30 Year Mortgage Rates Drop Below 3.5% Before Rising Above Record Lows

Average mortgage rates hit yet another record low the week of July 26th, but have since inched above the record setting levels. According to reports from mortgage financing company, Freddie Mac, mortgage rates for the week ending Thursday, July 26 dipped to 3.49 percent (0.7 points) for a conforming 30 year fixed rate loan on average. Rates for the previous week were 3.53 percent (0.7 percent), and for the week ending August 2nd they were a slightly higher 3.55 percent (0.7 points.)

Compared with a year ago, mortgage rates are a full point lower. Last year's average rate for a conforming 30 year fixed rate loan was 4.55 percent.

Rates on the increasingly popular 15 year fixed rate mortgage averaged 2.8% (0.7 points), down from 2.83% (0.6 points) the previous week and significantly lower than the 3.66% rate a year ago. 15 year rates also edged up on average the week of August 2nd, returning to the 2.83% (0.6 points) level reached 2 weeks earlier. These short term mortgage types are a popular choice for homeowners who wish to pay off their mortgage debt in half the time it takes for a traditional 30 year loan.

So if you're shopping around for a mortgage on your new home or looking at refinancing, don't be surprised to see some super competitive rates out there. Don't be afraid to shop around either, as the first low rate you come across may not necessarily be the best.

Sources:

Wall Street Journal http://blogs.wsj.com/developments/2012/07/26/here-we-go-again-mortgage-rate-drops-hits-3-49/

Freddie Mac
http://www.freddiemac.com/

Are older Americans at greater risk of foreclosure?

According to a recent report by AARP, millions of older Americans are facing the risk of losing their homes.

More than 3 million borrowers over the age of 50 are at risk, according to the report, with more than 1.5 million homeowners (age 50 or older) having already lost their homes since the beginning of the housing crisis. The report also showed that another 3.5 million owners are underwater in their mortgages, owing more than their homes are worth.

So why is this happening? There appears to be an underlying problem with greater debt. According to the report, older Americans are "carrying more mortgage debt than ever before." When it comes to the actual amount of debt these older homeowners have accumulated, the numbers don't look good.

According to the Federal Reserve, families with mortgages held by someone 75 or older jumped to 24.2% in 2010, versus only 6.3% in 1989. Over the same time period, the amount of debt mortgage holders carried shot up to a median of $52,000, versus only $11,800 in '89. Part of this, of course, has to do with the inevitable rising of prices over time. However, such a dramatic jump seems to be a cause for concern among housing experts.

A recent article on CNN Money explained that many older homeowners were burdened by subprime loans or lured by cash out refinances that they didn't work out in their favor. (Cash out refinances refer to taking out a loan for more than the mortgage is worth and using the difference to make repairs, pay bills or consolidate debt).

While cash out refis don't necessarily lead to foreclosure, and in some cases can be quite beneficial, experts warn that very careful consideration should be taken before signing on the dotted line. Financial mistakes or poor refinancing choices certainly happen within all age groups, but it is usually more difficult for elderly homeowners to bounce back from a financial crisis.

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Nat Criss is one of the publishers of ForTheBestRate.com, a consumer directed websites focusing on mortgage rates, insurance, and finance.