Blog – CTeBockhorst's Blog

The Benefits of Paying Points on Your Mortgage

August 13, 2025 by Coleen TeBockhorst

The Benefits of Paying Points on Your Mortgage
When you take out a mortgage, you may be given the option to pay points in exchange for a lower interest rate. A mortgage point, also known as a discount point, is equal to 1% of the loan amount. For example, if you re financing $200,000, one point would cost $2,000. While paying points means you ll pay more upfront, it can offer long-term savings. Understanding the benefits of paying points on your mortgage can help you decide if it’s the right move for you.

What Are Mortgage Points?
Mortgage points are fees paid directly to the lender at closing in exchange for a reduced interest rate. When you pay points, you essentially buy down the interest rate, which lowers your monthly payments. Typically, paying one point will reduce the interest rate by 0.25%, though this can vary depending on the lender and the market. While this option increases your upfront costs, it can result in significant savings over the life of the loan, especially if you plan to stay in the home for an extended period.

Lower Monthly Payments
The most obvious benefit of paying points on your mortgage is that it reduces your monthly payments. By lowering your interest rate, your monthly mortgage payment will be smaller, which can make a substantial difference in your monthly budget. For many homeowners, this can provide much-needed relief, particularly if they are dealing with high-interest rates or trying to reduce debt. Over time, the savings from lower payments may offset the initial cost of paying for points, making it a financially sound decision.

Long-Term Savings
In addition to lowering your monthly payment, paying points can result in long-term savings. The interest you save over the life of your loan can be substantial. For example, on a 30-year loan, reducing your interest rate by just 0.25% can save thousands of dollars in interest over the course of the loan. If you re planning to stay in the home for many years, paying points can be a wise investment, as the upfront cost will eventually pay for itself through the lower interest payments.

When Paying Points Makes Sense
Paying points may be a good choice if you have extra cash available at closing and plan to stay in your home for a long period. The longer you stay in the home, the more beneficial paying points can be, as it will take time for the upfront cost to be offset by the savings on your monthly mortgage payments. It s also a good idea if you re currently facing a high interest rate and want to lock in a lower rate without refinancing in the future. However, if you plan to sell or refinance in a few years, the upfront cost may not be worth the savings.

Factors to Consider
Before deciding to pay points, it s important to consider several factors, including your budget, how long you plan to stay in the home, and whether the upfront cost is feasible. You should also weigh how much you ll save with the lower interest rate versus the initial expense of paying the points. If you are unsure whether paying points is the right option, speaking with a mortgage professional can help you analyze the potential benefits based on your personal financial situation.

Cash-Out Refinance vs. Rate-and-Term Refinance: Which One Is Right for You?

August 12, 2025 by Coleen TeBockhorst

When considering refinancing your mortgage, two main options often come to the forefront: Cash-Out Refinance and Rate-and-Term Refinance. Both allow you to change the terms of your mortgage, but they serve different purposes and have distinct advantages. Understanding the differences between these two refinancing options is crucial to making an informed decision that best aligns with your financial goals.

What Is a Cash-Out Refinance?
A Cash-Out Refinance allows you to replace your existing mortgage with a new one for more than you currently owe. You receive the difference in cash, which you can use for various purposes, such as paying off high-interest debt, funding home improvements, or covering significant expenses. This type of refinance is ideal if you have built up equity in your home and need extra cash for a specific financial need. It can provide an opportunity to consolidate debt or make investments, but it does come with risks. By increasing your loan balance, you may extend your mortgage term or raise your monthly payment, so it’s important to assess whether the cash received outweighs these potential costs.

What Is a Rate-and-Term Refinance?
A Rate-and-Term Refinance, on the other hand, does not provide any additional cash but focuses on modifying the terms of your existing mortgage. This could involve adjusting the interest rate, changing the length of your loan, or switching between a fixed-rate and an adjustable-rate mortgage (ARM). The primary goal of this refinance is to reduce your monthly payments or save on interest over the life of the loan. If interest rates have dropped since you took out your original mortgage, a Rate-and-Term Refinance can be an excellent way to secure a lower rate and reduce your financial burden without taking on additional debt.

Key Differences Between the Two Options
The fundamental difference between Cash-Out and Rate-and-Term Refinances lies in the purpose and outcome. With a Cash-Out Refinance, you’re borrowing more money, whereas a Rate-and-Term Refinance focuses on adjusting your current loan without increasing the amount owed. If you re looking for quick access to funds and have the financial ability to manage a larger loan, a Cash-Out Refinance may be the right choice. However, if you want to lower your monthly mortgage payment or reduce the interest you pay without taking on extra debt, a Rate-and-Term Refinance might be the better option.

When to Choose Each Option
Choosing the right refinance option depends on your financial situation and goals. A Cash-Out Refinance could be beneficial if you need to cover major expenses or want to invest in home improvements that could increase the value of your property. Conversely, a Rate-and-Term Refinance is ideal if you’re primarily focused on saving money in the long term and reducing your overall debt without taking on extra liabilities. It s essential to weigh the costs, benefits, and potential risks of each option before making your decision.

In either case, consulting with a mortgage professional can help guide you through the process and ensure you choose the best refinancing option based on your unique needs.

What’s Ahead For Mortgage Rates This Week – August 11th, 2025

August 11, 2025 by Coleen TeBockhorst

The major report to look out for was the Trade Balance, which has decreased more than expected, suggesting that the current administration’s policies are having an impact. However, the long-term impact on the economy as a whole remain to be seen. This was followed closely by consumer credit, which came in far lower than expected, though many are predicting that consumer credit usage will grow over time. While the labor market remains constrained, the consumer market has remained stable in spite of the uncertainty brought on by the tariff policies.

Trade Balance
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $60.2 billion in June, down $11.5 billion from $71.7 billion in May, revised.

Consumer Credit
Revolving credit, mainly credit cards, declined for the second straight month in June, the Federal Reserve said. Revolving credit fell at a 1% rate in June after a 3.5% drop in the prior month. Declines in credit-card borrowing are rare: The last time revolving credit fell for two straight months was during the COVID pandemic in 2020.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw a decrease of -0.10% with the current rate at 5.75%
30-Yr FRM rates saw a decrease of -0.09% with the current rate at 6.63%

MND Rate Index

30-Yr FHA rates saw a decrease of -0.07% this week. Current rates at 6.15%
30-Yr VA rates saw a decrease of -0.08% this week. Current rates at 6.16%

Jobless Claims
Initial Claims were reported to be 226,000 compared to the expected claims of 221,000. The prior week landed at 219,000.

What’s Ahead
A heavy week with the next round of inflation data being released with both the CPI and PPI reports. It should be noted that this CPI will feature less recorded data, relying more on estimations. In addition, Retail Sales, Consumer Sentiment, and Treasury Budget should prove to be impactful data releases.

Why Retirees Are Taking Out Mortgages on Purpose

August 8, 2025 by Coleen TeBockhorst

For generations, the goal was simple, pay off your mortgage before retirement and enjoy your golden years debt-free. But today’s retirees are changing the conversation. More and more, homeowners in or near retirement are choosing to take out a mortgage on purpose, not out of necessity. And for many, it is a smart financial move.

So why would someone take on a mortgage after age 60, 70, or even 80? The answer lies in strategy, flexibility, and long-term planning.

Preserving Retirement Assets

Many retirees live on a fixed income, often supported by savings, pensions, or investment accounts. Tapping into these accounts to buy a home in cash might not always be the best financial decision. Leaving more money invested can potentially result in better long-term returns than paying for a home outright.

Taking out a mortgage allows retirees to keep their assets working for them, while still enjoying the security and comfort of homeownership. This is especially true when interest rates are favorable, or when the goal is to maintain liquidity.

Buying a New Home That Fits the Next Chapter

Some retirees use a mortgage to purchase a home that better suits their lifestyle, perhaps a single-story floor plan, a home closer to family, or a place in a warmer climate. Selling a longtime family home may free up some equity, but not always enough to purchase the new property in full.

In these cases, using a mortgage to bridge the gap provides the freedom to make a move without disrupting financial plans or delaying retirement goals.

Reverse Mortgage Purchase Options

For retirees age 62 and older, a Home Equity Conversion Mortgage for Purchase (HECM for Purchase) is a powerful option. It allows buyers to use a portion of their own funds, combine it with a reverse mortgage, and purchase a new home without taking on monthly mortgage payments.

This program can be especially attractive for those looking to downsize, relocate, or free up cash while still owning a home and living independently. It is not for everyone, but for the right borrower, it offers security, flexibility, and peace of mind.

Tax Strategy and Estate Planning

Some retirees work with financial advisors to manage taxes and preserve wealth for their heirs. A mortgage can play a surprising role in these strategies, helping to control when assets are withdrawn, how gains are taxed, and how much liquidity is available year to year.

In certain cases, leaving assets in place and using a mortgage for major purchases can improve long-term outcomes, for both the retiree and their beneficiaries.

A New Perspective on Home Financing

Today’s retirees are financially savvy, well-informed, and planning for longer, more active retirements. A mortgage, when used intentionally, can support those goals, not get in the way of them.

If you are exploring your options and wondering how home financing fits into your retirement plan, let’s have a conversation. Whether it is a forward mortgage, a reverse option, or something in between, we are here to help you make the decision that is right for you.

Your Mortgage Timeline, Backward

August 7, 2025 by Coleen TeBockhorst

For many homebuyers, the mortgage process feels like a maze. You know you want to own a home, but the path to get there can feel confusing. So let us try something different. Instead of walking forward through the process, let us walk backward, starting from the moment you get the keys and working our way to where you are now.

Seeing it in reverse can help demystify the journey and show you how each step builds on the last.

Closing Day: You Get the Keys

This is the moment you have been waiting for. On closing day, all paperwork is finalized, your loan is funded, and you officially become a homeowner. You sign your documents, funds are transferred, and the property title is recorded in your name. Congratulations, it is yours.

A Few Days Before Closing: The Final Review

Before closing, your lender completes a final review of your loan, often called a “clear to close.” We check for any last-minute changes to your credit, income, or financial status. You also complete a final walkthrough of the property to make sure everything is as expected.

One to Two Weeks Before: Underwriting Wrap-Up

Your loan goes through underwriting, where a trained underwriter reviews your documents to ensure everything meets lending guidelines. If anything is missing or needs clarification, we may ask for updates, commonly called “conditions.” Once satisfied, the loan moves to the final approval stage.

Weeks 2 to 3: Appraisal and Title Work

An appraisal is ordered to determine the home’s value. At the same time, a title company verifies legal ownership of the property and checks for liens or legal issues. These steps are key to protecting both you and the lender.

Week 1: Loan Application and Documentation

This is when you complete a full loan application and submit key documents, tax returns, pay stubs, bank statements, and photo ID. We also pull your credit report and lock in your interest rate, if you choose to do so.

A Few Days Before Applying: Getting Pre-Approved

Before you apply for a loan, you get pre-approved. This step helps you understand what you can afford and makes you a more competitive buyer. Pre-approval is based on a review of your income, assets, debts, and credit score.

Where You Are Today: Thinking About Homeownership

Maybe you are browsing homes online. Maybe you are just curious about what you qualify for. Wherever you are in the process, the most important step is getting informed. That starts with a conversation, no pressure, no commitment, just guidance.

The Takeaway

Buying a home does not happen all at once. It is a process, and each step builds on the last. Looking at it backward shows that it all starts with a simple question: “Am I ready to explore what’s possible?”

When you are ready, we are here to walk you through it, step by step, in whatever direction makes the most sense for you.

From Divorce to Fresh Starts, the Mortgage Paths No One Talks About

August 6, 2025 by Coleen TeBockhorst

When people think about getting a mortgage, the story usually sounds the same, young couple, starter home, perfect timing. But real life does not always follow that script. The truth is, many people come to the mortgage process in the middle of a major life change. Divorce, job loss, rebuilding credit, or starting over later in life, these chapters are real, and so are the mortgage paths that come with them.

If this is where you find yourself, you are not alone, and you are not without options.

Divorce and the Next Chapter

Divorce is one of the most common reasons someone might need to refinance, sell, or buy on their own. If your name is on a mortgage with your ex, there may be a need to separate financial ties, often through a refinance or buyout. Or you may be starting fresh and purchasing solo for the first time in years.

This process can feel emotional and overwhelming, especially when finances are tied up in court documents or shifting income. The key is working with a mortgage professional who understands these dynamics and can guide you through the paperwork, timelines, and financing options that support your transition.

Rebuilding After Setbacks

Job loss, credit challenges, or personal financial setbacks can leave people thinking homeownership is no longer within reach. But the mortgage world has changed, and there are more flexible programs today than many people realize.

Whether it is a low down payment loan, bank statement program for self-employed borrowers, or a second-chance plan for those recovering from bankruptcy or foreclosure, the right strategy can get you back on track. Time and planning matter, but so does working with someone who sees the potential, not just the past.

Later-in-Life Homeownership

There is a growing number of buyers starting over later in life, after divorce, after raising kids, or even after retirement. Many are surprised to learn that they can qualify for a mortgage in their 50s, 60s, or beyond.

You may be downsizing, relocating, or pursuing a lifestyle shift. Mortgage options like reverse mortgage purchases or tailored income calculations for retirees are designed to meet these needs. The key is to plan based on your goals, not outdated assumptions.

You Deserve a Mortgage That Fits Your Life, Not the Other Way Around

The traditional mortgage timeline does not apply to everyone, and that is okay. Life changes, priorities shift, and new beginnings come in many forms. The mortgage process should support that, not stand in the way.

Our role is not just to crunch numbers, it is to help you find a mortgage path that fits your current reality. Whether you are healing, rebuilding, or starting fresh, there is a way forward, and we are here to help you take the next step.

Why Getting Pre-Approved Feels So Intimidating, and Why It Shouldn’t

August 5, 2025 by Coleen TeBockhorst

For many people, the idea of getting pre-approved for a mortgage feels overwhelming. You are asked to hand over personal financial information, trust a stranger with your credit report, and answer questions you may not feel ready to face. It is no wonder some buyers delay this step, even when they are serious about purchasing a home.

But here is the truth, getting pre-approved is not something to fear. It is one of the most empowering steps you can take as a buyer.

The Emotional Roadblock

Let us start by acknowledging the emotions involved. The pre-approval process can feel personal, even invasive. You might be worried about your credit score, past financial mistakes, or whether your income is good enough. Some people assume they will be judged or turned away.

In reality, a good mortgage professional is not here to judge, they are here to guide. We understand that no financial journey is perfect. Our goal is to help you understand your options and get you into the best position possible, whether that means moving forward now or making a plan for later.

What Pre-Approval Really Does

Pre-approval gives you a clear picture of what you can afford. It shows sellers that you are a serious buyer, and it can help you move quickly when you find the right home. It also uncovers any issues early, before you fall in love with a property that might be out of reach.

More importantly, it turns uncertainty into clarity. Instead of guessing whether you are ready, you will know where you stand, and that knowledge puts you in control.

It Is Not as Complicated as It Seems

Getting pre-approved usually involves providing some basic financial documents like tax returns, pay stubs, and bank statements. You will complete a loan application and authorize a credit check. That is it.

Most pre-approvals can be completed in a matter of days, sometimes even the same day, depending on your situation. The process is secure, private, and designed to help you, not hold you back.

You Do Not Have to Go Through It Alone

A major reason people feel anxious is because they do not know what to expect. That is where I come in. My role is to walk you through each step, explain what documents are needed, and answer your questions without pressure or judgment. Whether you are buying your first home or your fifth, it is normal to have concerns. I am here to help you feel confident, not confused.

Take the First Step with Confidence

If you are thinking about buying a home, getting pre-approved is the smartest first move you can make. It is not about being perfect, it is about being prepared. You deserve to work with someone who respects your time, understands your goals, and helps make the process feel approachable.

Let us take that step together, because you are closer to homeownership than you think.

What’s Ahead For Mortgage Rates This Week – August 4th, 2025

August 4, 2025 by Coleen TeBockhorst

There were several notable releases this last week, with the largest being the PCE Index — the Federal Reserve’s preferred inflation indicator. The PCE Index may be the more accurate indicator going forward, as data collection for the Consumer Price Index has been recently cut, thereby reducing its reliability. As expected, the inflation numbers have been steadily rising with the PCE Index, indicating that impacts from the tariffs are now filtering into prices for both producers and consumers.

As a follow up, Personal Income & Spending has had a light upturn after the initial panic with the tariffs. Lastly, the job numbers from last week have been unexpectedly weak, showing a slow down of the economy overall due to many factors.

PCE Index
A key measure of inflation posted the biggest increase in four months in June as the delayed effects of higher U.S. tariffs began to filter through the economy, raising questions about whether the Federal Reserve will cut interest rates soon. The PCE index, the Fed’s preferred inflation gauge, rose 0.3% last month, the Bureau of Economic Analysis said Thursday. It was the biggest increase since February.

Personal Spending & Income
Americans spent more money in June after U.S. trade wars began to simmer down, but they were cautious spenders amid all the turmoil caused by the Trump administration’s tariffs. Personal spending increased 0.3% last month, the government said Thursday, and partly recovered from a soft patch in May and April.

Employment Reports
The U.S. only added 19,000 jobs in May compared to an initial report of 144,000, and only 14,000 in June after an initial report of 147,000, according to the BLS. Those two paltry totals, plus a July jobs gain of 73,000, means the U.S. added just 106,000 jobs over the past three months.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw a decrease of -0.02% with the current rate at 5.85%
30-Yr FRM rates saw a decrease of -0.02% with the current rate at 6.72%

MND Rate Index

30-Yr FHA rates saw a decrease of -0.17% this week. Current rates at 6.22%
30-Yr VA rates saw a decrease of -0.16% this week. Current rates at 6.24%

Jobless Claims
Initial Claims were reported to be 218,000 compared to the expected claims of 222,000. The prior week landed at 217,000.

What’s Ahead
Next week will be a fairly light week, with the most significant releases being the Trade Balance as well as the Services PMI reports.

The Risks of Using a Mortgage for House Flipping

August 1, 2025 by Coleen TeBockhorst

House flipping, the practice of buying a property, renovating it, and quickly selling it for a profit, can be an exciting and potentially lucrative investment strategy. However, financing a flip with a traditional mortgage carries significant risks that investors should carefully consider before proceeding.

Higher Interest Rates and Fees
Traditional mortgages typically offer lower interest rates for long-term homeownership, but they are not designed for short-term investments like flipping. Many lenders may charge higher rates or fees on loans for investment properties. This can increase your carrying costs, reducing your profit margin.

Longer Approval and Closing Times
Mortgage approval processes for primary residences can take weeks, while house flipping often requires quick acquisitions to capitalize on market opportunities. Delays in mortgage approval or closing can cause you to miss out on desirable properties or force you to pay higher prices.

Limited Loan Terms for Flippers
Some mortgage programs have restrictions on how soon you can sell or refinance the home after purchase. Selling too soon may trigger penalties or require repayment of certain fees. Additionally, lenders may require higher credit scores or down payments for investment loans, making financing more difficult.

Market Volatility Risks
The housing market can fluctuate rapidly. If property values decline during your renovation or holding period, you could end up selling at a loss. Mortgages with fixed monthly payments mean you must cover these costs regardless of market conditions, which can strain your finances.

Renovation Uncertainties
Unexpected costs or delays in renovation projects can increase your expenses and holding time. If your mortgage payments continue while the home is not generating income, your profits may shrink or disappear altogether.

Liquidity and Cash Flow Constraints
Using a mortgage increases your financial obligations, requiring steady monthly payments. If the property does not sell quickly, or if you cannot secure tenants for rental income, you could face cash flow challenges. This risk is especially high if you rely solely on financing without sufficient reserves.

Tax Implications
House flipping profits are often treated as ordinary income and may be subject to higher tax rates. Additionally, mortgage interest deductions may be limited on investment properties compared to primary residences. Consulting a tax professional is critical to understanding your specific situation.

Alternatives to Traditional Mortgages
Many flippers use hard money loans or private financing, which offer faster approvals and more flexible terms but come with higher interest rates. Balancing these options against traditional mortgages depends on your experience, capital, and risk tolerance.

While using a mortgage to finance house flipping may be tempting due to lower interest rates, the risks and constraints can outweigh the benefits. Careful planning, realistic budgeting, and consultation with mortgage and real estate professionals can help you navigate these challenges and improve your chances of a successful flip.

If you are considering financing a flip with a mortgage, it is important to weigh all risks and options before making a commitment.

Should You Get a Mortgage If You Plan to Move Soon?

July 31, 2025 by Coleen TeBockhorst

Deciding to buy a home when you know you might move within a few years can be a challenging choice. Many people wonder if it makes financial sense to take on a mortgage if they will not live in the property long term. The answer depends on several factors, including your personal goals, market conditions, and your financial situation.

Consider Your Time Horizon
Mortgage loans often come with upfront costs such as closing fees, appraisal costs, and sometimes private mortgage insurance. If you plan to move within a year or two, these costs can outweigh the benefits of homeownership. However, if your timeline extends beyond three to five years, buying a home may make more sense financially than renting.

Building Equity vs. Transaction Costs
One of the main advantages of buying a home is building equity with each mortgage payment. Over time, this equity can become a valuable asset. However, buying and selling a home involves transaction costs such as agent commissions, closing fees, and potential repairs or improvements needed before selling. If you move too quickly, these costs may reduce or eliminate any potential financial gains.

Market Conditions Matter
The state of the housing market also affects this decision. In a rapidly appreciating market, you might build equity faster and see gains even if you move within a few years. In a slow or declining market, you risk losing money if you sell too soon. Research your local market and seek advice from real estate and mortgage professionals.

Renting vs. Buying Costs
Compare the cost of renting with the total cost of homeownership, including mortgage payments, taxes, insurance, maintenance, and utilities. If renting is significantly cheaper, it may be better to wait until you plan to stay longer before buying. Conversely, if mortgage payments are close to or less than rent, buying could be more financially sound.

Flexibility and Lifestyle
Homeownership offers stability but less flexibility. If your job or family situation requires frequent moves, renting might be a better fit. However, if you have confidence in your ability to sell quickly or rent out the home, buying could still be a good option.

Financing Options and Strategies
If you do decide to buy with plans to move, consider mortgage options with lower upfront costs or loans that offer portability, allowing you to transfer the mortgage to a new property. Consulting a mortgage professional can help you identify programs tailored to your situation.

Buying a home when planning to move soon is a personal decision that requires weighing financial and lifestyle factors. It is important to consider how long you expect to stay, the costs of buying and selling, and your local housing market. Working with experienced real estate and mortgage professionals can help you make an informed choice.

If you are thinking about purchasing a home but expect to move within a few years, reach out to a mortgage expert to discuss your options and find the best path forward.

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