What’s Ahead For Mortgage Rates This Week – March 5th, 2018

Whats Ahead For Mortgage Rates This Week – March 5th 2018Last week’s economic releases included readings on new home sales, pending home sales and Case-Shiller Home Price Indices. Construction spending and consumer sentiment reports were also released, along with weekly readings on average mortgage rates and new jobless claims.

New Home Sales Drop in January

New home sales were reported at a seasonally-adjusted annual rate of 593,000 sales in January according to the Commerce Department. Analysts expected a rate of 693,000 sales based on December’s upwardly revised rate of 643,000 sales of new homes. January’s reading was 7.80 percent lower than for December; January’s reading was one percent lower than for January of 2017.

The average price of a new home was $323,000, which was 2.40 percent higher than for January 2017. The current supply of new homes for sale is 15 percent higher year-over-year, which is expected to ease low inventories of available homes.

Meanwhile, pending home sales were 4.70 percent lower in January than for December, which was unchanged as compared to November. Analysts said that sales activity, which is typically slow in January, was not likely a concern overall.

Case-Shiller Reports Higher Home Prices in December

Home prices were 6.30 percent higher year-over -year in December according to Case-Shiller’s 20-city home price index and were 0.60 percent higher month-to-month. The top three cities leading year-over-year home price growth were Seattle, Washington at 12.70 percent, Las Vegas, Nevada with 11.10 percent growth and San Francisco, California with 9.20 percent growth in home prices.  

None of the 20 cities in the index saw home prices fall in 2017 even after adjustments for inflation.

Construction spending was unchanged in January as compared to analyst estimates of 0.40 percent growth in spending. Builders cited concerns over higher materials prices and shortages of lots and skilled labor. Winter weather was also a factor in lower construction spending.

Mortgage Rates Rise New Jobless Claims Fall

Freddie Mac reported higher average rates for fixed rate mortgages last week; rates for 5/1 adjustable rate mortgages were lower on average. Mortgage rates for a 30-year fixed rate mortgage averaged three basis points higher at 4.43 percent. Rates for a 15-year fixed rate mortgage averaged 3.90 percent and were five basis points higher.

The average rate for a 5/1 mortgage was three basis points lower at 3.62 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Mortgage rates rose for the eighth consecutive week, which caused concerns about affordability for first time and moderate-income home buyers. Combined effects of rapidly rising home prices and higher mortgage rates may sideline buyers.

New jobless claims fell by 10,000 to 210,000 first-time claims filed last week. Analysts expected 226,000 new claims based on the prior week’s reading of 220,000 new claims filed. In other news, the University of Michigan reported a lower reading for consumer sentiment in February with an index reading of 99.7 against an expected reading of 100.0 and January’s reading 0f 99.9.

Whats Ahead

This week’s scheduled economic news includes multiple readings from the labor sector along with weekly reports on mortgage rates and new jobless claims.


Can Your Waistline Be Affected By Your Kitchen Colors?

Have you ever walked into your kitchen and instantly felt hungry?Have you ever walked into your kitchen and instantly felt hungry?

Rarely do people think about the colors that they choose to paint their kitchens. They are often too busy worrying about whether the kitchen will match the rest of the home, or whether the colors will be satisfactory to the rest of the household.

However, as much as you might want to have a special color in your kitchen, your brain is very likely wired in a way to react in ways that you may not have intended! When painting and decorating your kitchen, you may want to think about the process in a way many people do not — how the colors you choose will affect the way in which you eat. 

Colors affect a lot of our subconscious thinking. As behavioral psychologists have documented, the presence of specific colors your the kitchen can change your eating habits and your cravings for food.

Here are some examples :

Red: The color red increases your appetite. This is why so many restaurants paint their walls red. Although associated with romance and passion, red is also a color which promotes hunger. Furthermore, it has been noted that the color red in your kitchen can influence high blood pressure.

Orange: The color orange is a “stimulating” color; increasing oxygen supply to the brain and providing a mental boost. An orange-themed kitchen may stimulate your appetite, therefore, and make over-eating more likely.

Gray: Gray can be an ideal appetite-suppressing color for your kitchen. This is because, psychologically, gray is calming and relaxing, and it neutralizes anxiety. Gray can arrest binge eating and impulsive snacking. It’s also a color which home stagers recommend for its neutrality.

Blue: The color blue is calming, which can slow your eating speed, and prevent you from over-eating. When decorating your kitchen and dining room, therefore, using blue wallpaper or blue paint; and blue placemats, for example, can result in “slower” eating and fewer feelings of fullness.

And there’s more about blue! There are very few foods that are naturally blue outside of blueberries and some varieties of potatoes. So over time your subconscious mind has trained itself to be wary of any food that is blue. Some weight loss programs suggest eating on a blue plate and even putting a blue light in your refrigerator!

So if you’re concerned about the amount you or your family is eating, painting your kitchen blue may very well help curb the appetite.

Whether you’re a home buyer, a home seller, or just getting ready to remodel, consider the influence of colors in your home. They do more than just “match the next room” — they affect your food and drink cravings as well.

Should You Get Pre-Qualified Or Pre-Approved For Your New Home Purchase?

How Pre-Qualifying Helps You Find The Right New HomeOften times, home buyers can be disappointed when they find their dream home only to discover they are not able to get a mortgage to purchase the property. There are methods that potential buyers can use to ensure this does not happen to them.

One of the options is to ensure you obtain a pre-qualification from your lender. It is important to understand the difference between a pre-approval and a pre-qualification. While both are helpful, they do not carry the same weight.

What are the differences between these options?

A pre-qualification allows a borrower to determine how much money they may be able to borrow. For most borrowers, this allows them to start the house-hunting process with a mortgage amount in mind. Borrowers should understand, while the loan amount can be calculated, changes in interest rate as well as the borrowers credit are not evaluated in this process.

In general, the lender will request specific information from the borrower including income and expenses as well as ask about their credit. None of this information is typically verified by the lender through an underwriting process before sending a pre-qualification letter.

On the other hand, a pre-approval requires the borrower to provide a number of documents to the lender, typically the same documents borrowers need to apply for a loan. The documentation supplied to the loan professional is then treated as a full purchase loan application and run through underwriting to secure a conditional commitment from a bank or mortgage lender.

Oftentimes, this difference between the two options leads borrowers to speculate as to whether a pre-qualification is useful.

Why pre-qualification helps in your home hunting?

There are many valid reasons why potential homebuyers should ask about pre-qualifying for their mortgage. Some of these include:

  • Home prices – if a borrower is eligible for a mortgage of $200,000 they will know they will have to seek homes in a specific price range. If a borrower is only able to put down 10 percent, they know the maximum home price they can afford is $220,000.
  • Down payments – in most cases, borrowers who can afford to put down a large down payment will have more options available to them. In some cases, understanding how much mortgage a borrower may qualify for beforehand allows them to save additional money for a down payment.
  • Estimates of dollars needed – another advantage to pre-qualifying is borrowers can get an idea of what additional closing costs they may need to qualify for a mortgage. This can be very helpful for a first time home buyer.

Pre-qualifying for a loan can save a home buyer from being disappointed. There are few things that are more upsetting than finding a home you love only to discover you are not eligible for the loan you need in order to purchase that home.

Typically, when you are seriously looking for your next home it would be a good idea to move to the full pre-approval process in order to get the most leverage when you find the home of your dreams.

As always, it’s a good idea to consult with your trusted mortgage professional for both loan pre-qualification as well as pre-approval.


DIY Home Improvement: A Much Better Bedroom in Just a Few Hours

DIY Home Improvement: A Much Better Bedroom in Just a Few HoursTaking on the task of renovating your home can seem like an awful lot of work, but there are ways to do this that require a lot less energy and just a little bit of money. Whether you’re looking for an instant home revamp or are readying your home to sell, here are some ideas for how you can improve your bedroom in no time.

Make It Clutter Free

It might sound too simple, but just clearing away the extraneous stuff that can accrue in your bedroom will instantly improve the look of your space. Instead of doing it over time, set aside an afternoon to go through the excess and clean up extra receipts, junk left in the corner and any unpacked boxes. Cleaning up the stuff that’s been lingering may seem like a small step, but it will give way for what comes next.

A Coat Of Paint

While adding a coat of paint may seem like a lot of work for little reward, there are few things that will improve the appearance of a room like a shiny coat of paint. It may be tempting to go for a bright shade, but choose a neutral tone that will age well and can be complimented with bright accents from pillows or a colorful throw. Getting out the paint may seem like a big job at first, but it’s one of the best ways to upgrade the look of your bedroom.

Find A Unique Piece

It’s one thing to have a great coat of paint and a clutter-free space, but having a unique piece of furniture or a lighting fixture that you can call your own will add that special touch to your space. While there are plenty of options to go with, you may want to choose a vintage item like a claw-footed night table or an embellished chandelier that will instantly dress up a lackadaisical room. Instead of going with something expensive, choose something that you can dress up or re-paint for a modern effect.

It’s often the case that renovating your home or your bedroom can seem like an expensive project, but there are ways it can be done that are both economical and will add instant spark. If you’re currently renovating your home and are planning to put it on the market in the future, contact your local mortgage professional for more information about financing your next home.

How To Successfully Use Your Down Payment to Achieve Your Home Buying Goals

How To Successfully Use Your Down Payment to Achieve Your Home Buying GoalsWhen you are considering purchasing a home , understanding the lending guidelines regarding a down payment is important. 

Here are a few key tips to consider:

Gifting of a Down Payment

There are some programs that will allow you to use a gift for your home down payment. However, before you assume this, make sure you talk to your loan officer. Generally speaking, the lender will require the person making the gift to provide a letter stating the money was a gift and does not require repayment.

Windfalls as a Down Payment

When people hit the lottery or come into money through an inheritance, one of the first things they may consider is buying a new home. However, it is important ot keep in mind that lenders will typically want to know exactly how you came up with your down payment.

Borrowers still need to show a “paper trail” of how they came into money. If your down payment amount has not been “seasoned” the lender may not accept your loan.

What is a Seasoned Down Payment?

Generally speaking, your loan officer will want a “paper trail” to document your down payment. Most lenders require down payment funds to be at a minimum 60 days old. For example, let’s assume a borrower did win the lottery: If they deposit the funds into their checking account and leave it there for 2 months or more, the funds would be considered seasoned.

However not all lending guidelines are the same. Some lenders require even more seasoning to consider the money in your account truly yours. So it’s a good idea to plan well ahead of your purchase date to get your down payment funds in your account if you plan on getting money from another source.

Lender restrictions on down payment funds are fairly common. If you are uncertain if your funds meet the lender’s criteria, talk to your loan officer. In most cases, a lender will require at least one-half your down payment fall into the category of seasoned funds.

The One Place You Can Borrow For Your Down Payment

Some borrowers may use their retirement account or other savings to make their home down payment.  And most lenders are perfectly fine with you borrowing against your own savings in a 401(k) or IRA account. Of course you will likely want to discuss the tax implications with your accountant or financial advisor before making these withdrawals.

Don’t wait until the last minute to discuss your down payment with your loan officer because you may wind up disappointed. Keep in mind, every lender has different requirements and these rules may not apply to your lender.

What’s Ahead For Mortgage Rates This Week – February 26th, 2018

Whats Ahead For Mortgage Rates This Week – February 26th 2018Last week’s economic releases included minutes from the most recent FOMC meeting, a report on January sales of pre-owned homes and weekly readings on mortgage rates and new jobless claims.

FOMC Minutes: Economic Strength Hints at More Rate Hikes

Minutes of the January 30-31 meeting of the Fed’s Federal Open Market Committee indicated that most Committee members believe that inflation will reach the Fed’s goal of 2.00 percent. Members found that the economy was stronger since 2017 and expected “a gradual upward trajectory of the federal funds rate would be appropriate.”

While analysts expect three rate hikes in 2018, the FOMC voted to hold the federal funds rate at 1.25 to 1.50 percent. Most FOMC members expected that the goal of 2 percent inflation was within reach in 2018.

Analysts were not as confident about reaching to Fed’s inflation goal. Instead, the said that in response to tax cuts, the labor market could exceed full employment and lead to higher wages and surging inflation.

A minority of FOMC members said that inflation could fall short of the Fed’s goal as retailers would compete by lowering prices.

Existing Home Sales Drop in January

According to the National Association of Realtors®, sales of previously-owned homes dipped from a seasonally-adjusted annual rate of 5.56 million sales to 5.38 million sales in January. This reading was the lowest in more than three years; it could indicate that the shortage of homes for sale has reached critical mass.

Months of short supplies of homes for sale have caused rapidly rising home prices, buyer competition and fewer choices of homes for would-be buyers. Real estate pros have repeatedly said the only solution to shortages of available homes is that builders must build more homes but increasing materials costs and labor shortages have caused construction pace to lag demand for homes. Affordability continued to weigh on moderate-income and first-time buyers.

Mortgage Rates Rise for 7th Consecutive Week

Freddie Mac reported higher mortgage rates on average last week. The average rate for a 30-year fixed rate mortgage was two basis points higher at 4.40 percent; rates for a 15-year fixed rate mortgage averaged one basis point higher at 3.85 percent. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 3.65 percent.

New jobless claims dropped by 7000 first-time claims and regained a 45-year low. 222,000 new claims were filed last week as compared to expectations of 229,000 new claims and 230,000 new claims filed the prior week. Real estate pros and analysts cite strong labor markets as driving housing markets and high demand for homes. Workers with job security and options for advancement in their careers are more likely to consider investing in a home than paying rising rents.

Whats Ahead

This week’s scheduled economic releases include Case-Shiller Home Price Indices, readings on new and pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims will be released along with a report on consumer sentiment.

3 Great Homebuying Tools Millenials Have Available to Them Right Now

Millennials Have Great Home Buying Tools AvailableThe economy seems to be heating up rapidly, but home loan interest rates are still at historically low levels. Real estate values have climbed a bit across the country, but low interest rates and affordable prices makes for an excellent opportunity for new homeowners to get into their first home before it rates and prices rise higher.

According to the recent studies, there were 4 consecutive quarters of homeownership growth where new homeowners outpaced new renters.  The solid economic fundamentals are likely responsible for creating this excellent home buying environment.

Over the past year, Millennials seem to be on board and helping to drive the upward trend. They represent the next generation of homebuyers, and as this group is getting older, they are getting married more frequently. They are also starting families which tend to encourage the idea of home ownership. In fact, a recent analysis showed that home ownership is 30% higher among married couples than non-married couples.

Specifically, low unemployment numbers and a progressively aging pool of Millennials with a desire for home ownership appear to be driving this trend. US homeownership actually increased over 2017 to an unadjusted rate of 64.2%, which was a significant uptick from the previous year at 63.7%.

Here are a few very helpful tools are still available for new buyers:

  • Any homebuyer with military status can take advantage of Veterans Administration loans with far better rates than the normal market, making mortgage payments cheaper.
  • Those buying in rural areas can take advantage of rural homebuyer’s assistance programs provided by the U.S. Department of Agriculture to help people move to small towns and similar communities.
  • The Housing and Urban Development Agency provides HUD loans that make it very affordable for those with limited income to purchase HUD-owned homes as first-time buyers and get into real estate.

Of course, the big response from Millenials is how do I earn more to even get started. Like Generation X folks before them, Millenials can’t wait for a job to be made available on a platter.

While looking, many smart folks have started their own businesses online or in their local marketplace. If a current job is enough to cover current bills, a second income can be entirely dedicated to saving, which can generate thousands of dollars quickly.

Even a part-time second job that creates $1,000 a month produces $12,000 a year and in two years enough for a sizable down payment. 

If you have questions about buying your next home, give us a call. We’d be happy to help!

3 Tips To Consider When Buying A Home With An FHA Mortgage

Tips to Sidestep Common FHA Loan Problems

FHA loans are becoming increasingly popular these days as potential homeowners may not able to qualify as easily for conventional mortgages.

The FHA insures some higher-risk loans, in turn allowing borrowers with low down payments and less than perfect credit to purchase homes and bolster the housing market.

However, while getting through the loan process with an FHA mortgage loan is not necessarily more difficult than with a conventional or conforming loan, there are some issues that you will want to be aware of.

Property Condition

You can’t buy just any property with a FHA loan, or any other loan for that matter. All lenders are concerned with the condition of a property, especially as it relates to livability and safety. 

Major deficiencies in a home will almost always be noted when the home is seen by the FHA appraiser. The appraiser must deem it to be livable, without any conditions that could jeopardize health or safety. 

Sometimes you can get the seller to make the needed repairs to pass the lender requirements. In other cases, you may want go an alternate route. The FHA 203K streamline loan allows you to borrow up to $35,000 for home repairs to bring the house up to code.

Low Appraisal

The primary role of the appraiser is to estimate it’s market value. These estimates are based on the property’s features and a comparison to similar properties that have sold recently. If the appraisal is low, the loan funding could fall through because the FHA underwriting guidelines (along with almost all conventional guidelines) will not let you borrow more than the home’s appraised value. You can, however, add to the amount you bring in to closing if you prefer to compensate for a low appraised value.

Rather than trying to scrape together a bigger down payment, you may want to take the information to the seller to renegotiate the purchase price. The seller will likely recognize that other buyers would be in the same boat, leading the seller to agree to a lower purchase price.

High Debt-to-Income Ratio

Debt to income ratios are a concern with virtually every type of mortgage loan on the market today. Your FHA loan may encounter a snag in the underwriting process if your total debt payments, including your new mortgage, would be a high percentage of your income.

FHA has an automated underwriting program called TOTAL Scorecard which uses an algorithm to determine a borrower’s qualification. The process is quick, and often you can make up for a high debt-to-income ratio with other compensating factors, like a larger down payment or a cash reserve of several months of mortgage payments.

If you have any questions regarding FHA loans or any other home financing questions, please give us a call!

Questions and Answers Regarding Escrow Accounts

Questions and Answers Regarding Escrow AccountsWhether you are purchasing a new home or you are considering applying to refinance your home, chances are the lender will require an escrow account. These accounts are often a source of confusion for homeowners. In reality, these accounts benefit the homeowner and help protect the lender.

What is an escrow account?

Escrow accounts are sometimes called “impound” accounts. These accounts are set up to help manage payments of property taxes and homeowner’s insurance. Depending on the individual requirements of the lender, you may be asked to pay as much as one-quarter of these upfront and they will be put into the account for the purposes of making payments.

Who controls escrow accounts?

Lenders have complete control over escrow accounts. However, homeowners are entitled to receive an annual statement advising them of their escrow balance. If there is an increase or decrease in insurance payments through the year, a homeowner may request the lender evaluate the escrow account and change the amount that is paid.

Is interest paid on escrow accounts?

There is no mandate to pay interest on escrow accounts. When you refinance your home, the funds for your taxes and insurance are calculated into your overall payment. The portion that is to be used to pay taxes and insurance is placed in escrow. Federal laws do not require lenders to pay interest on these accounts.

What happens if I sell my home or refinance?

When you sell or refinance your home, your escrow account will be credited at closing. The amount may be used to lower your out-of-pocket costs or may be turned over to you as a direct payment.

What happens if there is not enough/too much money in escrow?

If your lender has underestimated your escrow payments, they may request you send an additional payment to make up the difference. In the event you are paying too much into escrow, your lender has the discretion to release the overage amount directly to you. In most cases, shortfalls or overages of $50 or less are typically not a major concern.

If your lender requires you to have an escrow account for the taxes and insurance portion of your mortgage payment, it can be very helpful. Escrow accounts help ensure you do not have to come up with a large payment once a year for insurance or quarterly for taxes.

In some cases, if a lender does not require an escrow account, as a borrower, you may request they escrow your taxes and insurance for convenience.

What’s Ahead For Mortgage Rates This Week – February 20th, 2018

What’s Ahead For Mortgage Rates This Week – February 20th, 2018Last week’s weeks economic releases included readings on the NAHB Housing Market Index, housing starts and building permits issued and consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

NAHB: Builder Confidence in Housing Market Holds Steady in February

The National Association of Home builders reported an index reading of 72 for its Housing Market Index in February. January’s reading was also 72; readings over 50 indicates that more builders than fewer are confident about housing market conditions.

Three readings comprising the overall NAHB HMI reading include builder confidence in current market conditions, which was one point lower in February at 78. Builder confidence in housing market conditions in the next six months rose two points to an index reading of 80.

This was the highest reading for future housing market conditions since before the recession. Builder confidence in buyer traffic in new housing developments was unchanged at 54.

Builders surveyed cited strong labor markets and short supplies of pre-owned homes as fueling confidence in current market conditions, but identified ongoing labor and lot shortages and rising materials costs as concerns for builders.

Housing Starts, Building Permits Issue Rise in January

High builder confidence was reflected in readings for housing starts and building permits issued in January. Housing starts rose to their highest level in more than 10 years. The annual pace of housing starts reached 1.326 million starts.

January’s reading exceeded expectations of 1.324 million starts and December’s reading of 1.209 million housing starts. January’s starts reflect strong builder confidence readings and may also signal future relief for short supplies of available homes and high demand for homes in many metro areas.

High demand for homes has caused rapid appreciation in home values and sidelined first-time and moderate-income buyers in areas with high home values. According to the Commerce Department, building permits issued rose to 1.396 million from December’s1.380 million starts annually.

The University of Michigan reported the second highest reading for consumer sentiment in 14 years. February’s reading of 99.9 was higher than expectations for a reading of 95.3 and January’s reading of 95.7Analysts said that recent tax cuts likely stabilized consumer outlook in spite of volatile financial markets.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates for all three types of mortgages it tracks in its Primary Mortgage Market Survey. Rates for a 30-year fixed rate mortgage rose an average of six basis points to 4.38 percent.

The average rate for a 15-year fixed rate mortgage was seven basis points higher at an average of 3.84 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.63 percent, which was six basis points higher than the prior week.

New jobless claims were higher last week with 230,000 new claims filed, which matched expectations and exceeded 223,000 new jobless claims filed the prior week.

Whats Ahead

This week’s economic releases include readings on existing home sales along with weekly readings on mortgage rates and new jobless claims. Financial markets were closed on Monday for President’s Day.