Blog – Page 2 of 347 – DiversiFund Texas, LP

07 Oct 2024

What’s Ahead For Mortgage Rates This Week – October 7th, 2024

Financial Reports

Last week was a fairly light week, with the non-farm payroll data being the most significant release. The data showed that payrolls are growing at a faster rate than historical trends suggest, which could indicate that inflation is still above the Federal Reserve’s target. In contrast, the upcoming week has a busy schedule, with many important economic releases lined up back to back.

Non-Farm Payrolls

Hourly pay for American workers rose a sharp 0.4% in September – above expectations – to put the increase over the past 12 months at 4.0%. That’s up from 3.9% in the prior month. Wages are rising faster compared to the last few years before the pandemic. Wage gains rose just slightly over 3% on average in 2018 and 2019 before the coronavirus exploded.

If wages keep growing at a 4% rate, it could call into question the Fed’s view that labor costs will remain non-inflationary.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw an increase of 0.09% with the current rate at 5.25%
30-Yr FRM rates saw a decrease of 0.04% with the current rate at 6.12%

MND Rate Index

30-Yr FHA rates saw a 0.25% increase for this week. Current rates at 6.04%
30-Yr VA rates saw a 0.26% increase for this week. Current rates at 6.06%

Jobless Claims

Initial Claims were reported to be 225,000 compared to the expected claims of 220,000. The prior week landed at 219,000.

What’s Ahead

Next week will be a heavy week, starting with key inflation reports like the CPI and PPI. These will be followed by the FOMC Minutes, Consumer Credit data, and the University of Michigan Consumer Sentiment report.

04 Oct 2024

By divfundposts

How to Get a Mortgage Without a Credit Score

Credit Scoring

Getting a mortgage without a credit score may seem like a tough task, but it is possible. Many assume that a credit score is a must, but if you don’t have one, you can still pursue your dream of homeownership. Here’s how.

What is a Credit Score?

A credit score is a numerical value that shows how well you manage debt. The score is based on factors like your payment history, how long you’ve had credit, and how much credit you’re using. Higher credit scores typically mean better mortgage terms, including lower interest rates.

Loans Without a Credit Score

If you don’t have a credit score, it’s not the end of the road for a mortgage. While many lenders are cautious about lending to people without a credit history, there are still options available. Some government-backed loans, such as FHA, VA, and USDA loans, accept applicants without a credit score. Additionally, certain conventional loans with a large down payment or shorter terms may also be accessible.

The Underwriting Process

Without a traditional credit score, lenders will need to evaluate your creditworthiness using non-traditional credit sources. Lenders typically ask for four forms of alternative credit to show that you can reliably make payments. These could include rent payments, utility bills, phone bills, insurance premiums, and even school tuition.

Once all the documentation is submitted, the underwriting process can take longer than it would for someone with a standard credit history—potentially up to 60 days or more. Since manual evaluation is involved, it’s important not to commit to any home purchase without contingencies for funding approval.

How to Build Credit

If getting a mortgage without a credit score proves challenging, you can start building a credit profile. Opening a credit card and responsibly managing it by paying off balances in full each month is a good start. Keeping your credit usage under 30% of the credit limit can help build a strong credit score over time.

While having no credit score can make the mortgage process more complex, it’s not impossible to secure a home loan. By providing alternative forms of credit or working on building your credit, you can still achieve homeownership.

03 Oct 2024

By divfundposts

Do VA Entitlements Ever Expire?

Mortgage

The VA home loan program is one of the most valuable benefits offered to those who have served in the U.S. military, providing veterans and active-duty personnel with access to favorable mortgage terms. One common question is whether these VA entitlements ever expire.

What is VA Home Loan Entitlement?

VA home loan entitlement refers to the amount the Department of Veterans Affairs guarantees to a lender if the borrower defaults on the loan. This guarantee significantly reduces the lender’s risk, which allows veterans to access zero down payments and lower interest rates. The VA doesn’t issue the mortgage itself but backs loans made by private lenders.

VA entitlements come in two forms:

Basic Entitlement: In 2023, the basic entitlement is typically around $36,000 or 25% of the loan amount, whichever is less. Veterans can use this entitlement multiple times as long as they meet eligibility requirements.
Bonus Entitlement (Second-Tier Entitlement): For higher-cost homes, veterans can access additional entitlement beyond the basic amount. This helps veterans secure larger loans in areas where housing prices exceed the standard limit.

Does VA Entitlement Expire?

The short answer is no. Once a veteran is eligible for the VA home loan program, they keep that entitlement for life. There is no expiration date for using it, making it a long-term benefit that veterans can tap into at any time during their lives.

Restoring Loan Entitlement

Veterans who have used their VA entitlement in the past but have paid off their loans or sold their home can have their entitlement restored. This gives them the flexibility to use a VA loan again, although certain conditions apply depending on the situation. Veterans should consult the VA or a lender to understand the specific process for restoring their entitlement.

What About Foreclosure?

In the event of a foreclosure, veterans may lose their entitlement. However, the VA allows for entitlement restoration under certain conditions. If a veteran repays the VA for any losses or sets up a repayment plan, they can regain their eligibility.

VA entitlements are an incredible financial resource for veterans and active-duty service members, providing flexibility and long-term benefits with no expiration. Whether you’re buying a home for the first time or looking to use your entitlement again, this benefit is there when you need it.

02 Oct 2024

By divfundposts

Steps to Take Now to Build Your Credit for a Home Purchase Next Year

Credit Scoring

If you’re thinking about buying a new home next year, there’s one important factor to consider before you start browsing listings—your credit score. A strong credit score can make a huge difference in the interest rates you will qualify for and can also determine your mortgage approval. Starting the process of improving your credit now gives you a head start, putting you in a better position to achieve your homeownership goals when the time comes.

Here are five steps to help you get started:

1. Check Your Credit Report

Before anything else, it’s essential to know where you stand. Request a copy of your credit report from the major credit bureaus. This will allow you to review your current score, see if there are any inaccuracies, and understand what areas need improvement. If you find any errors, dispute them immediately to avoid negative impacts on your score.

2. Pay Down Debt

The amount of debt you carry compared to your total credit limits is one of the most significant factors affecting your credit score. Begin by paying down your highest-interest debts first while making consistent payments on the rest. Reducing your credit utilization rate to below 30% can boost your score significantly over time.

3. Avoid New Credit Lines

Opening new lines of credit right before applying for a mortgage can raise red flags for lenders. Each new account can lower your average account age, which impacts your score. Focus on managing your existing accounts responsibly rather than seeking new credit.

4. Set Up Automatic Payments

Late or missed payments can hurt your credit score and are recorded for up to seven years. Setting up automatic payments ensures you’re never late on bills, which will help build a strong, consistent payment history. This habit can steadily improve your score and show lenders you’re a responsible borrower.

5. Stay Patient and Consistent

Improving your credit score is a gradual process, so the sooner you start, the better. Even small, consistent actions over the next several months will help you make significant progress. The goal is to have your credit in top shape by the time you’re ready to apply for a mortgage.

Why Good Credit Matters for Your Mortgage

A higher credit score can not only help you get approved for a mortgage but also potentially save you thousands of dollars over the life of your loan. Lenders use your score to gauge the risk of lending to you, and a better score usually means lower interest rates and more favorable loan terms.

Conclusion

If a new home is on your radar for next year, preparing your finances now can make a world of difference. Take the time to check and improve your credit score today. Your future self will thank you when you’re settling into your dream home with a manageable mortgage.

01 Oct 2024

By divfundposts

How Much Equity Can You Borrow Today?

Home Mortgage

Your home equity represents one of your most valuable assets. When it comes to borrowing against that equity, many homeowners question how much can they borrow. Understanding the amount of equity you can tap into today is essential, especially if you’re considering a home equity loan or line of credit (HELOC) for major expenses like home improvements, debt consolidation, or other financial needs.

What is Home Equity?

Home equity is the difference between your home’s current market value and the outstanding balance on your mortgage. As you pay down your mortgage and your property’s value increases, your equity grows. The more equity you have, the more borrowing power you hold.

Factors That Determine How Much You Can Borrow

When borrowing against your equity, lenders typically allow you to access up to 85% of your home’s value, minus what you owe on your mortgage. This percentage is known as your Loan-to-Value (LTV) ratio. For example, if your home is worth $500,000 and you still owe $250,000, you may be able to borrow up to $175,000 (85% of $500,000 is $425,000, and subtracting the $250,000 mortgage leaves you with $175,000 in available equity).

Lenders will also consider your credit score, income, and current debt levels when deciding how much equity they are willing to lend.

Types of Equity Loans

There are two primary ways to borrow against your home’s equity:

Home Equity Loan: A lump-sum loan with a fixed interest rate, repaid over a set term.
Home Equity Line of Credit (HELOC): A revolving credit line that you can draw from as needed, often with a variable interest rate.

Benefits of Borrowing Against Equity

Borrowing against your home’s equity can offer several advantages, including:

Lower Interest Rates: Since these loans are secured by your property, they often have lower interest rates compared to personal loans or credit cards.
Tax Benefits: In some cases, the interest you pay on home equity loans may be tax-deductible. Check with a tax professional for details.
Flexible Uses: Whether it’s for home renovations, education costs, or debt consolidation, using your home’s equity gives you financial flexibility.

Key Considerations Before Borrowing

Before tapping into your home’s equity, it’s important to weigh the risks:

Increased Debt: Borrowing against your home increases your overall debt, which could affect your financial stability if not managed wisely.
Risk of Foreclosure: Failing to repay a home equity loan or HELOC could put your home at risk of foreclosure.
Market Fluctuations: If home values decline, you could owe more than your home is worth, making it difficult to sell or refinance.

Is Now the Right Time to Borrow?

With interest rates fluctuating, it’s a good idea to consult with a mortgage professional to explore your options. They can help you determine whether borrowing against your equity makes sense for your current financial situation.

If you’re thinking about using your home’s equity, understanding how much you can borrow is the first step. Contact us today to discuss your unique situation and get tailored advice on how to make the most of your home’s value.