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American Morning
Minding Your Business: Home Loan Market
Aired August 29, 2003 - 07:36 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Well, for months now, we have heard that mortgage rates were hitting record lows. But there is a different spin in the home loan market right now and it is not good news.
Andy Serwer is off today, but Gerri Willis is here minding your business.
Good morning, once again.
It's been nice to have you all week.
GERRI WILLIS, FINANCIAL CORRESPONDENT: It's been great fun, Soledad.
O'BRIEN: Thanks for filling in for us.
Bad news for anybody who's looking for a mortgage. You really kind of missed the boat, I guess it's fair to say.
WILLIS: Well, yes. We've seen the steepest rise in 15 years in mortgage rates. That's pretty dramatic. We want to show you the numbers here. This week, the numbers up to 6.34 percent on a 30 year mortgage. You would have been paying $155 a month more compared to the mortgage you got just a couple of months ago in June at 5.37. A pretty dramatic change.
Now, let's take a look if rates actually went up another percentage point, which could happen, to 7.34 percent. You'd be paying $167 a month more if that happened. But, Soledad, just to make a point here, long-term average mortgage rates are about 8.4 percent. You're still well below that. So if you're thinking about buying a home, go ahead and do it and lock in now.
O'BRIEN: But it's not comforting when all your friends have a mortgage rate that's in the high fours, low fives.
WILLIS: And when you thought you could buy a bigger house or maybe in a better neighborhood than you can now. It's very tough for people.
O'BRIEN: Yes. You do have some advice, however, for folks who are going to go ahead and buy a house.
WILLIS: You bet. First off, fix your credit. If you have a bad credit report, the banks will lend you less money or charge you more for it. Your credit score should be below -- or above 700 instead of below. It should be above 700.
Get pre-approved instead of pre-qualified. You'll have more leverage with your lender. Try one of those adjustable mortgages. You know, people who are not staying in their home for a long period of time, it makes a lot of sense, a one year right now, 4.2 percent.
And be aware of the gimmicks. The bankers out there, they come up with all kinds of new ways to give you a mortgage. A lot of them carry higher interest rates, even though they're attractive. Make sure you check it out.
O'BRIEN: Always read the fine print seems to be the mantra every single time we talk.
WILLIS: That's right.
O'BRIEN: Gerri Willis, as always, thanks so much. And, again, thanks for filling in for Andy all week.
Appreciate it.
WILLIS: Thank you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired August 29, 2003 - 07:36 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Well, for months now, we have heard that mortgage rates were hitting record lows. But there is a different spin in the home loan market right now and it is not good news.
Andy Serwer is off today, but Gerri Willis is here minding your business.
Good morning, once again.
It's been nice to have you all week.
GERRI WILLIS, FINANCIAL CORRESPONDENT: It's been great fun, Soledad.
O'BRIEN: Thanks for filling in for us.
Bad news for anybody who's looking for a mortgage. You really kind of missed the boat, I guess it's fair to say.
WILLIS: Well, yes. We've seen the steepest rise in 15 years in mortgage rates. That's pretty dramatic. We want to show you the numbers here. This week, the numbers up to 6.34 percent on a 30 year mortgage. You would have been paying $155 a month more compared to the mortgage you got just a couple of months ago in June at 5.37. A pretty dramatic change.
Now, let's take a look if rates actually went up another percentage point, which could happen, to 7.34 percent. You'd be paying $167 a month more if that happened. But, Soledad, just to make a point here, long-term average mortgage rates are about 8.4 percent. You're still well below that. So if you're thinking about buying a home, go ahead and do it and lock in now.
O'BRIEN: But it's not comforting when all your friends have a mortgage rate that's in the high fours, low fives.
WILLIS: And when you thought you could buy a bigger house or maybe in a better neighborhood than you can now. It's very tough for people.
O'BRIEN: Yes. You do have some advice, however, for folks who are going to go ahead and buy a house.
WILLIS: You bet. First off, fix your credit. If you have a bad credit report, the banks will lend you less money or charge you more for it. Your credit score should be below -- or above 700 instead of below. It should be above 700.
Get pre-approved instead of pre-qualified. You'll have more leverage with your lender. Try one of those adjustable mortgages. You know, people who are not staying in their home for a long period of time, it makes a lot of sense, a one year right now, 4.2 percent.
And be aware of the gimmicks. The bankers out there, they come up with all kinds of new ways to give you a mortgage. A lot of them carry higher interest rates, even though they're attractive. Make sure you check it out.
O'BRIEN: Always read the fine print seems to be the mantra every single time we talk.
WILLIS: That's right.
O'BRIEN: Gerri Willis, as always, thanks so much. And, again, thanks for filling in for Andy all week.
Appreciate it.
WILLIS: Thank you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
