The LendingTree Weekly Mortgage Rate Pulse Uncovers the Truth Behind the Top 5 Mortgage Myths
Average rates drop by as much as 12 basis points
CHARLOTTE, N.C., Dec. 20, 2011 /PRNewswire/ -- Average mortgage rates fell once again week-over-week according to the LendingTree Weekly Mortgage Rate Pulse, which tracks the lowest and average mortgage rates offered by lenders on the LendingTree network. Because of heightened borrower confusion, LendingTree today is also releasing a list of the top five mortgage myths and explaining the truth that underlies each.
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On December 19, average mortgage rates offered by LendingTree network lenders were 4.22 percent (4.52% APR) for 30-year fixed mortgages, 3.46 percent (3.92% APR) for 15-year fixed mortgages and 3.23 percent (3.51% APR) for 5/1 adjustable rate mortgages (ARM), about a 12 basis point decrease for each 30 and 15-year fixed rates.
On the same day, the lowest mortgage rates offered by lenders on the LendingTree network also fell week-over-week to 3.50 percent (3.62% APR) for a 30-year fixed mortgage, 2.88 percent (3.11% APR) for a 15-year fixed mortgage and 2.50 percent (3.03% APR) for a 5/1 ARM.
Top 5 Mortgage Myths
1) A 30-year fixed rate mortgage is always the best option:
It's true that 30-year fixed rate mortgages are attractive because they provide long-term rate protection and low payments. However, this is also the most expensive option in terms of the amount paid towards interest compared to the principal, and other loan products offer borrowers greater savings. For example, even in a worst-case scenario, a 5/1 ARM is more beneficial to a borrower for over 7 years when compared to a 30-year fixed given today's rates.
2) At least 20 percent down is required for a home loan:
While it has been recommended that borrowers put 20 percent down for the best rates available, borrowers who don't have enough cash available still have options. For example, FHA allows for down payments as little as 3.5% and private mortgage insurance is still an option.
3) The rate must drop by 2 percentage points to make refinancing worthwhile:
Depending on the situation, cutting the interest rate by even half a point can be a prudent decision. But borrowers need to sit down and do the math and find their break-even point to see if refinancing makes sense for their situation. And be mindful of closing costs, and the amount of time it'll take to recoup them upon refinancing. If borrowers are not planning to be in the same location for an extended period of time, then recouping these costs may cancel out potential savings.
4) There's no point in shopping around for a mortgage when all lenders offer the same programs:
Lenders offer different programs and varying closing time frames. Additionally, rates can vary by over a percentage point from lender to lender. It's worth-while to comparison shop and have a wealth of options to choose from.
5) A pre-qualification is the same as a pre-approval:
A mortgage loan pre-qualification is simply an estimate of how much house a borrower can afford and how much money a lender would be willing to loan. Getting pre-approved means that a borrower has a tentative commitment from a specific lender for mortgage funding based on actual documentation and verification.
Below is a snapshot of the lowest mortgage rates for a 30-year fixed loan offered by lenders on the LendingTree network, as well as average loan-to-value ratios and negative equity by state.
| STATE-BY-STATE MORTGAGE DATA 12/19/11 *Updated Quarterly |
|||
| STATE |
LOWEST MORTGAGE RATE |
LOAN-TO-VALUE RATIO* |
NEGATIVE EQUITY* |
| US Average |
3.75% (3.88% APR) - |
69.8% |
33.5% |
| Alabama |
3.75% (3.88% APR) - |
68.0% |
29.5% |
| Alaska |
3.75% (3.88% APR) - |
65.8% |
19.5% |
| Arizona |
3.75% (3.88% APR) - |
93.1% |
38.9% |
| Arkansas |
3.75% (3.86% APR) - |
72.3% |
43.0% |
| California |
3.75% (3.88% APR) - |
70.0% |
34.4% |
| Colorado |
3.75% (3.88% APR) - |
72.3% |
22.9% |
| Connecticut |
3.75% (3.85% APR) - |
60.2% |
43.4% |
| Delaware |
3.75% (3.85% APR) - |
67.3% |
38.8% |
| District of Columbia |
3.75% (3.88% APR) - |
58.6% |
26.8% |
| Florida |
3.63% (3.73% APR) - |
87.8% |
38.9% |
| Georgia |
3.75% (3.88% APR) - |
80.9% |
26.5% |
| Hawaii |
3.75% (3.88% APR) - |
53.9% |
27.0% |
| Idaho |
3.75% (3.88% APR) - |
71.7% |
30.3% |
| Illinois |
3.75% (3.86% APR) - |
72.4% |
32.3% |
| Indiana |
3.75% (3.93% APR) - |
69.4% |
28.4% |
| Iowa |
3.75% (3.88% APR) - |
67.3% |
44.2% |
| Kansas |
3.75% (3.88% APR) - |
70.3% |
32.2% |
| Kentucky |
3.75% (3.89% APR) |
67.9% |
52.7% |
| Louisiana |
3.75% (3.88% APR) - |
75.2% |
82.4% |
| Maine |
3.75% (3.86% APR) - |
58.3% |
30.7% |
| Maryland |
3.75% (3.84% APR) ↓ |
70.3% |
25.9% |
| Massachusetts |
3.75% (3.86% APR) - |
61.9% |
47.0% |
| Michigan |
3.75% (3.88% APR) - |
84.0% |
33.4% |
| Minnesota |
3.75% (3.85% APR) - |
66.8% |
22.7% |
| Mississippi |
3.75% (3.87% APR) - |
78.2% |
29.2% |
| Missouri |
3.75% (3.88% APR)- |
71.9% |
32.4% |
| Montana |
3.75% (3.88% APR) |
60.3% |
33.9% |
| Nebraska |
3.75% (3.88% APR) - |
73.4% |
44.7% |
| Nevada |
3.63% (3.75% APR) - |
112.7% |
53.7% |
| New Hampshire |
3.88% (3.99% APR) - |
70.3% |
26.2% |
| New Jersey |
3.75% (3.87% APR) - |
62.8% |
29.9% |
| New Mexico |
3.75% (3.88% APR) - |
67.9% |
45.9% |
| New York |
3.75% (3.85% APR) - |
48.7% |
36.0% |
| North Carolina |
3.75% (4.88% APR) - |
71.6% |
32.4% |
| North Dakota |
3.75% (3.88% APR) - |
61.1% |
36.3% |
| Ohio |
3.75% (3.86% APR) - |
75.8% |
27.5% |
| Oklahoma |
3.75% (3.86% APR) - |
71.8% |
50.6% |
| Oregon |
3.75% (3.88% APR) - |
69.8% |
19.9% |
| Pennsylvania |
3.75% (3.84% APR) - |
61.1% |
42.0% |
| Rhode Island |
3.75% (3.87% APR) - |
63.7% |
38.7% |
| South Carolina |
3.75% (3.86% APR) - |
71.5% |
28.9% |
| South Dakota |
3.75% (3.86% APR) - |
N/A |
N/A |
| Tennessee |
3.75% (3.89% APR) - |
71.6% |
29.9% |
| Texas |
3.75% (3.88% APR) - |
68.1% |
31.6% |
| Utah |
3.75% (3.88% APR) - |
72.9% |
22.8% |
| Vermont |
3.75% (3.88% APR) - |
N/A |
N/A |
| Virginia |
3.75% (3.85% APR) - |
71.7% |
25.1% |
| Washington |
3.75% (3.88% APR) - |
68.3% |
21.7% |
| West Virginia |
3.75% (3.85% APR) - |
66.8% |
50.6% |
| Wisconsin |
3.75% (3.85% APR) - |
69.1% |
36.0% |
| Wyoming |
3.75% (3.88% APR) - |
63.1% |
24.2% |
For more information on current mortgage rates or for state specific mortgage rates, please visit http://www.lendingtree.com/mortgage-loans/rates/.
The LendingTree Weekly Mortgage Rate Pulse is published every Tuesday moving forward. Home loan rates above are reflective of actual rates offered to borrowers by lenders on the LendingTree network. Lowest rates shown reflect the payment of one discount point. Rates will vary based on the borrower's loan details and credit profile. Visit www.lendingtree.com to learn more.
About LendingTree, LLC
LendingTree, LLC is the nation's leading online lender exchange and personal finance resource, helping consumers take charge of all their financial decisions, from budgeting to money management to mortgages to credit cards and more. LendingTree provides a marketplace that connects consumers with multiple lenders that compete for their business, as well as an array of online tools to aid consumers in their financial decisions. Since inception, LendingTree has facilitated more than 28 million loan requests and $214 billion in closed loan transactions. LendingTree provides access to lenders offering mortgages and refinance loans, home equity loans/lines of credit, and more.LendingTree, LLC is a subsidiary of Tree.com, Inc. (NASDAQ: TREE). For more information go to www.lendingtree.com, dial 800-555-TREE , join our Facebook page and/or follow us on Twitter @LendingTree.
MEDIA CONTACT:
Megan Greuling
(704)943-8208
[email protected]
SOURCE LendingTree
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