February Already?

I had a conversation with my Dad this morning about how quickly time moves. I turned 40 in June of 2022 and although it wasn’t a major shock to the system what is shocking is how quickly I have approached 41. I have always kind of joked around about how fast time moves and that it seemingly moves quicker and quicker. It’s not much of a joke anymore though. It’s flying by and it causes me to take pause and think about what’s important and where focus should be.

I hate to be cliche but it’s all very short, the time we have here. Spend it with those you love, work to make the world a better place (or at least your community), fill your heart with the joy of being selfless and definitely don’t spend your time doing things that make you miserable. I’m in no way advocating for never doing things that make you uncomfortable or things that are difficult. I’m simply stating the rate race is over rated, scrolling social media is a waste of time… don’t let it pass you by and look up and find out that it’s February of 2024… already.

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This week in Mortgage

The week ahead:

Tuesday: New Appreciation Readings for November from the Case Shiller HPI and FHFA HPI

Wednesday: Mortgage Apps, ADP Employment Report, JOLTs, Fed Statement/Press Conference

Thursday: Initial Jobless Claims, Job Cuts Report, Jobs Report Strategy

Friday: BLS Jobs Report for January

What it all means:

We are expected to have another Fed hike on the the Fed Funds Rate at 25bps on Wednesday and we are hoping that this will finally be the peak of the rate push to battle inflation. The remaining reports this week will continue (or we hope) to show a weakening economy, a continued push towards a possible recession and a drop in inflationary metrics.

All of this is bond friendly and as the bond turns the corner it will only help us on mortgage rates. However, there is a flip side to this. As we approach the typical busiest months of the year for real estate the fact interest rates are likely to lower and with continued inventory shortages… now is a good time to make that move. Don’t wait.

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Getting A Mortgage When Self-Employed: What You Need To Know

getting-a-mortgage-when-self-employed-what-you-need-to-knowThere is a common misconception that someone who is self-employed will not have the tax records or income necessary to qualify for a mortgage; however, that is not necessarily the case. In reality, if you are self-employed, there are a lot of home loan options available to you. It is true that it might require some additional paperwork and planning, but as long as you have the necessary information, you should be able to qualify for a mortgage. 

What Is Necessary To Qualify For A Self-Employed Mortgage Loan?

If you are interested in taking out a mortgage when you are self-employed, you will be held to the same standards as everyone else. This means that the lender is going to require a solid credit score, a long credit history, a favorable debt-to-income ratio, and enough money to cover the down payment. In addition, you will also have to demonstrate a solid income history, just like everybody else. 

That is where the difference comes into play. A W-2 employee may be able to provide a few pay stubs, but someone who is self-employed may be required to provide up to two years of self-employment income. 

How Do I Maximize My Chances Of Getting Approved?

If you are self-employed and want to maximize your chances of getting approved for a self-employed mortgage, there are a few steps you should take. First, you need to make sure your debt-to-income ratio is as low as possible. That way, you can reduce the risk to the lender. You can also improve your chances by preparing financial documents ahead of time. That might mean including profit and loss statements, two years of tax returns, and 2 years of business taxes if you have them. Do not forget that improving your credit score and putting more money down can improve your chances of getting approved. 

Lengthen Your Income History

Finally, if you are serious about getting approved, lengthen your income history. Show that you are willing to provide a longer track record of income, and the bank will feel better about providing you with a self-employed mortgage loan. That way, you have the financing to purchase the house of your dreams. 

 

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Get off the Fence!

Today is that Day!

If you have been sitting on the fence waiting for the market to crash or because interest rates are high… today is the day. If you start paying attention to the economic factors that affect the interest rates and stop simply following mainstream media you’ll see that rates are coming back to us. I know I have been screaming this from the rooftops for a little while now but you need to take a real look at this picture:

  1. Inventory levels in the real estate market are already declining again
  2. The Fed is starting to show cracks in their strong stance on manipulating rates upwards
  3. Inflationary indicators are starting to slow in some areas and completely reverse in others
  4. Recessionary indicators aren’t on the rise, they are here… it’s simply a matter of time!

When you look at all of this combined it means that supply is low, rates will come back soon (we’re thinking possibly mid 5’s in the next couple months) which will increase demand… Low Supply + High Demand = Bidding Wars & Increased Prices. Would you rather pay a lot more at a low interest rate or pay a lot less and a temporary higher interest rate and still get that low interest rate a few months from now??

Oh and by the… way very soon the FHFA will be increasing rates for segments of the market. This is to help lower income buyers be able to better afford purchasing a home. In some ways though, this means higher purchase interest rates for the middle class (those with great credit but maybe not a lot of liquidity to put down large down-payments). This may be the last great time to buy for at least a couple years.

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On Time, Every Time: How Being Late on Monthly Payments Can Affect Your Mortgage

On Time, Every Time: How Being Late on Monthly Payments Can Affect Your MortgageAre you the type of person that struggles with remembering to pay their bills on time? You’re not alone. People across the country regularly submit late monthly payments, inflicting terrible damage to their credit. Let’s take a quick look at how paying your loan or other monthly payments late can have a negative impact on your mortgage.

Your Credit Score Is At Risk

As you already know, almost all banks, credit cards, mortgage companies and other lenders rely on your credit score to help assess the risk of lending money to you. Paying any of your payments late – even something as small as your mobile phone bill or a department store credit card – can result in negative marks showing up on your credit report. If you are late enough times or fail to repay the late payment in full, then your score will start to drop.

Refinancing Can Be Affected

If you already have a mortgage, then a lower credit score can be a problem when you try to refinance. The process of refinancing involves taking out a new mortgage, in which your lender will reassess your risk using your credit score as one of the indicators. If you have been making late payments, you might end up having to settle for a higher interest rate or you may even be declined for the new mortgage.

Making A Late Payment? Contact Your Lender

If you are caught in a bind and have to make a late payment, it is best to get a call in to your lender as soon as possible. First, there may be a grace period in which you can be a few days late without any penalty. If that little bit of breathing room is all you need to get caught up, you’re set. If not, you can let them know your circumstances and discuss what options you have.

It is essential to pay your monthly payments on time, even if it means making some small sacrifices in other areas. The better your credit score looks, the more opportunities you will have to make positive financial moves in the future. To learn more about monthly mortgage payments or to take out a mortgage on a new home, contact us today. Our team of mortgage professionals is here to help you find a mortgage to buy the home of your dreams.

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What is an INVERTED YIELD SPREAD?

Don’t leave your decisions to only what you read in the news. Do your Homework!

If you haven’t heard of or read about an inverted yield spread now is the time to get familiar. An inverted yield spread is an economic indicator that can predict a coming recession. This is absolutely vital for you to understand and review if you are considering purchase a home using a mortgage. It will guide your decisions in structuring the loan for your new home.

A very simple explanation is when interest rates on long term bonds fall lower than short term bonds. So if you are comparing the 10 year bond to the 2 year bond and the 10 year yield is lower than the 2 year yield it can start to be an indicator. Typically a recession is a year behind this yield curve inverting and as of right now we are 10 months into the start of this happening. With this in mind and the 60 year history we can show, it is a near inevitability that we are either in or heading into a recession.

What does this mean to you? Once it is recognized that we are in a recession we will start to see inflationary indicators drop, the manipulation of the rates removed and bond markets will react in favor of lower interest rates. If you consider this and the fact that lower rates will increase demand, now is a great time to buy, get seller contributions and refinance when rates are lower. We can always change the rate you have but we cannot change the price you pay and the amount of fees you pay on the day you close on your new home.

There are a lot of creative ways to have the current economic factors help you achieve your financial goals!

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What Is A Loan Contingency: An Overview

What Is A Loan Contingency: An OverviewIf you are in the process of looking for a new home, you need to find the right one to meet your needs. Sometimes, you want to learn more about specific properties before you decide if it is right for you. As a result, a lot of prospective buyers will include contingencies in their home offers that may allow them to back out without losing their earnest money. What are a few examples of loan contingencies, and how can you use them to protect yourself during the process? 

Examples Of Common Loan Contingencies

Even if you have agreed on a purchase price for the house, the closing date is probably not going to be for one or two months. This will provide you with time to complete your due diligence and make sure no issues come up. For example, there may be a contingency that allows the closing date to be extended if there are any issues with the financing process through the lender. 

You might also decide to include a contingency clause in case something develops with the home inspection. If something is wrong with the home inspection, you may provide yourself with an opportunity to pull out of the deal without losing your earnest money. 

How A Loan Contingency Clause Protects The Buyer

It is important for buyers to work with real estate agents who understand how loan contingencies work because this is an important protective measure. A contingency clause can protect the buyer because it provides the buyer with a way to back out of the contract without losing his or her earnest money. 

Typically, if the buyer backs out of the contract, he or she will lose his or her earnest money; however, if the buyer backs out for a reason that is protected by the contingency clause, then his or her earnest money might be protected. 

Some Buyers Waive Their Loan Contingency

If the housing market is particularly competitive, and you know you are going to purchase the house no matter what, then you might want to waive your loan contingency as a way to strengthen your offer. On the other hand, keep in mind that waving your loan contingency means sacrificing this important layer of protection. 

 

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What’s Ahead For Mortgage Rates This Week – January 23, 2023

What's Ahead For Mortgage Rates This Week - January 23, 2023

Last week’s economic reporting included readings from the National Association of Home Builders on U.S. housing markets, and Commerce Department data on housing starts and building permits issued. The National Association of Realtors® reported sales of previously owned homes, and weekly readings on mortgage rates and jobless claims were also released.

NAHB: Homebuilder Sentiment Rises in December

The National Association of Home Builders reported increased homebuilder confidence in U.S. housing market conditions in December; this was the first time in 12 months that homebuilder confidence rose. Builder confidence in current housing market conditions rose by four points; builder confidence in home sales conditions over the next six months increased by two points. Builder confidence in prospective buyer traffic in new housing developments rose by three points.

Jerry Konter, a Georgia home builder and chairman of NAHB, said: “It appears that the low point for building sent in this cycle was registered in December, even as many builders continue to use a variety of incentives including price reductions to bolster sales.  The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for homebuilding could be underway later in 2023.”

Robert Dietz, the NAHB’s chief economist, predicted that single-family home building will increase as mortgage rates are expected to trend lower and boost housing affordability. Mr. Dietz said, “Improved housing affordability will increase housing demand as the nation grapples with a structural housing deficit of 1.5 million units.”

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by 18 basis points to 6.15 percent. Rates for 15-year fixed-rate mortgages averaged 5.28 percent and were 24 basis points lower on average.

First-time jobless claims fell to 190,000 claims filed as compared to expectations of 215,000 initial claims filed and the previous week’s reading of 205,000 new jobless claims filed. Ongoing jobless claims increased to 1.65 million claims filed compared to the previous week’s reading of 1.63 million continuing jobless claims.

What’s Ahead

This week’s scheduled economic reporting includes readings on new and pending home sales, consumer sentiment, and predictions on inflation. Weekly readings on mortgage rates and jobless claims will also be published. 

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An Often-Overlooked Trick Can Help You Afford A Second House

An Often-Overlooked Trick Can Help You Afford A Second HouseThe whole idea of investing is to use a portion of your money now to get more down the road. It is important for everyone to diversify their investments, and you might be thinking about buying a second house to do so. Investing in real estate is a goal that a lot of people have, but how can you get started? It was challenging enough to buy your first house, so how can you afford a second one? 

Use A Cash-Out Refinance To Buy Your Second House

One trick that many people overlook is that they can actually conduct a cash-out refinance to purchase a second house. In general, your lender will allow you to cash out up to 80 percent of the value of your home during a cash-out refinance. This can give you a tremendous amount of flexibility that you can use to purchase a second house. For example, if your house is worth $300,000, you may be able to withdraw tens of thousands of dollars in equity.

What To Consider When Using A Cash-Out Refinance

When you apply for a cash-out refinance, there is a chance that the interest rate on your new loan might change. This might mean that you end up with a higher interest rate than before. You must make sure you can afford this new interest rate. Furthermore, you will be required to pay closing expenses. You need to have enough money set aside to cover those closing expenses. Keep in mind that the term of the loan might change as well. If you were close to paying off your house, this type of refinance might reset that clock. It might take you longer to pay off your mortgage than it did before. Consider these factors carefully before conducting a cash-out refinance.

A Cash-Out Refinance Might Be Right For You

In the end, a cash-out refinance could be a great way for you to withdraw equity from your home, using it to purchase an investment property. On the other hand, you need to ensure you can still afford the new loan after you take that equity out of your home. Work with an expert who can help you find the right option to meet your needs.

 

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How’s your vision?

A Story of how Short Sighted viewpoints can skew the world you see

I won’t go into full detail of how narrowing my vision of a certain situation caused a major headache as I do prefer to have some semblance of privacy. I will do my best to paint you a picture of how trying to see all angles and being open to other options can be time consuming but it can help you get to your goals without unnecessary strife and pain.

My wife and I are looking to make some major changes in our life to simplify things and get to doing the things we most enjoy. In this process we have made some decisions to really shake things up to start pushing towards those goals. Most of these decisions are based in finances and I had a very narrow vision of how this should work. I’m beyond thankful that my wife is patient and understanding as she let’s me kind of work through these things.

As I’m working to reconfigure our finances and push to accomplish some items we decided to take on I had an epiphany that showed how short sighted I was being. Once I allowed myself to look beyond my initial idea and be open to other ideas that maybe weren’t the first or even my idea at all… I found a way to save us almost a thousand dollars a month and replenish our savings almost overnight. This is a lesson in humility and patience. The first I have in spades but the second I have none. I want to go go go go! This can be great in some instances but in others it can narrow your vision so far that you don’t do the research and the thinking necessary to feel good and confident in what you’re doing.

Be self aware and humble enough to slow down a bit, ask for help and consider opposing views. It will save you time, it will save you money and it may even save your relationships. Keep pushing forward but don’t forget to re-evaluate!

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