The Quick and Easy Guide to Understanding the Math Behind Your Mortgage Closing Costs

The Quick and Easy Guide to Understanding the Math Behind Your Mortgage Closing CostsIt’s amazing that in a year with extremely low mortgage rates being reported around the country, closing costs are up by as much as 6% from the previous year. Part of the reason for this is that the stricter regulations on loans have increased the costs to banks, and they always find a way to pass on new costs to the consumer.

Understanding Third-Party Closing Costs

When closing on a mortgage the borrower will notice a long list of additional fees that they are expected to pay for. These can range from insignificant into the thousands of dollars depending on the state and the deal. When looking at these fees you will notice that some are third-party fees.

This is not out of the ordinary and you are not being taken advantage of. These costs are for services rendered by outside companies at the request of the mortgage lender to make sure everything is in order with the property.

Closing Costs You Can Expect To Pay

Anybody going through the mortgage process for the first time should expect to see several odd sounding terms on the bill. The first is ‘origination’ or ‘processing’ which is the primary fee the lender charges for creating the mortgage.

Other fees include discount points, flood certification, title insurance, credit report and appraisal. These are all necessary for buying a home and should be expected to appear when closing.

The Trick Behind Zero-Closing Cost Mortgages

With closing fees adding up it may seem like a good idea to opt for a mortgage that has absolutely no closing costs if it’s offered. While no money will be required up front, it adds up in the long run.

This is because the lender is making a deal. They agree to pay all the closing costs for the borrower in exchange for a slightly higher interest rate, which will pay out for them over the course of the mortgage.

The amount you can expect to pay really depends on the cost of living and real estate market where you’re buying. A mortgage specialist will be able to talk to you in advance of applying for your mortgage to give you a better idea of what you are looking at paying for closing costs. Contact one today for more information on why you have to pay closing fees and the amount you should be budgeting for.

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You Are A Serious Buyer: How To Show It

You Are A Serious Buyer: How To Show ItToday, the housing market is as hot as it has ever been. There are many people who are missing out on their dream homes because they are having a hard time competing with countless other people who are in the same position as them. If you want to put yourself in the best position possible to win a bidding war, you might be thinking about paying cash for your home; however, not everyone is in the same financial position. There are a few other ways for you to show a seller’s agent that you are serious about your offer.

Get A Pre-Approval Letter

This is arguably the most important step you need to take if you want your offer to be taken seriously. One of the reasons why sellers like cash offers is that they know that they do not have to worry about the buyer’s financing falling through. If you get a pre-approval letter from a lender, the buyer will know that you already have financing in place. If you want to go the extra mile, get a pre-approval letter from a local lender. If you get a better loan offer from a different lender down the road, you can always switch lenders at that time. 

Be Prepared To Pay Some Closing Costs

Traditionally, the seller is responsible for paying closing expenses; however, if you want the seller to pick your offer, consider shouldering some of those closing expenses. This will not have a long-term impact on your mortgage rate or monthly payment, but it could help you secure your dream home. You do not necessarily need to pay all of the closing expenses, but even paying a small percentage could go a long way. 

Put Down More Earnest Money

A lot of sellers are nervous about what the inspection might show. They don’t want a buyer to back out at the last minute. If you put down more earnest money, you can show a seller that you are serious because there will be a lower chance of you pulling your offer if the inspection reveals a few repairs. You should talk to a real estate professional about how much earnest money you should include for your offer to be considered competitive. 

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The Top Things To Know When Refinancing Your Home

The Top Things to Know Whne RefinancingIf you are thinking about refinancing your home in the near future, you probably know that this is a great way to shorten the term of your mortgage while also saving money. At the same time, refinancing your home does not come without risks. Take a look at some of the top things you should do and what to avoid before you go through the refinancing process.

Do Check Your Credit Score

Always check your credit score before you begin the refinancing process. A surprising number of credit reports contain errors, and you need to correct any errors on your credit report before you apply for a new home loan. If you do not correct the mistakes ahead of time, you could end up with a higher interest rate on your new home loan than you should.

Don’t Forget To Think About Closing Costs

You need to consider closing costs before you apply for a home refinance. Just because interest rates have gone down doesn’t necessarily mean you will save money. In general, if you can get a home loan that is at least a half of a percentage point lower, you should save money when compared to the closing costs you will owe; however, you should always do the math to calculate your break-even point. 

Do Think About The Equity You Will Have Left

If you complete a cash-out refinance, you need to calculate the amount of equity you will have left after the refinancing process is complete. While you might want to conduct a cash-out refinance to cover a major home repair or renovation, you do not necessarily want to completely deplete the equity in your home. You could end up with a very high-interest rate if you do so.

Don’t Forget To Talk To Your Lender About All the Options

When you refinance your home, you have multiple options available. You can tap into the equity in your home, reduce the size of your mortgage payments, or shorten the term of your loan. You should think about your goals and decide which option is best for your needs. Always talk to an expert before completing the refinance process.

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What’s Ahead For Mortgage Rates This Week – June 27, 2022

What's Ahead For Mortgage Rates This Week - June 27, 2022

Last week’s economic reporting included readings on home sales, Fed Chair Jerome Powell’s testimony on monetary policy to the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly reports on mortgage rates and jobless claims were also released.

New Home Sales Pace Rises as Pre-Owned Homes Sales Pace Slows

The Commerce Department reported a seasonally-adjusted annual pace of 696,000 new homes sold in May; analysts predicted a year-over-year pace of 587,000 new homes sold as compared to April’s year-over-year pace of 629,000  new homes sold. While the year-over-year pace of new home sales increased by 10.70 percent month-to-month in May, the year-over-year sales pace for new homes fell by 5.90 percent.

Increasing materials and labor costs continued to challenge home builders, but high demand for homes fueled sales of new homes even as mortgage rates and home prices rose.  The median price of new homes sold in May fell to $449,000 from April’s record high of $454,700. The inventory of available homes fell by 7.20 percent in May, which equaled a 7.70-month supply of new homes for sale.

Regional results for new home sales were mixed; sales of new homes fell by -51.10 percent in the Northeast and were -18.30 percent lower in the Midwest. New home sales rose by 12.80 percent in the South and were 39.30 percent higher in the West.

In other news, Fed Chair Jerome Powell spoke on monetary policy before the House Financial Services Committee and explained the Fed’s strategy to ease inflation through a series of interest rate increases intended to cut into consumers’ purchasing power. 

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by three basis points to 5.81 percent. Rates for 15-year fixed-rate mortgages averaged 4.92 percent and were 11 basis points higher than in the previous week. The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 4.41 percent. Discount points averaged 0.80 percent for 30-ye

ar fixed-rate mortgages and 0.90 percent for 15-year fixed-rate mortgages.

Initial jobless claims fell to 229,000 new filings last week as compared to 231,000 new claims filed in the previous week. Analysts expected 225,000 new jobless claims last week. Continuing jobless claims inched up with 1.32 million continuing claims filed as compared to the previous week’s reading of 1.31 ongoing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index fell to an index reading of 50.0 for June as compared to May’s reading of 50.2 and the expected June reading of 50.2. Consumer concerns over fuel prices and rising inflation eroded consumer confidence in the economy. Readings above 50 indicate that most consumers have a positive outlook on current economic conditions.

What’s Ahead

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales,  and construction spending. Weekly readings on mortgage rates and jobless claims will also be released.

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Can I Qualify for a Mortgage After Declaring Bankruptcy? Yes — and Here’s How

Can I Qualify for a Mortgage After Declaring Bankruptcy? Yes -- and Here's HowIt may feel like a very daunting task to consider buying a home after you’ve declared bankruptcy, and there’s no doubt that it’s an uphill battle. Fortunately, while you’ll have hard work ahead, there are things you can do in order to make your dream of home ownership a possibility. Whether you’ve just declared bankruptcy or some time has passed, here are some things you should consider before getting into the market.

Wait It Out

It might not be what you want to hear, but it’s, unfortunately, the case that you’ll have to wait at least two years before you purchase a home following bankruptcy. Since lenders will not want to take the risk on someone that has proven to have poor financial habits, they will require a waiting period in order for the credit risk you pose to improve. While this may seem like a long time, take the opportunity to improve your financial habits so you can be amply prepared when the time comes.

Build Up Your Credit

In order to own a home, you’ll need to develop some solid financial habits, and that means getting on top of your finances even in times when it feels like you have no leverage. Ensure you get a copy of your credit report and, if you notice any errors, reach out to the credit bureau for corrections. It’s also a good idea to consider applying for a secured credit card and ensure that you pay all of your bills on time. While it might feel like a lengthy task, developing good habits will have a positive impact on your credit over time.

Prepare For Your Payment

When it comes to a poor credit history, you’ll need to pull out every stop you can to that convince lenders that you’re a solid financial bet. Instead of wasting the time, write up a budget for yourself and save a sizeable sum for your down payment each month. It’s possible that 10 or 15% down will do, but a 20% payment will help you avoid private mortgage insurance (PMI) and will go further in convincing lenders of your reliability.

It’s more than a little disheartening to have to deal with bankruptcy, but by waiting it out and developing good financial habits in the interim, you’ll be well on your way to buying a home. If you’re currently preparing to purchase, contact your trusted mortgage professional for more information.

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A Home Loan For an AirBnB Property: What To Know

A Home Loan For an AirBnB Property: What To KnowIf you are looking for a way to diversify your investments, you might be thinking about buying a rental property. One of the most common rental options is AirBnB. Given the number of people who use AirBnB, this could be a great way to generate a steady stream of short-term renters. On the other hand, can you take out a loan to buy an AirBnB property?

There Are No Mortgages Specifically For AirBnB Properties

First, understand that there are no home loans available specifically for AirBnB or VRBO properties. If you go to a lender and ask for an AirBnB loan, they will direct you to a traditional investment property mortgage. Regardless of whether you want to do short-term loans through AirBnB or a long-term loan that you handle on your own (or through a formal property management company), the mortgage you will apply for is the same. What are the options you have available?

Options For An AirBnB Property

If you want to rent out an AirBnB space, you have a few options. First, you could always consider renting out a room in your primary residence. This could be a less expensive way for you to start generating some income through AirBnB.

Or, you can apply for a traditional investment property loan through a mortgage company. This loan uses the value of the investment property as collateral. The process of applying for this new mortgage will be similar to the process of applying for your first mortgage, but the lender may require you to put more money down. 

Finally, you could also move and buy a multi-family property, such as a duplex. Then, you could live in one of the units while renting out the others. This could be a nice middle ground between the other options.

Consider Using AirBnB To Generate Rental Income With Your Own Rental Property

These are a few of the top options available if you want to use AirBnB to generate rental income. It is one of the most popular rental apps, and the process of applying for a loan for an AirBnB property is the same as applying for a loan for any other type of investment property. 

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3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to Pay

3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to PayIf you’re in the process of buying a home, you probably have your deposit and monthly mortgage charges in a spreadsheet, along with a chart of your other expenses and your monthly income. But when it comes to buying a home, there are lots of different costs that will come into play – and it’s easy to forget something. When you’re preparing to close on your new home, make sure you consider these three closing costs that most buyers forget.

Home Inspection Fees: A Small Charge For Peace Of Mind

Most home purchase agreements are contingent upon a successful home inspection – and if you’re planning to buy a home, you should definitely have it inspected before you buy it. However, home inspectors don’t work for free, and you’ll have to pay a home inspector for a thorough evaluation of the premises.

Home inspection fees depend on the kind of property you’re buying, and can vary depending on your location. For a condo unit, you will typically only need to pay about $250, but a single-family home might cost up to $500. Luxury properties are often more expensive, sometimes even running as high as $1,500.

Private Mortgage Insurance: Obligatory With Small Down Payments

If you’re only planning to make the minimum down payment on your home, you’ll need to buy mortgage insurance. Mortgage insurance protects the lender in the event that you default on your loan. This is an added cost that your lender pays, and in general, almost every lender will pass the cost on to you.

You can pay for your mortgage insurance in one large payment, or you can add it to your monthly mortgage payments. Note that if your down payment is less than 20% of the purchase price, you’re legally required to buy mortgage insurance.

Lender Fees: Additional Fees to Process Your Mortgage

One category of closing costs that buyers often forget is lender fees. Lender fees are fees that your mortgage lender will charge for processing the transaction of the loan. These can include appraisal fees, credit report fees, processing and application fees, and administration fees for underwriting.

These fees can range depending on the lender, but in many cases they exceed $3,000. You’ll want to budget about $3,500 to $5,000 to be safe.

Buying a house is a major undertaking, and there are lots of ways that the process could go awry. But a good mortgage professional can help you navigate the process and get the home and the mortgage you’ve always wanted without any issues. Contact your trusted mortgage expert to learn more.

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

What's Ahead For Mortgage Rates This Week - June 20, 2022Last week’s economic news included reporting on home builder confidence in national and regional housing markets, a post-meeting statement from the Federal Reserve’s Federal Open Market Committee, and Fed Chair Jerome Powell’s news conference. The National Association of Home Builders released its national and regional housing market indices. Weekly readings on mortgage rates and jobless claims were also published.

NAHB Housing Market Indices Reflect Slowing Growth in Housing Markets

June readings from the National Association of Home Builders showed slower growth in builder confidence in current and future U.S. housing markets. The NAHB reported the lowest reading in two years for June’s housing market indices as builder confidence fell for the sixth consecutive month. June’s index reading for the National Housing Market index fell two points to 67 and matched analysts’ forecasts. Readings over 50 indicate a majority of home builders are positive about housing market conditions.

NAHB chair Jerry Konter said, “Six consecutive monthly declines in home builder confidence is a clear sign of a slowing housing market in a high inflation, slow growth economic environment.” Mr. Konter also noted the impact of rising mortgage rates on entry-level and moderate-income home buyers: “Entry-level markets were particularly affected by declines in housing affordability…builders are adopting a more cautious stance as demand softens with higher mortgage rates.” Rising mortgage rates added to builders’ ongoing concerns with high materials costs and shortages of skilled workers.

NAHB’s regional homebuilder indices also declined with homebuilder sentiment in the West falling by nine points; the Midwestern regional index dropped by six points. Home builder sentiment decreased by two points in the South and by one point in the Northeast.

On Wednesday, the Federal Open Market Committee of the Federal Reserve announced that it would raise its benchmark interest rate range by 0.75 percent in its attempts to slow inflation. The Federal Reserve has a dual mandate of maintaining inflation at or near two percent and achieving maximum employment. The Fed is expected to raise its key rate range into 2024 in its efforts to ease inflation.

Mortgage Rates Rise, Jobless Claims Fall

Freddie Mac reported a jump in average mortgage rates last week after the Fed announced its decision to raise its benchmark interest rate range to 0.75 to 1.00 percent. This was the highest federal funds range increase since 1981. The average rate for 30-year fixed-rate mortgages rose by 55 basis points to 5.78 percent; the average rate for 15-year fixed-rate mortgages rose by 43 basis points to 4.81 percent. The average rate for 5/1 adjustable rate mortgages rose by 21 basis points to 4.33 percent. Discount points averaged 0.90 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell to 229,000 first-time claims filed last week as compared to the prior week’s reading of 232,000 first-time claims filed and the expected reading of 220,000 new jobless claims filed. Last week’s reading for continuing jobless claims was unchanged with 1.31 million ongoing claims filed.

What’s Ahead

This week’s scheduled economic news includes readings on sales of previously owned homes and testimony by Fed chair Jerome Powell to the Senate Banking Committee and the House Financial Services Committee. The University of Michigan will release its monthly index reading on consumer sentiment and weekly readings on mortgage rates and jobless claims will also be released. 

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

What's Ahead For Mortgage Rates This Week - June 20, 2022Last week’s economic news included reporting on home builder confidence in national and regional housing markets, a post-meeting statement from the Federal Reserve’s Federal Open Market Committee, and Fed Chair Jerome Powell’s news conference. The National Association of Home Builders released its national and regional housing market indices. Weekly readings on mortgage rates and jobless claims were also published.

NAHB Housing Market Indices Reflect Slowing Growth in Housing Markets

June readings from the National Association of Home Builders showed slower growth in builder confidence in current and future U.S. housing markets. The NAHB reported the lowest reading in two years for June’s housing market indices as builder confidence fell for the sixth consecutive month. June’s index reading for the National Housing Market index fell two points to 67 and matched analysts’ forecasts. Readings over 50 indicate a majority of home builders are positive about housing market conditions.

NAHB chair Jerry Konter said, “Six consecutive monthly declines in home builder confidence is a clear sign of a slowing housing market in a high inflation, slow growth economic environment.” Mr. Konter also noted the impact of rising mortgage rates on entry-level and moderate-income home buyers: “Entry-level markets were particularly affected by declines in housing affordability…builders are adopting a more cautious stance as demand softens with higher mortgage rates.” Rising mortgage rates added to builders’ ongoing concerns with high materials costs and shortages of skilled workers.

NAHB’s regional homebuilder indices also declined with homebuilder sentiment in the West falling by nine points; the Midwestern regional index dropped by six points. Home builder sentiment decreased by two points in the South and by one point in the Northeast.

On Wednesday, the Federal Open Market Committee of the Federal Reserve announced that it would raise its benchmark interest rate range by 0.75 percent in its attempts to slow inflation. The Federal Reserve has a dual mandate of maintaining inflation at or near two percent and achieving maximum employment. The Fed is expected to raise its key rate range into 2024 in its efforts to ease inflation.

Mortgage Rates Rise, Jobless Claims Fall

Freddie Mac reported a jump in average mortgage rates last week after the Fed announced its decision to raise its benchmark interest rate range to 0.75 to 1.00 percent. This was the highest federal funds range increase since 1981. The average rate for 30-year fixed-rate mortgages rose by 55 basis points to 5.78 percent; the average rate for 15-year fixed-rate mortgages rose by 43 basis points to 4.81 percent. The average rate for 5/1 adjustable rate mortgages rose by 21 basis points to 4.33 percent. Discount points averaged 0.90 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell to 229,000 first-time claims filed last week as compared to the prior week’s reading of 232,000 first-time claims filed and the expected reading of 220,000 new jobless claims filed. Last week’s reading for continuing jobless claims was unchanged with 1.31 million ongoing claims filed.

What’s Ahead

This week’s scheduled economic news includes readings on sales of previously owned homes and testimony by Fed chair Jerome Powell to the Senate Banking Committee and the House Financial Services Committee. The University of Michigan will release its monthly index reading on consumer sentiment and weekly readings on mortgage rates and jobless claims will also be released. 

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Updating Your Home: The Top Options

Update Your Home Without RenovatingIf you want to improve your quality of life while also increasing the value of your home, you might be interested in updating it. You probably want to live in a home that is well-designed, and a prospective buyer wants the same thing. Unfortunately, performing a major renovation can be time-consuming and expensive, but there are more cost-effective ways to update your home. What are a few of the top ideas?

Paint Your House

One of the first ways you can update your home is to give it a fresh paint job. If you have an older home, a fresh coat of paint can go a long way toward making your home feel younger. Furthermore, there are still homes that have very outdated color schemes, and some of them even use wallpaper. Right now, neutral colors, such as grey, are very popular among homebuyers. In addition, neutral colors are very easy to match with furniture. 

Update Your Lighting

You can also update your home by improving the lighting system. If your lights are not that strong, certain rooms might feel small and cramped. On the other hand, a room that has plenty of natural light feels much more open and welcoming. Even something as simple as swapping out your light bulbs for LED bulbs can go a long way toward making your home feel more inviting. New light bulbs might also use less electricity, which can help you save money.

Swap Out The Handles And Cabinet Pulls

The kitchen is the heart of the home, so you should consider updating this room as well. You do not need to swap out all of the appliances and cabinets. Even something as simple as updating the handles and cabinet pulls can make your house look young and fresh. For example, stainless steel, aged copper, and brushed nickel are a few of the most popular materials for cabinet and drawer pulls. 

Get A Landscaper 

Finally, you can also update your home by hiring a landscaper. You may want to start by mowing your lawn, but you can also make your home look younger and more welcoming by planting a few flowers and bushes. This is also a great way to make your home more sustainable without breaking the bank.

 

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