Blog – Page 157 of 325 – DiversiFund Texas, LP

25 Feb 2021

An Overview Of Mortgage Points On Home Loans

Mortgage

An Overview Of Mortgage Points On Home Loans Unless someone works in the real estate or mortgage industry, there is a high likelihood that they are going to run into unfamiliar terms. Appraisals, underwriting, and private mortgage insurance are a few of the examples. One of the most common terms that people might run into is termed mortgage points. Even though the term “points” might sound positive, this is not always the case. What do people need to know about mortgage points?

Mortgage Points Refer To Payments Due At Signing

When someone is negotiating for a home loan, they want to get the lowest interest rate possible. There are several ways that potential homeowners can get the interest rate reduced on their home loan. One option might be to increase the down payment. Another option might be to pay a percentage of the loan amount at signing.

Usually, mortgage points refer to a certain percentage of the loan amount that is due at signing. For example, someone who is being charged one mortgage point will pay 1 percent of the loan amount at signing. Why would someone want to pay a percentage of their loan early?

Mortgage Points Are Usually Paid In Exchange For A Lower Interest Rate

The most common reason why someone might pay mortgage points upfront is that they can bargain for a lower interest rate. For example, someone might be able to pay one mortgage point in exchange for having the interest rate on the rest of the loan dropped by 0.25 percent. Therefore, points go both ways. It is nice that someone can pay mortgage points to have the interest rate lowered on their loan; however, is this the correct decision?

Borrowers Have To Do Some Math

Ultimately, this comes down to a math equation. If a potential homeowner is forking over more money at signing, they are not going to be able to earn interest on that money in their bank account or the stock market. On the other hand, they will save money over the life of the loan because the interest rate will be reduced. Therefore, homeowners have to do some math and compare the interest they are losing by paying money upfront compared to the interest they are saving on the home loan.

24 Feb 2021

By Kevin Gahagan

Case-Shiller Reports Home Prices Rise at Fastest Pace in 7 Years

Financial Reports

Case-Shiller Reports Home Prices Rise at Fastest Pace in 7 Years S & P Case-Shiller Home Price Indices reported the fastest pace of U.S home price growth in seven years. National home prices grew by 10.40 percent year-over-year in December as compared to November’s reading of 9.50 percent home price growth on a year-over-year basis.

The S&P Case-Shiller 20-City Home Price Index reported home price growth in 18 of 20 cities included in the index. Detroit, Michigan did not report home price data for December. Phoenix, Arizona held the top position in the 20-City Index for the 19^th consecutive month with year-over-year home price growth averaging 14.40 percent. Home prices in Seattle, Washington home prices held second place with year-over-year growth of 13.60 percent. San Diego, California home prices grew 13.00 percent year-over-year.

The Federal Housing Finance Agency released home price data for homes owned or financed by Fannie Mae and Freddie Mac. Home prices rose by 10.80 percent in the fourth quarter of 2020 as compared to home prices in the fourth quarter of 2019. Home prices reported by FHFA rose by 3.80 percent between the third and fourth quarters of 2020.

Idaho home prices reported by FHFA rose by 21.10 percent year-over-year. Montana home prices grew by 15.50 percent; Utah followed closely with 15.40 percent home price growth. FHFA reported the highest pace of home price growth for cities in Boise, Idaho; home prices in San Francisco, California grew at the slowest pace. This data supports the trend of homeowners moving from costly metro areas to inland suburbs where they can buy larger homes for lower prices.

Rapidly Rising Home Prices Impact Affordability

While homeowners welcome quickly rising home prices, affordability issues worry real estate analysts and prospective home buyers. The covid-19 pandemic caused home prices to rise as homeowners fled congested urban areas for suburban and rural areas.

Supplies of available homes fall as demand for homes keeps rising during the pandemic. Millennials are in their peak home-buying years but many current homeowners are waiting out the pandemic to sell. Low inventories of available homes and rising building materials costs add to the shortage of homes in general and affordable homes in particular.

First-time and moderate-income home buyers face increasing challenges as home prices and mortgage rates rise. Mortgage approval standards are difficult to meet as rising home prices cause housing payments and down payment requirements to increase. In addition to property taxes and hazard insurance, buyers who cannot pay 20 percent down must also pay for mortgage insurance.

Skyrocketing home prices should ease when demand for homes slows, but that won’t happen until supplies of available homes catch up to buyer demand.

23 Feb 2021

By Kevin Gahagan

Three Tips For Reducing Your Closing Costs If You’re Looking Forward To Buying A Home In The Spring

Home Mortgage Tips

Three Tips for Reducing Your Closing Costs if You're Buying a Home in the Spring Spring is aproaching fast and it is usually the busiest time of the year for home buying. After a long and cold winter, many people are ready to enjoy the nicer weather and begin to shop for a new home. Spring is also the perfect time for home buying for families with children because it allows them to move during the summer without interrupting school.

Home buying has costs associated with it other than the mortgage itself. Known as closing costs, these fees are a part of the home buying process and they are due at the time that the mortgage is finalized. Buyers, however, can negotiate these costs and reduce the expense with a little bit of effort and with the help of a good mortgage professional.

If you are thinking of buying a new home in the spring here are three helpful tips to reducing your closing costs.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage adviser to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Third Party Fees

Some of the closing cost fees will be associated with third party vendors that must perform required services. Home appraisals, title searches, and costs for obtaining credit reports are some of the items included in this area. While these may be a little harder to negotiate because the lender uses specific companies to perform these services, it does not hurt to ask if you can use your own appraiser or title search company.

Zero Closing Cost Mortgages

Buyers may also wish to inquire about a no closing cost mortgage. This type of mortgage eliminates all closing costs. The lender covers all of the closing cost fees in exchange or a slightly higher interest rate on the loan. In most cases the increase is less than one-quarter of a percent. This type of loan can be very helpful to buyers. Buyers can then use the money that they saved on closing costs to help with the move.

With a little preparation, you can find the best mortgage product for the up-coming spring season. Be sure to contact your experienced mortgage professional, as they will be able to help you find the right mortgage for your specific needs with the lowest out-of-pocket expenses.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

22 Feb 2021

By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – February 22, 2021

Financial Reports

What's Ahead For Mortgage Rates This Week - February 22, 2021 Last week’s economic reporting included readings from the National Association of Home Builders Housing Market Index, Commerce Department readings on housing starts and building permits issued along with data on sales of previously-owned homes. Weekly readings on mortgage rates and jobless claims were also released.

NAHB: Home Builders Index Rises One Point in February

Homebuilder confidence rose by one index point to 84 according to the National Association of Home Builders Housing Market Index. Readings over 50 in the Housing Market Index indicate that most homebuilders are confident about U.S. housing market conditions.

Component readings for the housing market index were mixed in February. Builder confidence in current market conditions for new single-family homes was unchanged with an index reading of 90; builder confidence in new home sales for the next six months fell by three points to a reading of 83. Builder confidence in buyer traffic in new single-family developments rose four points to an index reading of 72. Before the pandemic, readings for buyer traffic in new housing developments were typically below 50, but the pandemic has created more interest in new single-family homes as families moved from congested urban areas to suburban areas.

Builders cited ongoing concerns including rising materials costs and affordability issues for first-time and low-income homebuyers.

Housing Starts Lower in January as Building Permits Rise

The Commerce Department reported fewer housing starts in January based on 1.58 million starts reported on a seasonally-adjusted annual basis, 1.67 million starts were reported in December and analysts expected a pace of 1.68 million housing starts for January.

Building permits issued rose in January to a seasonally-adjusted annual pace of 1.88 million permits. Analysts expected a reading of 1.67 million permits issued based on 1.70 million permits issued in December. Winter weather conditions likely contributed to fewer housing starts, but builders took out more building permits in anticipation of improving weather and continuing demand for homes due to shortages of available homes for sale and higher demand due to the covid-19 pandemic.

The National Association of Realtors® reported 6.69 million sales of previously-owned homes on a seasonally adjusted annual basis as of January. Low inventories of available homes and high demand for single-family homes continue to drive home sales during the pandemic. Rising home prices caused by high demand and low inventories of homes for sale created affordability issues in suburban areas as well as traditionally high-priced metro areas.

Mortgage Rates Rise, Jobless Claims Mixed

Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose by eight basis points to 2.81 percent. Rates for 15-year fixed-rate mortgages averaged 2.21 percent and were two basis points higher. Rates for 5/1 adjustable rate mortgages averaged 2.77 percent and two basis points lower than the prior week.

Weekly jobless claims data was mixed last week with 861,000 initial jobless claims filed as compared to the prior week’s reading of 848,000 first-time jobless claims filed. Ongoing jobless claims fell to 4.49 million continuing claims as compared to the prior week’s reading of 4.56 million continuing jobless claims filed.

What’s Next

This week’s scheduled economic readings include S&P Case-Shiller Home Price Indices, the Federal Housing Finance Agency’s Home Price Index, and data on pending home sales. The University of Michigan will issue its reading on consumer sentiment and weekly readings on mortgage rates and jobless claims will also be published.

19 Feb 2021

By Kevin Gahagan

Variable-Rate VS. Fixed-Rate Mortgages – Which Is Better For Your Financial Situation?

Mortgage Rates

Variable-rate Vs. Fixed-rate Mortgages - Which is Better for Your Financial Situation? When applying for a new home mortgage, many loan applicants initially consider applying for a 30-year fixed rate mortgage. This is perhaps the most common and traditional type of mortgage available. It allows you to enjoy the opportunity to pay for your home over the course of 30 years with equal payments every month. While this is one option, there are actually multiple choices available. For some applications, a variable rate mortgage may be more advantageous. If you are comparing the options between a fixed rate and a variable rate mortgage, you may consider a few points.

A Lower Initial Interest Rate

When you compare the fixed rate and variable rate options, you will immediately notice that the variable rates have a lower start rate. The interest rate will influence the mortgage payment amount. Because of this, you will benefit from a lower initial mortgage payment with a variable rate. However, it is important to understand that the interest rate on a variable rate mortgage will adjust periodically over the life of the loan. This means that the mortgage payment will also adjust.

Managing A Potential Rate Adjustment

The true benefit of a fixed rate mortgage is the ability to better control your budget and manage your funds. A mortgage payment can be a large expense item in your budget, and it may be the largest single expense you have by far. An increase to your variable rate and therefore your mortgage payment can be difficult to bear if you have a tight budget with no wiggle room. In some cases, the rate may go beyond what is affordable for a homeowner to endure. If you do take on a variable rate loan, it is important that you understand what the highest possible interest rate adjustment is and what your payment may be with that rate. If you can manage that payment, then you may confidently apply for a variable rate mortgage.

If you are thinking about applying for a mortgage, it is important that you consider all of the options carefully and that you understand the key differences between them. You can speak with a mortgage loan officer or lending representative in detail to get more information about the options available to you. This can help you to make a better decision about your mortgage application and to better plan and budget for your future as a homeowner.