What's Ahead For Mortgage Rates This WeekU.S. Budget Stalemate, Italian Elections Stir Concerns

Mortgage rates were lower last week as investors sought safety in bonds in the wake of US legislators’ failure to agree on budget cutbacks, and after Italy’s elections failed to reveal a leader committed to continuing economic reform.

When bond prices including Mortgage Backed Securities rise, mortgage rates typically fall.

While the March 1st deadline for passing budget cutbacks for the U.S. government passed without a resolution, emergency legislation passed last year will keep the government running until March 27.

If a budget is not passed by then, the federal government could face shutdown.

As it stands, $85 billion in cuts are scheduled over the next seven months, but this represents only about 2 percent of the federal budget.

Investor concerns are likely to rise if the March 27 deadline approaches without a resolution.

Italian Elections Influence Investor Sentiment

On Monday, Italian elections were held, but the results did not reveal a leader dedicated to continuing economic reforms necessary for stabilizing Italy’s economy.

Another round of elections may be required to determine Italy’s new leader.

There is deep conflict in Italy as citizens do not agree with the need for economic austerity measures.

As the Eurozone’s third largest economy, Italy’s division on future economic reforms raises two concerns for investors.

First, without a clear reform leader established in last week’s elections, Investors fear that austerity measures may be relaxed and increase Italy’s debt risk.

A less likely risk is that Italy may leave the EU if it cannot resolve its need for economic reforms with its citizens’ wishes.

Upcoming Economic Releases

The coming week’s scheduled economic releases includes: ongoing developments regarding the U.S. budget and aftermath of the Italian elections are expected to continue influencing U.S. financial markets:

Date Time (ET) Statistic For Market Expects
03/05/13 10:00:00 AM ISM Services Feb 55.4
03/06/13 08:15:00 AM ADP Employment Change Feb 150K
03/06/13 10:00:00 AM Factory Orders Jan -2.20%
03/06/13 02:00:00 PM Fed’s Beige Book Mar
03/07/13 08:30:00 AM Initial Claims 03/02/13 350K
03/07/13 08:30:00 AM Trade Balance Jan -$43.0B
03/07/13 08:30:00 AM Productivity-Rev. Q4 -1.60%
03/07/13 08:30:00 AM Unit Labor Costs -Rev Q4 4.20%
03/07/13 03:00:00 PM Consumer Credit Jan $12.8B
03/08/13 08:30:00 AM Unemployment Rate Feb 7.90%
03/08/13 08:30:00 AM Hourly Earnings Feb 0.20%
03/08/13 08:30:00 AM Average Workweek Feb 34.4

As spring approaches, demand for homes typically increases, which in turn may drive up home prices and mortgage rates.

Consider getting pre-approved for a mortgage and looking for your new home sooner than later.

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Pay Off Mortgage FasterPaying off the mortgage on your Richmond home faster not only means that you’ll be able to enjoy the peace of mind that comes with completely owning your property sooner, but you may also save thousands of dollars in mortgage interest payments over time.

Below are seven clever tips to help you get your mortgage payments on the fast track.

Save for a large down payment
Make as large of a down payment as you can reasonably afford. The more cash you can put down, the less you’ll have to borrow from the bank. This will reduce your monthly mortgage obligation.

Read the fine print
When you are choosing a mortgage, ask your lender if there are restrictions related to paying extra principal monthly. Some lenders will charge you for making extra or early payments. 

Prepay early in the life of the mortgage
The early years of a mortgage are interest-heavy. On a 30-year mortgage, throughout the first five to seven years, you payments are mostly interest. Request an amortization schedule of your mortgage to get a clear picture of how this works.

Be smart with unexpected fortune
If you get an unexpected chunk of cash, such as a gift, prize, work bonus, inheritance, tax refund or other windfall, consider applying it directly toward paying down the principal on your mortgage.

Double-check your records
When you make extra payments, ensure that they are processed correctly. Sometimes when the lender receives a payment that is outside of the monthly cycle, they may not know what to do with it. Make a special note and keep track of the payments yourself, so you can make sure they’ve been applied to your principal.

Increase your payment
Even increasing your monthly mortgage payment by a small amount may take years off the length of your mortgage. Consider how much additional you can afford to pay every month rather than just the minimum required payment amount.

Think about a bi-weekly payment
Many lenders offer accelerated, bi-weekly mortgage payment programs which can reduce your loan term by several years, saving mortgage interest over the life of the loan.

These are just a few techniques you can use to pay off your mortgage more quickly. Remember, the fewer years you pay on your home loan, the less mortgage interest you will pay over time.

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