Tuesday, December 22, 2009

FLOAT or LOCK? Phoenix Home Mortgage Interest Rate Update and Recommendation - Dec 22nd, 2009

Current Pricing of FNMA 30 Year 4.5% Bond: $99.64
-62 bps (Prior Close – $100.26)

Market Update: Mortgage Backed Security (MBS) pricing is significantly lower today from yesterday's close. For a consumer, this translates into an upfront fee increase equivalent to .625% of the loan amount in order to obtain the same rate available yesterday for a home loan. A decrease in bond prices causes home loan rates and/or fees to increase.

Economic News: Existing Home Sales were reported slightly higher than expected and the inventory of unsold homes fell to a 6.5-month supply. Overall, this is a good news, but likely due to the perceived ending of the Homebuyer Tax Credit.

Recommendation: FLOAT

The decision to float or lock your interest rate can save, or cost, you thousands of dollars over the life of your new mortgage. Our recommendation won't apply in all situations, so if you have questions please contact us for clarification. Also, if you're considering purchasing or refinancing and you would like us to arrange your financing please contact The Krushinsky Team at 602-695-7575 or email david.krushinsky@wjbradley.com.

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