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Get caught up with the latest mortgage news from the Whitener Team!
Get caught up with the latest mortgage news from the Whitener Team!
Last week’s economic news included readings on pending home sales, new home sales, and readings on monthly and yearly inflation rates. Weekly readings on mortgage rates and jobless claims were also published along with the University of Michigan’s final monthly and year-over-year readings on consumer sentiment.
Commerce Department Reports Fewer New Homes Sold in July
Sales of new homes fell by 12.60 percent month-to-month and were 29.6 percent lower year-over-year in July. The Commerce Department reported a year-over-year sales pace of 511,000 new homes sold in July as compared with June’s revised pace of 585,000 new homes sold. June’s reading was revised from its original year-over-year pace of 590,000 new home sales and was the lowest pace of home sales reported since January 2016.
Fears of rapidly rising inflation and mortgage rates impacted would-be homebuyers as construction costs and labor shortages contributed to rising home prices. Pending home sales decreased by one percent in July as compared to June’s reading of -8.9 percent fewer pending sales reported in June.
Mortgage Rates Mixed, Jobless Claims Fall
Freddie Mac reported higher average rates for fixed-rate mortgages as the average rate for 5/1 adjustable rate mortgages fell. Rates for 30-year fixed mortgage rates averaged 5.53 percent and 42 basis points higher. Rates for 15-year fixed-rate mortgages averaged 4.85 percent and were 0.30 basis points higher. The average rate for 5/1 adjustable rate mortgages was three basis points lower at 4.36 percent; discount points averaged 0.80 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
Initial jobless claims fell to 243,000 first-time claims filed as compared to the previous week’s reading of 245,000 initial claims filed.
Inflation readings for July showed the first decrease since April 2020 as the month-to-month reading decreased by 0.10 percent as compared to June’s month-to-month reading of a one-percent increase in inflation. The core personal consumption rate, which does not include food or fuel costs, rose by 0.10 percent as compared to the expected reading of 0.20 percent and June’s reading of 0.60 percent inflation.
Inflation rose by 6.30 percent year-over-year in July as compared to June’s year-over-year reading of 6.80 percent. Core inflation rose by 4.60 percent year-over-year in July as compared to June’s reading of 4.80 percent. Decreasing inflationary growth suggests that relief may be on the way for consumers.
What’s Next
This week’s scheduled economic reporting includes readings on home prices, construction spending, public and private-sector job growth, and the national unemployment rate. Weekly readings on mortgage rates and jobless claims will also be released.
If you want to buy a home in the near future, you are probably aware of just how competitive the housing market is. You need to put yourself in the best position possible to be successful by getting pre-approved for a home loan. This is a very important step, particularly when you compete against people making cash offers. Learn more about the importance of getting pre-approved below, and make sure your offer is taken seriously.
A Pre-Approval Letter Shows You Are Serious
The first reason why you need to get a pre-approval letter is that it will show any potential seller that you are serious about buying the home. One of the reasons why settlers like to accept cash offers is because they know the sale will go through. Without a pre-approval letter, the seller may not know if you will be approved by a reminder for a home loan. By showing a pre-approval letter, the seller will know that you will get financing for the home, and they do not necessarily need to worry about the sale falling apart.
Getting Pre-Approved Gives You A Budget
You also need to get a pre-approval letter because it will give you a budget with which to work. Even though it is fun to take a look at different houses and imagine what your life might look like, you need to know how much money you can spend on a house. The lender will let you know the maximum amount that you are approved for, and you can quickly narrow down your search and find the right home to meet your needs.
Get Pre-Approved Before You Start Your Housing Search
The housing market is constantly changing, so you need to take advantage of every opportunity given to you. If you want to make it easier to navigate a difficult housing market, you need to get pre-approved before you start the housing search. Remember that you do not necessarily need to get a loan from the lender that gave you a pre-approval letter, but the seller needs to know that you have been approved by at least one lender if you want your offer to be taken seriously. A pre-approval letter does exactly that.
From the approaching holiday season to the New Year, there are a lot of things to prepare for when it comes to the winter. It’s important, though, not to forget about the needs of your lawn for the upcoming cold season. If you’re wondering how to ready your trees, your plants and your yard, here are some tips for saving your vegetation until the springtime.
Fertilize For Grass Growth
It might seem like a waste of time to fertilize your grass going into the winter months, but this is actually the perfect time to prep it for spring. As fertilizer will provide much-needed nutrients to the grass in the months when there is less growth, it will actually stimulate improved growth down the road. It’s just important to ensure that you provide a consistent amount of fertilizer so a patchy-looking yard can be avoided. Since weeds scale back in winter, like most other varieties of plants, it can also be an ideal time to apply a herbicide.
Garden Plants And Perennials
While plant maintenance duties like pruning can be done in the spring or fall months, it can actually be a better idea to give your plants the summer months to grow before diving in. Cutting them back will enable the plant to focus its energy on maintenance through the cold winter months, so it’s a good idea to get to work in before the first signs of cooler air set in. If you happen to have plants that won’t last through the winter, you’ll want to compost them so they can be used for soil in the next gardening season.
Clearing Away The Wood
Beyond the garden and the lawn, it’s also worthwhile to provide a little care for your favorite trees before the winter hits. While you’ll want to be cautious about what you do and may want to consult with a gardening professional, clearing away dead branches can help your tree retain its health throughout the year. You may notice the difference in your trees when the spring rolls around again, as they’ll likely have a revitalized look and show signs of new growth.
Winter is a busy time for many people, but it’s important to make the time to fertilize your grass and prune your perennials so your yard will be ready for spring.
Starter homes are incredibly popular for young couples who plan to have a family in the future but don’t need a large place yet.
Life moves pretty fast sometimes and many couples find themselves expecting children before they have begun to look for the next home. This shouldn’t be a problem, as moving into a larger home before the baby arrives can be a lot easier than it appears.
Always Move Before The Baby Is Born
There is a choice when upgrading a home for children: moving beforehand and settling down in advance of having kids or waiting until after having the child and dealing with a move later on.
It may be tempting to wait until the stress of a pregnancy is over to move into a larger home. After all, selling and buying houses can be a tiring process for anybody, let alone expectant parents. Just remember, no matter how difficult or stressful the move is it will be one hundred times worse after having kids.
Work With A Professional To Help Coordinate The Move
There is nothing wrong with rushing through a purchase or the sale of a home, as long as everything is done correctly. A situation like this is never the right time to assume control and responsibility for every aspect of the move.
A real estate professional, once told of the situation, will know exactly how to handle everything. From preparing a current home for sale to finding a larger house in the right price range, a professional will have experience in coordinating the process.
Prepare For The Move In Stages
The best way to go about facilitating a quick move is to go in steps. Everything in the house that is not necessary to the staging should be boxed up and moved into temporary storage before the home is shown.
This is beneficial because it removes all clutter from the house and helps to make a quick sale and also allows for many personal items to be moved into the new house without having to wait for the current home’s sale to close. Instead of one gigantic move, the process can be broken down into several smaller moves to relieve some stress.
When there is a deadline on a move, you can increase your chances of selling your current home and buying a new one by using the services of a real estate professional. When things are done fast they need to be done right and a professional with experience can facilitate the entire process while making sure nothing slips through the cracks.
If you are looking to buy a home, you may want to consider shopping for a loan first. Having your financing squared away ahead of time can make it easier to be taken seriously by buyers and help move along the closing process. For those who are looking to get a mortgage soon, keep in mind that the Debt-to-Income ratio of the borrower plays a huge role in the approval of your mortgage application.
What is a Debt-to-Income Ratio?
A debt-to-income ratio is the percentage of monthly debt payments compared to the amount of gross income that a person earns each month. Your gross monthly income is typically the amount of money you earn before taxes and other deductions are taken out. If a person’s monthly gross income is $2,000 a month and they have a monthly debt payments of $1000 each month, that person would have a DTI of 50 percent. The lower the DTI the better. 43 percent is in most cases the highest DTI that potential borrowers can have and still get approved for a mortgage.
What Debt Do Lenders Look At?
The good news for borrowers is that lenders will disregard some debt when calculating a borrower’s DTI. For example, utilities, cable, phone and health insurance premium would not be considered as part of your DTI. What lenders will look at are any installment loan obligations such as auto loans or student loans as well as any revolving debt payments such as credit cards or a home equity line of credit. In some cases, a lender will disregard an installment loan debt if the loan is projected to be paid off in the next 10-12 months.
What Is Considered Income?
Almost any source of income that can be verified will be counted as income on a mortgage application. Wage income is considered as part of a borrower’s monthly qualifying income. Self-employed individuals can use their net profit as income when applying for a mortgage, however, many lenders will average income in the current year with income from previous years. In addition, those who receive alimony, investment income or money from a pension or social security should make sure and include those figures in their monthly income as well when applying for a loan.
How Much Debt Is Too Much Debt?
Many lenders prefer to only offer loans to those who have a debt-to-income ratio of 43 percent or lower. Talking to a lender prior to starting the mortgage application process may help a borrower determine if his or her chosen lender offers such leeway.
A borrower’s DTI ratio can be the biggest factor when a lender decides whether to approve a mortgage application. Those who wish to increase their odds of loan approval may decide to lower their DTI by either increasing their income or lowering their debt. This may make it easier for the lender and the underwriter to justify making a loan to the borrower.
Last week’s economic reporting included readings on home builder confidence in housing market conditions, Commerce Department readings on building permits issued, and housing starts along with readings on retail sales. Weekly readings on mortgage rates and jobless claims were also published.
NAHB: Home Builder Confidence Falls for 8th Consecutive Month in August
The National Association of Home Builders reported an index reading of 49 for home builder confidence in August. Analysts expected a reading of 54 and July’s index reading was 55. Readings over 50 indicate that a majority of home builders surveyed viewed current housing market conditions as positive. Builders surveyed cited ongoing concerns including rising materials and labor costs and a lack of buildable lots, but rapidly rising mortgage rates and the resulting higher costs of buying a home increased home builders’ concerns about the U.S. housing market.
Builders reported making buyer concessions including lowering home prices and adding buyer incentives. 20 percent of home builders surveyed said that they reduced home prices within the last month.
Component readings for home builders’ confidence were also lower. Sales expectations for the next six months fell two points; the index reading for prospective buyer traffic fell by 5 points to 32 points. Regional readings also showed lower readings for builder confidence. The Western region reported 11 points lower builder confidence in July; home builder confidence in the Northeastern region fell by nine points and home builder confidence was seven points lower in the South. Home builder confidence in the Midwestern region fell by three points.
Mortgage Rates, Initial Jobless Claims Fall
Freddie Mac reported lower average mortgage rates last week as fixed-rate mortgages averaged 5.13 percent and were nine basis points lower. Rates for 15-year fixed-rate mortgages averaged 4.55 percent and four basis points lower. Rates for 5/1 adjustable rate mortgages averaged four basis points lower at 4.39 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.
Initial jobless claims fell to 250,000 initial claims filed as compared to 252,000 first-time jobless claims filed in the previous week. Analysts expected 260,000 initial jobless claims to be filed last week. Continuing jobless claims rose to 1.44 million claims from the previous week’s reading of 1.43 million ongoing jobless claims filed.
What’s Ahead
This week’s scheduled economic reporting includes readings on sales of new homes and pending home sales, inflation, and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be published.
James Whitener – Loan Officer
20359 N. 59th Ave, Suite 100
Glendale, AZ 85308
602-622-6514
James.Whitener@FairwayMC.com
The content on this website is written by James and reflects his opinion, and not the opinion of Fairway Independent Mortgage Corporation.