The 15-year fixed-rate mortgage jumped 9 basis points to an average of 3.09%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.36%, up 6 basis points.
Mortgage rates roughly track the direction of the 10-year Treasury note TMUBMUSD10Y, +2.14% . The yield on the 10-year note has generally fallen since mid-August.
Low rates have provided a lifeline to the housing market throughout the last few months, as it has helped to ease affordability concerns among buyers. Mortgage applications for home purchases are up 9% from a year ago, according to the Mortgage Bankers Association.
“While there has been a material weakness in manufacturing and consistent trade uncertainty, so far, the American consumer has proved to be resilient with solid home-purchase demand,” Freddie Mac said Thursday.
This week’s uptick in mortgage rates represents only the 10th instance in which rates have increased on a week-over-week basis this year. And increases could continue to prove to be a rarity in the weeks and months to come, based on the Federal Reserve’s decision-making.
The Federal Reserve is still expected to slash the benchmark interest rate by 25 basis points at the end of the month, despite signs of a pickup in inflation. Some analysts are now predicting that further interest-rate cuts could come down the pike, driven by concerns tied to trade and the global economy.
Nevertheless, President Trump continued his attacks on the central bank — becoming the first U.S. president to say he welcomes interest rates below zero.
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet…..
Of course, Trump likely was not talking about mortgage rates specifically when he made these comments. But what would happen to mortgage rates if the country’s benchmark interest rate dropped below zero?
Denmark provides us with a clue. The Scandinavian country’s Jyske Bank began offering a 10-year fixed-rate mortgage at negative 0.5% last month. Another bank, Nordea Bank, meanwhile, has offered Danish home buyers a 20-year fixed-rate mortgage that charges no interest.
Borrowers still make monthly payments when mortgage rates turn negative — the interest rate merely reduces the principal they owe the lender.
But a negative-rate environment wouldn’t be great for the U.S. housing market. For starters, it could drive people toward riskier methods of saving, since bank deposit rates would also be negative in such a scenario. Lenders would become stingier with the loans they offer, as it would be costing them money to make loans.
Home prices would also be expected to go up in such a low-rate environment. That’s what’s happened in Denmark. Given that many would-be home buyers are already priced out of the market today, a further increase in prices would aggravate that situation, no matter how inexpensive loan repayment became.
Even if the Fed does at some point push its benchmark rate into the red, it would be a while before such a low rate showed up in the mortgage market. It took seven years in Denmark.
DO create a file and keep copies of all your important financial documents as you receive them—check stubs, W-2s, tax returns, bank and investment account statements, rental agreements, Rental Property 1031 Tax Exchanges, etc. Do have them ready in case New American Funding needs updated documentation for your file.
DOwait to buy a new
car, boat, or appliance until after your
loan has funded.
DO look for a homeowner’s insurance policy for your new home. Consult with the insurer of your current home, your auto insurance agent, and others to get the best insurance quote. Do give the agent’s name and phone number to your escrow officer.
DO have any donors give you money as soon as possible, if part of your down payment is a gift. Be sure you understand the necessary steps and documentation for gifts; and don’t forget to follow all of them.
DO expect to receive
calls and correspondence from at least three different companies during the
course of your escrow:
Each of them has a different role to play in making sure your beautiful new home is ready for you to move into on time and on the terms you expect. You can also click here for a reputable moving company that can help make your move stress-free.
DON’Tkeep cash in a safe or in an overseas account if you plan to use these funds for
your down payment. Do talk with us about how and when to get the money into your U.S. bank account.
DON’T change jobs. If you have to change jobs, consult ahead of
time with New American Funding. Your loan cannot fund unless you are
on the job we have verified for you.
DON’Tmake large deposits to your bank account unless you have to. Do save the documentation which shows where the money came from.
DON’T apply for new credit or give your personal information to
anyone else who might run your credit report. Credit inquiries may hurt your
score, and will have to be explained to the underwriter.
DON’T make new purchases with your existing credit cards. The
underwriter may require a back-up credit report in a long escrow; and you could
lose your approval. If you must make a major purchase, do call us so we can go
over the impact on your ratios.
Buying single family homes can be really challenging if you are not prepared or if you know very little about financing a home. If you are in the process of getting a loan, you should learn the facts here now about the steps you must follow to obtain your payday loan.
There are many misconceptions about the home loan bad credit. Recently, it was reported that 24% of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is they are misinformed!
Only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according to Experian:
16% Very Poor (300-579)
18% Fair (580-669)
21% Good (670-739)
25% Very Good (740-799)
20% Exceptional (800-850)
Randy Hopper, Senior Vice President of Mortgage Lending for Navy Federal Credit Union said,
“Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there like credit repair for mortgage for consumers with low FICO® scores,”
There are many first time home buying services and programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640. Veterans Affairs (VA) loans have no credit score requirement.
As you can see, none of them
are above 700!
It is true that the average FICO® score for all closed loans in
January was 726, but there are plenty of people taking advantage of the low
credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae:As you can see, that number has been dropping for the last seven
years. As a matter of fact, the average FHA Purchase FICO® Score reported in
January 2019 was 675!
One of the challenges is that Americans are unsure about their
credit score. They just assume that it is too low to qualify and do not double
check. Credit.com confirmed
that only 57% of individuals sought out their credit score
at least once last year.
“Since October 2009, the average
year-over-year FICO® Score has steadily and consistently increased,
from a low of 686 in 2009 to the latest high of 704 as of 2018.”
Here is the increase in the average US FICO® Score over the same
period of time as the graph earlier.
At least 84% of Americans have a score that
would allow them to buy a house. If you are unsure what your score is or would
like to improve your score in order to become a homeowner, sit down with a real
estate professional that can help you to set a path to reach your dream!
Looking at Luxury residential homes for sale is quite exciting especially for a first-time home buyer. However, one of those big, fat decisions when you buy single family homes is: How much money should you put down?
decent-sized down payment will reduce your monthly mortgage payments and will
protect you from additional costs. But hey, maybe you just don’t have the cash.
Here’s the lowdown on down payments:
Low down payment, higher costs
Make a lower down payment, and you’ll face higher monthly mortgage payments.
come? Several reasons. The first is just simple math: If you put up less money
now toward the price of the house, you’ll need to borrow more and will have
more of the cost to pay off.
loans with lower down payments usually come with higher interest rates.
Finally, a big reason is something that’s often dreaded called private mortgage insurance, or PMI.
Benefits of a 20% down payment
love it when you can make a 20% down payment, because that makes the mortgage a
good risk. The lender believes it would have no trouble recouping the other 80%
if you ever default on the loan and fall into foreclosure.
Calculate what your monthly mortgage payment would
be with a 20% down payment.
you don’t want to put that much money down, the lender make you buy PMI.
It’s insurance that pays off the loan if you ever stop paying. PMI can be
expensive, and the premiums are tacked onto your mortgage payments.
types of mortgages — including VA loans — allow for low
down payments with no PMI.
Risks of a higher down payment
making a high down payment isn’t necessarily the smartest choice.
big chunk of money will be tied up in your home. You won’t have an easy way of
getting at that money if you’re suddenly slapped in the face with a major
unexpected expense and don’t have an emergency fund to deal with it.
you make a hefty down payment, there’s also a chance you could lose that money
you’re ever foreclosed on, the down payment will never be returned. Or, if you
have to sell the home for less than you paid, you might not recover your down
What should you do?
Personal finance is just that: personal. There is no right or wrong answer to how much of a down payment should be made.
Published in MoneyWise by Doug Whiteman, 03/18/2019
to pay off your home and run the mortgage contract through the shredder a
lot sooner than you planned?
are many ways to pay off your home loan faster. With the right tactics — like
the following ones — you’ll scarcely notice the increase in your monthly
1.Make mortgage payments every two weeks
homeowners make 12 monthly mortgage payments per year. But if you make
half-sized payments every two weeks, you’ll make 26 half-payments per year
— the equivalent of 13 full payments.
it is like making 13 monthly payments every year rather than the usual 12.
go this route, call your lender and ask the best way to do it. Some
lenders will set you up with such payments. Or, you might simply prefer
to send in the extra payments by mail or electronically.
you make any extra payment, however, be sure to designate it “apply to
principal.” Otherwise, the lender may treat it as a prepayment of your
next regular monthly payment.
to one calculator, if you have a $200,000 mortgage with a fixed interest rate
of 4.5 percent, making biweekly payments would save $28,037 in interest over
the life of the loan and pay off your mortgage in 25.6 years instead of 30.
That’s a big bang for not many extra bucks.
Caution: Avoid paying for “mortgage acceleration” programs. Paying down your mortgage faster should not cost extra.
2.Pour every bit of extra cash into your mortgage
every windfall you receive — such as bonuses and gifts — toward your mortgage
It’s possible you’ll find better uses for extra cash than paying down your mortgage, though. For example, if your after-tax mortgage interest rate is 4 percent, but you can earn 5 percent on your money elsewhere, you’re probably better off earning the 5 percent.
3.Round up your payments
in the habit of rounding up your monthly payment. If it’s $1,013, pay $1,020 or
this on a regular basis, and you’ll shave years off your mortgage while feeling
4.Make one extra payment a year
is an alternative to making a payment every two weeks. At the end of the year,
give yourself a holiday gift by making an extra payment. Heck, do it at any
if you’d rather, just add an amount equal to one-twelfth of your mortgage
payment to each month’s payment. For instance, with a $1,013 monthly
payment, one-twelfth is about $84. So, you’d pay $1,097 monthly instead.
5. Refinance into a shorter loan
rates are generally lower on shorter-term loans than on longer-term
loans. So, borrowers choosing shorter terms — such as a 15-year
mortgage instead of a 30-year mortgage — can save a great deal of money in the
long run, although their monthly payment will likely increase.
6. Refinance and pretend it’s a shorter loan
locking into a shorter mortgage with higher monthly payments feels scary, you
can get much the same effect by refinancing into a cheaper 30-year
mortgage but paying it off on a shorter schedule.
won’t enjoy the lower rates offered for shorter-term loans, but
you’ll still save heaps of money on interest.
option requires willpower, because you’re making a larger payment than you
are required to each month. But it gives you the option to fall back to your
smaller required payment if you need extra cash.
7. Decide if refinancing is cost-effective
5 and 6 involve refinancing your mortgage. Before considering those options,
decide if refinancing is a good move for you.
refinancing is worth it depends on the various associated costs, whether
rates are low enough to justify a refinance and how long you’ll stay in the
home. To be a good deal, you’ll need to stay long enough to more than recoup
can get an idea of your costs using FICO’s mortgage refinance calculator. Also, you can shop
around by telling several mortgage lenders how much you want to borrow and
asking for their estimates of fees.
Tip: Don’t give Postlenders consent to pull your credit report until you’re ready to actually apply for a loan, as that can temporarily ding your credit score.
Published on MoneyTalksNews by Marilyn Lewis 2/27/2019