Mortgage Rate News

Right now, with liquidity for mortgage lenders a problem, and with the economy promoting inflation, mortgage interest rates on their way up. This means that those wishing to buy a first home — and especially those looking for a second home mortgage — things are getting a little expensive.

Rising mortgage interest rates mean you pay more money

Whether it’s a new home mortgage loan or a second home mortgage, the higher the interest rate, the more you will pay over the life of the loan. (Even on a $200,000 home mortgage loan, the difference between last week’s mortgage rate and this week’s is more than $10,000 total in interest.) This is an issue especially for those looking into mortgage loan refinancing. Many are finding that when they go to refinance from an ARM or an interest only loan, the newer, higher rate is still somewhat difficult to pay.

However, if those looking for second home mortgage loans do not lock in interest rates now, there is a good chance that, come August, they could see an additional rise in interest rates. The longer they wait, the greater the chance that interest rates will get even higher on mortgage loan refinancing.

Difficulties with mortgage loan refinancing

Increased costs due to mortgage interest rates are not the only problem plaguing those looking for second home mortgage loans. Getting mortgage loan refinancing is increasingly difficult because home values in many areas are falling. These home values mean that many homeowners are already upside down on their home loans. SO, mortgage lenders are not willing to provide mortgage loan refinancing. And that does make sense. Why would you risk it?

So, the current situation offers an interesting bind. Mortgage loan refinancing is needed in order to forestall foreclosures, but some people are in a position that precludes them from getting that financing. And, even worse, some are in positions where they can’t even afford payments on new home loans — even if they could get them.

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second home mortgage, mortgage lenders, mortgage loan refinancing

Bank of America is expected to see some serious losses with regards to home equity loans. Why? Because second home mortgages are connected to home value, and that means that as home values fall, losses due to home equity loans rise. Bloomberg reports on the current state of Bank of America:

The bank expects losses to top 2.5 percent of its $118 billion in loans linked to home values, Liam McGee, president of the Charlotte, North Carolina-based company’s consumer and small business division, said at a conference in New York sponsored by UBS AG. The bank previously projected a loss rate of between 2 percent and 2.5 percent.

Bank of America, the nation’s largest credit-card issuer, is also seeing a “recent sharp increase” in spending on necessities by its credit-card customers. That has curbed retail, travel and entertainment purchases, McGee said. Economists and bankers have said the economy may be teetering near a recession as consumers struggle with job losses and gasoline prices topping $4 a gallon.

You can also see that problems may be arising in the area credit cards as well. As more people have to turn to credit cards to cover the necessities, there could be real problems ahead.

This presents a combination problem: Home equity is tapped out, and credit cards are moving toward being maxed out. This is a trend that is sweeping the nation. The question is this: How long until Americans as a whole move from managing their debt to actually drowning in it? And consider: with home equity loans getting harder to come by, it will make it difficult for Americans to use debt consolidation to get a handle on their credit card debt.

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second home mortgages, debt consolidation, credit cards

Whether it’s a first home mortgage, or a second home mortgage, it is possible to save money by going green. A product called a green mortgage is being offered by more and more lenders around the country.

Citi, Bank of America and JP Morgan Chase all offer some version of a green mortgage. And if you look around, you might find local mortgage lenders that do as well.

Green mortgage

A green mortgage is one in which the mortgage lenders offer special terms if you buy a home that meets certain environmental standards. If you buy a home that was built using green building practices, or if you have an energy audit before buying, it is possible to have the interest rate reduced — or the loan origination fees waived. It just depends on the green mortgage program in question.

Save money on green home improvements

This is an area that can help you save a great deal of money in the long run. Some mortgage lenders give you special rates on a second home mortgage that you take out to make green home improvements, like adding insulation or better windows. These green home improvements can also extend to getting new EnergyStar appliances and installing solar panels.

Not only are there green mortgage products available in terms of a home equity loan, but there are other savings as well. Many states offer grants to those wishing to build a wind power turbine or install solar panels. There are grants for energy efficient windows and insulation. Additionally, there are federal (and state as well) tax benefits when you make green home improvements. Speak with your accountant or other tax specialist to find out what you can do to take advantage of these tax offerings.

Going green doesn’t have to mean that you lose money. Indeed, many green home improvements pay for themselves in a few years, and then you start saving big over the long run.

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second home mortgage, green home improvements, mortgage lenders