02 Jan 2024
By divfundposts

What’s Ahead For Mortgage Rates This Week – January 2nd, 2024

Financial Reports

With the New Year, the final week only featured the normal reports of Jobless Claims, S&P Shiller Home Price Index (YoY), and the Chicago Business Barometer. All of them will have limited impact compared to the GDP and the Inflation data reports that have already been released.

S&P Shiller Home Price Index (YoY)

For the ninth consecutive month, home prices in prominent U.S. metropolitan regions have surged, reaching an all-time high. This increase is attributed to an ongoing shortage of available homes for sale. In October, the S&P CoreLogic Case-Shiller 20-city house-price index, after seasonal adjustments, showed a 0.6% rise compared to the preceding month.

Chicago Business Barometer

The Chicago Business Barometer, also known as the Chicago PMI, fell 8.9 index points to 46.9 in December.

Economists polled by the Wall Street Journal had forecast a 50 reading. 

The index had jumped to 55.8 in November, the highest level in 17 months, after the end of the United Auto Workers strike.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week decrease by -0.02% with the current rate at 5.93%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.06% with the current rate at 6.61%

MND Rate Index

• 30-Yr FHA rates saw a -0.04% decrease for this week. Current rates at 6.08%
• 30-Yr VA rates saw a -0.04% decrease for this week. Current rates at 6.09%

Jobless Claims

Initial Claims were reported to be 218,000 compared to the expected claims of 215,000. The prior week was 206,000.

What’s Ahead

Next week will be a light release week with one major report being the Consumer Price Index and Producer Price Index, which will show the inflation rates over December.

29 Dec 2023
By divfundposts

Mortgage Rate Locks: When and How to Secure the Best Rate

Mortgage Rates

Rate locks play a crucial role in the mortgage application process, helping borrowers secure a favorable interest rate for their home loan. Here’s an explanation of the importance of rate locks and when and how to secure the best rate:

Interest Rate Protection: Mortgage rates are subject to market fluctuations and can change daily or even multiple times a day. Rate locks protect borrowers from potential rate increases during the loan processing period.

Budgeting and Planning: Knowing the exact interest rate allows borrowers to budget more effectively and plan their finances with certainty. It prevents unexpected increases in monthly payments, helping borrowers manage their expenses.

Peace of Mind: Homebuyers can experience peace of mind when they know their interest rate is secured. This allows them to focus on other aspects of the home-buying process without worrying about market volatility affecting their mortgage terms.

Financial Stability: Rate locks provide financial stability, especially for those on a tight budget. Unpredictable rate changes can significantly impact the affordability of a mortgage, and a rate lock mitigates this risk.

When to Secure a Rate Lock:

Timing Matters: Rate locks are typically available for a specific period, such as 30, 45, or 60 days. It’s crucial to lock in a rate at the right time, considering the expected duration of the loan approval process.

Market Conditions: Monitor market conditions to identify favorable times for rate locks. If interest rates are low or expected to rise, it might be advantageous to secure a rate lock sooner rather than later.

Loan Approval Status: It’s generally recommended to wait until your mortgage application is complete and the loan is in the underwriting process before locking the rate. This ensures that the lock period aligns with the expected timeline for loan approval.

How to Secure the Best Rate Lock:

Shop Around: Obtain quotes from multiple lenders to compare interest rates and terms. This provides a basis for negotiating and helps you identify the best possible rate.

Understand Lock Terms:

Be aware of the lock period and any associated fees or conditions. Longer lock periods may come with higher fees, so it’s essential to strike a balance that suits your needs.

Consider Float-Down Options: Some lenders offer float-down options, allowing borrowers to secure a lower rate if market conditions improve before closing. Understand the terms and conditions of this option.

Consult with a Mortgage Professional: Work closely with your mortgage broker or loan officer. They can provide guidance on the optimal time to lock in your rate based on market trends and your specific financial situation.

In the end, rate locks provide stability and predictability in a volatile market, enabling homebuyers to secure favorable mortgage terms. Timing, market awareness, and careful consideration of lock terms are essential to ensure you get the best rate for your mortgage.

28 Dec 2023
By divfundposts

The Advantages And Disadvantages Of Using Online Mortgage Lenders

Home Mortgage Tips

Using online mortgage lenders can offer several advantages and disadvantages compared to traditional brick-and-mortar lenders. It’s important to weigh these factors based on your individual preferences, needs, and financial situation. Here’s a breakdown of the pros and cons:

Advantages of Online Mortgage Lenders:

Convenience:

Pros: Online lenders offer the convenience of applying for a mortgage from the comfort of your home at any time. The entire process, from approval application, can be done online, reducing the need for in-person visits.

Faster Approval Process:

Pros: Online lenders often have streamlined processes, leveraging technology to speed up the approval process. This can result in quicker loan approvals and faster closings compared to traditional lenders.

Competitive Interest Rates:

Pros: Online lenders may have lower operating costs, allowing them to offer competitive interest rates. Borrowers can potentially save money over the life of the loan by securing a lower rate.

Wide Range of Loan Options:

Pros: Online lenders often offer a variety of loan products and terms, allowing borrowers to choose the option that best suits their financial situation and goals.

Accessible Information:

Pros: Online lenders typically provide a wealth of information on their websites, making it easy for borrowers to compare rates, terms, and fees. This transparency can empower borrowers to make informed decisions.

Disadvantages of Online Mortgage Lenders:

Limited Personal Interaction:

Cons: Some borrowers may prefer face-to-face interactions with a loan officer or advisor, especially when dealing with a significant financial decision like a mortgage. Online lenders may lack the personal touch of in-person service.

Potential for Miscommunication:

Cons: Online communication may lead to misunderstandings, especially if there is a lack of clarity in the application process. Miscommunication can potentially delay the loan approval or closing process.

Less Flexibility for Special Cases:

Cons: Online lenders may have strict criteria, and their automated processes might not accommodate special cases or unique financial situations as well as a human underwriter might. Borrowers with complex financial profiles may face challenges.

Security Concerns:

Cons: Some borrowers may have concerns about the security of their personal and financial information when dealing with online transactions. It’s crucial to choose reputable online lenders with strong security measures in place.

Limited Local Market Knowledge:

Cons: Online lenders may not have the same level of local market knowledge as traditional lenders. This can be a disadvantage if local market conditions significantly impact the mortgage process.

In summary, the decision to use an online mortgage lender versus a traditional lender depends on individual preferences and priorities. Borrowers should carefully evaluate the pros and cons of each option, considering factors such as convenience, communication preferences, and the complexity of their financial situation.

Additionally, researching and choosing a reputable online lender with a track record of customer satisfaction is crucial to a positive borrowing experience.

27 Dec 2023
By divfundposts

A Deep Dive into Mortgage and Tax Facts

Home Mortgage Tips

Owning a home is a significant milestone that comes with a multitude of financial considerations. Beyond the pride of homeownership, there are substantial tax benefits and deductions available to those who embark on this journey. We will explore key facts about mortgages and taxes, focusing on the deductions, credits, and benefits that can make homeownership a financially savvy decision.

Mortgage Interest Deduction: A Prime Advantage for Homeowners

One of the most notable tax benefits for homeowners is the mortgage interest deduction. This deduction allows homeowners to deduct the interest paid on their mortgage from their taxable income. The rationale behind this is to encourage homeownership by making it more financially attractive. Homeowners can typically deduct the interest paid on mortgages up to $750,000 (or $1 million if the mortgage originated before December 15, 2017).

Property Tax Deductions: Easing the Burden of Ownership

Property taxes can be a significant expense for homeowners, but the silver lining is the ability to deduct these taxes from federal income taxes. Homeowners can include state and local property taxes when calculating their itemized deductions. This deduction is particularly valuable for those living in areas with higher property tax rates.

Points Deduction: Unveiling the Cost of Financing

When securing a mortgage, homeowners often pay points to lower their interest rates. The good news is that these points can be deducted from your tax return. Each point is typically equal to 1% of the loan amount, and the deduction can be claimed in the year the mortgage was taken.

Home Office Deduction: A Workspace Within Your Sanctuary

For those who work from home, there may be an opportunity to claim a home office deduction. While there are strict criteria for eligibility, if a portion of your home is used exclusively for business purposes, you may be able to deduct related expenses, including a portion of your mortgage interest.

First-Time Homebuyer Credits: Encouraging New Entrants

Governments often provide incentives for first-time homebuyers. These can come in the form of tax credits, helping offset the upfront costs associated with purchasing a home. Be sure to explore local and federal programs that may provide financial assistance or credits for those taking their first steps into homeownership.

Energy-Efficient Upgrades: Environmentally Friendly Tax Breaks

Making eco-friendly upgrades to your home not only benefits the environment but can also lead to tax credits. Installing energy-efficient systems, such as solar panels or energy-efficient windows, may qualify you for federal and state tax credits, putting money back into your pocket.

Owning a home comes with a range of financial advantages, especially when it comes to taxes. The mortgage interest deduction, property tax deductions, and various other credits can significantly reduce the financial burden of homeownership. As you embark on this journey, it’s crucial to stay informed about the ever-changing landscape of tax laws and seek professional advice to ensure you make the most of the available benefits. In the end, the dream of homeownership can be not only emotionally rewarding but also a smart financial move.

26 Dec 2023
By divfundposts

What’s Ahead For Mortgage Rates This Week – December 26, 2023

Financial Reports

The final release of the GDP figures are the last large releases of the year before moving into Q1 of 2024, with the GDP report showing the economy had shown growth — particularly in Q3 with it tapering off by the end of the year. While the growth had been strong, it still was less than expected by analysts, however the final numbers do indicate we are on a track for a soft-landing and with the potential to all-together avoid a potential recession. The only other reports of note were the Personal Spending and PCE Index Prices.

GDP 2023 (Final)
The U.S. economy expanded at a revised 4.9% annual pace in the third quarter, a surprising burst of growth that appears to have tapered off at year’s end.

Growth of gross domestic product, the official scorecard for the economy, was reduced from a previously reported 5.2% in the government’s third estimate. It was still the biggest increase in GDP in a decade, however, excluding the pandemic years of 2020-21.

Personal Income and Spending
In November, consumer spending experienced a slight increase of 0.2%, indicating a somewhat tempered growth in the U.S. economy. The trend of subdued spending was also observed in October. On a positive note, incomes saw a rise of 0.4% during the same period. This increase in income is noteworthy as it now outpaces inflation.
PCE Index

In November, the U.S. inflation rate, as measured by the Federal Reserve’s preferred PCE index, registered a decline for the first time since 2020, signaling a continued easing of price pressures. The year-over-year inflation growth also decelerated, dropping to 2.6% from the previous month’s 2.9%, marking the lowest level since February 2021.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates saw a decrease by -0.43% with the current rate at 5.95%.
  • 30-Yr FRM rates saw a decrease by -0.28% with the current rate at 6.67%

MND Rate Index

  • 30-Yr FHA rates saw a -0.02% decrease for this week. Current rates at 6.12%
  • 30-Yr VA rates saw a -0.02% decrease for this week. Current rates at 6.13%

Jobless Claims
Initial Claims have decreased to 206,000 in comparison to the expected claims of 218,000. The prior week number was 203,000.

What’s Ahead
With New Year’s on the horizon, the only notable release will be the regularly scheduled Jobless Claims release.