How Large Of A Down Payment Do You Truly Need?

If you are interested in purchasing a home, how much money should you put down? This is a difficult question that all potential homeowners need to answer, as it will dictate the size and location of the house you can afford. There are a number of factors to consider, so what do you need to know?If you are interested in purchasing a home, how much money should you put down? This is a difficult question that all potential homeowners need to answer, as it will dictate the size and location of the house you can afford. There are a number of factors to consider, so what do you need to know?

Generally, Putting More Down Is Better

There is a solid chance that a home loan is going to be the largest loan you will ever take out in your life. Therefore, there is some risk involved, and you must make sure you can pay it back. You can reduce the risk you take on by putting more money down. That way, you don’t necessarily have to take out such a large loan, and your lender may provide you with a lower interest rate. This could save you thousands of dollars over the life of the loan.

First-Time Homebuyer Options Are Available

The downside of saving up such a large down payment is that it could take a long time for you to save up so much money. Fortunately, there are programs available for first-time home buyers. For example, if you qualify for an FHA-backed loan for first-time homebuyers, you might be able to qualify for a home loan with as little as 3.5 percent down. This might make it easier for you to afford a house.

Is Your Money Better Served In The Market?

Putting more money down for a house may provide you with a lower interest rate while also reducing your monthly mortgage payments; however, you need to think about where your money will work the hardest for you. You may qualify for a lower interest rate if you put more money down, but will your money generate a higher return if you invested in your retirement? You should answer this question when you decide whether to put more money towards your house or more money in an investment portfolio.

Consider Working With An Expert

How much money should you put down for your house? This is a question that has a different answer for everyone, which is why you should consider working with a professional who can help you. 

What’s Ahead For Mortgage Rates This Week – November 28, 2022

What's Ahead For Mortgage Rates This Week - November 28, 2022

Last week’s economic reporting included readings on new home sales and consumer sentiment. Weekly readings on mortgage rates and jobless claims were also published. No economic data was published Thursday or Friday due to the Thanksgiving holiday.

New Home Sales Surpass Expectations in October

The Commerce Department reported higher-than-expected sales of new homes during October. New homes sold at a seasonally-adjusted annual pace of 632,000 homes sold.  Analysts expected new homes to sell at an annual pace of 570,000 sales as compared to the revised annual pace of 588,000 new home sales in September. The supply of available new homes rose by 1.50 percent between September and October and approached a nine-month supply of new homes for sale. Rising mortgage rates affected affordability for first-time and moderate-income home buyers, but average mortgage rates fell last week.

Mortgage Rates Fall, Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by three basis points to 6.58 percent and the average rate for 15-year fixed-rate mortgages fell by eight basis points to 5.90 percent. Homebuilders reported rising costs and slowing home sales; some builders added or increased buyer incentives including mortgage rate buydowns and paying buyers’ closing costs.

Last week’s first-time jobless claims were higher than expected with 240,000 new claims filed as compared to the expected reading of 225,000 initial claims filed and the previous week’s reading of  223,000 new jobless claims filed.

Consumer sentiment fell to an index reading of 56.8 in November according to the University of Michigan’s consumer sentiment survey. November’s reading reflected consumer concerns about inflation and a potential recession and was markedly lower than October’s index reading of 59.9 and the October 2021 reading of 73.6. Consumer sentiment about economic conditions in the next six months was also lower at an index reading of  55.6. Readings over 50 indicate that most consumers have a positive view of economic conditions.

What’s Ahead

This week’s scheduled economic news includes readings on home prices, pending home sales, and inflation. Weekly readings on mortgage rates and jobless claims will also be released.

Five Unique Renovations That Can Make Small Living Spaces Feel Bigger

Five Unique Renovations That Can Make Small Living Spaces Feel BiggerJust because you live in a small space doesn’t mean your home needs to feel cramped. There are several renovations that are popular among interior designers to make a space feel larger. Incorporate them into your own home to give it a more open, spacious feel.

1. Crystal Clear

Glass is an absolutely phenomenal way to make a small space feel larger as it removes visual barriers to show off additional square footage, making it seem as though it’s part of the room. Whether you choose a glass railing for a staircases or room divider or incorporate a glass shower into a small bathroom, glass can help your home feel more spacious.

2. Make The Most Of Mirrors

Similar to glass, mirrors can make a small space feel big as they add an illusion of depth to a room. Try installing a large mirror on a wall in lieu of paintings or other decor if you’d like to make a room seem larger than it is.

3. Goodbye Island

If it’s your kitchen that’s feeling cramped, consider removing the island. Islands can add value to a home, but if your kitchen is small enough that it shouldn’t have been there in the first place then getting rid of it will create a much more functional space. Consider whether you’d still have ample counter space and storage without your island, and if the answer is yes it may be time to say goodbye to your island.

4. Tear Down The Walls

Creating an open concept floor plan is a fantastic renovation for a small home as it removes barriers between several small spaces to create one larger open space. Do you really need a wall between your kitchen and dining room? How about between your dining room and living room? If there’s a wall that simply isn’t necessary, it may be time to tear it down.

5. Keep It Light

A very quick and easy renovation to help open up a small space is to paint the walls in a light color as it will reflect more light than a darker shade, making the room feel airy rather than cozy. If you’re considering re-doing the floors, choosing a lighter color can further contribute to the feeling of a larger space.

Small spaces don’t have to cramp your style. In fact, they offer unique design opportunities and can make wonderful living spaces.

Escrow And Your Mortgage: The Most Important Points To Know

Escrow And Your Mortgage: The Most Important Points To KnowThere are many complicated terms thrown around regarding your mortgage, and one of them is an escrow account. You will probably hear that your lender will collect some additional money every month for escrow payments. If you take a look at your mortgage statement, you will see your interest, your principal, and your escrow. What does this mean, and why do you have to pay additional money that isn’t going toward the balance of your loan?

The Definition Of An Escrow Account

An escrow account is an extra account that your lender opens on your behalf to make sure certain expenses are covered. Because your mortgage investor has a lien against the property, the mortgage company has an interest in making sure your property does not fall into foreclosure. That means that you need to stay on top of all of your expenses, including those beyond your mortgage. 

What Escrow Accounts Will Cover

Generally, your mortgage company will open an escrow account that is used to cover your home insurance premium and your real estate taxes. Generally, real estate taxes and home insurance premiums are only billed once per year. If you get a large bill for several thousand dollars, you might not be able to cover it. If you don’t pay your real estate taxes, the government could foreclose on your house. Instead of asking you to pay thousands of dollars at once, your mortgage company will open an escrow account for you, collecting small amounts of money every month to make sure you stay up to date on your home insurance taxes and premiums.

How The Balance In Your Escrow Account Is Determined

If your mortgage company is collecting additional money every month, that means there is less money for you to spend. Therefore, your mortgage company is careful only to collect as much money as required. Your escrow account balance is determined by your property taxes and insurance premiums. During an annual escrow review, your mortgage company will see if the account has a surplus balance. If it does, you will get a refund for the surplus balance. Keep in mind that if your real estate taxes or insurance premiums go up, your mortgage company may collect more money in the future. 

What’s Ahead For Mortgage Rates This Week – November 21, 2022

What's Ahead For Mortgage Rates This Week - November 21, 2022Last week’s economic reporting included readings on U.S housing markets, housing starts, and building permits issued. Data on sales of previously-owned homes were released along with weekly reports on mortgage rates and jobless claims.

Builder Sentiment on Housing Markets Declines in November

November’s National Association of Home Builders Housing Market Index fell five points to an index reading of 33; analysts expected a reading of 36. November’s reading was the lowest since June 2012 except during the pandemic.

All three indices contributing to the Housing Market Index were lower in November than in October. Homebuilder sentiment regarding current sales conditions fell six points to an index reading of 39; by comparison, this reading was 83 in November 2021. Builder confidence in home sales conditions over the next six months fell four points to 31. Homebuilder confidence in prospective buyer traffic in new single-family developments fell five points to an index reading of 20.

Homebuilders were less confident about housing market conditions in the four regions tracked by the NAHB. Builder sentiment in the Northeast fell six points to an index reading of 41. Builder sentiment in the Midwest fell two points to 38. Builder confidence in the South fell seven points to 42. Builder sentiment was five points lower in the West at 29. Index readings of less than 50 indicate that most builders lack confidence in housing market conditions.

Builders continue to experience rising materials costs and regulatory expenses associated with developing land and home construction. Rising home prices and resulting affordability concerns compelled builders to ask lawmakers to reduce regulatory costs connected with developing land and building homes.

Mortgage Rates, Jobless Claims

Freddie Mac changed the format of its Primary Mortgage Market Survey to include only average rates for 30 and 15-year fixed-rate mortgages and the survey no longer reports average discount points. The average rate for 30-year mortgages fell 47 basis points to 6.61 percent. Rates for 15-year mortgages averaged 5.98 percent and four basis points lower than in the previous week. 222,000 initial jobless claims were filed last week. Analysts expected 225,000 new claims filed as compared to the previous week’s reading of 226,000 first-time claims filed.

What’s Ahead

This week’s scheduled economic reporting includes readings on new home sales, minutes of the most recent meeting of the Fed’s Federal Open Market Committee, and weekly readings on mortgage rates and jobless claims. Financial markets will be closed on Thursday and Friday for the Thanksgiving holiday. 

3 Ways That a Reverse Mortgage Can Transform Your Retirement

3 Ways That a Reverse Mortgage Can Transform Your RetirementAre 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

NAHB: Home Builders Concerned Over Housing Market ConditionsThe 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

The Right (And Wrong) Reasons To Buy A HouseThere 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

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

What's Ahead For Mortgage Rates This Week - November 14, 2022Last 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.