Mortgage rates altered by oil prices
The drastically dropping price of oil has led to low gas and energy costs. According to Nasdaq, an American stock exchange, crude oil is selling for less than $60 a barrel at the end of December. The effect of lower trading value impacts more than just the price paid at the pump. Less expensive oil has the potential to lower the prices throughout the entire U.S. economy.
Crude oil's impact on residential mortgage interest rates. The New York Times noted interest rates are especially sensitive to inflation. In mid-June, barrels sold for approximately $115, while current prices bounce around in the $60 range. The Times reported that Keith Gumbinger, vice president of a financial publisher, noted cheaper oil lowers the general cost of most products and services, which causes inflation to fall as well. Consequently, lower inflation may instigate a decrease in interest rates.
Gumbinger also relayed that the length of time low oil prices will keep U.S. home mortgage rates low is questionable.
How low are US mortgage rates? Freddie Mac showed an average interest rate of 3.83% for a 30-year fixed rate mortgage and 0.6 in fees and points during the last week of December. The typical 15-year FRM remained low at an average 3.10% interest rate and also displayed 0.6 in fees and points.
Historically, mortgage rates have been much higher. In December 2007, just before the housing crisis in 2008, the average interest rate for a 30-year FRM sat at 6.10%.
In 2013, Forbes predicted that 2014 would bring about an interest rate of approximately 5.5%. The current mortgage rate is an intense contrast to this particular forecast.
"The 30-year fixed mortgage rate dropped to its lowest point of 2014 this week," said Frank Nothaft, vice president and chief economist at Freddie Mac. "Mortgage rates fell along with 10-year Treasury yields, which closed at their lowest level since May 2013."
A strengthening U.S. economy may bring up interest rates in the future, but as previously mentioned by Gumbinger, no one can be certain of what will rise and what will fall in the upcoming year.
The Times called the link between dropping oil prices and lower mortgage rates cloudy and complicated, but economists predict that rates will remain low well into the next year 2015.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2013 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.
Why veterans and active-service military homebuyers love VA loans [Infographic]
VA loans are one source of funding that an increasing number of qualifying homebuyers who are or have been in the U.S. military have found to be highly beneficial.
VA loans are available to qualifying active-service military personnel and veterans and are a wonderful benefit the U.S. Department of Veterans Affairs offers these brave men and women. Nearly three-quarters of active-service military buyers and more than half of veterans take advantage of the VA loan program.
There are plenty of reasons that could convince a qualifying member of the military to use a VA loan. If you are a qualifying member of the military, here are three important reasons to consider using a VA loan:
Most home loans either require a down payment of at least 20% or the purchase of Private Mortgage Insurance if you aren't able to provide that amount at the time of closing. However, VA loans don't require either. This means you may find they are a much more affordable option.
A VA loan can help in almost any of your homeownership goals, whether they involve to buying, building or refinancing. There are some requirements you'll need to meet to qualify. For example, the home needs to be your primary residence to be eligible.
For many loan products, there are certain qualifiers that allow you to obtain a loan or a low interest rate. For example, if you have a foreclosure or bankruptcy in your past, it may prevent you from getting a loan or an affordable interest rate. However, a VA loan is still obtainable with these financial hardships on your record.
Additionally, some lenders discourage early payments by imposing fees for pre-paying your bill. VA loans don't do this, which makes creating a payment plan that suits your lifestyle and income easy. If you prefer to make two smaller payments during the month instead of one bigger one, you can. Or, if you want to go ahead and pay your mortgage as soon as you get paid rather than waiting for your bill to come in, go right ahead.
What will your reason be for getting a VA loan for your next home purchase? With Veterans Day coming up on Nov. 11, many people and businesses will be saying thank-you to the brave men and women who have and are currently serving in our military. Tell the lenders at Academy Mortgage the next time you're in the market for a new house, and we will be happy to help you buy your perfect home.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Contact me to find a loan, get a rate, or calculate your payment today.