Archives for August 2015

What’s Ahead For Mortgage Rates This Week – August 17, 2015

What's Ahead For Mortgage Rates This Week August 17 2015Last week’s economic reports related to housing were few and far between other than weekly reports on new jobless claims and Freddie Mac’s mortgage rates survey.

Mortgage Rates Mixed, Jobless Claims Up

Freddie Mac reported that average mortgage rates rose for fixed rate mortgages and dropped for 5/1 adjustable rate mortgages. The average rate for a 30-year fixed rate mortgage rose by three basis points to 3.94 percent. The rate for a 15-year fixed rate mortgage rose by four basis points to 3.17 percent. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.93 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and rose from 0.40 percent to 0.50 percent for 5/1 adjustable rate mortgages.

Jobless claims rose to 274,000 last week from the prior week’s reading of 269,000 new jobless claims filed. Analysts expected a reading of 270,000 new jobless claims. New claims were lower by 1750 claims for the past month at a seasonally adjusted rate of 266,250 new jobless claims. This was the lowest level since April of 2000. Analysts consider the four week average a less volatile reading for new jobless claims than weekly readings, which fluctuate more due to transitory influences.

What’s Ahead

Next week’s scheduled reports include several releases related to housing. Expected releases include: the National Association of Homebuilders Housing Market Index, Commerce Department reports on Housing Starts and Building Permits and the National Association of Realtors® report on sales of previously owned homes.

House Hunting in a New City? Three Ways to Determine Which Neighborhoods Are Up and Coming

House Hunting in a New City? Three Ways to Determine Which Neighborhoods Are 'Up and Coming'If you’re moving to a new city and you’re looking for an affordable home in a nice neighborhood, one great way to get a fantastic home without paying sky-high prices is by choosing a home in an up-and-coming neighborhood. Communities that are starting to gentrify make it easy to find an affordable home, especially if you buy before the prices start to rise.

So how can you spot a neighborhood that’s on the rise? Here’s what you need to know.

Look For Neighborhoods Popular With Artists & Young People

Young people, artists, musicians, performers, and other bohemians tend to lead the way when it comes to neighborhood revitalizations. These are the kinds of people who typically don’t have copious amounts of disposable income, so they’re looking for something affordable. But they also want to live in a hip, trendy part of town.

And as the area gains more and more creative types, it starts to take on its own creative personality. That makes it attractive to all manner of buyers, which starts driving more and more sales. So if you want to find an up-and-coming neighborhood, just follow the artists, musicians, and Gen Y buyers.

Track The Area’s Average Days On Market

One great way to find which neighborhoods are the most popular with buyers is to track the average number of days on market for properties in those neighborhoods. Your real estate agent can help you find this information. If you notice a slow decrease in days on market over time, it’s a good sign that the neighborhood is on the up and up.

Oftentimes, in an up and coming area, the days on market will decrease before prices start to rise – which will help you get a great deal.

Look Up Building Permits To See Where The Renovations Are

You can also tell if an area is up and coming if there’s a lot of renovation activity happening. Visit your municipal government office and see if you can find information on which neighborhoods are seeing more and more building and renovation permits. Lots of construction and renovation activity in an area indicates that it’s a great place to move to.

Finding a great neighborhood is critical to being satisfied with your home purchase. There are lots of things about your home that you can change, but the neighborhood isn’t one of them – so make sure you’re happy with the area before you buy. 

Five Required Mortgage Closing Costs – And A Few Tips On How To Minimize Them

Five Required Mortgage Closing Costs And A Few Tips On How To Minimize ThemMortgages are expensive, and closing costs only add to the financial burden that homebuyers face. But with a little knowledge, you can pinpoint places to save on your mortgage closing costs and keep more money in your pocket. When you’re negotiating your next mortgage, use these tips to reduce required closing costs and keep more of your hard-earned money.

Title Insurance: Request The Simultaneous Issue Rate

Title insurance is an important add-on that no buyer should go without. At the time of closing, there may be a variety of title problems that could arise – like encroachments, easements, unpaid liens, and fraud. If a previous property owner wasn’t properly discharged from the title, they may have a claim to the property.

In the event that title ownership challenges arise later on, your title insurance will compensate you for any losses and expenses you incur when trying to prove your ownership. Buying title insurance may help you to avoid the hourly fees you’d pay a lawyer or notary to investigate your title. Typically, when you receive title insurance, you and your lender will each have separate insurance policies on the title.

You can minimize the out-of-pocket expense by asking the insurance provider for their simultaneous issue rate. This is a highly discounted rate that applies when both the borrower and lender title insurance policies are issued at the same time.

Origination Fees: Negotiable If You Have Good Credit

An origination fee is a kind of prepaid interest fee that you surrender to your mortgage broker when you apply for a mortgage. It only applies when you use a mortgage broker.

However, it’s not a mandatory fee for most buyers – even if they go through a broker. The purpose of an origination fee is to compensate the broker for the time and effort they need to invest to get your loan approved. If you have good credit and you can prove your income, then this fee isn’t necessary – and you shouldn’t have any trouble getting your broker to eliminate this fee.

Also note that an origination fee is the same thing as a broker fee. If your agreement includes both, you’re getting charged for the same service twice. Ask for one of them to be removed.

Mortgage Application Fees: Typically A Money Grab

A mortgage application fee is another common fee that you can usually avoid. This fee – which typically runs about $50 or so – is something your lender charges you in order to cover the cost of running your credit report. However, since banks and brokers order hundreds of credit reports every day, they can pull your credit report for next to nothing.

The $50 fee they charge you is, essentially, free money for them – and you can usually get them to drop this fee if you ask.

Underwriting Fees: Your Broker Shouldn’t Charge You For Underwriting

Brokers don’t underwrite loans – lenders do. That means if you’re getting your loan through a broker, you shouldn’t have to pay any kind of underwriting fee – it should already be included in the loan terms the bank set. It’s perfectly valid for a bank to charge you an underwriting fee, but ask your broker to take underwriting fees out of your agreement.

Courier Fees: Handling Documents Should Be A Standard Business Practice

One common closing cost is courier fees. These fees come in different amounts and go by different names. It may be $20 or $50, and it may be called a courier fee or a document handling fee.

Title companies might very well use couriers to send documents, but lenders most likely won’t – and $50 is excessive. Document handling fees are a standard cost of doing business – and that means they should already be included in the lender’s core billed services, not added as an extra fee. Use this argument when you ask your lender to remove the fee – they’ll likely comply.

Buying a house is expensive enough without added fees that merely complicate things. But with a mortgage professional on your side, you can figure out which costs are reasonable and which ones aren’t. Contact a mortgage professional near you to learn more about saving money on closing costs.

Real Estate Terminology 101: What Exactly Is A “Buyer’s Market”?

Real Estate Terminology 101: What Exactly Is A If you’ve been following the real estate and mortgage industry for any length of time, you’ve probably heard the phrase “buyer’s market” at some point. And although the meaning may seem apparent, it takes some study to understand what actually constitutes a buyer’s market.

Who decides whether it’s a buyer’s or seller’s market? What’s the threshold for deciding between the two? Here’s what you need to know.

Supply And Demand: Economic Factors That Govern…Everything

If you studied economics in school, you’ll probably remember an early lesson on supply and demand. Essentially, supply and demand are the two factors that influence what a commodity is objectively “worth” in a free market. They’re also a great way of characterizing whether a market is hot or cold, and whether or not it’s a good idea to invest at any particular moment in time.

In a nutshell, supply is the amount of something that is available for purchase, while demand is the amount of that same thing that people want to buy. When supply goes up while demand stays the same, buyers have more choice with respect to whom they want to buy from – and that means the price goes down because the commodity is freely available. When demand increases while supply stays the same, we see the opposite effect – the value (and price) increases because there’s not enough of the supply to go around.

The Buyer’s Market: What You Need To Know

A buyer’s market is a real estate market where the supply of homes available is greater than the demand for housing – it’s a market where there are more homes for sale than there are people willing to buy. This is a great situation for buyers, because their freedom of choice gives them a significant amount of power when negotiating prices. In a buyer’s market, sellers may have to accept a lower price in order to make the sale.

How To Navigate The Buyer’s Market

For buyers, the buyer’s market means lower prices and fewer bidding wars. But there are still some basic principles that savvy buyers ought to follow. Don’t lowball too far below the asking price, even if it is a buyer’s market – if homes in an area have recently been selling for $400,000 and the asking price is $450,000, offering $350,000 will only insult the buyers.

A buyer’s market means you can find your dream home at an affordable price, but there are certain nuances you’ll want to pay attention to. It also means that you will want to be ready to move quickly. Make sure to contact your trusted mortage professional today to get started so you are ready to move forward quickly.

Will Missing Mortgage Payments Impact My FICO Score? Yes – and Here’s How

Will Missing Mortgage Payments Impact My FICO Score Yes and Heres HowIf you’re like most homeowners, you probably believe that one missed mortgage payment won’t have a noticeable impact on your FICO score. People get behind now and then, and besides, you’ve been faithfully making payments on time for years. How bad could it be?

In truth, even one missed mortgage payment could seriously damage your FICO score. Lenders can report missed monthly payments whenever they choose – they don’t need to wait until a certain date to do it. That means even if your mortgage payment is a few days late, your lender may report it as unpaid.

So what exactly happens to a FICO score when you miss a mortgage payment? Here’s what you need to know.

Payment History: The Single Largest Factor In Determining Your Credit Score

FICO scores are calculated based on several different criteria, the largest of them being your payment history. A full 35% of your credit score is determined by how often you pay your bills on time and in full. And although FICO says that one or two late payments aren’t going to decimate your credit score, they will shave off some points that could have made the difference between a low-risk and high-risk interest rate.

Consumers With Higher Scores Have More To Lose

A 2011 FICO study analyzed the impact of late mortgage payments on consumer credit scores. The study grouped consumers into three groups based on their starting FICO score, with Consumer A having a score of 680, Consumer B a score of 720, and Consumer C a score of 780. The findings?

Even if you have a credit score of 780, being just 30 days late on a mortgage payment can result in a 100-point drop. And it can take up to three years to earn that credit back. In contrast, a consumer with a score of 680 who is 30 days late will see only a 70 point drop and can recover their original score within 9 months.

The takeaway? Contrary to popular belief, people with high credit scores stand to lose more from a missed payment than people with low credit scores.

There Are Varying Degrees Of “Late”

One common misconception is that if you miss a mortgage payment, it doesn’t matter if it’s 30, 60, or 90 days overdue. The mainstream thinking is that late is late is late. But that’s not how FICO sees it.

Although borrowers with credit scores under 700 won’t see much of a decline after 30 days late, borrowers with a higher credit score will. If you have a credit score of 720 and you’re 30 days late on your mortgage, your score will fall to about 640. If you’re 90 days late, that score will fall again this time, to about 620.

That means if you miss a mortgage payment, you need to get in touch with your lender as soon as possible in order make repayment arrangements and hope they haven’t yet reported the overdue payment. It’s your best shot at protecting your FICO score.

Credit scores can be vulnerable to all sorts of factors, which is why if you’re looking into mortgages, you’ll want to consult an expert. A qualified mortgage professional can help you find a mortgage you can afford, so your credit will stay intact. Contact your local mortgage expert to learn more.

What’s Ahead For Mortgage Rates This Week – August 10, 2015

Whats Ahead For Mortgage Rates This Week August 10 2015This week’s scheduled economic news includes reports on construction spending, a survey of senior loan officers, and reports on labor markets including ADP private sector jobs, the federal government’s reports on non-farm payrolls, core inflation and the national unemployment rate.

Construction Spending Slows, Loan Officers Survey Suggests Growing Confidence

Construction spending fell in June after the May reading was revised upward to 1.89 percent from the original reading of 0.90 percent. Spending for residential construction rose by 0.40 percent, while non-residential construction spending remained flat. The seasonally-adjusted annual outlay for construction was $1.06 billion in June.

Analysts continue to note a trend toward construction of smaller residential units including condominiums and apartments, with an emphasis on rental properties. This supports reports that would-be homebuyers are taking a wait-and-see stance to see how factors including rising home prices, fluctuating mortgage rates and labor market conditions perform.

According to a survey of senior loan officers conducted by the Federal Reserve, mortgage lenders reported that mortgage applications increased during the second quarter and indicating that financial constraints on consumers may be easing. According to the survey of 71 domestic banks and 23 foreign-owned banks, 44 percent of respondents reported moderate increases in loan applications, while only 5 percent of survey participants reported fewer loan applications.

Some banks surveyed reported easing mortgage approval standards, but fewer lenders eased standards than in the first quarter. Further supporting growing confidence among lenders, the Fed survey also reported that large banks were easing consumer credit standards for auto loans and credit cards.

Mortgage Rates Fall, Jobless Claims Rise

Freddie Mac reported that average mortgage rates fell across the board last week with the average rate for a 30-year fixed rate mortgage lower by seven basis points to 3.91 percent; the average rate for a 15-year fixed rate mortgage fell by four basis points to 3.13 percent, and the average rate for a 5/1 adjustable rate mortgage was unchanged at 2.95 percent. Discount points for all loan types were unchanged at 0.60 percent for 30 and 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose from the prior week’s reading of 268,000 new claims to 270,000 new claims, which matched analysts’ expectations. In other labor-related news, the government reported a national unemployment rate of 5.30 percent in July; this was unchanged from June’s reading.

The ADP employment report for July showed fewer jobs were available in the private sector. June’s reading showed that private sector jobs grew by 229,000 jobs; July’s reading fell to 185,000 private sector jobs. According to July’s Non-farm Payrolls report, 215,000 new jobs were added in July as compared to expectations of 220,000 jobs added and June’s reading of 231,000 new jobs added.

The Federal Reserve’s Federal Open Market Committee (FOMC) is closely monitoring job growth and inflation rates as it contemplates raising the target federal funds rate. Core inflation grew by 0.10 percent in June; which was consistent with May’s reading and expectations. The FOMC recently cited the committee’s concerns about labor markets and lagging inflation. The Fed has set an annual growth rate of 1.65 percent for inflation for the medium term; this benchmark is part of what the Fed will consider in any decision to raise rates.

What’s Ahead

This week’s scheduled economic reports include reports on retail sales and consumer sentiment in addition to usual weekly reports on mortgage rates and new jobless claims.

 

 

Tiny, but Cozy: 3 Ways to Furnish Small Spaces to Make Them Feel Much Larger

Tiny, but Cozy: 3 Ways to Furnish Small Spaces to Make Them Feel Much LargerWhen decorating a small space, there is a general desire to make the space look and feel larger than it is while also meeting basic functional needs in the room. For example, there may be a need to accommodate seating for a number of people in a living room, but there also may be a desire to provide ample space for foot traffic so the area does not feel cramped. By following a few important tips, it is possible to furnish smaller spaces so that they are functional and do not feel cramped.

Think About Decorative Storage Solutions

One of the most common factors that will make a small space seem cramped and uncomfortable relates to clutter, and because of this, focusing on storage solutions can go a long way toward making the space feel larger than it is. Storage solutions can be decorative, and they can be a true benefit to the décor in the room. Think about functional storage features like an ottoman with hidden storage features, an entertainment center with cabinets and shelves or a tall bookshelf that can hold many of the items that are needed in the room.

Decorate The Space Vertically

For most people, there is a general inclination to decorate a room horizontally and to fill the floor space with furnishings, but this can be detrimental when decorating a smaller room. In a smaller space, decorating the space vertically by using bookshelves, storage cabinets and other features that rise above the ground rather than that sprawl across the ground can be beneficial. The goal should be to decorate the room fully while leaving ample space for foot traffic to maneuver through the room comfortably.

Use Lighter Colors

Darker colors used in a smaller room can make the space feel closed off and cramped. Using lighter colors can brighten the space and make it seem more airy. While using shades of white and beige throughout a space may not be ideal in all rooms, these can be incorporated into various aspects of the décor to improve the spacious feel of the room.

Smaller spaces can be challenging to decorating, but there are different tricks and tips that can be used to make the space look and feel larger than it is. Some tips may improve the functional use of the space, and others may simply play tricks on the way to create the illusion of space. All can be used together to create the feeling of a larger, more inviting room.

3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to Pay

3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to PayIf you’re in the process of buying a home, you probably have your deposit and monthly mortgage charges in a spreadsheet, along with a chart of your other expenses and your monthly income. But when it comes to buying a home, there are lots of different costs that will come into play – and it’s easy to forget something. When you’re preparing to close on your new home, make sure you consider these three closing costs that most buyers forget.

Home Inspection Fees: A Small Charge For Peace Of Mind

Most home purchase agreements are contingent upon a successful home inspection – and if you’re planning to buy a home, you should definitely have it inspected before you buy it. However, home inspectors don’t work for free, and you’ll have to pay a home inspector for a thorough evaluation of the premises.

Home inspection fees depend on the kind of property you’re buying, and can vary depending on your location. For a condo unit, you will typically only need to pay about $250, but a single-family home might cost up to $500. Luxury properties are often more expensive, sometimes even running as high as $1,500.

Private Mortgage Insurance: Obligatory With Small Down Payments

If you’re only planning to make the minimum down payment on your home, you’ll need to buy mortgage insurance. Mortgage insurance protects the lender in the event that you default on your loan. This is an added cost that your lender pays, and in general, almost every lender will pass the cost on to you.

You can pay for your mortgage insurance in one large payment, or you can add it to your monthly mortgage payments. Note that if your down payment is less than 20% of the purchase price, you’re legally required to buy mortgage insurance.

Lender Fees: Additional Fees to Process Your Mortgage

One category of closing costs that buyers often forget is lender fees. Lender fees are fees that your mortgage lender will charge for processing the transaction of the loan. These can include appraisal fees, credit report fees, processing and application fees, and administration fees for underwriting.

These fees can range depending on the lender, but in many cases they exceed $3,000. You’ll want to budget about $3,500 to $5,000 to be safe.

Buying a house is a major undertaking, and there are lots of ways that the process could go awry. But a good mortgage professional can help you navigate the process and get the home and the mortgage you’ve always wanted without any issues. Contact your trusted mortgage expert to learn more.

The Down Payment: Four Great Reasons To Make The Largest Down Payment You Can Afford

The Down Payment: Four Great Reasons To Make The Largest Down Payment You Can AffordIf you’re looking for a new home, you’ve probably heard lots of advice about down payments. About how it’s okay to just have a five percent down payment – you’ll still get approved. About how you should make the down payment as small as possible to avoid cash flow problems.

In truth, you’re actually better off making the largest down payment you can possibly afford. Even if you have to slice up other areas of your budget, save for a few more years before you buy, or take a second job on the weekends, it’ll be worth it in the end. Here are just four reasons why you should make the largest down payment possible.

You Can Avoid Useless Insurance Premiums

Although you can buy a house with as little as a five percent down payment, it’s in your best interest to make a much larger down payment if you can. Mortgage insurance premiums can be as high as one percent of the loan’s value, which means until you’ve invested 20 percent of the home’s value in equity, you’ll have to pay an extra one percent every year. If you pay at least 20 percent of the purchase price upfront, you’ll be able to avoid having to get private mortgage insurance – so you keep more of your money in your own pocket.

You’ll Pay Much Less Interest

The less you have to borrow, the less you have to pay back – for more reasons than one.

When you take out a mortgage, the interest rate applies to the principal amount that you owe – and over time, the interest can run on top of interest, quickly outpacing the original sum. Having a larger down payment means the interest applies to a smaller sum. And that means it accumulates slower and ends up being a smaller amount over time.

You’ll Have More Ammunition In A Bidding War

Offering up a larger down payment is also a great way to make sure you get your dream house, especially if it’s a popular property with multiple offers. The seller isn’t just going to consider who offers the most money – they’re also going to consider which buyer is most likely to get a mortgage. After all, failing to get a mortgage is one of the most common reasons why real estate deals fail.

If you can show that you’re able to make a larger down payment, you’ll have a better shot at getting a mortgage – and that means sellers will prioritize you over other buyers.

You’ll Get A Great Start On Building Equity

Your home equity is equal to the difference between your home’s fair market value and the amount of debt invested into the home. If you don’t have enough equity in your home and home prices in your neighborhood fall, you may find yourself in a situation where you owe more money on your home than it’s worth – a phenomenon known as negative equity. By making the largest possible down payment you can, you’ll have a great head start on building your home’s equity – which may help you profit if you decide to sell in the future.

Buying a house isn’t easy, but making the largest down payment you can afford will give you a great financial head start on home ownership. Want to learn more about how to afford the home of your dreams? Contact your local mortgage professional today for practical advice to help you maximize your down payment.

A Guide for Those Intrested In Refinancing a Traditional Mortgage to a FHA Mortgage

A Step-by-Step Guide to Refinancing a Traditional Mortgage to a FHA MortgageRefinancing a mortgage can provide a homeowner with many benefits, and some may be interested in refinancing their traditional mortgage into an FHA mortgage to take advantage of low interest rates. Depending on the specific circumstances, this step may lower the monthly payment, reduce interest charges, adjust the loan term so that it is more beneficial for achieving financial goals. Those who are interested in refinancing their mortgage may consider these steps.

Understand the Rules and Requirements

There are specific rules in place regarding refinancing under the FHA program. For example, the loan amount may be up to 96.5 percent of the value of the home, but the homeowner cannot take cash out of the refinance transaction. If cash is taken out, the loan-to-value limit under the FHA program is usually 86 percent of the property value.

These limits are in place for loan amounts that are $417,000 and under. Loan amounts that are between $417,000 and $729,750 will fall under a different set of rules. Homeowners should be aware of these rules to ensure that the FHA program is the best fit for their unique goals. If a FHA Mortgage does not fit your needs there are other optioans that may suit your situation better.

Review Goals and Current Mortgage Details

The next step for homeowners to take is to review their own financial goals and to define their reasons for refinancing. In addition, it is important for homeowners to contact their current mortgage company to learn more about their current interest rate, if there is a prepayment penalty and the current loan balance. Estimating the property value is also important. Homeowners may have a reasonable idea about property value, or they can contact a real estate agent for a valuation. When all of this information is taken into account, the homeowner will have a better idea about what to expect from refinancing.

Each homeowner will be in a unique situation regarding current loan details, property value and goals that they want to achieve through refinancing. It can be confusing to decide if refinancing is the right move to make, and it can be even more complicated to determine which loan program is a best-fit for the goals of the homeowner.

Those who are interested in refinancing their traditional mortgage into the FHA loan program or other refinancing program should contact their trusted mortgage professional soon to discuss the options and to determine if this is the best fit for their situation.