped to 4.32 % in the week ended today from 4.36 %, Freddie Mac said in a statement today. That was the lowest since the mortgage giant began compiling the data in 1971. The average 15-year mortgage rate was 3.83 %, also a record.   The Mortgage Bankers Association’s index of mortgage refinancing climbed 2.8 % in the week ended Aug. 27 to the highest level in over a year.   FHA mortgages remain the most popular home loan, with conventional loans coming in right behind the government loan program.

The survey also found a slight pickup in demand for residential home mortgages since April, particularly for non-traditional mortgage loans.  The senior loan respondents noted no change in underwriting standards for commercial real estate mortgages and little change in demand.  “Overall, the net fraction of banks that reported that demand for CRE loans had deceased continued to be small,” the Fed said.

Home Mortgage Rates starting at 4.125%

According to McClung there are also some local housing financing agencies still providing homebuyer down-payment assistance.  “There are a lot of home loan options to getting someone in their home today with as little as 5% down,” McClung said.  In order to make sure you can take advantage of this opportune time, McClung says it is important to know how to be prepared. She says lenders are looking for a little more than they were a few years ago.   “Today somebody interested in a mortgage loan must keep track of their income documentation, their tax information from the last couple of years,” McClung said. “They also need to make sure that they have stable monthly income and that they can verified with acceptable documentation, like pay-stubs, W-2′s 10-40;s etc.  To be sure that this mortgage lender is going to be comfortable it is imperative that you demonstrate the ability to afford the new mortgage payment for the near future.”   In most cases, no income verification loans are unavailable. 

VA loans enable borrowers to get a 100% no moneydown mortgage, but you must qualify for the VA loan eligibility.  FHA mortgage loans allow borrowers to put a down-payment as little as 3.5% of the home sales price and most conventional lenders are asking for a 20% down-payment.

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Borrowers continue to comment on how much more difficult qualifying for a home loan or mortgage refinance today as mortgage lenders and banks have tightened loan programs.  Now new home buyers need to be able to document their income with a 2 year history as stated income home loans have been repealed by most lenders.  The bottom line is that for the near future borrowers will have to prove their income to qualify for these appealing home purchase loans that guarantee fixed rates for 15 and 30-year terms.

The National Association of Realtors said Thursday that last month’s sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million.  Most economists have suggested that the housing market stalled when the federal tax credits for first home buyers expired on April 30th.  Refinance applications increased in recent weeks but home purchase loan applications have stalled.  With home loan rates this low you have to wonder what kind of incentives consumers need to finance a home.

With home prices continuing to drop, more and more consumers now more have new opportunities to finance a home with a monthly payment they can actually afford.  While most conventional lenders are requesting 20% down-payments, FHA mortgage loans make more sense because borrowers only need to come up with a 3.5% down-payment.  According to Johnny Davis, a loan officer at Chase, “Loan applicants are usually surprised at how accommodating the FHA loan requirements are for first time home buyers.” Davis continued, “Although the home loan rates have dipped to record lows, many consumers are nervous to commit to a long term home mortgage because they are uneasy about the economy and future employment.”

When will mortgage rates rise?  Nobody knows for sure, but most finance advisors suggest that as soon as we get some positive economic news that mortgage refinance rates will rise.  Needless to say, the fixed rate refinancing trend will continue while interest rate remain this low.

Badendyck is one of many homeowners who are looking at today’s fixed-rate mortgages and deciding to refinance. Just a few years ago, mortgage rate less than 5% seemed almost too good to be true, but with motivated home loan lenders and an aggressive Federal Reserve, 2010 continues to see declining interest rates for new home financing and fixed mortgage refinancing.  And, if that isn’t enough to motivate you, 3/1 ARM  and 5/1ARM home loans are available below 4%.  These ARMS ensure fixed interest rates for 3 and 5 years.  Yes, those home mortgages carry a higher risk than the fixed rate mortgage do, but to many homeowners the hybrid ARMS make sense.  For example if you plan to move in the next few years, but would like to save some money every month in the meantime, then the 3/1 or 5/1 ARM’s are no brainers. 

According to Freddie Mac, home mortgage rates on fixed thirty-year terms declined again last week to the lowest point of 2010. So it is not surprising that refinance application volume is at its highest level since October 2009, according to the Mortgage Bankers Association.  Military borrowers get the best of both worlds because the VA mortgage loan guarantees a low fixed rate and no down-payment is needed for home buying.  These no money down mortgage loan is only available to borrowers who have earned the VA loan eligibility.

For everyone else, there is the FHA mortgage option that extends affordable lending to all Americans with or without a military background.  FHA mortgage refinancing has been very popular recently, because the conventional mortgages require more equity.  Many homeowners have seen their home equity disappear as the housing crisis continues to grow.  Again if you have good credit and enough equity to qualify, we suggest you get off the couch and talk to a loan company about locking into better mortgage with lower interest rates and lower monthly payments.

The major benefit is a reduced balance which will free up your cash flow and increase the monthly savings.  Also, you can have the debt paid quickly in less than eighteen months.  The only concern with debt relief would be is that you have to jump through some hoops to qualify and may have a short term blip on your credit but it’s not a big deal if you pay the debt off quickly.

In other mortgage news, no money down home loans are still available in a few states with FHA mortgages in states that a judge ruled that borrowers should be allowed to use the government’s $8,000 tax credit as down payment assistance.  In most states the only no money loans are VA home loans and you need to be a military veteran to qualify for those mortgages.

Meanwhile, the fifteen-year fixed rate dropped to 4.36%, the lowest figure since Freddie began tracking such mortgages in 1991. The average mortgage rate was 4.46% last week and 5.78% last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages also hit a record low, dropping to 4.42% from 4.51% and 6%, respectively. After yields on Treasuries rebounded from the multi-decade lows they hit earlier this year, they have since retraced some – taking home mortgage rates along with them.

Bad credit mortgage loans continue to be challenging for many Americans who have no equity or late payments, but the FHA mortgage loans and the Obama loans remain genuine options for borrowers with challenged credit seeking refinance alternatives.

According to the Commerce Department’s data for August, new home sales rose for the 5th time but existing home sales fell unexpectedly, breaking four months of improvement. And while the S&P Case-Shiller indexes showed home prices increased again in July from the prior month, Dallas Federal Reserve President Richard W. Fisher warned on Tuesday that housing, though stabilizing, was still “on life support.”