Is this the right time to buy a home? Prices are still falling but may be stabilizing. Just as important, mortgage rates continue to fall.
Average mortgage rates dropped this week, according to the LendingTree Weekly Mortgage Rate Pulse, a snapshot of the lowest and average mortgage rates available within the LendingTree network of lenders.
On September 28, average home loan rates offered by lenders on the network fell week-over-week to 4.39 percent (4.6% APR) for 30-year fixed mortgages, 3.86 percent (4.17% APR) for 15-year fixed mortgages and 3.39 percent (3.66% APR) for 5/1 ARMs.
On the same day, mortgage rates offered by lenders on the LendingTree network were as low as 3.875 percent (4.01% APR) for a 30-year fixed mortgage, 3.25 percent (3.58% APR) for a 15-year fixed mortgage and 2.75 percent (3.37% APR) for a 5/1 adjustable rate mortgage (ARM).
Rates fell one-eighth of a point for 15-year fixed home loans and remained flat for 30-year fixed loans and 5/1 ARMs.
No clear direction
"Since the end of August when Federal Reserve Chairman Ben Bernanke said the U.S. central bank would 'do all that it can' to ensure a continuation of economic recovery, mortgage rates have lacked any clear direction," said Cameron Findlay, Chief Economist of LendingTree.com. "Rates are not simply just declining anymore as they have been since April, but rather the magnitude of change from day-to-day has been pronounced. For example, the average rate last Friday, September 24, was up 18 basis points from Thursday's average rate."
With such a volatile rate environment, it's important for borrowers to do their homework before locking in a rate. It's also to get the right price on a piece of property.
Fannie Mae and Freddie Mac are dumping nearly 150,000 homes seized in foreclosure, creating a vast inventory in many markets. To move that inventory, the GSE's are letting some homes go at bargain basement prices. An analysis by SmartMoney Magazine shows some homes are being sold at $100,000 discounts, compared to comparable properties.
Chances are, it will take sellers years to work through the glut of homes on the market, meaning prices should stay soft for a while. The foreclosure tracking firm RealtyTrac says lenders are expected to take over 1.2 million homes this year, with all of them either auctioned or listed for sale. In the second quarter of this year, foreclosed homes made up 24 percent of all U.S. home sales, the firm said.
Game changer
While foreclosed properties need to be sold before the market can fully recover, the recent revelation that GMAC Mortgage may have violated rules in some foreclosure proceedings could throw an element of uncertainty into buying a foreclosure, experts say.
Roy Oppenheim, a legal blogger and Florida foreclosure defense attorney says banks aren't the only ones who might be affected by any legal action resulting from the revelations. The issue, he says, has broad consequences, not just for the people who lost homes, but for the millions of buyers of foreclosed homes, some of whom might not have clear title to their bargain property.
