Renters Missed Out On Tens Of Thousands Of Dollars This Past Year

Renters Missed Out On Tens Of Thousands Of Dollars This Past YearRent has gone up significantly during the past year. Even though it is not unusual for rent to go up over time, the average rent across the country has increased significantly during the past year. This means that the average rent will probably be even higher next year than it is this year. Even though this is one of the biggest deterrents against renting, there are other reasons to get out of the rental market as well. 

Renters Stand To Lose More Money This Year

One of the biggest reasons why renters are losing so much money is that the average value of a house has gone up significantly. During the past year, the average value of a home in the United States increased by more than $50,000. This means that the average homeowner gained this amount of money in equity. Renters do not get the same benefit. Because renters are not investing any money in property, they are not seeing any return on the money they throw away in rent. This means that renters lost tens of thousands of dollars by renting this past year instead of owning. 

Renting Can Be Very Expensive

A lot of people do not want to purchase a house because they are scared of maintenance expenses, property taxes, and the size of the down payment. On the other hand, renting is like throwing money down the drain. The money is going directly into the pocket of the property owner, and the renter is not seeing any sort of return on that investment. Furthermore, even though the price of renting can go up over time, many people who take out a mortgage lock in the rate for 30 years. This means the monthly payment will be the same at the end of the loan as it is at the beginning of the loan. If someone has a steady job, their income is likely to go up during the course of the mortgage, meaning that they have more financial flexibility in the future. Renters need to think carefully about what they can do to get out of the rental market and purchase property before rent increases in the future. 

 

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What’s Ahead For Mortgage Rates This Week – November 29, 2021

What's Ahead For Mortgage Rates This Week - November 29, 2021Last week’s economic reporting included readings on sales of new and previously-owned homes, inflation, and weekly readings on mortgage rates and jobless claims. President Biden announced his nomination of Federal Reserve chairman Jerome Powell for a second term.  Financial markets were closed Thursday and Friday for the Thanksgiving holiday.

Single-Family Home Sales Increase in October

The Commerce Department reported sales of new homes rose in October with 745,000 new homes sold on a seasonally-adjusted annual basis. October sales fell short of the 800,000 new home sales expected by analysts but surpassed September’s reading of 742,000 new homes sold.

The National Association of Realtors® reported 6.34 million previously owned homes were sold on a seasonally-adjusted annual basis in October. Sales of previously-owned homes rose by 0.80 percent from September to October and exceeded expectations of 6.20 million sales and September’s reading of 6.29 million sales of previously-owned homes. Real estate pros said that high demand for homes and strong job growth contributed to October’s reading.

Slim inventories of homes for sale and rising home prices continued to sideline some buyers; competition with cash buyers also caused difficulties for would-be buyers who relied on mortgage loans. 6.34 million pre-owned homes were sold year-over-year in October and exceeded expectations of 6.20 million sales and September’s reading of 6.29 million pre-owned homes sold.

LawrenceYun, the chief economist at the National Association of Realtors®, said,  “Inflationary pressures such as fast rising rents and increasing consumer prices may have some prospective buyers seeking the protection of a fixed consistent mortgage payment.” Rapidly rising home prices challenged would-be home buyers as the median price for a single-family home rose to $353,900 in October, which was more than 13 percent higher year-over-year. The inventory of available homes equaled September’s inventory with a 2.40  month supply of homes for sale. Real estate pros typically consider a six-month supply of homes for sale as a sign of balanced markets.

Mortgage Rates Little Changed as Jobless Claims Fall

Freddie Mac reported no change in the average rate of 3.10 percent for 30-year fixed-rate mortgages; the average rate for 15-year fixed-rate mortgages rose three basis points to 2.42 percent. The average rate for 5/1 adjustable rate mortgages fell two basis points to 2.47 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

Initial jobless claims fell to 199,000 first-time claims filed as compared to the expected reading of 260,000 new claims filed and the prior week’s reading of 270,000 first-time jobless claims filed. 2.05 million continuing jobless claims were filed as compared to 2.11 million ongoing claims filed in the prior week.

What’s Ahead

This week’s scheduled economic reporting includes readings from S&P Case-Shiller Housing Market Indices, along with reporting on pending home sales and construction spending. Public and private-sector job reports and the national unemployment rate will also be released along with weekly readings on mortgage rates and jobless claims.

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Have You Been Denied for a Mortgage? Here Are 3 Reasons Why You’ll Want to Keep Trying

Have You Been Denied for a Mortgage? Here Are 3 Reasons Why You'll Want to Keep TryingIf you’re in the market for a new home, you’ll most likely need a mortgage in order to afford it. But for some home buyers, getting a mortgage isn’t easy. Banks and other lenders are often hesitant to lend money to certain consumers, often for good reason.

But sometimes, lenders’ reasons for declining you aren’t entirely valid. That’s why, if you’ve been denied for a mortgage, you’ll want to keep trying to get mortgage funds. Here are three factors that can influence the likelihood of approval on the second try.

A Second Appraisal Might Change Your Circumstances

Sometimes, a mortgage lender will deny a loan because the property value of the home in question isn’t large enough to back the loan. If your mortgage lender declines you because of a poor loan-to-value ratio, getting a second appraisal could help. A lot of appraisal companies will give wildly different appraisals on the same property, with some brokers reporting valuation differences of up to $1.3 million.

Bear in mind that you cannot get two appraisals through the same lender, so if you choose to have the home appraised a second time, you’ll need to find a new lender.

Cleaning Up Your Credit Report Can Work Wonders

What’s on your credit report will have a large role in determining whether or not you get the mortgage you want. If you’ve been denied because of entries on your credit report, you’ll want to take every step possible to correct those report issues. If you’ve been more than 30 days late on a payment in the past, it will show on your credit report and affect your score – but by calling your creditor and asking them to remove the negative, you can bring your credit report back into good standing.

You’ll also want to pay off any and all past due balances as soon as possible. If you can’t pay what you owe in full, you’ll want to negotiate with your creditor to pay part of the amount. This will result in the debt showing on your credit report as “paid as agreed”, which will boost your credit score.

An Extra Down Payment May Be A Good Idea

Sometimes, a lender will decline a borrower if the borrower is asking for too much money. If you’re pursuing a mortgage worth more than 95% of the property value, you’ll probably be declined. But if you make an extra down payment, you can lower your loan amount – which may incline your lender to approve your application.

If you’ve been declined for a mortgage, don’t give up. As you can see there are steps you can take to get approved.

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What Are the Advantages to Paying off Your Mortgage Early? Here Are a Few That Might Entice You

If you're looking into fixed term mortgages, you might be wondering whether there's any reason why you should take the full term to pay off the loan. In a lot of cases, paying off a mortgage before it comes due is a great decision. If you're considering paying off your mortgage early, you'll experience a variety of benefits – here are just a few of them.If you’re looking into fixed term mortgages, you might be wondering whether there’s any reason why you should take the full term to pay off the loan. In a lot of cases, paying off a mortgage before it comes due is a great decision. If you’re considering paying off your mortgage early, you’ll experience a variety of benefits – here are just a few of them.

You’ll Save Thousands In Interest Payments

By and large, the single biggest advantage of paying off a mortgage early is the money you’ll save in interest. The longer you take to pay off your mortgage, the more you’ll pay in interest overall. In fact, on a 30-year fixed-rate mortgage, you’ll pay as much in interest as you do in principal over the course of the loan – but if you pay off a $300,000 mortgage five years early, you’ll save $60,000 in interest charges, assuming an interest rate of 5.5 percent.

You’ll Greatly Improve Your Credit Score

A mortgage is quite a sizeable debt, and the longer it takes you to pay off your mortgage, the longer it’ll weigh down your credit score. Paying off your mortgage early will boost your credit score quite substantially, which means you’ll be able to take out loans to buy an investment property and start earning income on a second home. And with your first mortgage paid off, you’ll have a significant amount of new money coming in.

You’ll Free Up Your Cash Flow

Once you’ve paid off your mortgage, you’ll free up a great deal of monthly income – which you can invest into mutual funds, a savings account, trips around the world, or a college fund for your children. With so much extra cash available every month, you’ll be able to save, invest, and spend more freely – and that means you’ll meet your financial objectives sooner.

Paying off a mortgage earlier than expected may seem like a daunting challenge, but with discipline and a solid plan in place, it’s very possible. And best of all, paying your mortgage off early offers a number of great advantages that extend beyond just the financial. It’ll offer a variety of lifestyle advantages and give you a great deal of financial freedom.

Want to learn more about how the mortgage process works, or discover great new strategies for paying off your mortgage sooner? Contact your local mortgage professional today to schedule a consultation.

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What’s Ahead For Mortgage Rates This Week – November 22, 2021

What's Ahead For Mortgage Rates This Week - November 22, 2021Last week’s scheduled economic news included readings from the National Association of Home Builders on housing market conditions. Reporting on housing starts and building permits was released along with weekly reports on mortgage rates and jobless claims.

NAHB: Home Builder Confidence Grows as Demand for Homes Increases


November’s national reading for home builder confidence in housing market conditions for single-family homes rose three points to an index reading of 83 and the expected reading of 80. Component readings for the national index were mixed. Builder confidence in home sales for the next six months was unchanged at an index reading of 84. Builder confidence in potential buyer traffic in new housing developments rose three points to an index reading of 68. Readings over 50 indicate that a majority of home builders were confident about housing market conditions.

 

High demand for homes continued, but builders faced ongoing obstacles including shortages of lots and labor. Robert Dietz, the chief economist at the National Association of Home Builders, said: “ Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions.” Mr. Dietz urged policymakers to address these issues to enable builders to better meet the high demand for single-family homes.

 

Three of four regional readings for builder confidence in housing market conditions rose, while the Northeast’s reading fell to 69 in November from October’s reading of 73. The Midwest reading rose to 75 in November from October’s reading of 72. Homebuilder confidence in the South also rose three points to 87 in November. The Western region posted a two-point gain in builder confidence for an index reading of 87.

 

Housing starts fell by one million starts in October to 1.52 million starts on a seasonally-adjusted annual basis. Building permits issued in October rose to a pace of 1.65 million permits issued on a seasonally-adjusted annual basis. Housing starts and building permits issued do not always reflect builder confidence readings.

 

Mortgage Rates Rise as Jobless Claims Fall


Freddie Mac reported higher fixed mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose  12 basis points to 3.10 percent. Rates for 15-year fixed-rate mortgages also rose 12 basis points and averaged 2.39 percent; the average rate for 5/1 adjustable rate mortgages fell four basis points to an average rate of 2.49 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent. 

 

Initial jobless claims rose to 286,000 new claims filed from the prior week’s reading of 269,000 first-time claims filed. Ongoing jobless claims fell to 2.08 million claims filed from the prior week’s reading of 2.20 continuing jobless claims filed. 

 

What’s Ahead

This week’s scheduled economic readings include sales of new and previously-owned homes, reporting on inflation and consumer sentiment are also scheduled. Weekly readings on mortgage rates and jobless claims will be released in advance of the Thanksgiving holidays on Thursday and Friday. 

 

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How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and More

How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and MoreAre you thinking about using a mortgage to buy a new home? Buying your own piece of local real estate is a major financial investment and one that can require some pretty complex math to fully understand.

In this blog post we’ll discuss mortgage calculators and how to use one of these tools to determine your monthly mortgage payments, interest charges, amortization periods and more.

Determining Your Principal and Down Payment Amounts

To get started with a mortgage calculator you’ll need to know how the price of the home and how much you intend to contribute as a down payment. Generally speaking you’ll want to place a down payment of at least 20 percent in order to avoid having to pay for private mortgage insurance and to give you access to better interest rates.

Choosing Your Interest Rate and Amortization Period

Now that you have an idea of the amount of mortgage financing you’ll need, the next step is to choose your interest rate and amortization period. Different lenders will offer different interest rates for every one of their mortgage products, so again you’ll want to play around with these numbers and run the calculation to see which combination of mortgage financing, interest rate and amortization period gives you a monthly payment that suits your budget.

Using a Mortgage Calculator for Refinancing

If you’re thinking about refinancing your current mortgage you can also use a mortgage calculator to help make the math a bit easier. Simply use your outstanding mortgage balance as the principal amount and then choose an amortization schedule that fits your financial goals. Be sure to keep an eye on your interest payments, as you may find that by refinancing to a longer amortization period your monthly payments go down but your total interest paid is quite a bit higher.

Don’t Forget the Closing Costs

Finally, don’t forget that there are numerous “closing costs” – fees, taxes and more – which you’ll need to factor in to your overall calculation. Closing costs will include everything from home appraisal fees to government filing fees and property taxes, and will vary depending on the home and the city or community you’re buying in.

While online mortgage calculators can handle the tricky math to determine monthly payments and interest costs you may still find that you have questions about your mortgage or some aspect of the process. For more information, contact your local mortgage professional and they’ll be happy to share their advice and expertise.

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Qualifying For A Mortgage Credit Certificate

Qualifying For A Mortgage Credit CertificatePurchasing a house can be expensive, but there are measures in place to make it easier, particularly for people buying a home for the first time. One option is a mortgage credit certificate. What is the certificate, and how does it work?

A Mortgage Certificate Is A Tax Credit

A mortgage credit certificate, usually shortened to MCC, is a credit issued to first-time homebuyers by the local or state government. This certificate allows first-time homeowners to claim a federal tax credit for mortgage interest paid on the loan, with a limit of up to $2,000. When someone takes out a mortgage, the majority of the payments go toward interest. This credit certificate allows homeowners to recover some of the interest paid in the form of a tax credit.

Who Qualifies For This Credit?

Not every homeowner will qualify for this certificate. Usually, this is a certificate reserved for low-income people purchasing a home for the first time. Or, these credits are limited to people who purchase a house in a certain area. Usually, these programs are run by the states. Every state has a slightly different income limit for people purchasing a home. Everyone needs to check the local rules and regulations set by their states.

Is The Certificate Different From A Tax Deduction?

Yes, the mortgage credit certificate is different from a tax deduction. A tax credit is directly applied to the amount of money someone owes in taxes. In contrast, a tax deduction is a deduction from someone’s gross taxable income. A tax credit is better for tax purposes than a tax deduction. It is possible for someone to be awarded a mortgage credit certificate and deduct the interest paid on the mortgage from their taxes. Anyone who has questions about how deductions and credits work should work with a tax professional. 

Do Not Leave Money On The Table

It is true that purchasing a house for the first time can be a challenge; however, there are financial measures in place to make this process easier. Anyone who is buying a home for the first time should take a look at the state qualifications for the mortgage credit certificate program. This could help people save money on their taxes.

 

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Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower Them

Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower ThemWhether you’re about to close on a lovely new house for your growing family or a stylish beachfront condo so you can retire close to the ocean, one thing is certain: you’re going to face a variety of closing costs. Insurance, taxes, financing fees, title fees, attorney fees and other costs will need to be paid, and if you’re a savvy buyer you’ll do everything you can to save on them.

In today’s post we’ll share three quick tips that can help you reduce your closing costs when you buy your next home.

Tip #1: Include Closing Costs in Your Negotiations with the Seller

As closing costs are a part of the real estate transaction they’re an excellent item to include in your negotiations with the seller.

For example, if you consider that closing costs might be 3 or 4 percent of the home’s value you can try to bring the seller’s asking price down to get those costs included. Or, you may be able to entice the seller with the prospect of a quick sale if they are willing to pay your closing costs in order to get you to sign on the dotted line.

Tip #2: Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Tip #3: Ask About Every Fee You’re Required to Pay

Finally don’t forget that you’re the customer and that you have the right to know about each one of your closing costs and why you’re expected to pay them. Being informed about all of the various items in your transaction will help ensure that you’re not paying something you could have avoided.

There you have it – three excellent tips for reducing your closing costs when you purchase your next home. For more information and advice about mortgage closing costs and how to best manage them, be sure to get in touch with your local mortgage professional.

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What Is A High Enough Credit Score For A Mortgage?

What Is A High Enough Credit Score For A Mortgage?There are many people who are interested in purchasing a home for the first time. Even though many first-time homeowners are interested in the sticker price of a home, it is just as important to consider credit scores. Anyone who requires financing to purchase a home will have to go through a credit check. What credit score is considered high enough for a home loan? What do people have to do if they want to increase their credit scores?

What Credit Bureaus Do Lenders Use?

First, a credit score is a reflection of someone’s overall financial health. A lender wants to make sure someone has the ability to pay back a mortgage before they give that person a home loan. The higher someone’s credit score is, the more likely the lender believes he or she will have that loan repaid. 

In general, there are three major credit bureaus. They include Experian, TransUnion, and Equifax. Most lenders are going to run something called a triple merge (or a trimerge) when they check someone’s credit. This means the lender is going to check someone’s credit score with all three major credit bureaus before deciding if someone should receive a home loan. All three major credit bureaus calculate credit scores using the Fair Isaac Corporation, or FICO, numbers, but they calculate credit scores slightly differently. 

What Is Considered A Solid Credit Score?

Every lender has a slightly different metric, but a credit score less than 580 is considered poor. In contrast, a credit score over 800 is considered excellent. The maximum credit score someone can have is 850. If a loan is given to someone with a score under 620, this is considered a “subprime” loan. It is possible for people to qualify for a home loan with a low credit score, but they may be facing a higher interest rate.

Those who are interested in raising their credit score should pay all of their bills on time. It is also important for individuals to pay down as much of their debt as possible before applying for a home loan. This could help them increase their credit scores and get approved for a loan with a solid interest rate. 

 

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What’s Ahead For Mortgage Rates This Week – November 15, 2021

What's Ahead For Mortgage Rates This Week - November 15, 2021Last week’s scheduled economic reporting included readings on inflation and a preliminary report on consumer sentiment. Weekly reports on mortgage rates and jobless claims were also released.

Inflationary Growth Exceeds Expectations, Creates Consumer Challenges

October’s inflation rate rose to its highest year-over-year pace in 31 years last week with a reading of 6.20 percent growth as compared to September’s year-over-year growth rate of 5.40 percent. Inflation rose by 0.90 percent month-to-month in October as compared to September’s reading of 0.40 percent growth. Consumers paid more for essential goods including food, fuel, and transportation. October’s inflationary growth rate surpassed the Federal Reserve’s inflationary goal of 2.00 percent year-over-year.

Pandemic-related conditions continued to delay supply chains and further limited goods and services available to consumers. Auto prices were higher due to lower production and falling inventories. Slim supplies and high demand caused rising prices in many economic sectors. Rising prices currently outstrip income growth, which renders current inflationary conditions unsustainable for many consumers.

Core inflation, which excludes volatile food and fuel sectors, rose by 0.60 percent in October and exceeded predictions of an 0.40 percent increase based on September’s reading of 0.20 percent month-to-month core inflation.

The Federal Reserve recently described ongoing high inflation as “transitory,” but it appears to be going nowhere anytime soon.

Mortgage Rates Fall; Jobless Claims Mixed

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 11 basis points to 2.98 percent. Rates for 15-year fixed-rate mortgages averaged 2.27 percent and were eight basis points lower. Rates for 5/1 adjustable rate mortgages averaged 2.53 percent and one basis point lower. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.40 percent for 5/1 adjustable rate mortgages.

Last week’s new jobless claims fell to 267,000 initial claims filed as compared to the previous week’s reading of 271,000 first-time claims filed. Continuing jobless claims rose to 2.16 million claims filed as compared to the reading of 2.10 million ongoing claims filed in the prior week.

The University of Michigan released its preliminary reading for November’s Consumer Sentiment Index and reported a November index reading of 66.8, which was lower than the expected reading of 72.0 and October’s index reading of 71.7. Consumer concerns over growing inflation and higher costs caused consumer sentiment about current economic conditions to dip.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders’ Housing Market Index, along with readings on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.

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