What’s Ahead For Mortgage Rates This Week – April 7th, 2025

April 7, 2025 by Coleen TeBockhorst

The previous week has seen tremendous impacts with the Trump administration’s recently revealed tariff policies, sparking widespread concern about their broad economic effects. These concerns have already led to rapid contractions in multiple markets.

Jerome Powell, Chairman of the Federal Reserve, has stated he is very uncertain about any moves made by the Federal Reserve and wants to wait for additional information before making decisions.

Uncertainty is at an all-time high, without much relief—even in light of positive data from previous months. Without any clear direction, there is growing speculation that inflation will only increase from here. Meanwhile, employment data has already shown a rapid increase in unemployment forecasts.

U.S. Employment Report

The U.S. added a bigger-than-expected 228,000 jobs in March. Good news to be sure, but that was before President Trump unveiled norm-shattering tariffs on the rest of the world, the repercussions of which are yet to be felt on the labor market. Economists polled by the Wall Street Journal had forecast an increase of 140,000 new jobs in March vs a revised 117,000 gain in February. The unemployment rate, meanwhile, moved up to 4.2% from 4.1%, matching the highest rate in five months.

ISM Manufacturing

According to the Institute for Supply Management (ISM), tariffs are driving up business costs and dampening economic activity. U.S. manufacturers appear to have slipped back into a slump, facing higher input prices and weaker demand due to President Donald Trump’s new metal tariffs and pending duties on other imported goods. ISM’s manufacturing index fell to 49% in March, down from 50.3% the previous month—any reading below 50% indicates a contraction in the sector.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.07% with the current rate at 5.82%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.64%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.15% for this week. Current rates at 6.03%
• 30-Yr VA rates saw a decrease of -0.15% for this week. Current rates at 6.05%

Jobless Claims

Initial Claims were reported to be 219,000 compared to the expected claims of 228,000. The prior week landed at 225,000.

What’s Ahead

Following reports that the tariff news has disrupted market expectations, we should anticipate that both the CPI and PPI forecasts will come in higher than expected.

Understanding the Role of the Federal Reserve in Mortgage Rates

April 4, 2025 by Coleen TeBockhorst

When you’re thinking about buying a home, you may hear a lot about mortgage rates going up or down. But have you ever wondered what causes these changes? One of the biggest influences on mortgage rates is the Federal Reserve, often called “the Fed.” While the Fed doesn’t set mortgage rates directly, its policies play a major role in how much you’ll pay for your home loan. Let’s break it down in simple terms:

What is the Federal Reserve?
The Federal Reserve is the central bank of the United States. Its main job is to keep the economy stable by managing inflation, employment, and interest rates. Think of the Fed as the “guardian” of the economy, adjusting financial policies to keep things running smoothly.

How the Fed Influences Mortgage Rates
The Fed doesn’t set mortgage rates directly. Instead, it controls something called the federal funds rate, which is the interest rate banks charge each other to borrow money overnight. Changes in this rate have a ripple effect on other interest rates, including those for mortgages.

Here’s how it works:

When the Fed raises rates – Borrowing money becomes more expensive for banks, and they pass that cost onto consumers in the form of higher mortgage rates.
When the Fed lowers rates – Borrowing becomes cheaper, and mortgage rates often decrease, making it more affordable to buy a home.

Why Does the Fed Raise or Lower Rates?
The Fed adjusts rates based on the overall health of the economy.

If inflation is high – The Fed raises interest rates to slow down spending and borrowing. This helps bring inflation under control but can make mortgage rates higher.
If the economy is struggling – The Fed lowers rates to encourage borrowing and spending, which can lead to lower mortgage rates and make homeownership more affordable.

How Fed Decisions Affect Homebuyers
Since mortgage rates influence your monthly payments, even a small increase can mean paying thousands more over the life of your loan. Let’s look at an example:

A $300,000 loan at 3% interest – Monthly payment: approximately $1,265
A $300,000 loan at 6% interest – Monthly payment: approximately $1,798

That’s a significant difference. Keeping an eye on Fed rate changes can help you decide when to lock in a mortgage rate.

Tips for Homebuyers in a Changing Rate Environment

Get Pre-Approved Early – Locking in a rate when they’re low can save you money.
Consider Adjustable-Rate Mortgages (ARMs) – If rates are high, an ARM might offer lower initial payments.
Work on Your Credit Score – The better your credit, the better the rate you’ll qualify for.
Talk to a Mortgage Professional – An expert can help you navigate the market and choose the best loan for your situation.

While the Federal Reserve doesn’t directly control mortgage rates, its decisions have a significant impact on the housing market. Understanding how the Fed influences interest rates can help you make informed decisions when buying or refinancing a home.

The Importance of Communication Between Mortgage Originators and Clients

April 3, 2025 by Coleen TeBockhorst

Effective communication between mortgage originators and clients is essential in ensuring a smooth, stress-free home financing process. Purchasing a home is one of the biggest financial decisions a person can make, and navigating the mortgage process can be overwhelming. Strong communication helps clients understand their options, stay informed, and ultimately secure the best loan for their needs.

Here’s why maintaining open and clear communication is vital in the mortgage process:

Setting Clear Expectations — One of the biggest reasons for miscommunication in the mortgage process is a lack of clarity on what to expect. A mortgage originator should provide a roadmap of the entire loan process, from application to closing. Clients need to be aware of key steps, required documents, and potential challenges that may arise. By setting clear expectations upfront, mortgage professionals can reduce confusion and minimize delays.
Reducing Stress and Anxiety — Applying for a mortgage can be a daunting experience, especially for first-time homebuyers. When clients do not receive timely updates, they may feel anxious about their loan approval status or next steps. Regular check-ins and proactive communication help ease worries and keep clients confident throughout the process. Whether through emails, phone calls, or online portals, keeping clients informed helps build trust and transparency.
Avoiding Costly Mistakes and Delays — Miscommunication or lack of communication can lead to costly mistakes that delay loan approvals or even cause deals to fall through. Missing paperwork, incorrect financial information, or misunderstanding loan terms can create obstacles in the mortgage process. A mortgage originator who actively communicates and ensures clients understand all requirements can help prevent these issues before they become major problems.
Educating Clients on Loan Options — Many borrowers are unaware of the different mortgage products available to them. Without clear guidance, they may settle for a loan that does not align with their financial goals. By taking the time to explain various loan options, interest rates, and down payment requirements, mortgage professionals empower clients to make informed decisions. Understanding the pros and cons of FHA, VA, USDA, or conventional loans can help clients choose the best fit for their needs.
Building Long-Term Relationships — Strong communication fosters long-term client relationships. A mortgage originator who is responsive, knowledgeable, and approachable is more likely to earn repeat business and referrals. Homebuyers remember positive experiences and are more likely to recommend their mortgage professional to friends and family. Effective communication not only benefits the current transaction but also contributes to future business growth.
Handling Changes in Loan Conditions — The mortgage process can be unpredictable, and sometimes interest rates, loan terms, or financial conditions may change. Clients need to be aware of any shifts that may affect their loan approval. Mortgage originators must be transparent about these changes and provide guidance on how to proceed. Prompt and honest communication ensures clients are prepared for any adjustments and can make necessary financial decisions accordingly.
Enhancing Client Confidence and Satisfaction — A mortgage originator who prioritizes communication helps clients feel valued and understood. When borrowers receive timely responses and clear explanations, they gain confidence in their mortgage professional’s ability to handle their loan. This leads to higher client satisfaction, positive reviews, and increased credibility in the industry.

Communication is the foundation of a successful mortgage transaction. By keeping clients informed, setting clear expectations, and providing education on loan options, mortgage originators can create a smooth and efficient home-buying experience. Effective communication reduces stress, prevents delays, and builds long-term client trust.

Creative Ways to Use Mortgage Pre-Approval to Your Advantage

April 2, 2025 by Coleen TeBockhorst

When shopping for a home, securing mortgage pre-approval is one of the most important steps you can take. Not only does it show sellers that you are a serious buyer, but it also gives you a clearer picture of your budget and financing options. However, many homebuyers do not realize that mortgage pre-approval can be leveraged in multiple ways to maximize their home search and negotiation power.

Strengthen Your Offer in a Competitive Market
In today’s fast-moving real estate market, multiple offers are common, and homes sell quickly. Having a mortgage pre-approval letter in hand can set you apart from other buyers. Sellers are more likely to accept offers from buyers who have already secured financing since it reduces the risk of the deal falling through due to financial issues.

Gain a Competitive Edge in Negotiations
A strong pre-approval not only makes you an attractive buyer but also gives you leverage during negotiations. Sellers may be more willing to accept a lower offer if they know the financing is already in place, reducing delays and uncertainty.

Identify Your True Budget
Pre-approval helps you determine the maximum loan amount a lender is willing to offer, but that does not mean you should borrow up to that limit. By knowing your approved amount, you can confidently search for homes that fit within your comfort zone without overspending.

Speed Up the Closing Process
A mortgage pre-approval means much of the underwriting process has already been completed, allowing you to close on your new home faster. This can be a significant advantage if you are in a time-sensitive situation, such as relocating for a job or moving before your current lease expires.

Show Confidence to Real Estate Agents
Agents take pre-approved buyers more seriously because it signals that you are ready to move forward with a purchase. This means you will receive more attention, better service, and access to homes that match your financial qualifications.

Secure Better Loan Terms
Getting pre-approved gives you a chance to compare different lenders and loan options before committing. This allows you to shop for the best interest rates, down payment requirements, and loan terms, ensuring you get the most favorable deal.

Avoid Last-Minute Surprises
Without pre-approval, buyers sometimes fall in love with homes they later find out they cannot afford. Pre-approval prevents this by setting clear expectations upfront, avoiding heartbreak and wasted time.

Mortgage pre-approval is not just a box to check, it is a powerful tool that can give you an advantage throughout your home-buying journey. From making stronger offers to negotiating better terms, using your pre-approval strategically can make all the difference.

If you are ready to start house hunting, let’s connect. I can guide you through the pre-approval process and help you make the most of your mortgage options.

Challenges and Solutions for Mortgages in Remote Areas

April 1, 2025 by Coleen TeBockhorst

Buying a home in a remote area can be a dream come true—peaceful surroundings, open spaces, and a slower pace of life. However, securing a mortgage for these properties comes with unique challenges. As a mortgage originator, I’m here to break down the hurdles and offer solutions so you can make your rural homeownership dreams a reality.

Challenges of Securing a Mortgage in Remote Areas

Limited Lender Availability
Many traditional lenders hesitate to finance rural properties due to lower housing demand, unique appraisal difficulties, and the risk of market fluctuations.
Higher Interest Rates & Stricter Requirements
Lenders may charge higher interest rates or require a larger down payment to mitigate perceived risks in remote areas.

Appraisal Complexities
Since rural properties have fewer comparable sales (“comps”), appraisers may struggle to assess an accurate market value, potentially affecting loan approvals.

Property Restrictions
Some remote homes may be off-grid, lack traditional utilities, or sit on large plots of land—factors that can disqualify them from conventional loan programs.

Accessibility & Infrastructure Issues
Lenders consider road access, emergency services, and property maintenance when evaluating loans. If a home is too isolated or lacks year-round access, it may impact eligibility.

Solutions & Mortgage Options

USDA Loans – A great option for eligible buyers in designated rural areas, offering 100 percent financing and low-interest rates.
FHA Loans – While typically used in suburban and urban areas, FHA loans can work for remote properties as long as they meet HUD requirements.
VA Loans – Eligible veterans can secure zero-down loans for rural properties, provided the home meets VA appraisal standards.
Portfolio Loans – Some smaller banks and credit unions offer in-house lending solutions for unique rural properties.
Construction Loans – If you’re building in a remote area, construction-to-permanent loans can finance both the land and the home.
Seller Financing – In cases where traditional financing is challenging, negotiating directly with the seller may be an option.

While financing a home in a remote area comes with challenges, the right mortgage strategy can open doors to your dream home. Working with an experienced mortgage professional ensures you explore all available options and secure the best possible loan.

Thinking about purchasing in a remote area? Let’s connect and discuss the best mortgage solutions for your needs.

What’s Ahead For Mortgage Rates This Week – March 31st, 2025

March 31, 2025 by Coleen TeBockhorst

With the introduction of tariffs on Tuesday, there is significant uncertainty across all sectors regarding the potential outcome. While important data releases—including the PCE Index, Personal Income & Spending, and Consumer Sentiment for the quarter—have taken place, their impact is expected to be largely overshadowed by apprehension surrounding the widespread tariff decisions.

With the upcoming release of inflation reports, including the CPI and PPI this week, all eyes will be on these two key metrics. The focus remains on tariffs and their impact on the markets, as well as inflation, which is likely to be influenced by the new tariff policies.

PCI Index

A separate measure of prices known as the core rate rose a sharper 0.4% in February, a tick above Wall Street’s forecast. The increase in the core PCE in the past year climbed to 2.8% from 2.7%. The core rate omits food and energy prices, which often jump up and down in the short run. It’s seen as a better predictor of future inflation.

Consumer Spending

Consumer spending rose a modest 0.4% last month, the government said, and rebounded from a decline in January. Economists surveyed by The Wall Street Journal had projected a 0.5% gain. Household spending is the main engine of the U.S. economy, but it appears to have sputtered in early 2025.

Consumer Sentiment

The final reading of consumer sentiment in March fell to a 32-month low, as more Americans than at any time since the financial crisis think unemployment will rise in the year ahead. The second of two readings of the consumer-sentiment survey fell to 57.0 from an initial 57.9, the University of Michigan said Friday.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.06% with the current rate at 5.89%
• 30-Yr FRM rates saw a decrease of -0.02% with the current rate at 6.65%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.03% for this week. Current rates at 6.18%
• 30-Yr VA rates saw an increase of 0.03% for this week. Current rates at 6.20%

Jobless Claims

Initial Claims were reported to be 224,000 compared to the expected claims of 226,000. The prior week landed at 225,000.

What’s Ahead

CPI and PPI are ahead next week as well as the tariffs, which are set to be in effect starting Tuesday.

Can I Get a Mortgage Without a Credit Score By Using Alternative Credit History?

March 28, 2025 by Coleen TeBockhorst

If you’ve been managing your finances responsibly but don’t have a traditional credit score, you may be wondering whether homeownership is still within reach. The good news? It is! While most mortgage lenders rely on credit scores to assess your creditworthiness, alternative credit history—like rent payments, utility bills, and other recurring expenses—can help you qualify for a mortgage.

What Is Alternative Credit History?

Alternative credit history consists of financial records that demonstrate your ability to manage debt and make payments on time, even if you don’t have a credit card or traditional loans. Some examples include:

Rent payments – A history of on-time rent payments can be a strong indicator of financial responsibility.
Utility bills – Consistent payments for electricity, water, gas, and even phone bills can showcase your reliability.
Insurance premiums – Paying for car, health, or renter’s insurance on time adds to your credibility.
Streaming or subscription services – Some lenders may even consider consistent payments for services like Netflix or a gym membership.

How Do Mortgage Lenders Use Alternative Credit?

Some lenders, especially those offering FHA, VA, and USDA loans, accept alternative credit data in place of a credit score. Instead of pulling a standard credit report, they may request documentation proving your payment history, such as:

Canceled checks
Bank statements showing recurring payments
Letters from landlords or service providers confirming on-time payments

Additionally, Fannie Mae and Freddie Mac now allow rent payments to be factored into credit evaluations when applying for conventional loans, making it easier for first-time homebuyers to qualify.

What Are the Requirements?

While each lender may have different criteria, here are some general guidelines to keep in mind:

A strong rental history – Typically, lenders want to see at least 12 months of consistent, on-time rent payments.
Three or more alternative credit sources – Having multiple payment histories helps build a well-rounded financial profile.
Stable income and employment – Lenders still evaluate your ability to afford a mortgage based on your earnings and job history.
Low debt-to-income (DTI) ratio – Keeping your total monthly debts (including the future mortgage payment) below 43% of your income improves your chances of approval.

Which Mortgage Programs Accept Alternative Credit?

If you don’t have a traditional credit score, consider these mortgage options:

FHA Loans – Backed by the Federal Housing Administration, FHA loans are ideal for borrowers with limited credit history.
VA Loans – If you’re a veteran or active-duty military member, VA loans offer flexible credit requirements.
USDA Loans – Designed for rural homebuyers, these loans allow alternative credit history for qualification.
Manual Underwriting on Conventional Loans – Some lenders offer manually underwritten loans, meaning a person (rather than an automated system) reviews your finances.

Tips for a Successful Mortgage Application

Keep records of payments – Save bank statements, receipts, and letters from service providers.
Use a rent-reporting service – Some companies, like RentTrack or Experian Boost, can help report your rent payments to credit bureaus.
Work with a knowledgeable mortgage lender – Not all lenders accept alternative credit, so finding one who specializes in this process is key.

Yes, you can get a mortgage without a credit score! By leveraging alternative credit history, demonstrating financial responsibility, and choosing the right loan program, you can achieve homeownership—even without a traditional credit report. If you’re unsure where to start, connect with a mortgage professional who can guide you through the process and help make your dream of owning a home a reality.

The Difference Between FICO Score and Credit Score: How It Affects Your Mortgage and Rates

March 26, 2025 by Coleen TeBockhorst

When applying for a mortgage, your creditworthiness plays a significant role in determining your loan approval and interest rates. Two commonly referenced terms are FICO score and credit score, which are often used interchangeably but have distinct differences.

1. What is a Credit Score?

A credit score is a broad term that refers to a numerical representation of a consumer’s credit risk. It is calculated based on various scoring models, including FICO and VantageScore, and is derived from credit report data such as payment history, credit utilization, and length of credit history.

2. What is a FICO Score?

A FICO score is a specific type of credit score developed by the Fair Isaac Corporation. It is the most widely used scoring model by mortgage lenders. FICO scores range from 300 to 850 and are calculated based on five key factors:

Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
Credit mix (10%)
New credit inquiries (10%)

3. How Do They Affect Your Mortgage?

Interest Rates: A higher FICO score typically qualifies you for lower mortgage interest rates, while a lower score may result in higher rates or loan denial.
Loan Approval: Lenders often have minimum credit score requirements, and FICO scores are a primary factor in the underwriting process.
Loan Terms: Your score can affect down payment requirements and loan programs available to you, such as conventional, FHA, or VA loans.

4. Key Differences

Scope: Credit scores can come from various models, while FICO is a specific scoring model.
Usage: Most mortgage lenders rely heavily on FICO scores for risk assessment.
Impact: Your FICO score has a direct influence on mortgage rates and loan eligibility.

Understanding the distinction between a FICO score and a credit score is essential when preparing for a mortgage application. By improving your FICO score, you can increase your chances of securing better loan terms and lower interest rates.

Navigating Mortgages as a Self-Employed Professional

March 25, 2025 by Coleen TeBockhorst

Securing a mortgage as a self-employed professional can be more challenging than for traditional W-2 employees, but with the right preparation and documentation, it is entirely achievable. Here’s a guide to help you navigate the process:

Document Your Income
Lenders need to assess your financial stability and income consistency. To do this, you’ll need to provide:
- Tax returns for the past two years
- Profit and loss statements
- Bank statements
- Client invoices or contracts
- Consistency is key, so showing steady or increasing income over time strengthens your application.
Manage Your Tax Returns
Many self-employed individuals minimize their taxable income through deductions, but this can reduce the income lenders consider when evaluating your mortgage application. It’s essential to strike a balance between tax savings and showing sufficient income for loan qualification.
Boost Your Credit Score
A strong credit score can offset some of the challenges associated with self-employment. Pay down debt, make timely payments, and avoid opening new lines of credit before applying for a mortgage.
Increase Your Down Payment
A larger down payment can make you a more attractive borrower. It reduces the lender’s risk and can help you secure better interest rates.
Work with a Mortgage Professional
Partnering with a mortgage originator who understands the unique needs of self-employed borrowers can make a significant difference. They can help you find lenders that specialize in working with non-traditional income streams.

While obtaining a mortgage as a self-employed professional may require additional effort, proper documentation, financial management, and the right guidance can help you achieve your homeownership goals.

Mortgage Interest Rates and Affordability in Minneapolis–St. Paul

March 24, 2025 by Coleen TeBockhorst

What Homebuyers Need to Know

In today’s real estate market, mortgage interest rates and affordability are two of the most important factors homebuyers in Minneapolis–St. Paul must consider. With average rates in Minnesota hovering around 6.58% for 30-year fixed loans and 5.96% for 15-year loans (as of March 2025), understanding how these rates affect what you can afford is more critical than ever. Whether you’re a first-time homebuyer or planning to refinance, this guide will help you make informed, confident decisions.

How Mortgage Interest Rates and Affordability Affect Homebuyers in Minneapolis–St. Paul

Interest rates directly impact your monthly payment and the total cost of your loan. Even a slight increase can significantly raise what you pay over time. For example:

On a $350,000 loan at 5.5%, your monthly principal and interest would be about $1,987
At 6.5%, that jumps to about $2,212

That’s a difference of nearly $225/month—or $81,000 over 30 years. With home prices in the Minneapolis–St. Paul metro area reaching a median of $340,000, higher rates are putting pressure on affordability like never before.

Why Mortgage Interest Rates Remain High in Today’s Housing Market

Several national and local economic factors are keeping interest rates elevated:

Inflation and Federal Reserve Policy: The Fed has taken aggressive action in recent years to fight inflation, resulting in higher borrowing costs.
Strong Local Demand: Minneapolis–St. Paul remains one of the most desirable housing markets in the Midwest, sustaining buyer interest even in a high-rate environment.
Limited Housing Inventory: A shortage of available homes is also keeping prices high, further compounding affordability challenges.

Smart Strategies to Improve Mortgage Affordability Despite High Interest Rates

While you can’t control the market, you can take steps to improve your mortgage affordability:

1. Boost Your Credit Score to Qualify for Lower Mortgage Interest Rates

Better credit = better rates. Aim for a FICO score of 740+ to qualify for the lowest available rates.

2. Explore Loan Types That Improve Affordability in High-Rate Markets

You may be eligible for:

FHA loans with lower down payments and flexible credit requirements
Adjustable-rate mortgages (ARMs) with lower initial rates
First-time homebuyer programs offering down payment assistance

3. Choose the Right Loan Term to Balance Interest Rates and Monthly Costs

While 15-year loans have higher monthly payments, they come with lower interest rates and long-term savings.

4. Work With a Trusted Local Lender

Local lenders often provide personalized service, quicker closings, and access to exclusive community loan programs that national banks can’t match.

Mortgage Affordability Tips for Minneapolis–St. Paul Homebuyers

In a city like Minneapolis where the housing market remains competitive, buyers need to be especially strategic. With fewer homes available and rising rates, it’s important to:

Get pre-approved before you shop
Lock in a rate as soon as you find the right home
Consult with a mortgage expert who understands the local market

Final Thoughts on Mortgage Interest Rates and Affordability

Mortgage interest rates and affordability go hand-in-hand—and right now, both are major considerations for Twin Cities homebuyers. By staying informed, improving your financial profile, and working with a knowledgeable mortgage advisor, you can still find a home that fits your budget and lifestyle.

📖 Want more expert tips? Check out our guide on Mortgage Interest Rates and Fees to dive deeper into how you can save.

📞 Ready to take the next step? Contact Coleen TeBockhorst at 612-701-8512 or visit Bay Equity Home Loans – Coleen TeBockhorst for personalized guidance.

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