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What You Should Know About Rising Mortgage Rates

February 28, 2023 by Coleen TeBockhorst Leave a Comment

After steadily falling over the winter, mortgage rates have started to rise in recent weeks. This is concerning to some potential homebuyers as the combination of higher mortgage rates and higher prices have made homes less affordable. So, if you’re planning to purchase a home this year, you too may be wondering if now’s the right time to buy or if you should hold off on your search until rates come back down.

The recent uptick in rates has been driven by what’s happening with inflation. Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains:

“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”

The most recent weekly average 30-year fixed rate mortgage reported by Freddie Mac is 6.5%. It’s the third week in a row that rates have increased and puts them at the highest point they’ve been this year.

Advice for Home Shoppers

If you’re thinking about pausing your home search because rates have started to go up again, you may want to reconsider. This could actually be an opportunity to buy the home you’ve been searching for. According to the MBS, mortgage applications declined by 13.3% in just one week, so it appears the rise in mortgage rates is leading some potential homebuyers to pull back on their search for a new home.

So, what does that mean for you? If you stay the course, you’ll likely face less competition among other buyers when you’re looking for a home. This is welcome relief in a market that has so few homes for sale.

Bottom Line

Over the last few weeks, mortgage rates have risen. But that doesn’t mean you should delay your plans to buy a home. In face, it could mean the opposite if you want to take advantage of less buyer competition. Let’s connect today to explore the financing options available to you.

Moving From An Apartment To A House? Here’s What You Need To Remember About Your Lease

February 28, 2023 by Coleen TeBockhorst

Moving From An Apartment To A House The major problem that the vast majority of buyers will run into – especially when purchasing their first home – has to do with a lease agreement that is still active with their apartment complex at the time of the purchase. If you locate the perfect home in February but your lease isn’t over until August, you can’t be expected to wait around.

But at the same time, the remainder of that lease agreement could represent thousands of dollars that you’ll be paying to essentially “live” in two different places at the same time.

Luckily, all hope is not lost. There are a variety of steps that you can take to help mitigate your remaining financial risk at your apartment as much as possible.

Breaking Your Lease Early: What You Need to Know

First, look at your existing lease agreement and make sure you understand their early termination policy. This will outline the various acceptable ways, usually dictated in large part by state and other local laws, that you can break a lease early without being forced to pay through the duration of the agreement itself.

Much of this will vary based not only on the state, but also the property manager in question. Your property manager may very well allow for early termination for home buyers – particularly if they’re in an area where they know they can rent the apartment quickly.

This is not always the case, though, which is why you need to begin by reviewing the situation thoroughly so you know what you’re dealing with.

Next, you should review what state laws have to say about your landlord’s duty to find a new tenant in the area of the country that you’re living in. In some states, for example, your landlord MUST make “reasonable efforts” to re-rent your unit as quickly as possible, regardless of the reason you’ve decided to leave.

Many state housing laws require landlords to make every effort to keep their own losses at a minimum – meaning that you may not have to pay much, if anything at all, to break your lease early provided that you give said landlord enough notice.

Why Conversations Matter

Finally, you’ll want to sit down with your landlord face-to-face (if you haven’t already done so) and explain to them exactly what is going on. Landlords are people too and oftentimes they can be more sympathetic than you think.

According to an authority on the matter, the “worst case scenario” for most renters-turned-buyers breaking a lease agreement is often that they’ll need to pay an early termination fee to break their agreement early. This can be as little as one month’s rent to “a few month’s rent” depending on the situation.

At the very least, this is better than being forced to pay every month for the remainder of your term.

In the end, it’s important for you to understand that you should not let anything get in the way of buying the home you’ve always wanted – even if you’re currently living in an apartment with an active lease agreement.

You just need to know as much about the specifics of that agreement as possible so that you can move into your new home while mitigating as much risk as possible for both yourself and your landlord at the same time.

It’s wise to consult with your trusted home financing professional about the implications of your specific situation.

What’s Ahead For Mortgage Rates This Week – February 27, 2023

February 27, 2023 by Coleen TeBockhorst

What's Ahead For Mortgage Rates This Week - February 27, 2023 Last week’s economic reporting included readings on sales of previously-owned homes, the minutes of the Federal Reserve’s most recent Federal Open Market Committee meeting, and weekly readings on average mortgage rates and jobless claims.

Federal Reserve leaders raise key interest rate range

The Federal Open Market Committee of the Federal Reserve raised the Fed’s key interest rate range by 25 basis points to 4.50 to 4.75 percent. Fed officials cautioned that failure to ease inflationary pressure by raising interest rates could lead to inflation remaining higher than the Fed’s target inflation pace of two percent per year.

In other matters, the minutes of the Fed’s most recent Committee meeting indicated “a number” of Fed officers said that “a drawn-out period of negotiations to raise the federal debt limit could pose significant risks to the financial system and the broader economy.” Failure to increase the federal debt limit could cause the government to default on its loan obligations and lead to political implications as the 2024 election year approaches.

Sales of previously-owned homes fall in January

Previously-owned homes sold at their lowest level since 2010 and declined for the twelfth consecutive month in January. This was the longest consecutive streak of monthly price declines since sales of previously-owned homes were first tracked in 1999. Previously-owned homes sold at a year-over-year pace of 4 million sales; analysts expected an annual pace of 4.02 million sales based on December’s reading of 4.03 million sales.

New homes sold at a pace of 670,000 sales in January, but year-over-year sales were down by 19.4 percent. This was the fourth consecutive month when new home sales rose on a month-to-month basis.

Mortgage rates rise, jobless claims fall

Freddie Mac reported higher average mortgage rates as rates for 30-year fixed-rate mortgages averaged 18 basis points higher at 6.50 percent. Rates for 15-year fixed-rate mortgages averaged 5.76 percent and 25 basis points higher than for the previous week.

New jobless claims fell last week with 192,000 initial claims filed as compared to the expected reading of 197,000 first-time claims filed and the previous week’s reading of 195,000 first-time claims filed.

Consumer sentiment rose to an index reading of 67 in February as compared to the expected reading of 66.4, which matched January’s reading. The University of Michigan’s consumer sentiment index is based on a benchmark reading of 50; readings above 50 indicate that a majority of consumers surveyed held positive views of current economic conditions.

What’s ahead

This week’s scheduled economic news includes readings from S&P Case-Shiller home price indices and data on pending home sales. Weekly readings on mortgage rates and jobless claims will also be published.

The Top Reasons To Stop Renting And Buy Today

February 24, 2023 by Coleen TeBockhorst

The Top Reasons To Stop Renting And Buy Today Buying a house can be expensive, and it can take a long time to save up money for a down payment; however, it might be time for you to stop renting and buy your own place. What are some of the top reasons why it might be time to put down some roots?

Your Rent Is Going Up

The reality is that your rent will go up with time. Every time you renew your lease, it can be frustrating to see that rent check continue to increase. If you are tired of your rent going up, get a mortgage. You could lock in the same payment for 30 years.

You Are Going To Stay Put For A While

Are you planning on staying put for a while? If so, you don’t have to worry about buying a selling a house too quickly. Go ahead and purchase a house! You are going to be here for a while anyway, so you might as well get a stable mortgage.

You Don’t Want To Pay Someone Else’s Mortgage

Did you know that you might be paying someone else’s mortgage with your rent check? Why not use that money to pay off your own mortgage? After all, there’s no reason why you should feel obligated to use your money to pay down someone else’s home loan.

You Want To Build Wealth

If you want to build wealth for yourself and your family, one of the best ways to do so is to own property. Your property should go up in value over time, and 100 percent of the capital appreciation is yours because the value of your loan will remain the same, regardless of the capital appreciation of your house. If you want to build wealth, owning property is one of the best ways to do so.

Stop Renting And Buy Today

Clearly, there are plenty of reasons why you might want to stop renting and consider buying a house. You need to work with an expert who can help you find the right loan option to meet your needs. There are attractive opportunities out there, so if you are ready to build financial wealth, consider buying a house today.

What Items Can Change My Mortgage Pre-Approval Status?

February 23, 2023 by Coleen TeBockhorst

What is a mortgage pre-approval When you are purchasing a home, your lender may recommend you obtain a mortgage pre-approval before you find the home of your dreams. There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.

So the question many buyers have is what exactly is a mortgage pre-approval? In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.

What Do I Need For Pre-Approval?

In order to obtain a pre-approval for your home purchase, you will have to provide your lender all of the same information you would need to show for qualifying for a mortgage. This means providing tax returns, bank statements and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.

What Conditions Are Attached to a Pre-Approval?

Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a pre-approval letter:

Interest rate changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease
Property passes valuation and inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements
Credit check requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval
Changes in jobs/assets – after a pre-approval is received, a change in your employment status or any substantial assets may result in the pre-approval becoming worthless

What Items Can Change My Mortgage Pre-Approval Status?

One of the major issues that affect some borrowers as they are preparing to purchase their new home is financing large ticket items before the home purchase loan is completely funded. Even if you are buying new furniture or other items for the home, it’s best to wait until after your home loan is entirely complete before purchasing any of these new items.

Work changes can also drasitically affect your pre-approval status. Make sure your loan professional is well aware of any changes well in advance of them happening in order to plan effectively. There are ways to work with job changes but it is a delicate matter during the mortgage underwriting process.

Getting pre-approved for a home mortgage may allow you more negotiation power with sellers and may help streamline the entire loan process. It is however important to keep in mind there are still things that may have a negative impact on actually getting the loan.

It is important to make sure you keep in contact with the lender, especially if interest rates increase or your employment status changes after you are pre-approved.

The Job Of A Mortgage Loan Originator

February 22, 2023 by Coleen TeBockhorst

The Job Of A Mortgage Loan Originator Do you want to purchase a house? If you cannot pay cash for your house, you will need to apply for a mortgage. A mortgage loan originator can help you find the right mortgage to meet your needs. What are some of the job duties of a mortgage loan originator, and how can they help you with the financing process?

Provide You With a Budget

The house-hunting process can be exciting, but it can also be a bit stressful. How do you know if you can afford your dream house? This is one of the first jobs of a mortgage loan originator. A mortgage loan originator can help you review your financial statements and provide you with a limit against which you can borrow. Now that you know exactly how much money you can take out in the form of a mortgage, you will have an easier time narrowing down your options.

Go Through The Loan Options With You

A mortgage loan originator could also help you review your loan options with you. For example, do you think a fixed-rate mortgage is better for you? Or, do you think an adjustable-rate mortgage is better for you? There are even some home buyers who might be interested in a loan that comes with a balloon payment on the back end. A mortgage loan originator can help you evaluate the benefits and drawbacks of each option.

Ensure All Rules And Regulations Are Followed

Finally, one of the most important jobs of a mortgage loan originator is to ensure that all rules and regulations are followed. There are strict documentation regulations that all lenders need to follow to ensure their applicants are financially healthy enough to qualify for a mortgage. A mortgage loan originator will make sure that you do not take out a loan that you cannot afford.

Work With A Mortgage Loan Originator To Find The Right Loan

If you need to take out a mortgage for your house, you need to work with a mortgage loan originator. Keep in mind that this loan originator is there to answer your questions, so make sure you have a comprehensive understanding of the process before you move forward. That way, you can find the right loan package to meet your needs.

What’s Ahead For Mortgage Rates This Week – February 21, 2023

February 21, 2023 by Coleen TeBockhorst

What's Ahead For Mortgage Rates This Week - February 21, 2023 Last week’s economic news included readings on housing markets, inflation, retail sales, and data on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims were also published.

NAHB: Homebuilder sentiment improves in February

The National Association of Home Builders reported higher builder confidence in current U.S. housing market conditions with an index reading of 42 for February; Analysts expected a reading of 37 and January’s reading was 35. NAHB index readings over 50 indicate that most home builders have a positive view of housing market conditions.

Factors influencing positive builder sentiment included lower mortgage rates and expectations of less severe winter weather conditions as spring approaches. February’s reading was the second consecutive month for improved builder sentiment since September 2022; and was the first time builder sentiment improved at its current pace since June 2013. The NAHB said in its statement that “the housing market may be turning a corner.”

In related news, The Commerce Department reported that 1.34 million building permits were issued in January, which fell short of the expected reading of 1.35 million building permits issued and matched December’s reading. Year-over-year housing starts were reported at 1.31 million starts in January; analysts expected a reading of 1.35 million housing starts and December’s reading showed 1.37 million housing starts.

January retail sales rose by 3 percent and exceeded expectations of a 1.9 percent increase in retail sales and surpassed December’s negative reading of -1.1 percent. Retail sales excluding the automotive sector rose by 2.3 percent in January and exceeded expectations of a 0.9 percent increase and December’s negative reading of -0.9 percent.

Mortgage rates rise as jobless claims fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by two basis points to 6.32 percent. The average rate for 15-year fixed-rate mortgages rose by 15 basis points to 5.51 percent.

First-time jobless claims fell to 194,000 initial claims filed last week as compared to the expected reading of 200,000 claims filed and the prior week’s reading of 195,000 first-time claims filed. 1.70 million continuing jobless claims were reported last week as compared to the previous week’s reading of 1.69 million ongoing claims filed.

What’s ahead

This week’s scheduled economic reporting includes readings on sales of new and previously-owned homes, minutes of the February 1 meeting of the Federal reserve’s Federal Open Market Committee, and monthly data on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.

Buying Your First Home? Here’s Why You’ll Need to Ensure You Have a Proper Home Inspection

February 17, 2023 by Coleen TeBockhorst

Buying Your First Home? Here's Why You'll Need to Ensure You Have a Proper Home Inspection There’s a whole lot to learn when buying one’s first home, an investment that can bring joy, but sometimes, grief. A competent real estate agent can assist in locating those homes that meet the home buyer’s needs and can advise on factors such as market value of the home and neighborhood services. The agent will help the buyer through the negotiation and purchase process. But the buyer should take responsibility to make sure that the steps below are taken.

Home Inspection Contingency Included in Purchase Offer

At the point where the buyer finds a home and decides to make an offer, the contract should be written contingent on an acceptable inspection. If serious issues are found, the buyer has the options of requesting certain items to be fixed, to be compensated for the costs of repair, for a lower purchase price or to cancel the contract. Without this contingency, the buyer is bound to the contract without these options and may suffer huge costs.

Selecting the Home Inspector

Reputable and successful home inspectors may be recommended by the real estate agent or friends. The buyer should talk with prospective inspectors and ask for references. Another indication of competency is an affiliation with professional groups such as the American Society of Home Inspectors (ASHI) or the National Association of Home Inspectors (NAHI).

Inspecting the Home

There are potentially many problems in homes that are not visible to the eye. The home buyer that engages a professional home inspector can be assured that major problems will be identified. As an added value, by accompanying the home inspector and asking questions, the first-time buyer can learn about proper maintenance and of possible problems that will not go into the report.

What Will the Home Inspector Do?

The home inspector examines the entire home, both outside and inside, and checks for safety, defects, replacement or repair needs, and potential problems that should be monitored closely. The inspector will then produce a report covering the findings. The inspection generally takes two to three hours and costs between $200 and $500.

What Will Be Inspected?

External inspections will cover the roof, exterior walls, foundation, grading, garage, and may include sprinklers, lawn, porch lights, walkways and driveways as well. Interior inspections will examine the plumbing and electrical systems, HVAC (heating, ventilation and air conditioning), the water heater, kitchen appliances, laundry room, fire safety and bathrooms.

Taking this optional step of completing a home inspection, even with a new home, will be well worth the time and additional cost. It will provide a basis on which to make a more realistic offer and give the buyer the peace of mind of having in-depth knowledge about the house being purchased.

Why You Receive So Much Junk Mail After Closing On Your Home

February 16, 2023 by Coleen TeBockhorst

Why You Receive So Much Junk Mail After Closing On Your Home Congratulations! You have finally closed on your home loan, and you are excited to get moved in. Or, you may have just refinanced your home, and you are excited to enjoy it. Regardless, all of a sudden, you start to get a bunch of junk mail in your mailbox. It can be frustrating to sort through everything, and how did they get your information in the first place?

Where Junk Mailers Get Your Personal Information

First, there are a few locations where junk mailers may have gotten your personal information. Once your property deed is recorded, it goes into the public record. Anyone who goes into the public record can find your name, the name of your lender, your loan amount, and your address. This is what they use to send you junk mail, and it is why you get flooded with a bunch of mail as soon as you close on a home loan.

Always Check Your Mail Before Shredding It

Even though you are going to receive a lot of junk, some of it is going to have your personal information listed on it. You should always check to see if your personal information is on the mail, and if it is, go ahead and shred it. On the other hand, you must make sure you do not throw out anything important. For example, there might be a note about property taxes, or there might be information related to changes in your loan. Always screen your mail before you shred it.

Can You Stop The Junk Mail?

It is unlikely that you will be able to stop the junk mail completely. On the other hand, there are a few locations where you might be able to opt out of some of this junk mail. If you put yourself on the do not mail registry, you may be able to reduce the amount of junk mail you receive.

Talk To A Professional To Learn More

You need to understand exactly what is happening with your home loan before you close, and that is why you should reach out to an expert who can help you. They might even be able to provide you with some advice regarding how you can stop the junk mail from coming in.

Thinking About a New Home? 3 Reasons Why a Mortgage Will Be the Best Money You Ever Borrow

February 15, 2023 by Coleen TeBockhorst

Thinking About a New Home? 3 Reasons Why a Mortgage Will Be the Best Money You Ever Borrow In these days of low interest rates, it can be a great idea to get into the real estate market and invest in a home. However, if you don’t have the funds saved up to buy a home outright, it may seem like more of a burden than it’s worth. The good news is that you might qualify for a mortgage loan, which tends to come with more favorable terms than a traditional bank loan. Here are three reasons why a mortgage might just be the best money you ever borrow.

Taking Advantage Of Low Interest

Interest rates have been relatively low for a number of years, which can be a definite financial boon when it comes to your monthly mortgage payment. Unfortunately, though, the predictions forecast that rates are on the rise and that means home ownership may be a more difficult dream in the coming years. If you’re interested in getting a home at a lower price with a better interest rate, it may be worth getting a short-term loan for the long-term gain.

Begin To Invest

It will certainly improve your financial outlook if you have a financial plan and a monthly budget you stick to, but few things will help your money grow like investing. Fortunately, real estate is still one of the best investments you can make in terms of helping your money grow and ensuring your future fiscal success. While stocks and mutual funds can be a bit topsy-turvy if you’re not knowledgeable about investing, real estate can be a more reliable asset that’s easier to understand.

Giving Up On Rent

When investing in a home, there are few things more rewarding than not having to pay rent anymore. Instead of effectively tossing away money each month that you’ll never see again, you will be able to see your equity grow in the home and property you purchase. Plus, this equity can be used as leverage for investment in another home. It also means that no matter the downturn in the market, you’ll have a solid investment in something.

You may not like the idea of borrowing money for your mortgage, but it can be a good fiscal choice with interest rates on the rise and the opportunity to say goodbye to rent forever. If you’re currently considering borrowing and are planning on buying a home in the near future, contact your trusted mortgage professional for more information.

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