Blog – CTeBockhorst's Blog

What’s Ahead For Mortgage Rates This Week – April 21st, 2025

April 21, 2025 by Coleen TeBockhorst

While the week had a significant absence of impactful data releases, there are still the notable U.S. retail figures numbers, as the turbulent tariff policies that have been announced have sent shockwaves across many industries. This time the U.S. retail sales have seen a significant jump as consumers try to get ahead of the tariff policies, although it is suspected that the subsequent data will show a significant curtailing of purchasing power by consumers. This restraint in the future is what has most analysts concerned about the future in addition to inflation rising as a result of the tariff policies.

U.S. Retail Sales

The numbers: Retail sales in the U.S. surged 1.4% in March—the biggest increase in more than two years—as shoppers sought to buy big-ticket items such as cars before Trump administration tariffs could raise prices.

The rise in sales surpassed Wall Street expectations, but it doesn’t mean the U.S. economy is trouble-free. The trade wars threaten to boost prices, fuel inflation and slow the economy in the months ahead if they persist.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.21% for this week, with the current rate at 6.03%
• 30-Yr FRM rates saw an increase of 0.21% for this week, with the current rate at 6.83%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.36%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.38%

Jobless Claims

Initial Claims were reported to be 215,000 compared to the expected claims of 225,000. The prior week landed at 224,000.

What’s Ahead

Watching where crude oil is headed in the coming weeks will also be important to see how international trade is handling the recent tariff policies. In addition, the Consumer Sentiment report will give a better indication of how safe consumers feel in the current climate, along with the Federal Reserve’s Beige Book.

What Every Buyer Should Know About Home Appraisals

April 18, 2025 by Coleen TeBockhorst

Buying a home is an exciting yet complex process, and one critical step often catches buyers off guard—the home appraisal. This professional evaluation determines the fair market value of a property, ensuring that both you and your lender are making a sound investment. Understanding how appraisals work can help you navigate this stage with confidence and avoid potential roadblocks.

What Is a Home Appraisal?

A home appraisal is an unbiased, professional assessment of a property’s value, conducted by a licensed appraiser. Mortgage lenders require an appraisal before approving a loan to confirm that the home’s value aligns with the purchase price. This step protects both the buyer and lender by ensuring the property isn’t overpriced.

Why Do Appraisals Matter?

Protects the Buyer: If an appraisal comes in lower than the agreed-upon price, it prevents you from overpaying and gives you leverage to renegotiate.
Protects the Lender: The home serves as collateral for your mortgage, so lenders need to verify its value before approving a loan.
Aids in Financial Planning: A fair valuation helps you assess the property’s future resale value and long-term investment potential.

When Does the Appraisal Take Place?

Once your offer is accepted, the lender will schedule an appraisal before closing. While the lender arranges it, the buyer usually covers the cost, which typically ranges from $300 to $600.

The Appraisal Process: What to Expect

Property Inspection – The appraiser visits the home to evaluate its condition, size, layout, and key features, including any upgrades.
Comparative Market Analysis (CMA) – They research similar recently sold properties (called “comps”) in the area to gauge market value.
Market Condition Evaluation – Factors like neighborhood trends, school districts, and overall real estate market performance are considered.
Appraisal Report – The appraiser compiles a detailed report, which includes:
- The estimated market value of the home
- A breakdown of the property’s condition and features
- Comparable property sales used in the valuation
- Any factors affecting the valuation

What Happens If the Appraisal Is Lower Than the Purchase Price?

A low appraisal can complicate your home purchase, but you have several options:

Renegotiate the Price – Ask the seller to lower the price to match the appraised value.
Cover the Difference – If allowed by your lender, you can pay the gap between the appraisal and the purchase price out of pocket.
Dispute the Appraisal – If you believe the appraiser overlooked important details, you can request a review.
Walk Away – If your contract includes an appraisal contingency, you can exit the deal without penalty.

How Buyers Can Prepare for an Appraisal

Research Local Market Trends – Understanding recent home sales in the area will help you set realistic expectations.
Attend the Appraisal (If Possible) – While not mandatory, being present can provide insight into how the appraiser evaluates the home.
Stay Calm – A low appraisal isn’t always a deal-breaker. There are ways to resolve the issue and keep your home purchase on track.

A home appraisal is a vital part of the buying process, ensuring that you’re making a smart investment. By understanding how it works, what factors influence the outcome, and how to handle potential challenges, you can move forward with confidence. Whether the appraisal confirms your purchase price or presents a hurdle to overcome, being informed will help you make the best decision for your future home.

Why Did My Mortgage Lender Change?

April 17, 2025 by Coleen TeBockhorst

Buying a home is one of the most significant financial steps you’ll ever take. After securing a mortgage, you expect to send your payments to the same lender for years to come. So, when you receive a notice saying your mortgage has been sold and your payments should now go to a different company, it might feel alarming. However, this is a common practice in the mortgage industry, and it doesn’t change the terms of your loan. Understanding why mortgages are sold can help ease any concerns.

Why Do Lenders Sell Mortgages?

When a lender issues a mortgage, they provide a large sum of money upfront so you can buy your home. However, instead of holding onto that loan for its entire term, lenders often sell mortgages to other financial institutions. This practice helps free up their capital, allowing them to continue offering new loans to other borrowers.

Mortgages are valuable financial assets, and like any asset, they come with both risks and rewards. By selling mortgages, lenders can reduce risk while maintaining a steady cash flow to finance more home purchases. Many mortgages are sold to government-sponsored enterprises like Fannie Mae or Freddie Mac, which then package them into mortgage-backed securities for investors.

What Happens When Your Mortgage Is Sold?

If your mortgage is sold, you’ll receive a formal notice informing you of the transfer. This notice will include details about your new loan servicer—the company responsible for handling payments and managing your loan. While the entity collecting your payments may change, your loan’s terms, including your interest rate, monthly payment, and repayment schedule, will remain exactly the same.

The only action you need to take is ensuring that you send payments to the correct servicer. Your notification will include instructions on where and how to make payments going forward. If you have automatic payments set up, be sure to update your banking details to avoid any missed payments.

Does This Affect Your Mortgage in Any Way?

For most borrowers, a mortgage sale has little to no impact. You still owe the same amount, your interest rate stays the same, and the length of your loan doesn’t change. In some cases, the new loan servicer may offer different online payment options or customer service features, but the core aspects of your loan remain intact.

While it might seem unsettling at first, mortgage sales are a routine part of the housing market. They allow lenders to keep issuing new loans, making homeownership more accessible to others. If you receive notice that your mortgage has been sold, rest assured that it’s simply a behind-the-scenes transaction that won’t affect your loan terms.

If your mortgage is transferred, don’t panic, just take the time to read the notification carefully and update your payment information as needed. Understanding how the mortgage market works can help you feel more confident in your homeownership journey.

The Facts and Fictions of Reverse Mortgages

April 16, 2025 by Coleen TeBockhorst

A reverse mortgage can be a powerful financial tool for homeowners aged 62 and older, providing access to home equity without the burden of monthly mortgage payments. If you’re considering this option, here’s a step-by-step guide to help you navigate the process.

Steps to Secure a Reverse Mortgage

Meet with a Reverse Mortgage Specialist
Before moving forward, consult with a professional to discuss your financial goals and determine if a reverse mortgage aligns with your needs. A specialist can explain the benefits, risks, and available options to ensure you make an informed decision.
Complete HUD-Approved Counseling
A mandatory counseling session with a HUD-approved agency is required. This ensures you fully understand the loan terms, repayment obligations, and how the reverse mortgage impacts your finances and heirs.
Submit Your Application and Get Approved
Once you decide to proceed, you’ll need to submit an application and provide necessary documentation. A financial assessment will be conducted to ensure you can meet loan obligations, such as property taxes, insurance, and home maintenance. Once all conditions are met, your loan moves to approval.
Close and Access Your Funds
After approval, you’ll finalize the loan through a closing process. You can then choose how to receive your funds, whether as a lump sum, line of credit, or monthly payments—based on your financial preferences.

What Heirs Need to Know

A reverse mortgage offers financial security for aging homeowners, but it’s essential for heirs to understand what happens when the borrower passes away.

Providing Peace of Mind

Reverse mortgages allow seniors to maintain their independence while reducing the financial strain on family members. This ensures they can continue living in their homes without relying on loved ones for financial support.

Handling the Home After the Borrower’s Passing

When the borrower is no longer living in the home, heirs have several options:

Sell the Property – The home can be sold, with proceeds used to pay off the loan. Any remaining equity belongs to the heirs.
Refinance the Loan – If heirs wish to keep the home, they can refinance the reverse mortgage into a traditional loan.
Walk Away Without Obligation – If the home’s value is less than the loan balance, heirs can choose to walk away, as reverse mortgages are non-recourse loans, meaning no additional financial responsibility falls on the family.

A reverse mortgage can be an excellent way for seniors to access their home equity while continuing to live comfortably. By understanding the process and educating heirs about their options, families can make well-informed decisions that benefit everyone involved.

Smart Strategies for Building an Emergency Fund

April 15, 2025 by Coleen TeBockhorst

Life is full of unexpected expenses, from medical bills to car repairs and even job loss. Having an emergency fund in place can help protect you from financial stress and prevent you from relying on high-interest loans or credit cards. If you don’t already have one, now is the perfect time to start building your safety net.

Why an Emergency Fund Matters
An emergency fund is a dedicated savings account meant to cover unexpected expenses such as:

Major home or appliance repairs
Car repairs or replacements
Unexpected medical bills
Job loss or reduced income

Without savings, many people turn to credit cards or loans, which can lead to more debt. An emergency fund provides peace of mind and financial stability when life throws a curveball.

How Much Should You Save?
Financial experts recommend saving three to six months’ worth of essential living expenses. This amount ensures you have enough funds to cover necessities if you lose your income or face a major expense. If that goal seems overwhelming, start small—any savings is better than none. The key is to begin and build over time.

Steps to Build Your Emergency Fund
1) Determine Your Savings Goal
To figure out how much you need, calculate your monthly expenses, including:

Rent or mortgage
Utilities (electricity, water, internet)
Groceries
Insurance (health, home, auto)
Car payments and transportation costs
Credit card or loan payments
Childcare or medical costs

Multiply that total by three to determine a three-month emergency fund goal, or by six for a more secure six-month fund.

2) Set Up Automatic Deposits
One of the easiest ways to save is to automate the process. Set up an automatic transfer from your paycheck or checking account into a separate savings account. This ensures consistency and removes the temptation to spend the money elsewhere.

3) Save Small Amounts Consistently
Even small contributions add up over time. Simple ways to save include:

Rounding up purchases and transferring the spare change into savings
Setting aside a percentage of each paycheck
Cutting back on non-essential expenses and redirecting that money to your emergency fund

4) Use Unexpected Money Wisely
If you receive a tax refund, work bonus, or other unexpected cash, consider saving a portion of it. Large lump sums can give your emergency fund a significant boost.

5) Keep Your Fund Separate and Untouched
It’s important to distinguish between emergency savings and other savings goals. While it may be tempting to dip into your fund for a vacation or new gadget, keep this money reserved strictly for true emergencies. If possible, open a separate account to prevent easy access.

Building an emergency fund takes time and discipline, but even small steps will help you create financial security. By consistently saving, automating deposits, and keeping your funds for true emergencies, you can protect yourself from unexpected financial stress and gain greater peace of mind.

What’s Ahead For Mortgage Rates This Week – April 14th, 2025

April 14, 2025 by Coleen TeBockhorst

Last week’s inflation reports, both the CPI and PPI, came in significantly cooler than expected. However, this must be viewed in the context of the administration’s recent tariff policies. Rather than signaling a healthy reduction in inflation, the data points to signs of deflation—which can be just as damaging to the economy as high inflation. While the FOMC Minutes offered little insight regarding interest rate changes, Federal Reserve Chairman Jerome Powell has made it clear that no action will be taken until more data becomes available. Finally, the latest consumer sentiment report dropped to its lowest level in three years, with inflation concerns reaching their highest point since 1981.

Consumer Price Index

Consumer prices fell in March for the first time since the outbreak of the coronavirus pandemic in 2020, but economists warn inflation could get worse if the U.S. retains higher tariffs on China and the rest of the world. The consumer-price index declined 0.1% last month, the Bureau of Labor Statistics said, aided by falling oil prices and lower airfares. It was the first drop since May 2020.

Producer Price Index

Cheaper oil has taken some pressure off on the inflation front, but it may only be temporary in the face of a major trade war between the U.S. and China. Wholesale prices in the U.S. fell 0.4% in March, dropping for the first time in 17 months, mimicking a similar report on consumer goods and services that showed retail-level inflation was muted last month.

Consumer Sentiment

The University of Michigan’s gauge of consumer sentiment fell to 50.8% in a preliminary April reading from 57.0% in the prior month. It is the lowest level since June 2022. Sentiment has dropped for four straight months and is down 30% from December. Economists polled by the Wall Street Journal had expected an April reading of 54.6%.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw no change from last week, with the current rate at 5.82%
• 30-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 6.62%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.47% for this week. Current rates at 6.50%
• 30-Yr VA rates saw an increase of 0.47% for this week. Current rates at 6.52%

Jobless Claims

Initial Claims were reported to be 223,000 compared to the expected claims of 223,000. The prior week landed at 219,000.

What’s Ahead

Very light release week with low impact data in the form of Federal Reserve’s beige book, Consumer Sentiment, and Leading U.S. Economic Indicators.

The Top 3 Home Loan Programs First-Time Buyers Should Consider

April 11, 2025 by Coleen TeBockhorst

Buying your first home is an exciting milestone, but navigating the mortgage process can feel overwhelming. With so many loan options available, it is important to choose one that best suits your financial situation and long-term goals. Here are three of the most popular home loan programs that first-time buyers should consider.

1. FHA Loan: Ideal for Buyers with Lower Credit Scores and Small Down Payments

The Federal Housing Administration (FHA) loan is a popular choice for first-time buyers because of its flexible requirements. FHA loans allow for lower credit scores and smaller down payments, making homeownership more accessible.

Down Payment: As low as 3.5 percent with a credit score of at least 580.
Credit Score Requirements: Borrowers with scores between 500-579 may still qualify with a 10 percent down payment.
Mortgage Insurance: Requires both an upfront and annual mortgage insurance premium (MIP), which increases the overall cost of the loan.
Flexible Debt-to-Income Ratios: Allows higher debt levels compared to conventional loans.

This loan is a great option for buyers who need a lower barrier to entry and are comfortable with paying mortgage insurance over the life of the loan or until refinancing into a conventional loan.

2. Conventional 97 Loan: Low Down Payment with No Upfront Mortgage Insurance

For first-time buyers who want a low down payment without the added cost of upfront mortgage insurance, the Conventional 97 loan backed by Fannie Mae and Freddie Mac is worth considering.

Down Payment: Requires just 3 percent down, making it an attractive alternative to FHA loans.
Credit Score Requirements: Generally requires a minimum score of 620, but better rates are available for scores above 700.
Mortgage Insurance: Private mortgage insurance (PMI) is required but can be removed once 20 percent equity is reached.
No Upfront Mortgage Insurance: Unlike FHA loans, there is no upfront insurance premium, which can save buyers money at closing.

This loan is ideal for buyers with decent credit scores who prefer a conventional loan structure and want to remove PMI once they build enough equity.

3. VA Loan: The Best Option for Eligible Military Members and Veterans

For service members, veterans, and eligible spouses, the VA loan offers unbeatable benefits that make homeownership more affordable.

Down Payment: No down payment required, which helps buyers save cash for other expenses.
Credit Score Requirements: No official minimum score, though most lenders prefer at least 620.
Mortgage Insurance: No private mortgage insurance (PMI) required, lowering monthly costs.
Competitive Interest Rates: VA loans often have lower rates than conventional or FHA loans.
Additional Benefits: Includes limits on closing costs, no prepayment penalties, and support from the VA if financial hardships arise.

For those who qualify, the VA loan is a powerful tool that eliminates many of the financial barriers to homeownership.

Choosing the Right Loan for You

Each loan program has its own advantages and trade-offs. The right option depends on your credit score, financial situation, and long-term goals. Here are some quick considerations to help you decide:

Choose FHA if you have a lower credit score and need a small down payment.
Choose Conventional 97 if you have a higher credit score and want to remove mortgage insurance later.
Choose VA if you are eligible and want the best loan terms with no down payment.

Taking the time to explore these loan options and speaking with a mortgage professional can help you make an informed decision and move forward confidently in your home-buying journey.

Why Your Mortgage Rate Isn’t the Same as the One Advertised Online

April 10, 2025 by Coleen TeBockhorst

Shopping for a mortgage can be exciting, but it can also be confusing when you see a low advertised rate online, only to be quoted a different rate when you apply. While this can be frustrating, there are several reasons why your actual mortgage rate may differ from what you initially expected. The good news is that understanding these factors can help you make informed decisions and secure the best possible rate for your financial situation.

Personal Financial Profile Matters

Advertised mortgage rates are typically based on ideal borrower profiles—those with excellent credit, low debt-to-income ratios, and substantial down payments. Lenders assess risk when determining mortgage rates, and factors such as your credit score, income stability, and outstanding debts can impact the rate you are offered. If your financial profile is strong, you are more likely to qualify for the lowest available rates.

Loan Type and Terms Affect Rates

Not all mortgage loans are the same, and different types of loans come with varying interest rates. Fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and jumbo loans all have unique risk factors that influence the interest rate. Additionally, the term length of your mortgage—whether 15, 20, or 30 years—can affect your rate, with shorter terms generally offering lower rates.

Market Conditions Play a Role

Mortgage rates fluctuate based on economic conditions, including inflation, Federal Reserve policies, and the overall health of the financial markets. Advertised rates may reflect conditions at a specific moment in time, but by the time you apply, rates may have shifted. Staying informed about market trends can help you time your application wisely.

Discount Points and Fees Influence the Rate

Some advertised rates assume that borrowers will pay discount points upfront to lower their interest rates. If the rate you saw online was based on paying points and you prefer not to pay them, your quoted rate may be higher. Additionally, fees associated with loan origination, underwriting, and closing costs can affect the overall cost of your mortgage.

Locking in Your Rate at the Right Time

Mortgage rates can change daily, and a delay in locking in your rate may result in a different rate than what was originally quoted. Lenders offer rate locks to protect you from market fluctuations, but the length of the lock period and any changes in your financial profile can influence the final rate.

How to Get the Best Rate Possible

The key to securing the most competitive mortgage rate is preparation. Here are a few steps to improve your chances:

Boost Your Credit Score: Pay down debt, make on-time payments, and check your credit report for errors.
Save for a Larger Down Payment: A higher down payment can reduce your loan-to-value ratio, leading to better rates.
Compare Lenders: Rates and fees vary, so shopping around can help you find the best deal.
Consider Timing: If possible, monitor market trends and apply when rates are favorable.

While the rate you are offered may not always match the one advertised online, there are many ways to position yourself for the best mortgage deal. By understanding the factors at play and preparing accordingly, you can take control of your home financing journey with confidence.

The Airbnb Factor and How Renting Out a Room Can Help You Qualify for a Mortgage

April 9, 2025 by Coleen TeBockhorst

With rising home prices and strict lending requirements, many aspiring homeowners are looking for creative ways to strengthen their mortgage applications. One potential game-changer? Renting out a room on Airbnb or another short-term rental platform. This additional income stream could help you qualify for a mortgage and make homeownership more affordable.

How Lenders View Rental Income

Lenders primarily assess your mortgage application based on your income, credit score, debt-to-income (DTI) ratio, and financial stability. While traditional employment income is the gold standard, many lenders are now recognizing rental income as a legitimate source of earnings. However, how they factor in Airbnb income varies based on the lender, loan type, and your rental history.

For lenders to consider Airbnb income in your application, you typically need to meet certain requirements:

Documented Rental History: Most lenders require at least one to two years of consistent short-term rental income, verified through tax returns or bank statements.
Stable Occupancy Rates: If your Airbnb rental is sporadic, lenders may discount the income or exclude it altogether.
Legal and Zoning Compliance: Your property must comply with local short-term rental regulations to ensure the income is legitimate and sustainable.

Boosting Your Mortgage Approval Odds with Airbnb Income

If you are considering using Airbnb income to help secure a mortgage, here are a few key strategies:

Keep Detailed Records: Lenders will want proof of rental income, so maintaining clean records, including Airbnb earnings statements and tax filings, is crucial.
Consider a Debt-to-Income Boost: If your primary job income isn’t quite enough to meet lender requirements, rental income can help lower your DTI ratio by increasing your overall earnings.
Show Rental Stability: If possible, provide proof of consistent bookings and positive guest reviews. Some lenders may be more flexible if you can demonstrate that your property has a steady demand.
Opt for a Lender-Friendly Loan Program: Some loan programs, such as those offered by Fannie Mae and Freddie Mac, have provisions that allow rental income to be considered. Consulting with a mortgage professional can help you identify the best options.

Things to Watch Out For

While Airbnb income can be a powerful tool in mortgage approval, there are risks and challenges to consider:

Lender Restrictions: Not all mortgage lenders accept short-term rental income, so it’s essential to find one that does.
Market Volatility: Short-term rental demand can fluctuate due to seasonal changes, economic downturns, or local regulations.
Property Insurance and Liability: Some lenders require specific homeowner’s insurance policies that cover short-term rentals, which may be more expensive.

Renting out a room on Airbnb can be a great way to boost your income and increase your mortgage eligibility. However, it’s important to have a well-documented and consistent rental history to convince lenders of its reliability. If you’re considering this route, working with a knowledgeable mortgage professional can help you navigate lender requirements and maximize your chances of approval.

How Your Netflix Subscription Might Affect Your Mortgage Approval

April 8, 2025 by Coleen TeBockhorst

When applying for a mortgage, you expect lenders to scrutinize your income, credit score, and debt-to-income ratio. But did you know that your Netflix subscription—or any other recurring expense—could play a role in your approval?

While a $15-per-month streaming service may seem insignificant, lenders are increasingly looking at all aspects of your financial behavior, including discretionary spending. Here’s how something as small as your entertainment subscriptions could influence your mortgage approval.

Open Banking and Subscription Spending
The rise of open banking has allowed lenders to gain deeper insights into your financial habits. Instead of just looking at credit reports and pay stubs, some lenders now use AI-driven tools to analyze bank transactions. That means your Netflix, Hulu, and Amazon Prime subscriptions, along with gym memberships, meal delivery services, and other recurring expenses, may be factored into their risk assessment.

Lenders want to determine how much disposable income you have after fixed expenses. If your bank statements reveal excessive discretionary spending, they might question whether you can comfortably afford your mortgage payments.

Debt-to-Income Ratio and Lifestyle Spending
Your debt-to-income (DTI) ratio is one of the most critical factors in mortgage approval. It’s calculated by dividing your total monthly debt payments by your gross monthly income. While streaming subscriptions aren’t technically considered “debt,” they are recurring financial obligations that impact how much cash you have left at the end of each month.

If your DTI is already near the threshold lenders consider acceptable—typically under 43% for most conventional loans—additional expenses, even small ones, could make a difference. Lenders may view excessive subscriptions or high entertainment spending as a sign that you are stretching your budget too thin.

How to Improve Your Mortgage Readiness
If you’re planning to apply for a mortgage soon, consider tightening up your spending habits:

Audit Your Subscriptions: Take a close look at all your recurring charges. Cancel unused or unnecessary services to reduce your financial obligations.
Minimize Discretionary Spending: In the months leading up to your mortgage application, try to keep entertainment and luxury expenses in check. A conservative approach to spending could improve your mortgage eligibility.
Show Consistent Savings: Lenders love to see a healthy savings account. Reducing subscriptions and unnecessary expenses can help you save more, demonstrating financial stability.
Keep Bank Statements Clean: Since lenders often request two to three months of bank statements, avoid any unusual spending patterns that could raise red flags.

While a single Netflix subscription is unlikely to make or break your mortgage approval, your overall spending habits do matter. The rise of open banking means lenders can see more of your financial life than ever before. Taking proactive steps to manage your subscriptions and discretionary spending can strengthen your mortgage application and improve your chances of approval.

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