18 Feb 2021
By Kevin Gahagan

Understanding The Key Factors That Affect Your Mortgage Interest Rate

Mortgage Rates

Understanding the Key Factors That Affect Your Mortgage Interest RateWhen you initially start shopping for a home mortgage, you may be drawn to advertisements for ultra-low interest rates. These may be rates that seem too good to be true, and you may gladly contact the lender or mortgage company to complete your loan application. However, the unfortunate truth is that all too often, mortgage applicants are unpleasantly surprised and even disheartened to learn that they do not qualify for the advertised interest rate. By learning more about the factors that influence your interest rate, you may be able to structure you loan in a more advantageous way.

Your Credit Rating

One of the most important factors that influence an interest rate is your credit score. Lenders have different credit score requirements, but most have a tiered rating system. Those with excellent credit scores qualify for the best interest rate, and good credit scores may qualify for a slightly higher interest rate. Because of this, you may consider learning more about your credit score and taking time to correct any errors that may be resulting in a lower score.

The Amount Of Your Down Payment

In addition, the amount of your down payment will also play a role in your interest rate. The desired down payment may vary from lender to lender, but as a rule of thumb, the best home mortgage interest rates are given to those who have at least 20 to 30 percent of funds available to put down on the property, and this does not include subordinate or secondary financing. If you are applying for a higher loan-to-value loan, you may expect a higher interest rate.

The Total Loan Amount Requested

In addition, the total loan amount will also influence the rate. There are different loan programs available, but one of the biggest differences in residential loans is for very large loan amounts. The qualification for a jumbo loan will vary for different markets, but these loans qualify for different rates than conventional loans with a smaller loan amount.

While you may be able to use advertised interest rates to get a fair idea about the rate you may qualify for, the only real way to determine your mortgage rate will be to apply for a loan and to get pre-qualified. You can contact a mortgage lender today to request more information about today’s rates and to begin your pre-qualification process.

13 Jan 2021
By Kevin Gahagan

How Low Can They Go: With Mortgage Interest Rates Low, Should You Refinance?

Mortgage Rates

How Low Can They Go: With Mortgage Interest Rates Still Dropping, Should You Refinance?Do you have a mortgage? You’ve likely seen or heard a lot about mortgage refinancing as interest rates remained low in recent months.

In today’s blog post we’ll explore the topic of mortgage refinancing, including when you should consider refinancing and how to take advantage of low interest rates.

What is Mortgage Refinancing?

In simple terms, refinancing refers to the practice of taking out a new mortgage and using the proceeds to pay off your old one in its entirety. You’ll go through the full borrowing process with your chosen lender, including the credit check, financial history and employment history in order to ensure that you have the ability to pay your new mortgage – even if your monthly costs are lower.

Depending on your financial goals, you may refinance to tap into some of the equity you’ve built up in your home, or you may refinance in order to secure a new mortgage with a lower interest rate or better payment terms. Whatever the case, know that if you decide to refinance you’ll be engaging with a lender for a brand new mortgage.

When Should I Consider Refinancing My Mortgage?

When you should refinance depends on your reason for refinancing. If you’re looking to reduce your interest rate and your monthly payments, you should refinance your mortgage whenever interest rates drop enough that you will be able to save more in monthly payments then you will be paying in closing costs and fees.

Consulting with a mortgage professional is the best way to understand how much money you can save, but to get a quick idea simply take a look at how much you owe on your mortgage, your current interest rate and the types of rates you may qualify for. If you owe $200,000 at 4% percent interest and you can refinance down to 3% percent you’re going to save a considerable amount over the long term.

How to Take Advantage of Low Interest Rates

Refinancing your mortgage is a major financial decision and not one that should be taken lightly. Careful research is needed to determine if now is best time to switch up your mortgage to one with a lower interest rate.

05 Oct 2020
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – October 5, 2020

Financial Reports

What's Ahead For Mortgage Rates This Week - October 5, 2020Last week’s economic news included readings from Case-Shiller Home Price Indices, along with Commerce Department readings on public and private-sector job growth and the University of Michigan’s Consumer Sentiment Index. Weekly reports on jobless claims and mortgage rates were also released.

Case-Shiller: Home Price Growth Ramps Up as Demand for Homes Increases

July home prices rose at a year-over-year rate of 4.80 percent in July as compared to June’s reading of 4.40 percent. Shortages of available homes were driven by demand. Homebuyers were looking for larger homes to accommodate working from home and also wanted to leave congested urban areas.

Home prices in Case-Shiller’s 20-City Index rose by 3.90 percent year-over-year in July; Home prices in participating cities grew by 3.50 percent in June. Home prices grew fastest in Phoenix, Arizona with a year-over-year growth rate of  9.20 percent. Seattle, Washington home prices grew by 7.00 percent, and home prices in Charlotte, North Carolina rose by 6.00 percent.

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said,

“Prices were particularly strong in the Southwest and West were comparatively weak in the Midwest and Northeast.” 16 of 19 cities in the 20-City Home Price Index reported a faster growth rate for July’s home prices. Detroit, Michigan did not report data for July’s 20-City Home Price Index.

Construction spending in August jumped from July’s reading of 0.70 percent growth to 1.40 percent. This could be positive news if it indicates a faster pace of home construction, but it could also reflect higher prices for building materials. Rising costs of building materials are typically added to home prices, which further challenges first-time and moderate-income home buyers.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates last week; The average rate for a 30-year fixed-rate mortgage dropped two basis points to 2.88 percent; rates for 15-year fixed-rate mortgages averaged four basis points lower at 2.36 percent. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.90 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages 0.20 percent. 

New jobless claims fell to 837,000 claims filed from the prior week’s reading of 873,000 initial claims filed. Ongoing claims were also lower last week with 11.77 million filings as compared to 12.75 million ongoing claims filed in the previous week.

The national unemployment rate dipped below 8.00 percent for the first time since March with a reading of 7.90 percent. Analysts said that the number of people in the workforce dropped from 164.5 million in February to 160.1 million workers in September; this indicates that 4.4 million workers have left the workforce.

Consumer sentiment rose to its highest level since March according to the University of Michigan’s Consumer Sentiment Index reading for September was 80.40 as compared to August’s index reading of  74.10.

What’s Ahead

This week’s scheduled economic news includes readings on job openings and the minutes from the Fed’s Federal Open Market Committee meeting. Readings on public and private-sector jobs will also be reported.

24 Sep 2020
By Kevin Gahagan

Buying A Home With Cash Versus Low Interest Rate Mortgages

Mortgage

Buying A Home With Cash Versus Low Interest Rate MortgagesThe real estate market has been in flux during the past few months. As a result, this could be a great time to both buy and sell a home. This is because mortgage rates are attractive for borrowers right now. With so many people who are looking to buy a home, is likely the people selling a home are going to receive multiple offers. On the other hand, given what the mortgage market looks like right now, borrowers also have attractive options.

As a result, many people are wondering if they should buy a house with cash or take advantage of low interest rates. For homebuyers in this position, there are a few important points to keep in mind. 

Consider What The Cash Can Do

Ultimately, a decision to buy a house with cash or taking advantage of low interest rates is going to be a personal decision. At the same time, there are several factors to consider. One of them involves what the cash is going to be used for. For example, many people have heard the saying that cash is king. Buying a house with cash might be right for some people. 

On the other hand, there might be some individuals or families who can put this cash to better use elsewhere. For example, if this cash is needed to buy a new car, fun retirement, or pay for someone’s education, then the cash might be better spent in this area. It is important to think about how this cash will be spent when deciding whether or not to use it to buy a home. 

The Competitiveness Of A Cash Offer

It is also important to consider the advantages of buying a house with cash. In addition to the obvious benefit of not having a mortgage payment, a cash offer is also going to be seen as more competitive. With so many people looking to buy a house right now, it is critical for homebuyers to appear competitive right off the bat. 

A cash offer is always going to look better than someone who is trying to take out a loan because the transaction is simpler, faster, and provides the seller with an instant source of liquidity. 

These are a few of the most important points that people should keep in mind when deciding how they are going to purchase a home.

 

04 Aug 2020
By Kevin Gahagan

What Is The Impact Of COVID-19 On Home Value?

Mortgage

What Is The Impact Of COVID-19 On Home Value?It is no secret that the COVID-19 pandemic has had an impact on everyone; however, there are a few impacts that are being overlooked. In addition to the public health crisis and the tanking of the stock market, there are also impacts of the virus on people’s home values.

Some of these impacts have been positive while others have been negative.

Regardless, it is important for everyone to understand how these impacts might impact someone’s home value, particularly for those who are looking to buy or sell a home in the future.

The Dropping Rates Of Mortgages

Because of the shelter in place laws surrounding the COVID-19 pandemic, not many people are looking to move right now. As a result, banks have had a hard time getting people to come in and sign up for loans. 

This means that many people who are looking to buy a home might be able to sign up for a loan at a very low cost. This might open the door for someone to buy a bigger home than they might have been able to during less turbulent times.

The Impact On Sellers

As a result of the low-interest rates from the COVID-19 pandemic, this also means that sellers should anticipate getting a large number of offers for their homes. There are still many people who are hesitant to sell a home in this environment. This means that there might not be many options on the market. For those who decide to take the plunge, they might be rewarded with more offers than usual. This is going to drive up the value of their home, which is good for their next purchase.

The Future Of The Market During The Pandemic

These are just two of the many ways that the COVID-19 pandemic has impacted the value of homes. While it is unclear when this pandemic is going to be behind us, it is important for everyone to understand how the pandemic is going to impact them if they are looking to buy or sell a home. This will help everyone make the right decision during a turbulent time.