Blog – CTeBockhorst's Blog

What’s Ahead For Mortgage Rates This Week – August 12th, 2024

August 12, 2024 by Coleen TeBockhorst

With so little in the way of data releases following the previous week’s FOMC Rate Decision, we’re left with a small release schedule with Consumer Credit and U.S. Trade Deficit rounding up the reports. While relatively light indicators of the current health of the economy, they are still useful for determining more impactful trends in the future. Next week, the inflation data reports with the CPI and PPI are the ones to look out for. This time, these are the ones that will largely determine whether we see rate cuts this year, and lending partners have already been lowering rates in anticipation.

U.S. Trade Deficit

The trade deficit fell by 2.5% in June and receded from a 19-month high, owing to higher exports of aircraft and U.S.-produced oil and gas. The deficit dropped to $73.1 billion in June from $75.0 billion in May, government data showed.

Consumer Credit

Consumers increased the amount of credit they used in June at a slower rate, in a sign of rising financial stress on U.S. households. Consumer credit rose by a modest $8.9 billion in June, Federal Reserve data showed. Economists had expected a $9.7 billion increase, according to a Wall Street Journal forecast.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing a decrease by -0.36% with the current rate at 5.63%
30-Yr FRM rates are seeing a decrease by -0.26% with the current rate at 6.47%

MND Rate Index

30-Yr FHA rates are seeing a -0.01% decrease for this week. Current rates at 6.09%
30-Yr VA rates are seeing a -0.02% decrease for this week. Current rates at 6.10%

Jobless Claims

Initial Claims were reported to be 233,000 compared to the expected claims of 240,000. The prior week landed at 250,000.

What’s Ahead

As we head towards the last quarter of the year, next week will unveil one of the most important inflation data reports of the year. The Federal Reserve has kept a tight lip on whether it intends to cut rates this year, but they have repeatedly said it was predicted based on inflation data. With the last two releases showing favorable results in achieving their goal, it has fueled speculation that rate cuts are on the horizon.

Exploring Alternative Paths to Homeownership

August 9, 2024 by Coleen TeBockhorst

Purchasing a home is a significant milestone, and traditional mortgages aren’t the only route to achieving this dream. For many homebuyers, especially those who may face challenges with conventional financing, exploring alternative financing options can be a game-changer. We will discuss three creative financing options: rent-to-own, lease-purchase agreements, and shared equity arrangements.

Rent-to-Own: Bridging the Gap to Homeownership

First and foremost, let’s discuss rent-to-own arrangements. This option allows potential buyers to rent a home to purchase it after a set period. During the rental phase, a portion of the monthly rent may go toward the future purchase price. This method is particularly beneficial for individuals who need time to improve their credit score or save for a down payment.

Rent-to-own agreements typically lock in the purchase price at the outset, shielding buyers from potential market fluctuations. This can be advantageous in a rising market, as you’ll secure your future home at today’s prices. However, it’s crucial to thoroughly understand the terms and ensure they are fair and transparent.

Lease-Purchase Agreements: A Step Beyond Rent-to-Own

In addition to rent-to-own, lease-purchase agreements offer another pathway. Although similar, lease-purchase agreements obligate the renter to purchase the property at the end of the lease term. This binding agreement can be a double-edged sword. On one hand, it provides certainty and a clear path to homeownership. On the other hand, it requires the buyer to be fully committed to purchasing the home, regardless of any changes in circumstances.

Lease-purchase agreements can include stipulations regarding maintenance and repairs, making it imperative for both parties to clearly define their responsibilities. This option is ideal for those who are committed to buying a home but need a bit more time to get their finances in order.

Shared Equity Arrangements: Partnering for Purchase

Shared equity arrangements present a unique approach to homeownership. In these agreements, a buyer partners with an investor or government entity to purchase a home. The buyer and the partner both contribute to the down payment and share in the home’s equity.

This method can significantly reduce the amount of money a buyer needs upfront, making homeownership more accessible. Additionally, shared equity arrangements often come with favorable terms for the buyer, such as lower interest rates or the option to buy out the partner’s share in the future.

However, it’s important to carefully consider the long-term implications. Sharing equity means sharing the profits when the home is sold, so buyers should weigh the benefits of immediate assistance against the potential future cost.

Creative financing options like rent-to-own, lease-purchase agreements, and shared equity arrangements can open doors to homeownership for many who might otherwise find it out of reach. By understanding and exploring these alternatives, you can find the path that best suits your needs and circumstances.

If you’re considering one of these options, it’s always wise to consult with a mortgage professional to ensure you make an informed decision. Give us a call, we can help you navigate the complexities of home financing and move closer to your dream of owning a home.

Understanding Foreclosure and How to Avoid It

August 8, 2024 by Coleen TeBockhorst

As a homeowner, the thought of foreclosure can be daunting. Understanding what foreclosure is and how to prevent it can provide peace of mind and safeguard your investment.

What is Foreclosure?

Foreclosure is a legal process where a lender attempts to recover the balance of a loan from a borrower who has stopped making payments. The lender forces the sale of the asset used as collateral for the loan—in this case, your home.

How Does Foreclosure Work?

The foreclosure process typically begins after several missed mortgage payments. First, the lender issues a notice of default, giving you a certain period to catch up on payments. If the default isn’t resolved, the lender can proceed with selling the home at a foreclosure auction.

Steps to Avoid Foreclosure

1. Communicate with Your Lender

Firstly, if you’re struggling to make payments, don’t ignore the problem. Contact your lender immediately to discuss your situation. They may offer options such as a loan modification or repayment plan.

2. Understand Your Mortgage Rights

Secondly, review your loan documents to understand your lender’s rights and your own. Knowing the timeline and procedures for foreclosure in your state can help you prepare and respond appropriately.

3. Explore Government Programs

Several federal programs are designed to help homeowners avoid foreclosure and offer various options such as refinancing and modification programs to make mortgage payments more affordable.

4. Consider Selling Your Home

If keeping up with mortgage payments is not feasible, selling your home may be a viable option. This can prevent foreclosure and protect your credit score. Work with a real estate agent to explore the best strategy for selling your home quickly and at a fair price.

5. Seek Professional Help

Do not hesitate to seek help from a HUD-approved housing counselor. These professionals can offer free or low-cost advice on avoiding foreclosure and managing your finances.

Foreclosure can be avoided with proactive steps and professional guidance. By communicating with your lender, understanding your mortgage rights, exploring government programs, considering selling your home, and seeking professional help, you can protect your home and your financial future.

Mortgage Insights: What You Need to Know About Financing a Fixer-Upper

August 7, 2024 by Coleen TeBockhorst

Buying a fixer-upper can be a strategic way to acquire a home below market value while customizing it to fit your needs. However, the financing process for these properties requires a bit of extra insight. As a loan officer, I’m here to guide you through the key mortgage considerations for purchasing a fixer-upper and help you secure the right financing to make your renovation dreams a reality.

Explore Specialized Loan Options

When it comes to financing a fixer-upper, traditional mortgages often fall short. Here are a few specialized loan options designed to address the unique needs of these properties:

FHA 203(k) Loans
The Federal Housing Administration (FHA) offers the 203(k) loan program, which allows you to finance both the purchase price and renovation costs. This type of loan is perfect for homes requiring major repairs or updates.
Fannie Mae HomeStyle Renovation Loans
Fannie Mae’s HomeStyle Renovation loan provides the flexibility to finance both the purchase and renovation of a property. This loan can be used for a variety of improvements and renovations, giving you more control over your investment.
VA Renovation Loans
If you are a veteran or an active-duty service member, the VA Renovation loan could be a great option. It combines the cost of the home and renovations into one loan, and it offers the advantage of no down payment for eligible borrowers.

Prepare for the Renovation Process

Securing the right mortgage is just the beginning. To ensure a smooth renovation experience, follow these key steps:

Conduct a Comprehensive Home Inspection – A thorough inspection is essential before you finalize your loan. It helps you identify the extent of repairs needed and avoid unforeseen issues that could impact your renovation budget.
Choose Certified Contractors – Lenders often require that renovations be carried out by licensed professionals. Ensure you select reputable contractors to meet loan requirements and achieve high-quality results.
Develop a Clear Renovation Plan – Outline your renovation goals, budget, and timeline. Share this plan with both your lender and contractor to align expectations and streamline the renovation process.

Financial Considerations

Financing a fixer-upper involves more than just securing a mortgage. Consider these financial aspects to ensure a successful investment:

Budget for Contingencies – Renovations can reveal unexpected problems. It’s wise to set aside extra funds to cover any surprises and avoid financial strain.
Assess Future Property Value – Research the potential increase in property value post-renovation. This will help you gauge the profitability of your investment and ensure you’re making a sound financial decision.

Navigating the mortgage process for a fixer-upper can be complex, but with the right knowledge and preparation, it’s a rewarding endeavor. By exploring specialized loan options and planning your renovation meticulously, you can transform a fixer-upper into a stunning home or a profitable investment.

Ready to get started? Contact me today to explore your mortgage options and take the first step toward turning your fixer-upper dreams into reality!

Understanding Your FICO Score: Key to Better Home Loan Rates

August 6, 2024 by Coleen TeBockhorst

When you’re looking to buy a home, one of the most important numbers you need to know is your FICO score. This three-digit number represents your creditworthiness and plays a crucial role in determining the terms of your home loan. Let’s discuss what a FICO score is, how it’s calculated, and why it matters for your home-buying journey.

What is a FICO Score?

A FICO score is a numerical representation of your creditworthiness, ranging from 300 to 850. It is calculated based on your credit report, which includes your payment history, amounts owed, length of credit history, new credit, and types of credit used. Essentially, it gives lenders an idea of how likely you are to repay borrowed money.

How is Your FICO Score Calculated?

Payment History (35%): Your track record of making payments on time.
Amounts Owed (30%): The total amount of credit and loans you are using compared to your total credit limit.
Length of Credit History (15%): How long you’ve been using credit.
New Credit (10%): Recent credit inquiries and newly opened accounts.
Types of Credit Used (10%): Your mix of credit accounts, such as credit cards, mortgage loans, and car loans.

Why Does Your FICO Score Matter?

Your FICO score is a critical factor that lenders use to determine your eligibility for a mortgage and the interest rate you will be offered. A higher score can lead to better loan terms, such as lower interest rates, which can save you thousands of dollars over the life of your mortgage. Conversely, a lower score might result in higher interest rates or even difficulty securing a loan.

Tips to Improve Your FICO Score

Pay Your Bills on Time: Consistently paying your bills by their due dates is the most impactful action you can take to improve your score.
Reduce Your Debt: Aim to keep your credit card balances low relative to your credit limits.
Check Your Credit Report Regularly: Ensure there are no errors on your report that could be negatively affecting your score.
Limit New Credit Applications: Too many inquiries in a short period can lower your score.
Maintain a Mix of Credit Types: Having a variety of credit types can positively influence your score.

Understanding and improving your FICO score is crucial for securing the best possible terms on a home loan. If you’re ready to take the next step in your home-buying journey, contact me today for personalized advice and guidance on your mortgage options. Let’s work together to make your dream home a reality!

What’s Ahead For Mortgage Rates This Week – August 5th, 2024

August 5, 2024 by Coleen TeBockhorst

The Federal Reserve’s decision to maintain the current interest rates has paved the way for a potential rate cut in September. While this news has been met enthusiastically by lending partners, the broader markets have indicated a slightly less warm reception despite both the data and Federal Reserve’s intentions being a match. Until September, we can expect a lull in significant data releases, with more substantial decisions anticipated then.

FOMC Rate Decision

Powell stated that the Federal Reserve seeks “a little more confidence” that inflation is consistently trending downward before taking action. The Federal Reserve’s benchmark short-term interest rate now stands at 5.25% to 5.5%. Although consumer prices spiked briefly in the first few months of the year, causing the Federal Reserve to hesitate, inflation has since calmed.

Consumer Confidence

The index of consumer confidence rose to 100.3 in July from a revised 97.8 in the prior month, the Conference Board said Tuesday. Economists polled by the Wall Street Journal had forecast the index would slip to 99.5 in July.

U.S. Hourly Wages

Wages rose a mild 0.2% last month. The increase in pay over the past year slowed to 3.6% from 3.8% in the prior month and is returning close to pre-pandemic levels.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 5.99%
30-Yr FRM rates are seeing a decrease by -0.05% with the current rate at 6.73%

MND Rate Index

30-Yr FHA rates saw a -0.22% decrease for this week. Current rates at 6.10%
30-Yr VA rates saw a -0.22% decrease for this week. Current rates at 6.12%

Jobless Claims

Initial Claims were reported to be 249,000 compared to the expected claims of 235,000. The prior week landed at 235,000.

What’s Ahead

Last week was tense as everyone anticipated the Federal Reserve’s decision to maintain interest rates. This week, apart from the usual unemployment data, there are only minor releases like the US Services PMI and Consumer Credit Reports, which aren’t expected to have a significant impact.

How to Upkeep Your Home with a Year-Round Maintenance Checklist

August 2, 2024 by Coleen TeBockhorst

Your home is more than just a building; it’s the setting for your life story. As you plan your monthly calendar, why not include enhancing and maintaining your home? Here, we provide a thorough guide of home maintenance tasks organized into monthly, seasonal, and year-round tips.

Monthly Home Maintenance Tips

Appliance Check – Regularly inspect and clean appliances such as refrigerator coils, dishwasher filters, and range hood filters. This not only keeps them running smoothly but also extends their lifespan.

Inspect Plumbing – Check for water pressure issues, dripping faucets, and running toilets. Tackling these promptly can conserve water and prevent costly repairs.

Outdoor Landscape Inspection – Examine gutters for debris and blockages. Clear them to ensure proper water flow and prevent potential water damage. Also, check your yard for drainage issues and make necessary adjustments to avoid water pooling around your home.

Pest Control – Look for signs of pests like rodents, insects, or termites. If you notice any issues, take steps to address them by sealing entry points, setting traps, or calling a pest control professional.

Seasonal Home Maintenance Tips

Spring

Exterior Inspection – Check for any winter damage on your home’s exterior, including roof shingles, siding, and foundation cracks.

Landscaping – Cut back trees and shrubs, clear debris from gutters, and check irrigation systems.

Summer

Swimming Pool Care – If you have a pool, perform regular maintenance like cleaning filters, checking water chemistry, and skimming for debris.

Deck and Patio Maintenance – Clean and reseal your deck or patio to protect it from the elements.

Water Usage Assessment – Reassess your water usage to ensure efficiency during the hot and dry months while maintaining your landscape.

Fall

Gutter Cleaning – Clean gutters at least two times a year to prevent clogs and ensure proper drainage.

Heating System Maintenance – Schedule a professional inspection of your heating system to ensure it’s ready for winter.

Lawn and Garden Watering Schedule – Adjust watering to early morning or late evening when temperatures are lower to reduce water evaporation.

Winter

Weatherproofing – Seal gaps in windows and doors to improve energy efficiency and reduce heating costs.

Insulation Check – Inspect caulking and weatherstripping around windows and doors, resealing any gaps to improve insulation.

Emergency Kits – Prepare kits with essential supplies in case of winter storms or power outages.

Year-Round Home Maintenance Tips

Leak Inspections – Regularly check for signs of water leaks or damage. Fixing them promptly can prevent costly repairs.

HVAC System Maintenance – Change air filters regularly and schedule annual professional maintenance for your heating and cooling systems.

Chimney Inspection and Cleaning – If you have a fireplace, have your chimney inspected and cleaned by a professional to remove creosote buildup, a potential fire hazard.

Roof Inspection – Examine your roof for loose, damaged, or missing shingles. Address issues promptly to prevent leaks and extend the roof’s life.

Safety Device Checks
Test smoke and carbon monoxide detectors monthly to ensure they work properly. Replace or service fire extinguishers as needed.

Maintaining Home Value on a Budget

DIY Repairs – Many maintenance tasks can be tackled with basic tools and knowledge. Save money by handling smaller repairs yourself.

Regular Cleaning – Keeping your home clean not only makes it more appealing but also prevents wear and tear.

Energy Efficiency – Invest in energy-efficient appliances and lighting to lower utility bills and increase your home’s value.

Plan and Prioritize – Create a maintenance schedule and budget. Prioritize essential repairs and upgrades.

Mastering home maintenance is about more than keeping your property in good condition; it’s about ensuring its value appreciates over time. A well-maintained home becomes a foundation for cherished memories and an investment that grows.

By following this comprehensive checklist of monthly, seasonal, and year-round tips, along with cost-effective strategies, you can maintain your home’s value without breaking the bank. Start your home maintenance journey today and enjoy a safe, comfortable, and valuable living space for years to come.

Managing Your Debt During the Homebuying Process: A Guide for Homebuyers

August 1, 2024 by Coleen TeBockhorst

Embarking on the journey to homeownership is an exciting milestone, but it also requires careful financial planning. One crucial aspect is managing your debt effectively. I want to ensure you have the tools and knowledge to navigate this process smoothly. Let’s discuss some essential strategies for managing your debt while purchasing a home.

Understand Your Debt-to-Income Ratio

Firstly, it’s essential to understand your debt-to-income (DTI) ratio. This ratio compares your monthly debt payments to your gross monthly income and is a critical factor lenders consider when approving a mortgage. A lower DTI ratio indicates you have a healthy balance between debt and income, making you a more attractive borrower.

Prioritize High-Interest Debt

Next, prioritize paying off high-interest debt. Credit cards typically have higher interest rates than other types of debt. By focusing on reducing or eliminating these balances, you’ll not only save on interest but also improve your credit score. Consequently, this can lead to better mortgage terms.

Avoid New Debt

Additionally, avoid taking on new debt during the home-buying process. New loans or credit card accounts can increase your DTI ratio and negatively impact your credit score. Instead, focus on maintaining your current financial status until your mortgage is finalized.

Create a Budget

Moreover, creating a budget is crucial. A well-planned budget will help you allocate funds for debt payments, savings, and other expenses. Tracking your spending ensures you stay on top of your financial obligations and avoid unnecessary expenditures.

Save for a Down Payment

Simultaneously, save for a substantial down payment. A larger down payment reduces the loan amount you’ll need and can lead to lower monthly payments. It also shows lenders that you have financial discipline and are less risky.

Communicate with Your Lender

Furthermore, maintain open communication with your lender. If you have any concerns or anticipate changes in your financial situation, inform them promptly. They can provide guidance and may offer solutions to help you manage your debt more effectively.

Seek Professional Advice

Finally, don’t hesitate to seek professional advice. Financial advisors and mortgage professionals can offer personalized strategies tailored to your situation. Their expertise can be invaluable in helping you manage debt and achieve homeownership successfully.

Managing your debt during the home-buying process requires careful planning and discipline. By understanding your DTI ratio, prioritizing high-interest debt, avoiding new debt, creating a budget, saving for a down payment, communicating with your lender, and seeking professional advice, you’ll be well-prepared to navigate this exciting journey.

#HomebuyingTips #DebtManagement #RealEstateAdvice #FinancialPlanning

How to Unlock Your Home’s Equity with a Cash-Out Refinance

July 31, 2024 by Coleen TeBockhorst

As a homeowner, you might be sitting on a valuable asset without even realizing it—your home equity. Tapping into this equity through a cash-out refinance can open up financial opportunities you hadn’t considered. Here’s how you can unlock your home’s equity with a cash-out refinance and what you need to know before diving in.

Understanding Cash-Out Refinance

First and foremost, a cash-out refinance involves replacing your existing mortgage with a new one, but with a larger loan amount. The difference between your old loan and the new loan is given to you in cash. This can be a strategic way to access significant funds, especially if your home’s value has increased over the years.

Assessing Your Home’s Equity

Before you proceed, it’s essential to determine how much equity you have in your home. Equity is calculated by subtracting your outstanding mortgage balance from the current market value of your home. For example, if your home is worth $500,000 and you owe $200,000, you have $300,000 in equity.

Benefits of Cash-Out Refinance

One of the primary advantages of a cash-out refinance is the ability to use the funds for a variety of purposes. You could:

Renovate Your Home: Enhance your living space and potentially increase your home’s value.
Consolidate Debt: Pay off high-interest debts, such as credit card balances, to streamline your finances.
Invest in Education: Fund your or your child’s education for long-term benefits.
Emergency Fund: Create a safety net for unexpected expenses.

The Process

Evaluate Your Goals: Determine why you need the funds and how much you need.
Check Your Credit Score: A higher credit score can secure better interest rates.
Consult a Mortgage Originator: Work with a professional to explore your options and understand the terms.
Appraisal: An appraisal will be conducted to assess your home’s current market value.
Underwriting: Your financial profile will be evaluated to ensure you qualify for the new loan.
Closing: Once approved, you’ll close on the new mortgage, and the cash-out amount will be disbursed.

Considerations and Risks

While a cash-out refinance can be advantageous, it’s crucial to consider the risks. You’re increasing your mortgage debt and potentially extending the term of your loan. Additionally, if property values decline, you could owe more than your home is worth. Always weigh the pros and cons and consult with a mortgage professional to make an informed decision.

Unlocking your home’s equity with a cash-out refinance can provide you with the financial flexibility to achieve various goals. By understanding the process and potential benefits, you can make a decision that aligns with your long-term financial plans. Always work with a trusted mortgage originator to guide you through the complexities and help you make the best choice for your situation.

How to Leverage Down Payment Assistance (DPA) Loans for Your Home Purchase

July 30, 2024 by Coleen TeBockhorst

Purchasing a home is a significant milestone, but the process can be intimidating, especially when it comes to saving for a down payment. Fortunately, Down Payment Assistance (DPA) loans offer a solution that can make homeownership more accessible. Let’s discuss how DPA loans work, their benefits and drawbacks, and the steps involved in leveraging these loans for your home purchase.

Understanding Down Payment Assistance (DPA) Loans

Down Payment Assistance (DPA) loans provide funds to help cover the down payment on a home. While DPA loans can cover 100% of your down payment, it’s important to note that closing costs are not included and must be paid separately. These loans can be a game changer for individuals who are eager to buy a home but struggle to save up the necessary down payment.

Features of DPA Loans

DPA loans come with several attractive features:

Low Mortgage Insurance Adjustments and No Income Limits: DPA loans often come with favorable mortgage insurance terms and are available to a wide range of income levels.
Zero Down Payment: With a DPA loan, you can potentially avoid making a down payment out of pocket.
Lower FICO Scores Accepted: These loans can be accessible even to those with lower credit scores.

Pros and Cons of DPA Loans

Before opting for a DPA loan, it’s essential to weigh the pros and cons.

Pros:

Reduced Financial Barriers: DPA loans lower the amount of money needed upfront, making homeownership more accessible to individuals who may not have significant savings.
Increased Buying Power: With financial assistance, buyers might afford a better home or a more desirable location than they could without the aid.

Cons:

Program Availability: Not all programs are available in every area. Research local and state programs to find out what’s available to you and consult with a loan officer for detailed information.
Repayment Terms: It’s crucial to understand the repayment terms of your DPA loan. Some DPA loans are grants, some are deferred loans, and others may be forgivable under certain conditions.

How Does Down Payment Assistance Work?

Navigating the process of securing a DPA loan involves several steps:

Determine Eligibility: Check the eligibility criteria for various DPA programs to see if you qualify. Eligibility requirements can vary significantly between programs.
Apply for a DPA Loan: Work with a loan officer to guide you through the application process. You will need to provide documentation such as income verification, tax returns, and credit reports.
Secure a Primary Mortgage: Once approved for a DPA loan, obtain a primary mortgage for the remaining balance of the home purchase price. Your lender will coordinate the DPA funds with your primary mortgage.
Close on the Home: At the closing, you will review and sign documents, pay closing costs, and receive the DPA funds to cover your down payment.
Repay the DPA Loan (if applicable): Understand the terms of your DPA loan. Some DPA loans are forgivable, while others require repayment under specific conditions.

Leveraging DPA loans can significantly ease the financial burden of purchasing a home. By reducing the upfront costs and increasing buying power, these loans can help many achieve their dream of homeownership. However, it’s important to thoroughly research available programs and understand the terms and conditions associated with repayment. Give me a call and I will provide clarity and guidance for you throughout the process.

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