The Latest News
Get caught up with the latest mortgage news from the Whitener Team!
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.
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.
There 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.
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:
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.
Are 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.
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!
James Whitener – Loan Officer
20359 N. 59th Ave, Suite 100
Glendale, AZ 85308
The content on this website is written by James and reflects his opinion, and not the opinion of Fairway Independent Mortgage Corporation.