Sarasota Mortgage Rates | The Mortgage Skinny

In today’s market many people are starting to feel the pressure of having to make those high and forever changing Home Eqiuty Line Of Credit payments.  The prime rate right now is at 8.25%, and we can finally thank the Fed for not adjusting the Fed Funds rate the last few times they’ve met. But with an ever changing economy and market, it’s still an uncomfortable feeling to have.

So How can borrowers get out of a HELOC hole?

Prepay the loan. If they have the cash, they could pay off the loan immediately. If it’s less than three years since taking out the loan, however, they would probably incur a penalty of between $350 and $500. That’s probably worth it, especially for a large loan.

Take a cash-out refi. Refinance the primary mortgage and pay back the full amount of the Heloc. Rates are a couple of points lower on a 30-year fixed rate today than on a HELOC. Application fees, title search and insurance and other expenses will increase the total debt but monthly payments may still be lower than the blended total of the old primary mortgage and the Heloc. Plus, with a fixed rate, borrowers know exactly what their payments will be.

For borrowers with low rate primary mortgages, however, this is not recommended; they would be refinancing at a higher interest rate. Currently, 30-year fixed rate loan average 6.11 percent.

Switch to a fixed rate home equity loan. Unlike HELOCs, home-equity loans are usually fixed-rate loans. They don’t cost as much as a mortgage refinancing to execute but there still are some closing costs. Plus interest rates run a point or so higher than for 30-year, fixed rate mortgages, but that’s still a savings compared with Helocs.

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Hundreds of thousands of families all over the nation were foreclosed upon last year and this year looks just as grim. It’s sad and unfortunate that people financed and purchased homes they clearly could not afford.  I’m sure they were all hyped about the appreciation the country was seeing and thought it was a win-win situation. Maybe they were looking for a quick flip for some extra cash or were talked into a stated program, pay option arm, or even a no doc program. Who knew it was going to be so difficult to find a buyer or people would stretch themselves so thin that even finding a renter would not fit. Take a look at this article I found:

The number of housing foreclosures rose sharply across the country in 2006, reported Default Research (http://www.defaultresearch.com/), the rapidly growing real estate research company for foreclosure properties. The largest increase in foreclosure activity was in Nevada (up 166 percent); while the smallest increase was in Washington State (up only 18 percent).

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CNNMoney wrote an article about 25 rules that will help you save, invest, and live happier.  In today’s market we need all the help we can get when it comes to saving and making sound investment decisions.  If you’re able to discipline yourself to follow these 25 rules then your a better person than I.

1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second.

2. It’s worth refinancing your mortgage when you can cut your interest rate by at least one point.

3. Spend no more than 2 1/2 times your income on a home. For a down payment, it’s best to come up with at least 20%.

4. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%.

5. Never hire a roofer, driveway paver or chimney sweep who is going door to door.

6. All else being equal, the best place to invest is a 401(k). Once you’ve earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA.

7. To figure out what percentage of your money should be in stocks, subtract your age from 120.

8. Invest no more than 10% of your portfolio in your company stock - or any single company’s stock, for that matter.

9. The most you should pay in annual fees for a mutual fund is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund.

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