Blog – CTeBockhorst's Blog

How Can I Get Removed from a Mortgage as a Co-Signer?

February 7, 2025 by Coleen TeBockhorst

Being a co-signer on a mortgage can be a significant financial commitment, one that you might not want to maintain indefinitely. Whether your circumstances have changed, or the primary borrower is now in a position to manage the loan independently, it’s understandable to want to remove your name from the mortgage. While the process can be complex, there are several pathways to achieve this goal. Here’s what you need to know.

Understanding the Role of a Co-Signer

When you co-sign a mortgage, you’re essentially taking on joint responsibility for the loan. This means that if the primary borrower defaults, you are legally obligated to step in and make the payments. While co-signing can be a way to help someone secure a mortgage when they might not qualify on their own, it also ties your credit and financial health to the loan.

Removing yourself from this obligation requires deliberate steps and cooperation with the borrower and the lender. Let’s explore your options.

Option 1: Refinancing the Mortgage

One of the most common ways to remove a co-signer from a mortgage is through refinancing. This involves the primary borrower applying for a new loan in their name alone. If they qualify for the refinance based on their creditworthiness, income, and debt-to-income ratio, the new loan will replace the original mortgage, effectively releasing you from any obligation.

What to Consider with Refinancing:

Eligibility: The borrower must meet the lender’s criteria without relying on your financial profile.
Costs: Refinancing comes with closing costs, which the borrower will need to cover.
Interest Rates: Depending on market conditions, refinancing could result in higher or lower monthly payments for the borrower.

If refinancing is viable, this is often the cleanest and most straightforward way to remove your name from the loan.

Option 2: Loan Assumption

In some cases, the borrower may be able to assume the existing loan, essentially taking over the mortgage under its current terms without involving you. This option depends on whether the lender allows loan assumptions, as not all loans are assumable.

Steps for Loan Assumption:

Check with the Lender: Confirm if the loan qualifies for assumption and inquire about the process.
Verify Borrower Qualifications: The borrower will need to demonstrate that they can handle the payments independently.
Complete Legal Documentation: If approved, the lender will update the loan documents to reflect the borrower as the sole responsible party.

Loan assumption can be a good option if refinancing isn’t feasible, but it typically requires lender approval and may involve fees.

Option 3: Selling the Property

In some situations, selling the property might be the most practical solution. This is particularly true if the borrower struggles to qualify for refinancing or loan assumption. Selling the home allows the mortgage to be paid off entirely, freeing both you and the borrower from the loan.

Important Considerations:

Market Conditions: The property’s value should ideally cover the remaining loan balance and any selling costs.
Timing: Depending on the market, selling a home can take weeks or even months.
Agreement with the Borrower: Both parties need to agree to the sale and cooperate throughout the process.

While selling the property may seem drastic, it provides a definitive resolution to the shared financial responsibility.

Other Factors to Keep in Mind

Work with the Lender: Open communication with the lender is crucial, as they will need to approve any changes to the mortgage.
Monitor Your Credit: Until your name is officially removed, late payments by the borrower could affect your credit score.
Legal and Financial Advice: Consulting a financial advisor or attorney can help you navigate the process and ensure your interests are protected.

Why Removing Yourself Matters

Remaining a co-signer ties up your financial resources and could limit your ability to qualify for other loans or make significant purchases. It also places your credit score at risk if the primary borrower misses payments. Taking steps to remove your name is not just about peace of mind; it’s a way to regain control of your financial future.

By understanding your options, whether through refinancing, loan assumption, or selling the property, you can take the necessary steps to untangle yourself from the mortgage and move forward confidently.

Ensure a Stress-Free Home Purchase with These Gift Fund Tips

February 6, 2025 by Coleen TeBockhorst

Imagine you are about to purchase your dream home, and a generous financial gift from family or friends is making it possible. It’s a moment to celebrate! But did you know that mishandling gift funds can lead to delays, added stress, or even jeopardize your loan approval?

Don’t worry, we are here to guide you through the process! Let’s explore the top mistakes homebuyers make when receiving gift money and how to avoid them.

1. Skipping the Lender Consultation

Before accepting any funds, consult your lender. Gift money rules vary by loan type, and your lender will ensure the funds are eligible and compliant with regulations. Skipping this step could result in complications or even a denied loan application.

2. Failing to Document the Gift Properly

A gift without a paper trail is a red flag to lenders. They need proof that the money is a gift—not a loan. Typically, this involves:

A signed gift letter stating the amount and confirming no repayment is required.
Documentation of where the funds came from, such as a bank statement or canceled check.
Proper documentation prevents delays and provides transparency during underwriting.

3. Overlooking Tax Implications

Did you know that gift money can have tax consequences? In 2025, the annual gift tax exclusion is $17,000 per recipient. If the gift exceeds this amount, your family member may need to file a gift tax return. Make sure everyone involved understands the tax rules to avoid surprises.

4. Using Digital Payment Apps

Convenient payment apps like Venmo or Zelle might seem like a quick way to transfer funds, but they lack the paper trail required by lenders. Opt for more traditional methods like a wire transfer, electronic funds transfer (EFT), or a check. These methods ensure verifiable records that meet loan requirements.

5. Spending Every Penny Without a Cushion

It’s tempting to allocate the entire gift toward your down payment, but leaving yourself financially stretched isn’t wise. Reserve some funds for early mortgage payments or unexpected expenses during your first months as a homeowner. A financial cushion ensures peace of mind and stability.

Keep Communication Open

The key to handling gift money correctly is open communication. Keep your lender, donor, and real estate agent informed throughout the process to ensure everything is handled smoothly.

Gift money can be a wonderful way to achieve your homeownership dreams, but only if it’s managed correctly. By avoiding these common pitfalls and following your lender’s guidance, you’ll set yourself up for success and a stress-free journey to closing day.

Ready to make your dream home a reality? I’m here to help you navigate the process from start to finish. Reach out today!

What’s the Difference Between a Second Mortgage and a Home Equity Loan?

February 5, 2025 by Coleen TeBockhorst

If you’ve been diligently paying down your mortgage, you’ve likely built up a valuable asset: home equity. This financial resource can be a game-changer, offering opportunities to fund major expenses, consolidate debt, or tackle unexpected financial challenges. But with multiple borrowing options tied to your home equity, it’s essential to know which route aligns best with your goals.

Two popular options are second mortgages and home equity loans and often leave homeowners wondering about their differences. Let’s break it down to help you make an informed decision.

What is a Second Mortgage?

A second mortgage is any loan that uses your home’s equity as collateral while existing alongside your primary mortgage. Common types include home equity loans and home equity lines of credit (HELOCs). Both provide access to your equity but differ in structure and flexibility.

Understanding Home Equity Loans

A home equity loan offers a lump sum payment at a fixed interest rate. This setup is ideal for homeowners with a specific, one-time expense in mind, such as a home renovation, medical bill, or education costs. With predictable monthly payments, budgeting becomes straightforward, making this a popular choice for those who value stability.

Pros:

Fixed interest rate ensures consistent payments.
Suitable for large, single-purpose expenses.

Cons:

Less flexible—borrowers receive a one-time lump sum.
Interest starts accruing immediately on the full amount.
Exploring HELOCs
A HELOC, or home equity line of credit, functions like a credit card tied to your home’s equity. You’re approved for a credit limit and can withdraw funds as needed during a draw period, typically 5–10 years. This option is excellent for ongoing or variable expenses, like managing a business or funding multiple home improvement projects.

Pros:

Flexible access to funds over time.
Interest accrues only on the amount borrowed.

Cons:

Variable interest rates can lead to fluctuating payments.
Requires disciplined spending to avoid overborrowing.
The Key Consideration: Your Home is Collateral

Both options offer lower interest rates than unsecured loans or credit cards, making them cost-effective solutions for many homeowners. However, remember that your home serves as collateral. Missing payments could result in foreclosure, making it crucial to borrow responsibly.

Which Option is Right for You?

The choice between a second mortgage and a home equity loan depends on your financial needs and goals:

Opt for a home equity loan if you prefer stability and have a specific expense in mind.

Choose a HELOC if you need ongoing access to funds with flexible repayment options.

If you’re still uncertain, consulting a trusted mortgage professional can provide clarity and ensure you select the best path for your unique situation.

Putting Your Equity to Work

Your home equity is a powerful tool, but leveraging it wisely requires careful consideration. By understanding the differences between a second mortgage and a home equity loan, you’re one step closer to achieving your financial goals with confidence.

If you need more guidance tailored to your situation, reach out todayI’, we are here to help you make informed decisions and maximize the value of your home equity.

Let’s Chat! How to Get Prepared for Your House-Hunting Journey

February 4, 2025 by Coleen TeBockhorst

Imagine that you are exploring your city or a new city and you stumble upon your dream home. It is perfect! With an open kitchen for entertaining, a backyard oasis for relaxation, and all the space you’ve envisioned. Just as you’re ready to make your move, someone else beats you to it because your finances weren’t prepared. The good news is you can avoid it with a little preparation.

Here are some steps to get you house-hunting ready:

1. Understand Your Budget

Before you even check out the first home listing, take a hard look at your finances. Getting pre-approved for a mortgage is essential. Pre-approval not only gives you clarity on what you can afford but also shows sellers that you’re serious. Plus, it saves you from falling in love with a home that’s beyond your financial reach.

When determining your budget, factor in all the costs, property taxes, homeowners insurance, and potential HOA fees so there are no surprises.

2. Gather Your Documents

Prepare essential documents like recent pay stubs, W-2s, and tax returns. If you are self-employed, be ready to provide two years of tax returns, profit and loss statements, and bank statements. Sellers and lenders want assurance that you’re financially ready. Having these documents on hand speeds up the process and puts you one step ahead of other buyers.

3. Identify Your Priorities

Not every house will check all your boxes, so it’s important to distinguish between your must-haves and nice-to-haves. Are you looking for a specific school district? A spacious home office? A big yard for your pets? Write down your priorities and keep them handy when touring homes.

This list helps you stay focused, ensuring you don’t settle for less or get swept away by features that don’t align with your needs.

4. Build Your Dream Team

House hunting is a team effort. Surround yourself with experts who have your best interests at heart:

Mortgage Professional: That’s where I come in! I’ll guide you through the pre-approval process and help you choose the best loan options for your goals.
Real Estate Agent: A knowledgeable agent will help you find the right home and negotiate the best deal.
Home Inspector: They’ll make sure your dream home doesn’t come with hidden nightmares.

Having this team in place ensures that when you find “the one,” you’re ready to act swiftly and confidently.

Do not rush the process. Buying a home is a big decision, and taking time to prepare can save you from costly mistakes. By being proactive, you’ll be in a position to act decisively when the right opportunity comes along.

Ready to take the first step toward homeownership? Let’s connect and discuss your goals, budget, and timeline. Together, we’ll ensure you’re ready to secure the home of your dreams.

What’s Ahead For Mortgage Rates This Week – February 3rd, 2025

February 3, 2025 by Coleen TeBockhorst

The previous week’s reins were held by the Federal Reserve’s Rate Decision and also the preferred inflation indicator, the PCE Index. With the PCE Index coming in well above the Federal Reserve’s 2% target, it suggests that rate cuts may be postponed much longer this year than initially anticipated.

Looking ahead, the upcoming week features the CPI and PPI inflation data reports, making for a busy schedule. However, this week’s reports are relatively limited in terms of significant market impact. The most notable releases include Unemployment Data and U.S. Wages, both of which will complement the inflation data to provide a broader outlook on the economy’s trajectory. Additionally, the Consumer Sentiment and Consumer Credit reports may offer insight into consumer conditions amid a changing administration and ongoing inflation. Notably, inflation has had a strong impact on markets such as eggs and livestock poultry, which have reached all-time high prices in the past decade.

PCE Index

The PCE index rose 0.3% last month, the government said Friday, to mark the biggest increase since last April. The increase in inflation in the past year was at a seven-month high of 2.6%, up from 2.4% in the prior month.

FOMC Rate Decision

In a widely anticipated move, the central bank’s Federal Open Market Committee left unchanged its overnight borrowing rate in a range between 4.25%-4.5%.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.04% with the current rate at 6.12%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.95%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.46%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.48%

Jobless Claims

Initial Claims were reported to be 207,000 compared to the expected claims of 228,000. The prior week landed at 223,000.

What’s Ahead

CPI and PPI reports are set to release tomorrow along with Consumer Sentiment and Consumer Credit reports.

Should You Use Home Equity to Pay for College?

January 31, 2025 by Coleen TeBockhorst

Higher education can be one of the most significant financial investments you’ll make, second only to purchasing a home. While federal loans are a common method for covering college costs, using your home’s equity is another option to consider. Before making a decision, it’s important to understand the pros and cons of tapping into your home equity to pay for college.

The Financial Cost of College

Just as most buyers need a mortgage to finance a home, many families rely on loans to fund college expenses. The average net price of college, which accounts for tuition, room, and board after financial aid, can be significant. According to the College Board, during the 2019-2020 school year, the average annual net price was $27,400 for private colleges and $15,400 for public institutions.

Advantages of Using Home Equity for College

For families exploring ways to pay for college, home equity loans or Home Equity Lines of Credit (HELOCs) may present some unique benefits.

1. Bridging the Gap Beyond Federal Loans

Federal loans often have borrowing limits that may not fully cover the cost of tuition, room, and board. Home equity loans can help close the gap. You can typically borrow up to 85% of your home’s equity as either:

A Lump-Sum Loan: A fixed amount borrowed with regular monthly payments.
A HELOC: A revolving line of credit with variable interest rates, offering more flexibility.

2. Lower Interest Rates

Home equity loans usually have lower interest rates compared to federal PLUS loans or private student loans. Since these loans are secured by your home, lenders can offer more favorable rates, saving you money over the life of the loan.

3. Immediate Access to Funds

Home equity loans or HELOCs allow quick access to funds, making them ideal for unexpected expenses or semester payments. A HELOC, in particular, offers flexibility by allowing you to borrow only what you need, reducing the amount of interest you pay. For example, if you open a $50,000 HELOC but use only $20,000, you’ll owe interest only on the $20,000, potentially saving you money.

Disadvantages of Using Home Equity for College

While there are advantages, it’s equally important to consider the potential downsides of using home equity for education costs.

1. Risk of Losing Your Home

Since your home serves as collateral for a home equity loan or HELOC, failure to make payments could result in foreclosure. Unlike federal student loans, which do not jeopardize your home, defaulting on a home equity loan carries significant risks. Carefully evaluate your financial situation before proceeding.

2. Limited Tax Benefits

The Tax Cuts and Jobs Act of 2017 eliminated the tax deduction for home equity loan interest unless the funds are used to improve your home. This means you cannot deduct home equity loan interest used for education expenses. In contrast, federal or private student loans may qualify for a Student Loan Interest Deduction of up to $2,500 annually.

3. Long-Term Financial Impact

Using home equity for college ties up a major asset that could otherwise be used for emergencies, retirement, or other future needs. It’s important to weigh whether reducing your home equity is worth the potential long-term financial impact.

Making the Right Decision

If you or your child are preparing for college, now is the time to explore your financing options. Home equity loans can be a viable choice for covering education costs, especially if:

Federal loans don’t meet your needs.
You’re confident in your ability to make payments.
You prefer lower interest rates and flexible borrowing options.

However, weigh the risks carefully, particularly the potential impact on your home and finances. Speak with a financial advisor or lender to determine whether using your home equity aligns with your overall financial goals.

Can You Buy Land with a VA Loan?

January 30, 2025 by Coleen TeBockhorst

The VA loan program offers exceptional benefits to veterans, active-duty service members, and eligible surviving spouses, including no down payment, competitive interest rates, and no private mortgage insurance (PMI). But what about buying land? While the rules around using a VA loan for land can be more complex, there are still ways to make it work. Here’s a breakdown of your options if you’re looking to buy land using a VA loan.

Understanding VA Loans

VA loans are specifically designed for veterans and service members looking to buy, build, repair, or adapt a home for personal occupancy. These loans come with several advantages over conventional loans:

No Down Payment: VA loans often don’t require a down payment, making homeownership more accessible.
Competitive Interest Rates: VA loans typically offer lower interest rates than conventional loans.
No PMI: Unlike most loans with less than a 20% down payment, VA loans don’t require private mortgage insurance (PMI).
Lenient Credit Requirements: VA loans often have more flexible credit score requirements, making them easier to qualify for.

Can You Buy Land with a VA Loan?

The simple answer is no – you cannot typically use a VA loan to purchase land alone. VA loans are primarily for purchasing or refinancing homes. However, there are certain scenarios where you can use a VA loan to buy land, particularly if it’s part of a plan to build a home.

Purchasing Land and Building a Home

One of the most common ways to buy land with a VA loan is by combining it with the construction of a home. Here’s how this works:

Start with a Construction Loan: A construction loan provides the necessary funds to purchase the land and build the home. Keep in mind that these loans generally have higher interest rates and stricter requirements than traditional loans.
VA Loan Conversion: After the home is built, you can refinance the construction loan into a VA loan. This allows you to take advantage of VA loan benefits, such as lower interest rates and no PMI.

This approach is ideal for veterans who wish to build a custom home on a piece of land they’ve chosen.

Buying Land with the Intent to Build Later

If you plan to purchase land and build a home at a later date, you’ll need to secure financing for the land purchase itself, since VA loans can’t be used for land-only transactions. Once you’re ready to build, you can then apply for a VA construction loan to cover the building costs. The key is that the VA loan must be tied to the construction of a home, not just the land.

Combining Land Purchase with a Home

If you find land that already has a home on it, and the home meets VA standards, you may be able to use a VA loan to purchase the property. This is a straightforward process, as the loan is used to buy the home, and the land is included as part of the overall property.

Alternatives for Buying Land

If you want to buy land without immediate plans to build, here are some alternative options:

Land Loans: These loans are designed specifically for purchasing land, but they often require a higher down payment and come with higher interest rates than VA loans.
Personal Loans: For smaller land purchases, a personal loan may be an option, though they typically come with shorter terms and higher rates.
Seller Financing: Some sellers offer financing directly, allowing you to pay for the land over time.
Home Equity Loan: If you own a home with significant equity, you might be able to use a home equity loan to finance the land purchase.

While VA loans are generally intended for buying or refinancing homes, you can use them in specific circumstances to buy land, especially if you plan to build a home. Understanding the requirements and exploring other financing options will help veterans and service members find a path to owning land and building their dream homes.

Working with experienced lenders and real estate professionals who understand the ins and outs of VA loans can ensure a smoother process and help you make the most of your benefits.

Can You Be a First-Time Homebuyer Again?

January 29, 2025 by Coleen TeBockhorst

Purchasing a home is a significant milestone, and first-time homebuyer programs make the process easier for many stepping into homeownership. But what if you’ve owned a home before or are currently a homeowner? Can you qualify as a first-time homebuyer again?

Surprisingly, the answer is yes. Under certain conditions, you may be eligible for these programs more than once. Here’s a closer look at how it works, the eligibility criteria, and how to make the most of these opportunities.

Who Qualifies as a First-Time Homebuyer?

The term “first-time homebuyer” doesn’t always mean it’s your first-ever purchase. According to the U.S. Department of Housing and Urban Development (HUD), you may qualify as a first-time homebuyer if:

You haven’t owned a primary residence in the past three years. Even if you’ve owned a home before, taking a break from homeownership for three or more years may make you eligible.
You’re a single parent or displaced homemaker. If you previously owned a home with a former spouse, you might still qualify after a divorce or separation.
You’ve only owned non-permanent structures. Homes that didn’t meet building codes or lacked permanent foundations may not count as prior ownership.

These expanded definitions help more buyers access first-time homebuyer benefits, even if they’ve owned a home in the past.

Why Reapply for First-Time Buyer Benefits?

First-time homebuyer programs often offer significant financial advantages, such as:

Lower down payment requirements: Some loans require as little as 3.5%.
Assistance with closing costs: State and local programs may provide grants or forgivable loans.
Tax credits: Certain programs reduce your tax burden when purchasing a home.
Favorable loan terms: Access to lower interest rates and reduced private mortgage insurance (PMI).

If you qualify again, these benefits can make your next home purchase more affordable and less stressful.

Steps to Qualify Again

1. Follow the Three-Year Rule

If you haven’t owned a primary residence in the last three years, you likely qualify. Even if you’ve owned investment properties, they won’t disqualify you as long as they weren’t your primary residence.

2. Provide Documentation for Special Circumstances

If you’re divorced, separated, or a displaced homemaker, be prepared to show documentation such as legal papers or housing history to prove your eligibility.

3. Research State and Local Programs

Eligibility rules for first-time buyer benefits vary by location. Research the programs available in your area to ensure you meet the specific requirements.

Loan Options for First-Time Homebuyers

FHA Loans: Popular for their low 3.5% down payment requirement and flexible credit score criteria.
USDA Loans: Ideal for rural buyers, offering 0% down payment options, though income limits and location restrictions apply.
VA Loans: Provide 0% down payment and no PMI for eligible veterans and active-duty service members.
Special Conventional Loans: Many lenders offer conventional loans with perks like lower down payments for first-time buyers.

Tips for Repeat First-Time Buyers

Strengthen Your Credit Score: Even with program benefits, a better credit score can secure lower interest rates.
Save for Additional Costs: Beyond the down payment, set aside funds for closing costs and moving expenses.
Apply Early: Many programs have limited funding, so act quickly to take advantage of available resources.
Work with Experienced Professionals: Partner with an agent or lender knowledgeable about first-time homebuyer programs to simplify the process.

Challenges to Keep in Mind

Documentation: Proving eligibility, especially under unique circumstances, may require extra effort.
Program Restrictions: Some benefits include income caps or property eligibility rules.
Competition: First-time buyer programs can have limited funds, so applying early is key.

If you meet the criteria, qualifying as a first-time homebuyer again can open doors to significant financial perks, making homeownership more attainable. Whether you’re leveraging the three-year rule or special circumstances, these programs can save you money and reduce stress when purchasing your next home.

We can help guide you through the process. Homeownership may be closer than you think.

What to Do If Interest Rates Drop After Getting a Mortgage

January 28, 2025 by Coleen TeBockhorst

When securing a mortgage, buyers aim to lock in the best possible interest rate. But what if interest rates fall after you’ve closed on your loan? Are you stuck with your current rate? The good news is that you may have options, whether your loan is brand-new or you’ve been paying it off for a while. Here are three ways to take advantage of lower rates.

1. Explore a Float Down Option

Many borrowers choose fixed-rate loans for stability—they protect you from rising rates. However, if rates drop, your fixed rate stays the same.

This is where a float down option can help. Some lenders offer this as a one-time opportunity to reduce your interest rate without refinancing. While the rest of your loan terms remain the same, the lower rate could save you money over time.

Because this option can only be used once, timing is crucial. Be sure the potential savings justify the decision, and consider working with your lender to understand the terms and conditions before proceeding.

2. Refinance Your Mortgage

Refinancing is the most common way to capitalize on lower interest rates. This involves replacing your current loan with a new one at a better rate. The new loan pays off your old mortgage, and you start with fresh terms.

Refinancing offers more than just interest rate savings. You could:

Adjust the loan term to pay off the mortgage faster or reduce monthly payments.
Remove private mortgage insurance (PMI) if you’ve built sufficient equity.
Change borrowers on the loan if needed.

However, refinancing isn’t without costs. You’ll need to cover new closing fees, which could offset your savings if the rate drop is minor. Generally, a reduction of at least 0.5% to 1% is necessary to break even on the costs and start saving. Additionally, refinancing restarts the amortization schedule, meaning you’ll pay more interest upfront in the new loan’s early years.

3. Inquire About Loan Modifications

Loan modifications are another option to lower your interest rate. These programs are typically offered to borrowers facing financial challenges, such as a reduction in income or an inability to qualify for refinancing.

With a loan modification, the lender agrees to adjust the loan’s terms—such as lowering the interest rate or extending the repayment period—to reduce the risk of default. While these programs gained attention during past recessions, they may still be available even in stable economic conditions.

If you think a loan modification might work for you, contact your lender to discuss their specific requirements. Some programs are also supported by government initiatives to help homeowners remain in their properties.

Where to Start

If interest rates fall after you’ve secured a mortgage, you don’t have to feel stuck. Whether it’s exploring a float down option, refinancing, or pursuing a loan modification, there are ways to reduce your rate and save money.

Give us a call. We can review your current loan, discuss potential options, and guide you toward the best decision for your financial situation. With the right plan, you can make the most of favorable rate changes and keep your financial goals on track.

What’s Ahead For Mortgage Rates This Week – January 27th, 2025

January 27, 2025 by Coleen TeBockhorst

With the holiday of the previous week in addition to an extremely light release week, only the Consumer Sentiment report is weighing in on the lending markets. With both the inflation reports showing inflation cooling off, there is still some optimism about where the Federal Reserve will take things. This optimism is only cooled by the uncertainty the new presidency will bring. Many markets have responded in kind, with lending partners showing a trend of increasing rates and other markets preparing for uncertainty. Within the next few months, we will see how the new administration intends to handle monetary policy. This will have a greater impact than the Federal Reserve on the direction things will be headed in the future. Next week will be the first FOMC Rate Decision of the year, with many being optimistic about a potential rate cut with the recent inflation data.

Consumer Sentiment (Univ. of Michigan)

Consumer sentiment fell for the first time in six months, edging down 4% from December. While assessments of personal finances inched up for the fifth consecutive month, all other index components pulled back. Indeed, sentiment declines were broad-based and seen across incomes, wealth, and age groups. Buying conditions for durables softened but remained about 30% better than six months ago amid persistent views that purchasing now would avoid future price increases.

Despite reporting stronger incomes this month, concerns about unemployment rose; about 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession. January’s data closed on Inauguration Day, and consumers of all political leanings will continue to refine their views as Trump’s policies are clarified and implemented.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.11% with the current rate at 6.16%
• 30-Yr FRM rates saw a decrease of -0.08% with the current rate at 6.96%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.07% for this week. Current rates at 6.54%
• 30-Yr VA rates saw an increase of 0.07% for this week. Current rates at 6.55%