Blog – CTeBockhorst's Blog

3 Ways That a Reverse Mortgage Can Transform Your Retirement

November 18, 2022 by Coleen TeBockhorst

3 Ways That a Reverse Mortgage Can Transform Your Retirement Are you a retired individual looking for ways to increase your financial security? If so, you may have heard of a home equity conversion mortgage, more commonly known as a reverse mortgage. Used correctly, this is one of the most effective financial products for retirees who own their home.

Let’s explore three ways that a reverse mortgage can help to transform a dull retirement into one filled with excitement.

It’s All About Flexibility

The primary benefit that one receives with a reverse mortgage is financial flexibility. It is an excellent way to tap into the equity that has built up in your home over time without having to sell the house and move out. Moreover, unlike a traditional home loan, the payment terms are far more flexible. In many cases, payments are not required until you are ready to leave the home permanently.

An Extra Source Of Income

Is your lifestyle starting to suffer because you do not have a regular salary coming in for you and your partner? Regardless of how much you have saved in 401-k and other retirement accounts, losing that regular monthly income can be depressing.

The good news: a reverse mortgage can help to change that. The funds you receive can be used however you want. You can invest in renovations for your home, take a nice vacation, invest in the stock market or simply leave it in your bank account. It is a helpful ‘bridge’ income source that will ensure that you have no trouble taking care of life’s many expenses.

A Contingency Fund, Just ‘In Case’

Finally, a reverse mortgage can be an excellent contingency fund. If you take this out as a line of credit, the money will be available if and when it is needed. Many retired individuals lack a financial ‘safety net’ and end up suffering due to unexpected health issues or other costs. With a reverse mortgage, you can sleep soundly knowing that emergency cash is there if needed.

As you can see, taking advantage of a reverse mortgage can be the catalyst that helps take your retirement to the next level. To learn more about these unique financial products, contact us today. We are happy to share how a reverse mortgage can benefit you and your family.

NAHB: Home Builders Concerned Over Housing Market Conditions

November 17, 2022 by Coleen TeBockhorst

NAHB: Home Builders Concerned Over Housing Market Conditions The National Association of Home Builders’ Housing Market Index for November showed builders’ growing concerns over U.S. housing market conditions. November’s index reading dropped five points to 33 as compared to October’s reading of 38 and the November 2021 reading of 83. November’s home builder index reading was the lowest reading since June 2012 except during the pandemic. Readings over 50 indicate that most home builders were positive about housing market conditions.

All three index readings that contribute to the HMI reading were also lower. Builder confidence in current housing market conditions fell six points to an index reading of 39. Home builder sentiment over housing markets in the next six months fell four points to an index reading of 31. Home builder expectations for prospective buyer traffic in new housing developments fell five points to November’s reading of 20.

Home Builders Face Multiple Challenges

Home builders continued to face obstacles including rising materials costs and falling demand for homes. Rising mortgage rates and home prices sidelined potential buyers. The Federal Reserve’s decision to raise its target interest rate range to slow inflation caused mortgage rates to rise; home builders asked lawmakers to lower costs related to land development and home construction to offset the impact of rising mortgage rates.

NAHB chairman Jerry Konter said: “Higher interest rates have significantly weakened demand for new homes as buyer traffic is becoming increasingly scarce. With the housing sector in a recession, the administration and new Congress must turn their focus to policies that lower the cost of building and allow the nation’s home builders to expand housing production.”

Builders reported offering buyer incentives including mortgage rate buydowns, paying discount points for buyers, and reducing home prices. 37 percent of home builders cut prices in November as compared to 26 percent in September. Price reductions averaged 6 percent. Current home price reductions were lower than reductions of 10 to 12 percent seen during the Great Recession in 2008.

NAHB Chief Economist Robert Dietz said, “To ease the worsening housing affordability crisis, policymakers must seek solutions that create more affordable and attainable housing.” Regional readings for home builder confidence were also lower. Builder sentiment in the Midwest fell 2 points to 38; Builder sentiment in the Northeast fell 6 points to 41, and builder sentiment in the South fell 7 points to 42. Home builder sentiment in the West fell 5 points to an index reading of 29.

The Right (And Wrong) Reasons To Buy A House

November 16, 2022 by Coleen TeBockhorst

The Right (And Wrong) Reasons To Buy A House There are many people who dream of owning a home, but you need to purchase your home for the right reasons. Simply purchasing a house because other people are doing so is not a strong reason to make such an expensive purchase. What are some of the reasons why you should purchase a house? What are some examples of bad reasons to buy a home?

The Right Reasons To Buy A Home

There are several strong reasons why you should consider purchasing property. If you have children, you may want them to attend a specific school. Therefore, you might be interested in purchasing a house in that school district. If you plan on being in a house for several years, you may be able to financially justify this purchase.

You may also want to purchase a house because you have relatives who want to move in with you. For example, many people like to take care of their parents as they get older. If you believe you can keep your parents out of an assisted living center by allowing them to move in with you, purchasing a house might be a smart move.

The Wrong Reasons To Buy A Home

On the other hand, there are wrong reasons to purchase a house as well. For example, if you believe you should purchase a house because the value of a home is always going to go up, that is not necessarily the case. Just like other financial markets, the real estate market can rise and fall, and there is no guarantee that your house is going to go up in value.

You should also try to avoid purchasing a house just because you feel guilty about renting. If you feel like you are approaching the home purchase process with some misgivings, you need to pause and think twice. Just because you are tired of renting doesn’t mean you should purchase a house.

Think Carefully Before Making A Decision

Purchasing a house is a big decision, and you need to review the benefits and drawbacks carefully before you decide to move forward. Do not hesitate to reach out to an expert who can help you figure out if purchasing a house is right for you.

Mortgage 101: How Interest-Only Mortgages Work and Why They’re A Good Solution for Some Buyers

November 15, 2022 by Coleen TeBockhorst

Mortgage 101: How Interest-Only Mortgages Work and Why They're A Good Solution for Some Buyers Whether you’re a first-time homebuyer or an experienced real estate investor, if you are planning to borrow funds to buy a home you will want to choose the right mortgage product. In today’s blog post we’ll explore how interest-only mortgages work and why they’re the perfect choice for some homebuyers.

How Interest-Only Mortgages Differ From Conventional Ones

As the name suggests, interest-only mortgages are loans where you are only required to pay off the interest portion of the loan each month for some specific term. The length of these loans can be up to ten years, although five or seven is the most common. Once this period is over, you will have some options. Some choose to refinance their mortgage into a new term; others will make a lump-sum payment to pay off the balance. The most important item of note is that during the interest-only period, no principal is paid off unless you pay a bit extra.

The Pros And Cons Of Interest-Only Mortgages

Interest-only mortgages are a popular choice because of their many upsides. Your monthly payments are almost certainly going to be far lower during the interest-only period. This is because you’re not responsible for paying down the principal of the loan. A lower monthly payment frees up money that you can use for other purposes, such as investing. Also, your entire monthly payment during the interest-only period should be tax deductible, which may contribute to a refund each year.

Note that there are some potential downsides to interest-only mortgages as well. For example, if your mortgage interest rate is adjustable, you can end up paying more in interest than if you had locked in. You also need to stay disciplined financially. Once the interest-only period ends, your monthly payment may increase significantly to cover both interest and principal.

Who Should Consider An Interest-Only Mortgage?

Interest-only mortgages are a good fit for those individuals or families where you are confident that your income is going to grow significantly in five or ten years. Alternatively, if your income is somewhat sporadic and you want the option of paying lower payments in some months and more substantial payments in others. The key point is that these mortgages offer flexibility that other mortgage products do not.

As you can see, interest-only mortgages are an excellent choice in certain circumstances. To learn more about how an interest-only mortgage might be right for you, contact our professional mortgage team today. We are happy to share our experience to find mortgage financing that perfectly suits your needs.

What’s Ahead For Mortgage Rates This Week – November 14, 2022

November 14, 2022 by Coleen TeBockhorst

What's Ahead For Mortgage Rates This Week - November 14, 2022 Last week’s scheduled economic news included readings on monthly and year-over-year inflation and the University of Michigan’s preliminary reading on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.

Consumer Price Index: Inflation Shows Signs of Slowing

Government readings on October inflation showed signs of stabilizing and even slowing. The Consumer Price Index for October showed month-to-month inflationary growth of 0.40 percent as compared to the expected reading of 0.60 percent and September’s reading of 0.40 percent growth. Year-over-year inflation rose by 7.70 percent as compared to the expected reading of 7.90 percent and September’s reading of 8.20 percent.

Month-to-month core inflation, which excludes volatile food and fuel sectors, rose 0.30 percent in October as compared to expectations of 0.50 percent growth and September’s reading of 0.60 percent growth. Year-over-year core inflation rose 6.30 percent; analysts expected year-over-year core inflationary growth of 6.50 percent. September’s year-over-year reading for core inflation was 6.60 percent. The Federal Reserve considers year-over-year inflation of two percent as normal.

Mortgage Rates, Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week as rates for 30-year fixed-rate mortgages averaged 7.08 percent and 13 basis points higher than for the previous week. Rates for 15-year fixed-rate mortgages rose nine basis points and averaged 6.38 percent. Rates for 5/1 adjustable rate mortgages averaged 6.06 percent and 11 basis points higher than for the previous week. Discount points averaged 0.90 percent for 30-year fixed-rate mortgages and 1.00 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.20 percent

Initial jobless claims rose last week with 225,000 new claims filed as compared to 220,000 new claims expected and 218,000 first-time jobless claims filed. in the previous week. 1.49 million continuing jobless claims were reported, which matched the previous week’s reading.

The University of Michigan released its preliminary consumer sentiment survey for November with an index reading of 54.7. Analysts expected a reading of 59.5 for November; October’s reading was 59.9. Index readings over 50 indicate that most survey participants view current economic conditions as positive.

What’s Ahead

This week’s scheduled economic reporting includes readings on housing markets, sales of previously-owned homes, government reports on housing starts, and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.

The Benefits of Using a Veterans (VA) Loan To Purchase Your Home

November 11, 2022 by Coleen TeBockhorst

The Benefits of Using a Veterans (VA) Loan To Purchase Your Home U.S. military veterans have opportunities to enjoy some richly-deserved benefits in other aspects of their lives, including some special options for financing their homes. VA loans may give active military personnel, retired veterans, and sometimes surviving family members of veterans the ability to purchase homes that might not prove available to them through more conventional mortgage loans.

But the mere fact that you can do a thing doesn’t necessarily mean that you should. In some circumstances, military home seekers may find other types of loan options more amenable to their specific needs.

If you’ve decided to pursue a mortgage loan during or following your military career, you may want to examine these considerations before leaping into a VA loan application.

Loan Qualifications and Limits

A VA loan can open the door to home ownership for cash-strapped or credit-challenged military personnel who might otherwise struggle to get a conventional mortgage loan. This type of loan offers tremendous flexibility in qualifying factors such as credit scores and debt-to-income ratios; in fact, VA loans may come with no maximum debt ratio at all.

Potential For Zero Down Payment

Additionally, VA loans do not require the down payment typically needed for a more conventional or FHA loan. (The only other loan with no down payment requirement, the USDA loan, applies to rural areas and comes with some prohibitive income restrictions.)

The elimination of a mandatory down payment, coupled with the relaxed financial qualifications, can make a VA loan the most sensible choice for individuals who suffer from limited resources, “upside-down” credit and short credit histories.

Additional Qualifications To Consider

That said, VA loans usually impose some qualifications of their own — qualifications which may not appeal to some buyers. For one thing, a VA loan can only go toward the primary place of residence, not a summer cottage or second home. Military personnel who already own a home may therefore find this restriction a deal-breaker for their specific needs.

VA Loan Limits

VA loan amounts may also impose varying guaranty limits depending on where you live. The guaranty limit refers to your VA entitlement, the portion of your loan that escapes the down payment requirement.

As always, your best move is to call your trusted real estate and mortgage professionals to discuss the VA home purchase process and find out if it’s the best option for you.

Considering a New Home Next Year? Start Now and Get a Jump on Improving Your Credit Score

November 10, 2022 by Coleen TeBockhorst

Considering a New Home Next Year? Start Now and Get a Jump on Improving Your Credit Score With the new year right around the corner, that leaves you with precious little time to get your finances in order. Let’s explore a few tips that will help you get a jump on improving your credit score before the end of the year.

Grab A Fresh Copy

The first step is to order a fresh copy of your credit report from one of the major agencies. The Fair Credit Reporting Act allows you to access a free copy of your credit report once every 12 months. So, if you have not ordered a copy recently, it is time to do so. You can access this free service through AnnualCreditReport.com, which is a website recommended by the Federal Trade Commission.

Clean Up Anything Outstanding

Now that you have a copy of your credit report, it’s time to go through it, line-by-line. You should recognize every current and outstanding account in the report. Any balances owing should be in order and reflect how much you owe. It’s critical that you flag any mistakes or old debts that you have already paid in full. If you come across anything that shouldn’t be on your credit report, call the reporting agency to let them know. If necessary, they will assist you with challenging the issue.

Pay Down Those High-Interest Debts

The final tip is to prioritize your outstanding debts so that you can pay them off more efficiently. The essential debt payments are your mandatory minimums, which you need to pay to avoid being sent to a collection agency. From there, try to pay off your debts with the highest interest rates first. Getting these paid off faster means that over time, you’re spending less on interest payments. Moreover, you can use that extra cash to pay your debts down further.

The above are just a few of the action steps that you can take today to start improving your credit score. When you’re ready to discuss a mortgage for your new home, give our team a call. We will be happy to advise you on the mortgage offer that suits your needs, budget, and credit.

How Can You Increase The Safety And Functionality Of Your Home?

November 9, 2022 by Coleen TeBockhorst

How Can You Increase The Safety And Functionality Of Your Home? What do you need to do if you want to improve the safety and functionality of your home? You may not think that your home has a lot of safety hazards, but you might be surprised at how many people get hurt at home every year. Particularly if you have older people in your home, or if you have people in your house with disabilities, you need to pay close attention to your safety and functionality. What are a few tips you should keep in mind?

Target The Lights In Your Home

If you have an older home, it may have incandescent light bulbs in it. Pay attention to the lights in your home, and make sure they maximize the light in every room. If the bulbs are too dim, it may be a challenge for you to see where you are going, particularly when the sun goes down. Consider swapping out the lights for LED light bulbs. You can not only make it easier to see but also reduce your electricity bills.

Remove Trip Hazards

You should also try to remove trip hazards from your home. Falls are one of the most common reasons why people get hurt, so try to remove objects that you might trip over. For example, if you have area rugs, you may want to tuck the tassels underneath. That way, you have a much lower chance of tripping on them.

Install Grab Bars In The Bathroom

You may also want to consider installing some grab bars in the bathroom. Bathroom floors can get wet, making it easier for people to slip and fall. This is particularly true in the shower and bathroom. By installing some grab bars, you have an extra way to stabilize yourself when you are bathing. This can reduce your chances of falling and striking your head, shoulder, or hip.

Make Your Home Safer And More Functional With These Tips

From time to time, you should do a comprehensive evaluation of your home to see how you can improve your house’s safety and functionality. This can make a significant difference in the value of your home while also reducing the chances of someone falling and getting hurt.

Closing Costs And A Cash Sale: Who Pays?

November 8, 2022 by Coleen TeBockhorst

Closing Costs And A Cash Sale: Who Pays? There are some people who are able to pay cash for a home. Typically, these are individuals who are selling an existing property that has gone up in value. Now, all of a sudden, they have a lot of extra money they can spend on a house. If you can pay cash for a home, you have a lot of extra negotiating power. When it is time to complete the sale, who pays?

What Is Included In Closing Costs?

Before deciding who pays closing expenses, it is important to take a look at what is included. Because you do not have to worry about going through a lender, you can avoid many of the fees associated with the process of buying a home. Examples include origination fees, processing fees, credit checks, and mortgage points.

On the other hand, there are several other expenses you might have to cover. For example, you will have to put down some earnest money, and you might have to pay for a property inspection and appraisal. You should also pay for title insurance and a title search. There are some states that require you to work with an attorney, and you may have to pay attorney’s fees as well. Finally, you might also be responsible for notary expenses and certain escrow fees. Keep in mind that these expenses can vary from state to state.

Who Pays For These Costs?

Because there are still several expenses you need to pay, you will need to work with the seller to decide who was responsible for them. In a lot of situations, these costs are the responsibility of the buyer.

At the same time, it is a matter up for debate. If you believe you have a lot of negotiating power, you might be able to convince the seller to pay for these expenses. For example, if the house has been on the market for a long time and the seller does not have any other offers, you might convince the seller to cover your closing expenses. You may want to work with a real estate agent who can help you figure out if you can convince the seller to cover these expenses.

What’s Ahead For Mortgage Rates This Week – November 7, 2022

November 7, 2022 by Coleen TeBockhorst

Last week’s economic reporting included the Federal Reserve’s statement on its target interest rate range and Fed Chair Jerome Powell’s regularly-scheduled press conference. Data on construction spending and public and private-sector jobs was published along with weekly reports on mortgage rates and jobless claims.

Fed Hikes Key Interest Rate Range, but Signals a Future Slowdown

The Federal Reserve increased its key interest rate range last week from 3.50-3.75 percent to 3.75-4.00 percent. While this was the highest interest rate range in 15 years, the Fed said it plans to continue raising the target interest rate range until it reduces the inflation rate to 2 percent “over time.” Analysts viewed the Fed’s latest comments as less aggressive than its stance earlier this year.

Fed chair Jerome Powell said during his scheduled press conference that at some time “it will be appropriate to slow the pace of increases.” Mr. Powell also cautioned that the target interest rate range will likely rise past the current expected rate range of 4.50 to 4.75 percent.

Mortgage Rates Fall, Jobless Claims Mixed

Average mortgage rates fell last week as the rate for 30-year fixed-rate mortgages fell by 13 basis points to 6.95 percent. Rates for 15-year fixed-rate mortgages averaged 6.29 percent and 7 basis points lower than in the previous week. Rates for 5/1 adjustable rate mortgages averaged one basis point lower at 5.95 percent; Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 1.20 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.20 percent.

Initial jobless claims fell by 217,000 claims as compared to the previous week’s reading of 218,000 new claims filed. Continuing jobless claims increased to 1.49 million claims filed from the previous week’s reading of 1.44 million ongoing claims filed.

Job Growth Data Mixed, Unemployment Rate Rises

ADP reported 239,000 private-sector jobs added in October as compared to expectations of 195,000 jobs added and September’s reading of 192,000 private-sector jobs added. The Commerce Department’s Non-Farm Payrolls reported 261,000 public and private-sector jobs added in October as compared to expectations of 205,000 jobs added and 315,000 jobs added in September. The national unemployment rate rose to 3.7 percent in October from September’s rate of 3.5 percent.

In other news, construction spending rose 0.2 percent in September; analysts expected spending to drop -0.6 percent based on August’s construction spending pace of -0.7 percent

What’s Ahead

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

Fed Hikes Key Interest Rate Range, but Signals a Future Slowdown

Mortgage Rates Fall, Jobless Claims Mixed

Job Growth Data Mixed, Unemployment Rate Rises