Blog – CTeBockhorst's Blog

What’s Ahead For Mortgage Rates This Week – November 12th, 2019

November 12, 2019 by Coleen TeBockhorst

What’s Ahead For Mortgage Rates This Week – November 12th, 2019 Last week’s scheduled economic news included the Federal Reserve’s survey of loan officers and the University of Michigan’s report on consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

Fed Survey of Loan Officers Finds Banks Tightened Lending Standards

The Federal Reserve’s survey of financial institutions found that lenders tightened standards for credit card and other consumer loan approval. Lending officials said that concerns over the economy drove decisions to tighten standards for new credit cards, auto loans, and personal loans.

Lenders also tightened lending requirements for new borrowers in January and March. January’s revision to lending requirements was the strictest since 2009.

Lending officials surveyed said that less tolerance for risk and concerns over new borrowers’ ability to repay loans drove decisions to tighten loan approval requirements. Growing concerns over student loan debt may have influenced lenders’ reluctance to extend credit to new borrowers.

Survey respondents said that they did not tighten requirements for residential real estate loans, but did increase restrictions on commercial real estate loans. Survey participants included 76 domestic banks and 22 foreign banks and agents of federal banks.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week after the prior week’s spike. Rates for 30-year fixed-rate mortgages fell nine basis points and averaged 3.69 percent. Rates for 15-year fixed-rate mortgages fell six basis points to an average of 3.13 percent.

The average rate for 5/1 adjustable rate mortgages fell four basis points to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Initial jobless claims fell to a one-month low of 211,000 new claims filed; analysts said that last week’s reading approached a 50-year low and proved the staying power of the strongest job market in decades. In other news, the University of Michigan’s Consumer Sentiment Index rose to 95.70 in November as compared to October’s index reading of 95.50. Analysts expected consumer sentiment to fall to 95.00.

What’s Ahead

This week’s economic releases include reports on inflation and retail sales. Weekly readings on mortgage rates and initial jobless claims will also be released.

How To Find Hot Markets For Real Estate Investment

November 8, 2019 by Coleen TeBockhorst

How To Find Hot Markets For Real Estate Investment Real estate investors who want to build up a strong investment portfolio always keep an eye out for hot markets, which gives them a chance to pick up properties that add to their portfolio value.

A word of caution about hot markets is that if you learn about them after they are already hot, you may have missed much of the run-up that made them hot.

Clever real estate investors try to anticipate markets that will heat up before they do, so they can buy properties in advance of increasing values. Selling properties in a hot market is how they capture profits.

The Hot Markets

Realtor.com® identified seven markets in the United States that are currently hot markets for flipping houses. The average gross profit for house flippers is $62,700. This figure does not include the cost of making the repairs. The gross profit equals about 20% to 33% of the home’s sales price after making the repairs.

An evaluation looking for hot markets for flipping homes considered the percentage of home sales that were investment properties.

The current hot markets, in the order of activity, are:

St. Louis, MO – 18.8% of home sales are investment properties. The median sales price is $189,900.
Birmingham, AL – 17.3% of home sales are investment properties. The median sales price is $190,000.
Miami, FL – 17% of home sales are investment properties. The median sales price is $299,900.
Tampa, FL – 16.2% of home sales are investment properties. The median sales price is $230,000.
Memphis, TN – 16.1% of home sales are investment properties. The median sales price is $206,300.
Las Vegas, NV – 15.7% of home sales are investment properties. The median sales price is $301,800.
Phoenix, AZ – 15.1% of home sales are investment properties. The median sales price is $275,800.

Hot Pockets In Cooler Markets

Another way to find opportunities is to know your local market very well and look for areas that are up and coming. Look for a fixer-upper in a decent area. Also, search in areas that are adjacent to high-priced areas.

Look for soft barriers that can be passed easily, such as a block that is improving, which is next to another block that has already improved. Hard barriers, such as a wide street, a freeway, or a river make it more challenging for an improving neighborhood trend to pass across them.

Summary

Finding a hot market or a hot pocket comes from investigating potential growth areas and watching them. Get a feel for the trends. One strategy is to buy early when the prices are still low, rent the property for a while, and then sell later, once the market heats up.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.

The 5 Most Common Dangerous Home Issues

November 7, 2019 by Coleen TeBockhorst

The 5 Most Common Dangerous Home Issues You are supposed to feel safe in your own home; however, accidents can happen and there are plenty of hidden dangers that might land someone in the hospital. It is important for you to understand the common household dangers. Knowledge is power and you can take steps to prevent these issues from arising.

Carbon Monoxide Poisoning

This is one of the most common household dangers that everyone should know. Homes always have a smoke detector; however, carbon monoxide detectors are often overlooked. This is an odorless gas that can actually kill someone if the levels get too high. Make sure that your carbon monoxide detectors are working. This gas commonly arises from the tailpipe of a running car.

Lead Poisoning

Lead can be absorbed through the skin or the mouth. Lead poisoning can lead to serious neurological issues. Newer homes are built without lead paint; however, if you purchase an older home, there might still be lead paint on the walls. Check the paint thoroughly and swap it out if lead is present.

Mold

Mold is a common hazard that grows in homes. Mold can release spores into the air that can irritate people who suffer from asthma and allergies. Make sure that you keep your home clean to avoid mold growth. Mold likes warm, humid climates.

Falls

Injuries due to falls are among the most common accidents that happen in homes. If someone falls in their home, they are at risk of breaking bones or suffering a head injury. Make sure that you keep your outdoor steps clean and stabilize your staircases. This will reduce the risk of falls.

Drowning

Unfortunately, drowning can happen even if someone is safe in their own home. Even if a house doesn’t have a pool, people can still drown in the bathtub. In order to reduce the risk of a drowning event, make sure your pool has a fence around it (if you have one). Also, try to supervise bathing children. This will reduce the risk of a drowning event.

Reducing Household Dangers

Knowing about these dangers ahead of time reduces the chances of them happening. Try to inspect your home thoroughly to make sure that these common hazards are avoided.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss current financing options.

3 Positive Reasons To Get A 15-Year Mortgage

November 6, 2019 by Coleen TeBockhorst

3 Positive Reasons To Get A 15-Year Mortgage Most people can’t pay for a home outright, so they finance it with a mortgage loan. 30-year mortgages are more conventional, but they also come with a significant interest price tag.

People who have a stable career and the income to afford larger payments, or who are nearing retirement, may want to take out a 15-year mortgage. Here are some reasons to consider one.

Save Money Over The Life Of The Loan

The total interest paid on a 30-year loan can be nearly as much as the principal. While it can be difficult to see the bigger picture when facing a mortgage payment that will be a good bit higher, consider this: Paying off a loan in 15 years versus 30 years will save tens of thousands of dollars in interest, and in some cases, as much as $100,000.

Interest rates on 15-year mortgages are also typically lower than other longer-term home loans, which provides additional mortgage interest savings.

Build Equity Faster

Equity refers to how much of your home you’ve already paid for plus what it appreciates in additional value over time. If your home is worth $250,000 and you owe $190,000 on your loan, you have $60,000 in equity.

Since more money is going toward the loan principal rather than interest on a 15-year loan, you build equity faster, which is beneficial for numerous reasons. It lowers your loan-to-value ratio and may improve your chances of getting a home equity loan, which can be used for large expenses.

Become Mortgage-Free Sooner

Instead of having a housing payment later in life, that money is freed up for retirement or other expenses.

If retirement is on the horizon for you in the next 10-20 years, ditching your mortgage payment sooner rather than later is wise. Once you are on a limited income, you will want as few expenses as possible. Plus, having the option of a home equity loan for emergencies is attractive.

There are several excellent reasons to get a 15-year mortgage. Run the numbers with your trusted home mortgage advisor and decide what makes the most sense for you.

How Does My Existing Debt Affect Getting A New Mortgage?

November 5, 2019 by Coleen TeBockhorst

How Does My Existing Debt Affect Getting A New Mortgage Carrying debt is a common problem that people have. Some of the most common types of debt include student loans, credit cards, and motor vehicles. When you are interested in buying a new home, you often think about whether or not your debt is going to hurt your chances of qualifying for a new mortgage.

Fortunately, you may still get a new home with that debt. There are several factors that may determine whether or not you qualify.

Your Debt to Income Ratio

The debt to income ratio is a major factor that the mortgage lender is going to consider when deciding whether or not you will qualify for a new mortgage. In general, the magic number is 43 percent. If your debt exceeds 43 percent of your total income, the lender will have a hard time giving you that new mortgage.

For example, if you make $5,000 per month, you will want to have less than $2,150 in monthly debt payments. To make yourself a more attractive candidate for a mortgage, try paying off some of your existing debt.

Taking A Look At The Credit Score

The lender is also going to consider your credit score. The higher your credit score is, the more likely the lender will reward you with a loan. In order to keep your credit score high, make sure you manage your debt well.

Making your debt payments on time will keep your credit score high. Missing debt payments will lower your score. Manage your existing debt well and you will have a better chance of qualifying for a mortgage.

Making Sure You Can Handle A Mortgage

Finally, the lender is also going to take a look at whether you can take on the responsibilities of owning a home. The monthly mortgage payment isn’t the only expense you will be taking on. Some of the other issues you will have to handle include property taxes, maintenance costs, and homeowners’ insurance.

The bank or credit union will want to ensure you can handle these costs. To make these expenses easier to bear, it might be a good idea to pay off some of that existing debt.

Investing In A New Mortgage

Looking for a new home is exciting. You can purchase a house with existing debt as long as it is minimized and managed well. Think about these factors before investing in a mortgage. And as always, consult with your trusted local mortgage professional for the best advice on your personal situation.

What’s Ahead For Mortgage Rates This Week – November 4th, 2019

November 4, 2019 by Coleen TeBockhorst

What’s Ahead For Mortgage Rates This Week – November 4th, 2019 Last week’s economic reports included readings from Case-Shiller on home prices, pending home sales data and the post-meeting statement announcement from the Fed’s Federal Open Market Committee were released.

Labor sector reports on jobs and the national unemployment rate were also released. Weekly readings on mortgage rates and initial jobless claims were also published.

Case-Shiller: Home Price Growth Slows in August

Home price growth slowed by 0.20 percent in August for the first time since August 2018. Home price growth rates typically decrease in August as peak home-buying season passes. The Case-Shiller 20-City Home Price Index showed a geographical shift away from the West and Southwest in August as two of the three cities with the highest home price growth rates were in the Southeast.

Home prices in Phoenix, Arizona held the top spot in the 20-City Home Price Index with a seasonally-adjusted annual growth rate of 6.30 percent. Home prices in Charlotte, North Carolina and in Atlanta, Georgia rose 4.50 and 4.00 percent.

Pending home sales rose 1.50 percent in September according to the National Association of Realtors®. Pending home sales gauge future closed sales and mortgage loan volume.

Fed Lowers Key Interest Rate Range

The Federal Reserve announced its third consecutive cut to its benchmark interest rate range but indicated that future rate cuts may be on hold. Fed policymakers cut the federal funds rate range one-quarter percent to 1.50 to 1.75 percent from 1.75 percent to 2.00 percent.

Federal Open Market Committee members said global economic developments and muted inflationary pressure were considerations in the decision to lower the Fed’s key interest rate range.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week; rates for a 30-year fixed-rate mortgage rose eight basis points and averaged 3.78 percent. Rates for 15-year fixed-rate mortgages rose one basis point and averaged 3.19 percent.

Rates for 5/1 adjustable-rate mortgages rose three basis points to 3.43 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.40 percent.

First-time jobless claims rose by 5000 claims to 218,000 new claims filed. The national unemployment rate rose to 3.60 percent in October as compared to September’s reading of 3.50 percent. ADP reported 125,000 private-sector jobs added in October as compared to 93,000 jobs added in September. 128,000 public and private sector jobs were added in October according to the government’s Non-Farm Payrolls report.

What’s Ahead

This week’s scheduled economic news includes readings on job openings and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

When’s The Best Time To Buy A House?

November 1, 2019 by Coleen TeBockhorst

When's The Best Time To Buy A House If you happen to want to move to a hot market for home sellers, here is some advice. Go looking for a home to buy when it is freezing outside or the weather is otherwise severe. Buying a home is both about finding one you like and beating out others if the market has buying competition.

Days On Market

To find out the competition for a particular market, check the median number of days that a home is listed on the market before it sells. This is called the “days on market.”

In a hot seller’s market, the median number of listing days may be very low. The national average days on market (DOM) is 62 days in America.

The top ten cities where homes sell the fastest with the lowest DOM as reported by Realtor.com® are:

San Francisco, CA – DOM 28
Spokane, WA – DOM 31
Boston, MA – DOM 32
Colorado Springs, CO – DOM 32
Lafayette, IN – DOM 34
Columbus, OH – DOM 34
Sacramento, CA – DOM 34
Santa Cruz, CA – DOM 34
Midland, TX – DOM 36
Odessa, TX – DOM 36

Time Of Year

Most homebuyers look for a home during spring and summer. That is when the buying competition is normally stronger. June is the worst month to buy a home if you want to get a discount.

If you can wait until fall or winter, you may see more price reductions. The best time to make a low offer may be during the short window of time between Christmas and New Year’s when virtually no one is looking to buy a home.

Use bad weather for an advantage. Go looking for a home in the dead of winter, when the roads are barely passable, and you may be the only buyer interested. Another advantage that comes from viewing a home during severe weather is that you get to see how much trouble the weather will be if you own it.

Tax Time

One very successful real estate investor buys homes right before tax time because that is when sellers are worried about paying taxes and might be more flexible on the price.

Estate Sales

It is possible to get a nice deal on a house when a family is liquidating assets.

Divorce

A seller may be motivated by having to sell a house as part of a divorce settlement.

Summary

The main factors, if you want to get a discounted price for buying a home, are not to be in a rush to buy one and take your time finding a home that is for sale by a motivated seller. Always ask, “Why are you selling your home?” when negotiating with a seller.

If you are interested in buying a new home or in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss current financing options.

What Is Passive Real Estate Investing?

October 31, 2019 by Coleen TeBockhorst

What Is Passive Real Estate Investing When you are looking to purchase a home, you might be looking for a place for you and your family to live. It might surprise you to learn that not everyone who is looking for a house is necessarily in search of a place to live.

Real estate is also a great way for someone to grow wealth. Furthermore, real estate is actually one of the most common ways that people become millionaires.

Some of the active ways that people invest in real estate include flipping houses and renting out property. This can be time-consuming and isn’t right for everyone.

If you are looking for a way to make money in real estate without flipping houses or looking for tenants, passive real estate investing might be the answer.

An Overview Of Passive Real Estate Investing

While passive is the opposite of active in this scenario, passive real estate investing does not mean that you won’t have to do anything. There is still work to be done.

When you invest in a passive manner, this means that you aren’t playing an active role in the growth of the asset, which is property in this example.

One example of passive investing is the stock market. You need to make sure that you do your homework before you start throwing money at the real estate market.

There is a serious time commitment that comes with passive real estate investing. You will also need to monitor the property values to make sure your investment is generating a solid return.

Ways To Get Involved In Passive Real Estate Investing

There are a few common ways that you can start investing in real estate, in a passive manner.

First, one of the most common ways is through the stock market. There are businesses that make their money by investing in the real estate market for you. You can buy shares of these companies who then invest your money in real estate.

Alternatively, you can also set up a partnership with an active investor. You might own the properties and then pay the active investor to rent them out to someone else.

Finally, there is also real estate crowdfunding that has come on the scene. Those looking to invest smaller amounts of money might be interested in this method which pools smaller investments together to invest in much larger real estate projects.

It’s important to talk with your trusted local real estate and mortgage professionals to get the best information for your personal situation.

What is Owner Financing When Buying A Home?

October 30, 2019 by Coleen TeBockhorst

What is Owner Financing When Buying A Home There are many options when it comes to taking out a loan on a new home. One of the options that people might have heard about is called owner financing. In general, the property owner takes the place of a traditional lender.

Instead of someone taking out of a loan from a bank or a credit union, they take out a loan from the owner of the property. Similar to a traditional loan, the buyer will make payments to the seller over a period of time with a certain interest rate.

The Structure Of Owner Financing

If someone elects to go with owner financing, there are several terms that will specify the repayment structure. The most common structure is called a note and mortgage.

This is a secure form of financing. It is also the closest in structure to a traditional mortgage from a bank. The seller will put together a note that specifies the size of the loan and how it will be repaid. The mortgage will secure the seller with the property in case the borrower cannot repay the loan.

The buyer is still placed on the title of the home. Then, the mortgage is recorded with public records, just as in a traditional loan. There are other types of seller financing; however, this is the most common structure.

The Structure Of Repayment

You may have questions regarding this type of financing when compared to a traditional mortgage. Just as in a traditional mortgage, the repayment terms can vary. You will still have the opportunity to negotiate the terms of the loan.

Typically, interest rates are close to that of a loan from a bank or credit union. There are still options to set up a fixed-rate or adjustable-rate mortgage as well.

The Benefits Of Seller Financing

There are several benefits for both the buyer and the seller. First, seller financing may allow the seller to avoid paying capital gains taxes on the property. This can also help the seller offload a property that otherwise might not sell.

The buyer will also be able to purchase a home without having to borrow from a bank. Often, there is less paperwork and fewer fees. Finally, a buyer that might not qualify for a traditional bank loan might be able to buy a home through seller financing.

Understanding Owner Financing

It is important for everyone to think carefully before signing up for this type of financing. This is a unique option that you should understand when looking for a home. Consult with your trusted home mortgage professional to get the best answer for your particular situation.

Common Reasons Why Buyers Are Denied A Mortgage

October 29, 2019 by Coleen TeBockhorst

Common Reasons Why Buyers Are Denied A Mortgage When you are buying a new home, it is an exciting process. You have spent months searching and have found the home you want to purchase. You are ready to move into the home of your dreams.

Unfortunately, you have found out that your request for a mortgage has been denied. This can be a deflating experience. Fortunately, there are ways to avoid this by understanding the most common reasons why a buyer is denied for a loan.

The Loan Requirements Have Changed

One of the most common reasons why you might be denied a mortgage is that the terms of the loan have changed. For example, the lender might have raised the minimum credit score requirement. This might sound unfortunate; however, it does happen from time to time.

Loan requirements might change from the pre-approval stage. If this happens, think about searching for a loan from a different lender.

You Added Debt

The debt to income ratio is going to matter when applying for a loan. If you are pre-approved for a loan and your amount of debt changes, the lender is going to look at this closely. Common forms of debt include student loans and credit cards.

Even small changes in your debt amount can impact your ability to qualify for a loan. Try to avoid buying a new car or maxing out a credit card during the mortgage application process. This will help you keep the loan you’ve worked so hard to earn.

You Changed Jobs

Finally, employment status also matters to the lender. When you take out a loan, the lender needs to know that this will be repaid. This depends on you having a steady stream of income from your job.

If you decide to change jobs between the time of pre-approval and the time of purchase, your employment history and income stream do not mean as much. While changing employment will not totally disqualify you, make sure to discuss this possibility with your lender. Changing jobs within the same field is likely fine; however, moving to a new career entirely can be a red flag.

Mortgage Denials are Frustrating

It is frustrating to have your request for a loan denied. Fortunately, understanding these common reasons can help you avoid this deflating experience. Think about all of these possible scenarios when you apply for a home loan. And rely on the expertise of your trusted home mortgage professional.

« Previous Page