Blog – CTeBockhorst's Blog

What’s Ahead For Mortgage Rates This Week – August 7, 2023

August 7, 2023 by Coleen TeBockhorst

What's Ahead For Mortgage Rates This Week - August 7, 2023 Last week’s scheduled economic reporting included readings on construction spending, public and private sector payroll growth, and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims were also released.

Construction Spending Slips in June

U.S. construction spending slipped by 0.60 percent to 0.50 percent growth in June; analysts expected a month-to-month reading of 0.70 percent growth in construction spending. Year-over-year construction spending increased by 3.50 percent of which single-family residential construction accounted for 2.10 May’s reading for construction spending was revised from 0.90 percent growth to 1.10 percent growth from May to June.

Private residential construction rose by 0.30 percent in June. Spending on public residential construction decreased by -0.20 percent.

July Payroll Growth Shows Mixed Results

ADP reported 324,000 private sector jobs added in July. Analysts predicted only 175,000 private sector jobs added in July while June’s reading showed 455,000 jobs added. The federal government’s Nonfarm Payrolls report showed 187,000 jobs added in July. Analysts expected 200,000 public and private sector jobs added in July while June’s reading showed 185,000 public and private sector jobs added.

The U.S. national unemployment rate dropped to 3.50 percent in July from June’s reading of 3.60 percent.

Mortgage Rates and Initial Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose to 6.90 percent. The average rate for 15-year fixed-rate mortgages rose by 14 basis points to 6.25 percent. The Commerce Department reported that 227,000 jobless claims were filed last week, which matched expectations and was higher than the 221,000 unemployment claims filed in the previous week.

What’s Ahead

This week’s scheduled economic reporting includes readings on inflation and consumer sentiment. Weekly reports on mortgage rates and jobless claims will also be released.

Will Buying A New Car Impact The Ability To Buy A New Home?

August 4, 2023 by Coleen TeBockhorst

Will Buying A New Car Impact The Ability To Buy A New Home? Making major life decisions often involves a delicate balancing act. Among the most significant choices individuals face are buying a new car and purchasing a new home. Both ventures represent milestones in one’s life, bringing excitement and anticipation. However, there is a complex interplay between these two financial endeavors that can significantly impact a person’s ability to achieve their dream of owning a new home. Here are some factors to consider:

Debt-to-income ratio: When you apply for a home loan, your lender will consider your debt-to-income ratio (DTI) to determine whether you qualify for a mortgage. Your DTI is the amount of debt you have compared to your income. High DTI ratios are a red flag for lenders as it indicates a greater risk of defaulting on the mortgage. Therefore, potential homeowners should carefully assess the impact of adding a car loan to their financial portfolio. If you take on a new car loan, it will increase your debt load and could make it more difficult to qualify for a mortgage.

Down payment: A new car loan will require a down payment, which means you’ll have less money available for a down payment on a new home. Lenders generally prefer borrowers to have a sizeable down payment as it demonstrates financial responsibility and lowers the loan-to-value (LTV) ratio, which affects the terms and interest rates of the mortgage. By prioritizing a home purchase over a new car, potential homeowners can better secure their financial position and increase their down payment amount.

Credit score: Taking out a new car loan can impact your credit score, which is an important factor in getting approved for a mortgage. If you have a high credit score, you’ll likely qualify for better interest rates and terms on a mortgage. However, if your credit score drops due to the new car loan, it could make it more difficult to qualify for a mortgage or result in a higher interest rate. Opting to purchase a new home before buying a new car allows borrowers to present a more robust credit profile, potentially resulting in a more favorable mortgage deal.

Overall, it’s important to consider how taking on a new car loan will impact your finances and your ability to buy a new home. It’s important to make sure that the cost of the new car fits within your budget. If you’re already stretching your finances to make car payments, it may be more difficult to save for a down payment on a new home or make mortgage payments. It’s always a good idea to speak with a financial advisor or mortgage lender to understand how your financial decisions will impact your ability to achieve your goals.

How Much Equity Can I Borrow from My House

August 2, 2023 by Coleen TeBockhorst

How Much Equity Can I Borrow from My House The amount of equity you can borrow from your house depends on several factors, including the current market value of your home, the amount you owe on your mortgage, and your credit score.

In general, lenders typically allow you to borrow up to 80% of your home’s equity. For example, if your home is currently valued at $400,000 and you owe $200,000 on your mortgage, you may be able to borrow up to $160,000 (80% of the $200,000 in equity you have in your home).

However, it’s important to note that borrowing against your home’s equity comes with risks. If you are unable to make payments on the loan, you could potentially lose your home through foreclosure. It’s important to carefully consider the risks and benefits of borrowing against your home’s equity before proceeding. It’s also recommended to consult with a financial advisor or a mortgage professional to help you make an informed decision.

What Is My Loan-to-Value?

Your loan-to-value (LTV) is the ratio of the amount of money you borrowed (usually through a mortgage) to the appraised value of the property. It is typically expressed as a percentage.

To calculate your LTV, you need to divide the amount of your loan by the appraised value of the property, then multiply the result by 100. For example, if you have a mortgage of $250,000 on a property appraised at $400,000, your LTV is 62.5% (250,000 / 400,000 x 100 = 62.5%).

LTV is an important factor in determining the risk level of a loan. Lenders generally prefer lower LTV ratios, as they indicate a lower risk of default. A high LTV, on the other hand, can make it more difficult to get approved for a loan, or result in higher interest rates or additional fees.

How Can I Increase My Home Equity?

There are several ways to increase your home equity, which is the difference between the current value of your home and the amount you owe on your mortgage. Here are a few strategies to consider:

Make extra payments on your mortgage: Making additional payments towards your principal balance can help reduce the amount of interest you’ll pay overtime, and also help you build equity more quickly.

Increase the value of your home: Making home improvements or renovations can increase the value of your home, which can in turn increase your equity. Focus on upgrades that provide the best return on investment, such as kitchen and bathroom remodels or adding energy-efficient features.

Refinance to a shorter-term loan: If you can afford higher monthly payments, refinancing to a shorter-term loan can help you pay off your mortgage faster and build equity more quickly.

Avoid taking out additional loans: Avoid taking out additional loans against your home equity, as it will reduce the amount of equity you have in your home.

Regular maintenance: Regular maintenance, such as repairing leaks, repainting walls, and replacing worn-out fixtures can help maintain your property’s value and prevent the need for expensive repairs.

It’s important to remember that building equity is a long-term strategy and requires consistent effort and discipline over time. Consult with a financial advisor or a mortgage professional to determine the best approach for your individual situation.

The Difference Between A Home Equity Loan Versus A HELOC

August 1, 2023 by Coleen TeBockhorst

The Difference Between A Home Equity Loan Versus A HELOC When homeowners need to tap into the equity they’ve built in their homes, two popular options are Home Equity Loans (HEL) and Home Equity Lines of Credit (HELOC). Both types of loans allow homeowners to access funds for various purposes, such as home improvements, debt consolidation, or unexpected expenses. However, it’s essential to understand the differences between these two mortgage products to make an informed decision that aligns with your specific needs and financial goals. Here are some important differences between the two.

Home Equity Loan
A home equity loan is a one-time loan that provides you with a lump sum of money that you repay over a fixed term, usually between five and 30 years. The interest rate on a home equity loan is fixed, meaning it remains the same throughout the life of the loan, and your monthly payments are fixed as well.

One advantage of a home equity loan is that you know exactly how much you are borrowing and what your monthly payments will be, which can make it easier to budget for. Additionally, since the interest rate is fixed, you can be sure that your payments won’t increase if interest rates rise.

HELOC
On the other hand, a home equity line of credit (HELOC) is a revolving line of credit that you can draw from as needed up to a predetermined limit. You only pay interest on the amount you borrow, and you can use the funds for a variety of purposes, such as home renovations, debt consolidation, or other expenses. HELOCs typically have a variable interest rate that can change over time, and your monthly payments will vary based on the amount you borrow and the interest rate.

A HELOC can offer more flexibility since you can draw on the line of credit as needed and only pay interest on the amount you borrow. This can be beneficial if you have ongoing expenses or projects that require funding overtime.

Ultimately, the choice between a home equity loan and a HELOC will depend on your individual needs and financial situation. It’s important to carefully consider the terms and interest rates of each option before deciding.

What’s Ahead For Mortgage Rates This Week – July 31, 2023

July 31, 2023 by Coleen TeBockhorst

What's Ahead For Mortgage Rates This Week - July 31, 2023 Last week’s economic reporting included readings on the Fed’s interest rate decision, S&P Case-Shiller’s Home Price Indices, sales of new homes, and pending home sales. Weekly readings on mortgage rates and jobless claims were also released.

The Federal Reserve raised its target interest rate range to 5.25 to 5.50 percent; this announcement signaled that rates for home loans and unsecured credit would also rise.

S&P Case-Shiller Reports Slower Home Price Growth in May

Average U.S. home prices fell in May according to the S&P Case-Shiller 20-City Home Price Index. Home prices were -1.70 percent lower as compared to an expected dip of -1.90 percent and April’s reading of -1.70 percent. The top three cities reporting the highest pace of year-over-year home price growth were Chicago, Illinois with home price growth of 4.60 percent; Cleveland Ohio, where home prices grew by 3.90 percent, and New York City, where home prices rose by 3.50 percent.

Sales of previously owned homes fell due to high demand and slim supplies of homes for sale. Homeowners stayed on the sidelines while waiting for lower mortgage rates, but prospective buyers didn’t seem discouraged by rising rates, which recently approached 7 percent.

Craig J. Lazzara, managing director at S&P Case-Shiller Indices, said that the rally in U.S. home prices continued in May.

New home sales fell to a seasonally adjusted annual pace of 697,000 sales in June. Analysts estimated a pace of 725,000 sales and May’s reading showed a pace of 715,000 new home sales. Higher home prices in popular metro areas and rising mortgage rates created affordability challenges for first-time and moderate-income home buyers.

In related news, the FHFA Home Price Index reported that home price growth for homes owned and sold by Fannie Mae and Freddie Mac rose by 0.70 percent in May and was unchanged from April’s pace of home price growth. The FHFA reported year-over-year home price growth of 2.80 percent.

Mortgage Rates Rise as Jobless Claims Fall

Freddie Mac reported higher mortgage rates for the fourth consecutive week as the average rate for 30-year fixed-rate mortgages rose by three basis points to 6.81 percent. The average rate for 15-year fixed-rate mortgages was five basis points higher at 6.11 percent.

First-time jobless claims fell to 221,000 claims as compared to the previous week’s reading of 228,000 claims filed.

What’s Ahead

This week’s scheduled economic reporting includes readings on construction spending, public and private-sector payrolls, and the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims will also be released.

Selling a House “As-Is”: Pros, Cons, and Considerations

July 26, 2023 by Coleen TeBockhorst

Selling a House

When it comes to selling a house, homeowners have different options available to them. One approach that some sellers consider is selling their house “as-is.” This means selling the property in its current condition without making any repairs or renovations.

Pros of Selling a House “As-Is”

Convenience: One of the primary advantages of selling a house as-is is the convenience it offers. By selling the property in its current condition, you can avoid the time, effort, and cost associated with repairs and renovations.

Cost Savings: Selling a house as-is can potentially save you money. When you sell a property in need of repairs, you can avoid the expense of hiring contractors or professionals to fix issues. Additionally, you won’t have to invest in materials or deal with unexpected expenses that may arise during the renovation process.

Faster Sale: Properties listed as-is often attract buyers who are specifically looking for fixer-uppers or investment opportunities. Consequently, selling as-is can expedite the selling process and lead to a quicker sale compared to selling a house that needs repairs.

Cons of Selling a House “As-Is”

Lower Sale Price: While selling a house as-is can speed up the selling process, it often comes at the expense of a lower sale price. Buyers may discount their offers to account for the repairs they’ll need to undertake after purchasing the property. Keep in mind, you might not receive the full market value for your home.

Limited Buyer Pool: Selling a house as-is typically appeals to a narrower pool of buyers. Many potential buyers may prefer move-in-ready homes, which means you might have fewer interested parties.

Disclosure Obligations: Selling a house as-is doesn’t absolve you of disclosing known defects or issues with the property. Failing to disclose material defects can lead to legal complications and potential lawsuits.

Considerations for Selling a House “As-Is”

Evaluate the Property’s Condition: Assess the extent of repairs needed and the overall condition of the house. Determine if selling as-is is a viable option or if minor repairs could help attract a wider range of buyers and potentially increase the sale price.

Consult with Real Estate Professionals: Engage with experienced real estate agents or property consultants who can provide insight into local market conditions, potential buyers, and pricing strategies. Their expertise can help you make an informed decision about selling your house as-is.

Weigh Financial Implications: Consider the financial implications of selling as-is versus investing in repairs. Calculate potential repair costs, estimated sale price, and the impact on your net proceeds. Determine if the convenience of selling as-is outweighs the potential financial trade-offs.

Selling a house as-is can be a viable option for homeowners looking for convenience and cost savings. However, it’s crucial to carefully consider the potential drawbacks, such as a lower sale price and limited buyer pool. Assessing the property’s condition, seeking professional advice, and evaluating the financial implications are essential steps in deciding whether selling a house as-is is the right choice for you.

Financial Considerations When Buying a Home

July 25, 2023 by Coleen TeBockhorst

Financial Considerations When Buying a Home Purchasing a home is one of the most significant financial decisions many individuals make in their lifetime. It involves a substantial investment of money and requires careful consideration to ensure long-term financial stability. To navigate the complexities of the home-buying process, it’s essential to be well-informed about the various financial considerations involved. In this blog post, we will explore key factors to consider when buying a home to help you make informed decisions and achieve financial success.

Establishing a Realistic Budget:

Before diving into the home-buying process, it’s crucial to establish a realistic budget based on your financial situation. Consider factors such as your income, existing debts, credit score, and other financial obligations.

Saving for a Down Payment:

Saving for a down payment is a significant aspect of buying a home. Lenders typically require a down payment, which is a percentage of the home’s purchase price. Saving for a substantial down payment not only reduces the overall loan amount but also helps secure better mortgage terms, such as lower interest rates. Aim for a down payment of at least 20% to avoid private mortgage insurance (PMI) and decrease your monthly payments.

Understanding Mortgage Options:

Explore different mortgage options to find the one that suits your financial goals and circumstances. Common types of mortgages include fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-insured loans. It’s essential to carefully evaluate interest rates, terms, and potential risks associated with each type before deciding.

Considering Closing Costs and Additional Fees:

In addition to the down payment, be prepared for closing costs and other fees associated with purchasing a home. Closing costs typically include expenses like appraisal fees, loan origination fees, title insurance, and attorney fees.

Evaluating Long-Term Affordability:

While you may be able to afford the monthly mortgage payment currently, it’s essential to consider long-term affordability. Consider potential changes in your income, lifestyle, and expenses. Ensure that you have a realistic understanding of how your finances may evolve over time, accounting for future goals like starting a family, education expenses, and retirement planning.

Assessing Property Taxes and Insurance:

Property taxes and homeowners’ insurance are ongoing expenses that come with homeownership. Research the property tax rates in the area where you plan to buy a home and include them in your budget.

Maintaining an Emergency Fund:

Owning a home comes with unforeseen expenses, such as repairs, maintenance, and unexpected emergencies. Aim to have three to six months’ worth of living expenses set aside in an easily accessible savings account.

Getting Pre-Approved for a Mortgage:

Before house hunting, consider getting pre-approved for a mortgage. This process involves a lender reviewing your financial situation and creditworthiness to determine the amount they are willing to lend you. Pre-approval provides a clear understanding of your budget, strengthens your bargaining position with sellers, and speeds up the closing process once you find your dream home.

When buying a home, making well-informed financial decisions is crucial for your long-term financial well-being. Remember to evaluate long-term affordability and maintain a financial cushion to handle unexpected costs. By following these financial considerations, you’ll be better prepared to embark on your homeownership journey and achieve financial success in the long run.

What is a Home Warranty?

July 21, 2023 by Coleen TeBockhorst

What is a Home Warranty A home warranty is a type of service contract that provides coverage for repairs or replacements of major systems and appliances in a home. It typically covers items such as heating and cooling systems, electrical systems, plumbing, water heaters, and kitchen appliances.

Home warranties are purchased by homeowners to protect against unexpected expenses for repairs or replacements that may occur due to normal wear and tear.

When a covered item breaks down, the homeowner can contact the home warranty company, which will send a qualified technician to diagnose and repair the issue. If the item cannot be repaired, the home warranty company will typically replace it with a similar model.

It is important to note that home warranties are not the same as homeowners’ insurance. Homeowners insurance covers damage to the structure of the home and personal belongings due to unexpected events such as fires, storms, or theft. Home warranties, on the other hand, cover the repair or replacement of items due to normal wear and tear.

What’s generally included in a home warranty?

The items that are typically included in a home warranty can vary depending on the specific plan and provider, but they generally cover major systems and appliances in a home that are subject to normal wear and tear. Some of the most common items included in a home warranty are:

Heating and Cooling Systems – This typically includes coverage for furnaces, heat pumps, air conditioning units, and ductwork.

Electrical Systems – Issues with your home’s electrical system can be expensive and dangerous. Having these covered makes sure that your home stays safe. This includes coverage for the main electrical panel and wiring throughout the home.

Plumbing Systems – Just like electrical repairs, plumbing issues often require a professional and can cause major problems if not fixed right away. Having these things covered by a home warranty will cut repair costs and includes coverage for the water heater, pipes, and drains.

Kitchen Appliances – This includes coverage for the refrigerator, oven, dishwasher, and built-in microwave.

Laundry Appliances – This includes coverage for the washer and dryer.

Garage Door Opener – This includes coverage for the garage door opener and related components.

It’s important to note that while these items are typically included, each home warranty plan is different, so it’s important to read the details of the plan to understand what is and is not covered. Additionally, there may be optional add-ons available for specific items or systems that are not covered under the basic plan.

Critical Tips To Consider When Hiring A Home Contractor

July 20, 2023 by Coleen TeBockhorst

Hiring a home contractor can be a daunting task, as the success of your home renovation or construction project depends largely on the competence of the contractor you choose. Here are some critical tips to consider when hiring a home contractor:

Research: Do thorough research on potential contractors before hiring them. Check their credentials, licenses, certifications, and experience. Also, look for reviews and testimonials from past clients to get an idea of their work quality.

Get multiple quotes: Request quotes from multiple contractors and compare them. This will give you an idea of the average cost of the project and help you choose the contractor that offers the best value for your money.

Check for insurance: Ensure that the contractor has liability and worker’s compensation insurance. This will protect you from liability in case of accidents or injuries on the job site.

Define the scope of work: Clearly define the scope of work and project specifications in writing. This will help avoid misunderstandings or disagreements later on.

Set a timeline: Establish a realistic timeline for the project and make sure the contractor agrees to it. This will ensure that the project is completed on time and within budget.

Communication: Effective communication is crucial when working with a contractor. Make sure that the contractor is responsive and easy to communicate with, and that you are comfortable asking questions and expressing concerns.

Contract: Sign a contract that outlines all the terms and conditions of the project, including payment schedules, warranties, and dispute resolution procedures.

By following these critical tips, you can hire a reliable and competent home contractor who can deliver quality work on time and within budget. When contacting previous clients, be sure to ask specific questions about their experience, such as whether they completed the project on time, if they stayed within budget, and if they were responsive to any concerns or issues that arose during the project. This information can help you make an informed decision when choosing a contractor and give you peace of mind knowing that you have hired a competent and reliable professional.

Why You Should Consider a Home Energy Audit

July 19, 2023 by Coleen TeBockhorst

Why You Should Consider a Home Energy Audit In today’s environmentally conscious world, finding ways to save on energy costs has become increasingly important. One effective method to achieve both goals is by conducting a home energy audit. A home energy audit is a comprehensive assessment of your home’s energy efficiency and helps identify areas where energy is being wasted.

Identify Energy Inefficiencies: A home energy audit provides a detailed analysis of your home’s energy consumption patterns. Certified auditors use specialized tools and techniques to evaluate various aspects of your property, including insulation, HVAC systems, appliances, lighting, and more.

Save on Energy Costs: Identifying energy inefficiencies through a home energy audit allows you to take targeted actions to reduce your energy consumption.

Enhance Comfort and Indoor Air Quality: A home energy audit not only helps you save on energy costs but also improves the overall comfort and indoor air quality of your living space.

Contribute to Environmental Conservation: Reducing energy consumption through a home energy audit has a positive impact on the environment. By minimizing energy waste, you can help lower greenhouse gas emissions associated with electricity generation.

Access to Incentives and Rebates: Many utility companies, government agencies, and environmental organizations offer incentives and rebates for energy-saving upgrades. By conducting a home energy audit, you gain valuable information to take advantage of these programs.

A home energy audit provides valuable insights into your home’s energy performance, allowing you to identify areas for improvement and make informed decisions to enhance energy efficiency. By conducting a comprehensive assessment, you can save on energy costs, improve comfort and indoor air quality, contribute to environmental conservation, and access incentives and rebates.

It’s important to prioritize the recommendations based on your budget and potential energy savings. You can also reach out to a professional contractor or energy auditor for assistance in implementing the recommended upgrades. By addressing the issues identified during your home energy audit, you can improve the energy efficiency of your home and save money on utility bills. Consider a home energy audit today and take the first step toward a greener, more energy-conscious lifestyle.

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