Blog – CTeBockhorst's Blog

What Your Coffee Habit Can Teach You About Paying Off Your Mortgage Faster

May 20, 2025 by Coleen TeBockhorst

As your mortgage advisor, I am not here to tell you to give up your favorite coffee, but I am here to show you how something as simple as your daily coffee run can reveal some powerful lessons about how to pay off your mortgage faster.

The Cost of Coffee and the Opportunity It Hides
Let’s say you spend $5 a day on coffee, five days a week. That is $25 a week, about $100 a month, and $1,200 a year. Over 10 years? That adds up to $12,000.

Now imagine if you took just a portion of that and applied it toward your mortgage principal instead. That small, daily choice could save you thousands in interest and shave years off your loan.

Small Choices, Big Results
You do not need to make big changes to see an impact. Something as simple as adding $100 a month to your mortgage can make a big difference. For example, on a $300,000 loan at 6%, adding $100 extra to your principal each month could save you over $38,000 in interest and help you pay off your mortgage more than five years earlier. That is your coffee habit at work, just redirected with purpose.

Create a “Mortgage Mindset”
Think about all the little expenses that sneak into your monthly budget like food delivery, unused subscriptions, extra shopping trips. These small amounts can become powerful tools when applied consistently to your mortgage.

Try automating extra payments or rounding up your monthly payment. Use your tax refund, work bonuses, or even income from a side hustle to chip away at your loan. These little decisions really do add up.

It’s Not About Deprivation, It’s About Direction
This is not about cutting all the fun out of your life. It is about being more intentional. Maybe you still enjoy your morning coffee, but cut back in another area. It is all about choosing what matters most in the long run.

Let’s Build Your Plan
As your loan originator, I’m here to help you explore strategies to pay down your mortgage faster, without feeling like you are giving everything up. Together, we can create a plan that fits your budget and brings you closer to financial freedom.

Have questions? Let’s talk. Sometimes it just takes a new perspective and a little coffee math to get you on the right path.

What’s Ahead For Mortgage Rates This Week – May 19th, 2025

May 19, 2025 by Coleen TeBockhorst

The latest inflation data has been released, offering insight into the near-term impact of the recent tariff measures. The results indicate that despite deflationary pressure on the economy, inflation continues to trend upward with the recent, ongoing tariff wars.

While the tariffs have been temporarily suspended, their effects are already being felt—consumers are experiencing price increases, and retailers have already been positioning themselves to increase prices due to the impacts of the tariff policies. While wholesale and producer inflation has seen a modest decline, this was expected as the market adjusts to the shifting economic landscape. Economists broadly predict that consumer prices will rise in the near term.

These findings reinforce what consumers have already been experiencing: sentiment has declined for the fifth consecutive month. Consumers are among the first to feel the direct effects of policy shifts.

Consumer Price Index

Consumer prices showed only a mild increase in April, but inflation probably won’t slow much further this year as the effects of the Trump trade wars ripple through the economy. The consumer-price index increased 0.2% last month, the Bureau of Labor Statistics said Tuesday, matching Wall Street expectations. Prices had posted a rare decline in March.

Price Producer Index

Wholesale prices posted the biggest drop in April, a -0.5% decline, since the pandemic in 2020, but economists say the decline in inflation appeared to be a one-off that might not be sustained if tariffs persist at current levels.

Consumer Sentiment

The University of Michigan’s popular gauge of U.S. consumer sentiment edged down to 50.8 in a preliminary May reading from 52.2 in the prior month. This is the index’s fifth straight monthly drop. Expectations for inflation spiked. Economists polled by the Wall Street Journal had expected sentiment would rise to 53.5.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.03% for this week, with the current rate at 5.92%
• 30-Yr FRM rates saw an increase of 0.05% for this week, with the current rate at 6.81%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.10% for this week. Current rates at 6.35%
• 30-Yr VA rates saw an increase of 0.12% for this week. Current rates at 6.37%

Jobless Claims

Initial Claims were reported to be 229,000 compared to the expected claims of 226,000. The prior week landed at 229,000.

What’s Ahead

A very light week with the Economic Leading Indicators, Job Data, and Manufacturing PMI dotting the landscape. The leading indicators are expecting a deflationary impact.

Eco-Friendly Mortgages To Finance Green Homes

May 16, 2025 by Coleen TeBockhorst

As more homeowners seek sustainable living options, eco-friendly mortgages have become a valuable tool for financing energy-efficient homes. These specialized loans offer financial incentives to buyers and homeowners who invest in environmentally friendly properties or upgrades. Understanding how these mortgages work can help you determine if they align with your homeownership and sustainability goals.

What Are Eco-Friendly Mortgages?
Eco-friendly mortgages, also known as green mortgages, are designed to encourage energy-efficient homeownership. Lenders offer these loans to homebuyers purchasing energy-efficient properties or homeowners making upgrades to improve energy conservation. These loans often come with lower interest rates, higher borrowing limits, or flexible repayment terms as incentives for sustainable housing investments.

Types of Green Mortgages

Energy-Efficient Mortgages (EEMs) – Available for purchasing, refinancing, or renovating a home to improve energy efficiency. Borrowers can include the cost of energy upgrades in the mortgage, reducing the need for separate financing.
Green Home Loans – Specifically for buying newly built green-certified homes that meet energy efficiency and sustainability standards.
FHA and VA Energy-Efficient Loans – Government-backed mortgage programs offering additional loan amounts to cover energy-efficient improvements.

Benefits of Eco-Friendly Mortgages

Lower Utility Bills – Energy-efficient upgrades reduce electricity and heating costs.
Potential Tax Credits & Rebates – Many states and local governments offer incentives for green home improvements.
Increased Home Value – Sustainable features can make a home more attractive to buyers, potentially boosting resale value.
Lower Interest Rates & Better Terms – Some lenders provide favorable loan conditions for energy-efficient properties.

Common Green Home Improvements

Solar panels for renewable energy production.
Energy-efficient windows and insulation to reduce heating and cooling costs.
Smart home technology for better energy management.
High-efficiency HVAC systems to lower energy consumption.
Water-saving appliances to reduce waste.

Is an Eco-Friendly Mortgage Right for You?
A green mortgage makes sense if:

You are buying a certified energy-efficient home or planning upgrades.
You want to lower long-term energy costs while financing improvements.
You qualify for lender incentives such as reduced interest rates or higher loan limits.

Financing a green home through an eco-friendly mortgage not only benefits the environment but also enhances your financial well-being. If sustainability is a priority for your homeownership journey, exploring these options could be a smart investment.

Why Your Mortgage Has an Escrow Account and How It Works for You

May 15, 2025 by Coleen TeBockhorst

When you close on a home loan, you’ll likely hear the term “escrow account” mentioned—and if you’re like most buyers, you may not be entirely sure what it means. While it might sound complicated, an escrow account is a helpful tool that simplifies homeownership and protects your investment.

What is an Escrow Account?
An escrow account is a separate account set up by your mortgage servicer to hold funds for specific home-related expenses, most commonly property taxes and homeowners’ insurance. Rather than paying those large bills all at once, you make monthly contributions as part of your mortgage payment. When the bills come due, your mortgage servicer pays them on your behalf from the escrow account.

Why Do Lenders Require Escrow Accounts?
Lenders want to ensure your property taxes and insurance premiums are paid on time. If those payments aren’t made, your home could be at risk, either from legal claims (like a tax lien) or from damage without insurance coverage. Since your home is the collateral for the mortgage, it’s in the lender’s best interest to protect it.

That’s why many mortgage lenders require escrow accounts, especially for borrowers who make smaller down payments or use government-backed loans. In some cases, if you put down at least 20%, you may be able to opt out—but it depends on your lender’s guidelines.

How Escrow Accounts Affect Your Monthly Payment
Your monthly mortgage payment includes more than just principal and interest—it often includes escrow payments, too. Each year, your lender estimates how much you’ll owe in taxes and insurance, divides that total by 12, and adds that amount to your monthly bill.

Because these costs can change from year to year, your lender will conduct an annual escrow analysis. If taxes or insurance premiums go up, your escrow payment may increase. If they go down, you might receive a refund or a lower payment.

What Happens If There’s a Shortage?
If there isn’t enough money in your escrow account to cover your bills, say, if your property taxes increased unexpectedly, your lender will notify you of a shortage. You’ll typically have the option to pay the difference in a lump sum or spread it out over the coming year.

Escrow Accounts Offer Peace of Mind
Instead of having to remember due dates and save for large annual expenses, your escrow account helps you stay on track. It’s a built-in budgeting tool that simplifies the financial side of homeownership—and ensures your biggest investment stays protected.

Creative Ways to Finance a Home Renovation with Your Mortgage

May 14, 2025 by Coleen TeBockhorst

Renovating a home can be an exciting yet costly endeavor. Whether updating an outdated kitchen, adding more living space, or improving energy efficiency, homeowners often seek financing options that make renovations more affordable. One strategic way to fund home improvements is by leveraging your mortgage. Several loan programs and refinancing options allow homeowners to roll renovation costs into their mortgage, making upgrades more accessible and financially manageable.

1. Renovation Loans
Renovation loans combine the cost of home improvements with the mortgage, allowing homeowners to finance both under a single loan. Some of the most popular options include:

FHA 203(k) Loan – A government-backed loan that allows homeowners to finance renovations along with their home purchase or refinance. There are two types:
Limited 203(k): For minor repairs up to $35,000.
Standard 203(k): For major renovations requiring structural changes.
Fannie Mae HomeStyle Loan – A conventional renovation loan that covers a wide range of improvements, from cosmetic updates to major structural changes.
Freddie Mac CHOICERenovation Loan – Similar to HomeStyle, this loan allows financing for renovations, including disaster-resistant upgrades.

2. Cash-Out Refinance
A cash-out refinance allows homeowners to replace their existing mortgage with a new loan for a higher amount, withdrawing the difference as cash for renovations. This option works well when home values have increased, providing access to equity for improvements. Benefits include:

Lower interest rates compared to personal loans or credit cards.
Potential tax benefits if renovations increase home value.
A single monthly payment instead of multiple financing accounts.

3. Home Equity Loan
A home equity loan, also known as a second mortgage, lets homeowners borrow a lump sum based on the equity in their home. This loan has a fixed interest rate and repayment term, making it a stable option for financing renovations.

Pros:

Fixed monthly payments for predictable budgeting.
Ideal for large renovation projects.
Interest may be tax-deductible if used for home improvements.

4. Home Equity Line of Credit (HELOC)
A HELOC functions like a credit card, providing a revolving line of credit based on home equity. Homeowners can withdraw funds as needed during the draw period and repay only what they use.

Advantages of HELOC include:

Flexible access to funds for ongoing projects.
Lower initial payments compared to a home equity loan.
Interest-only payment options during the draw period.

5. VA Renovation Loans
For eligible veterans and active-duty service members, a VA renovation loan allows financing for home improvements within a VA-backed mortgage. This loan covers repairs and upgrades to ensure the home meets VA property standards.

6. Energy-Efficient Mortgage (EEM)
For homeowners looking to make energy-efficient upgrades, an Energy-Efficient Mortgage (EEM) allows financing for improvements like solar panels, new insulation, and energy-efficient windows. These loans are available through FHA, VA, and conventional mortgage programs.

Choosing the Right Option
When selecting a financing option, consider:

Project Scope: Major renovations may require a renovation loan, while minor updates might be covered with a HELOC.
Loan Terms & Interest Rates: Compare rates to find the most cost-effective solution.
Repayment Timeline: Choose a financing method that aligns with your long-term financial plans.

Leveraging your mortgage to finance home renovations can be a smart strategy, offering lower interest rates and more manageable payments than alternative borrowing methods. Understanding the options available can help homeowners make informed decisions that enhance both their home and financial well-being.

The Rise of Mortgage Payment Protection Insurance

May 13, 2025 by Coleen TeBockhorst

For many homeowners, a mortgage is one of the largest financial commitments they will ever undertake. With economic uncertainty, job market fluctuations, and unforeseen life events, many borrowers seek additional safeguards to ensure they can meet their mortgage obligations. One such safeguard that has gained prominence in recent years is Mortgage Payment Protection Insurance (MPPI).

What is Mortgage Payment Protection Insurance?
Mortgage Payment Protection Insurance (MPPI) is a type of insurance policy designed to cover a homeowner’s mortgage payments in the event of income loss due to circumstances such as unemployment, illness, or disability. Typically, these policies provide coverage for a fixed period, often between 12 and 24 months, allowing policyholders time to recover financially without the added pressure of making mortgage payments.

Factors Driving the Popularity of MPPI
Several key factors have contributed to the growing adoption of MPPI among homeowners:

Economic Uncertainty – The unpredictability of the job market, economic downturns, and global financial crises have made homeowners more aware of the risks associated with losing their primary source of income.
Rising Cost of Living – Inflation and increased living expenses mean that many homeowners have less disposable income and limited savings to cover mortgage payments in the event of a financial setback.
Stricter Lending Requirements – Lenders have become more stringent in their lending practices, making it more challenging for borrowers to obtain mortgage forbearance or modifications without demonstrating financial hardship.
Increased Awareness – Financial institutions, mortgage brokers, and insurance providers have actively promoted MPPI as a responsible financial planning tool, leading to greater consumer awareness.
Benefits of MPPI

Homeowners who opt for MPPI can experience several advantages, including:

Financial Security – MPPI provides a safety net that ensures mortgage payments are covered even in the face of unexpected financial hardship.
Protection Against Foreclosure – By maintaining regular mortgage payments, homeowners can avoid default and the risk of foreclosure.
Peace of Mind – Knowing that a policy is in place to cover mortgage obligations can alleviate stress and allow homeowners to focus on recovery from job loss or illness.
Flexible Coverage Options – Many policies offer customizable coverage, allowing homeowners to select plans that align with their specific needs and financial situation.

Considerations Before Purchasing MPPI
While MPPI offers valuable protection, it is important for homeowners to evaluate their options carefully. Some key considerations include:

Policy Exclusions and Waiting Periods – Most policies have exclusions for pre-existing medical conditions or specific circumstances surrounding job loss. Additionally, there may be a waiting period before benefits begin.
Cost vs. Benefits – Homeowners should assess the monthly premium costs in relation to their budget and overall financial plan.
Alternative Protection Plans – Other financial safety nets, such as emergency savings, disability insurance, or income protection insurance, may provide comparable benefits.

The rise of Mortgage Payment Protection Insurance reflects the growing need for financial security among homeowners. As economic conditions continue to fluctuate, MPPI serves as a valuable tool for those seeking to protect their homes and financial well-being. However, homeowners must conduct thorough research and consult with financial professionals to ensure they select a policy that best meets their needs. By doing so, they can achieve greater stability and peace of mind in the face of life’s uncertainties.

What’s Ahead For Mortgage Rates This Week – May 12th, 2025

May 12, 2025 by Coleen TeBockhorst

Over the weekend, the recent talks with China and the U.S. about the recent tariffs have been said to be making progress recently in Geneva, leading to restoring some stability across all sectors and markets. The prior week, the FOMC decided not to change the rates and that will likely be the case in the foreseeable future. While having less presence due to the current economic climate, this week’s CPI and PPI inflation data releases remain as important as ever. These reports will offer insight into the recent impact of the trade war and help inform expectations for the near-term economic outlook.

Trade Deficit

The U.S. international trade deficit, including goods and services, widened 14% in March to a record seasonally adjusted $140.5 billion, the Commerce Department said Tuesday, as companies rushed to import foreign products while they were slightly cheaper than they would be with White House tariffs added to the cost. Economists surveyed by The Wall Street Journal had predicted the deficit would widen to $136 billion from $122.7 billion in February.

FOMC Rate Decision

At its May 7, 2025, meeting, the Federal Open Market Committee (FOMC) unanimously decided to keep the federal funds rate unchanged at 4.25% to 4.5%, maintaining the rate at this level since December 2024. The Fed attributed this decision to increasing concerns about rising unemployment and inflation risks.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.03% for this week, with the current rate at 5.89%
• 30-Yr FRM rates saw no change for this week, with the current rate at 6.76%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.03% for this week. Current rates at 6.25%
• 30-Yr VA rates saw a decrease of -0.05% for this week. Current rates at 6.25%

Jobless Claims

Initial Claims were reported to be 228,000 compared to the expected claims of 230,000. The prior week landed at 241,000.

What’s Ahead

Consumer Price Index and the Producer Price Index are set to release next week, highlighting the biggest indicators of the impact of the recent tradewar on the average consumer.

Explaining Mortgage Options for Self-Employed Borrowers with Irregular Income

May 9, 2025 by Coleen TeBockhorst

Securing a mortgage can be challenging for self-employed borrowers, especially those with irregular income. Traditional lenders typically rely on W-2s and steady paychecks to assess financial stability, which can make qualifying more complex for business owners, freelancers, and gig workers. However, several mortgage options cater specifically to self-employed individuals, allowing them to secure financing based on alternative income verification methods.

Challenges for Self-Employed Borrowers
Lenders evaluate mortgage applicants based on income consistency, tax returns, and debt-to-income (DTI) ratio. Self-employed borrowers often face hurdles such as:

Fluctuating income that makes it harder to demonstrate financial stability
Tax deductions that reduce taxable income, making it appear lower than actual earnings
Limited W-2 documentation, requiring extensive financial paperwork

Mortgage Options for Self-Employed Borrowers

Bank Statement Loans
Instead of tax returns, lenders assess income based on 12 to 24 months of bank statements. This is ideal for borrowers who maximize tax deductions but maintain strong cash flow.
Profit and Loss (P&L) Statement Loans
Some lenders allow a CPA-prepared profit and loss statement to verify income instead of tax returns. This works well for borrowers with significant write-offs.
Debt Service Coverage Ratio (DSCR) Loans
For real estate investors, DSCR loans focus on a property’s income rather than the borrower’s personal income. This allows investors to qualify based on rental cash flow.
No-Doc and Stated Income Loans
Certain lenders offer no-documentation or stated-income loans, though they often come with higher interest rates and larger down payment requirements.
Traditional Loans with Adjusted Documentation
Self-employed borrowers may still qualify for conventional or government-backed loans (FHA, VA, USDA) by providing two years of tax returns, business financials, and additional documentation.

Improving Mortgage Eligibility

Maintain strong credit, as a higher credit score can help offset income variability
Show consistent deposits in bank statements to strengthen income verification
Lower the debt-to-income ratio by paying down existing debts
Work with lenders who specialize in self-employed borrowers and alternative income verification

While self-employed borrowers may face extra hurdles, there are plenty of mortgage options designed to accommodate irregular income. By understanding these loan programs and preparing documentation strategically, self-employed individuals can successfully secure home financing.

The Impact of Rental Income on Mortgage Qualification

May 8, 2025 by Coleen TeBockhorst

For real estate investors and homeowners looking to purchase additional properties, rental income can play a crucial role in mortgage qualification. Lenders often consider this income when assessing a borrower’s ability to repay a loan, but the way it is calculated and applied varies based on different loan programs and underwriting guidelines. Understanding how rental income factors into mortgage approval can help buyers maximize their borrowing potential and secure favorable financing terms.

How Lenders Assess Rental Income
Lenders typically evaluate rental income based on documentation such as lease agreements, tax returns, and property appraisals. The amount of income they recognize depends on the property’s occupancy status:

Existing rental properties: If a borrower owns rental properties, lenders usually require two years of tax returns (Schedule E from IRS Form 1040) to determine average rental income. Depreciation and other expenses are typically added back to calculate the borrower’s effective income.
New rental properties: If a borrower is purchasing an investment property or converting a current home into a rental, lenders may allow a portion of the projected rental income to offset the mortgage payment. This is often determined through a rent schedule (Fannie Mae Form 1007 or Freddie Mac Form 1000).

Rental Income and Debt-to-Income (DTI) Ratio
Debt-to-income ratio (DTI) is a key metric lenders use to assess affordability. Rental income helps lower a borrower’s DTI by either increasing total income or offsetting the mortgage payment. However, lenders typically apply a vacancy factor—usually 25%—to account for potential rental gaps, meaning they may only consider 75% of the rental income.

For example, if a property generates $2,000 in monthly rent, the lender may only count $1,500 toward the borrower’s income. This adjustment ensures that a borrower can manage expenses even during vacancies.

Loan Program Considerations
Different loan programs have varying requirements for rental income qualification:

Conventional Loans: Fannie Mae and Freddie Mac allow rental income from leased properties and projected rental income with proper documentation.
FHA Loans: The Federal Housing Administration permits rental income to qualify if the borrower has at least a two-year history of managing rental properties.
VA Loans: The Department of Veterans Affairs allows rental income on multi-unit homes if the borrower occupies one of the units.
DSCR Loans: Debt Service Coverage Ratio (DSCR) loans focus primarily on a property’s income rather than the borrower’s personal finances, making them a great option for investors.

Maximizing Rental Income for Mortgage Qualification
To improve mortgage eligibility using rental income, borrowers should:

Keep detailed financial records, including lease agreements and tax returns.
Ensure rental properties are well-maintained and occupied.
Work with lenders who understand investment property financing.
Consider loan programs that best fit their investment goals.

Rental income can be a powerful tool in mortgage qualification, but lenders apply specific guidelines to ensure financial stability. Understanding how it factors into loan approval can help borrowers make informed decisions and optimize their financing options.

The Impact of Homeowners Associations (HOAs) on Mortgage Approval

May 7, 2025 by Coleen TeBockhorst

When purchasing a home in a community with a Homeowner’s Association (HOA), it’s important to understand how this organization can impact your mortgage approval. While HOAs provide benefits like maintaining neighborhood amenities and enforcing community standards, they also add financial obligations that lenders consider when evaluating your loan application.

How HOA Fees Affect Mortgage Qualification
Mortgage lenders assess a borrower’s total debt-to-income ratio (DTI) to determine affordability. Since HOA dues are a required expense for homeowners in these communities, lenders include them when calculating your monthly obligations. Even if you meet standard mortgage qualifications, high HOA fees could push your DTI beyond acceptable limits, affecting loan approval.

HOA Financial Health Matters
Lenders also evaluate the financial health of the HOA when approving mortgages for condos or townhomes. A well-managed HOA with adequate reserves is seen as a lower risk, while an HOA struggling with debt or maintenance issues can raise red flags. Some key factors lenders consider include:

Reserve Funds: HOAs should have sufficient reserves to cover repairs and maintenance without relying on frequent special assessments.
Delinquency Rates: If too many homeowners in the community are behind on their HOA dues, it may indicate financial instability.
Pending Litigation: If the HOA is involved in lawsuits, lenders may hesitate to approve loans in that community.

Loan Type Considerations
Certain loan programs have specific HOA requirements. For example:

FHA Loans: The condo community must be FHA-approved for borrowers to qualify for an FHA mortgage.
VA Loans: VA loans also require HOA approval, ensuring financial stability and compliance with VA guidelines.
Conventional Loans: While conventional lenders have fewer restrictions, they still review the HOA’s financial health and legal standing.

Special Assessments and Their Impact
In addition to regular HOA fees, homeowners may be required to pay special assessments for unexpected repairs or improvements. Lenders may take these into account when assessing affordability, as they can significantly increase monthly expenses. If an HOA is planning a large assessment, it could impact a buyer’s ability to qualify for a mortgage.

What Borrowers Should Do Before Buying in an HOA Community
If you’re considering a home in an HOA-governed community, take these steps to avoid surprises during the mortgage process:

Review HOA Documents: Request the HOA’s financial statements, reserve studies, and meeting minutes to assess financial stability.
Understand Fee Structures: Ask about current HOA dues, any pending increases, and potential special assessments.
Check Loan Program Eligibility: If using an FHA or VA loan, ensure the community meets lender approval requirements.

While HOAs can provide valuable benefits, they also come with financial responsibilities that impact mortgage approval. Before committing to a home in an HOA community, work with your lender to ensure the fees fit within your budget and loan qualifications. By doing your due diligence, you can avoid surprises and make an informed decision about your home purchase.

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