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What You Should Know About Rising Mortgage Rates

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After steadily falling over the winter, mortgage rates have started to rise in recent weeks. This is concerning to some potential homebuyers as the combination of higher mortgage rates and higher prices have made homes less affordable. So, if you’re planning to purchase a home this year, you too may be wondering if now’s the right time to buy or if you should hold off on your search until rates come back down.

The recent uptick in rates has been driven by what’s happening with inflation. Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains:

“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”

The most recent weekly average 30-year fixed rate mortgage reported by Freddie Mac is 6.5%. It’s the third week in a row that rates have increased and puts them at the highest point they’ve been this year.

Advice for Home Shoppers

If you’re thinking about pausing your home search because rates have started to go up again, you may want to reconsider. This could actually be an opportunity to buy the home you’ve been searching for. According to the MBS, mortgage applications declined by 13.3% in just one week, so it appears the rise in mortgage rates is leading some potential homebuyers to pull back on their search for a new home.

So, what does that mean for you? If you stay the course, you’ll likely face less competition among other buyers when you’re looking for a home. This is welcome relief in a market that has so few homes for sale.

Bottom Line

Over the last few weeks, mortgage rates have risen. But that doesn’t mean you should delay your plans to buy a home. In face, it could mean the opposite if you want to take advantage of less buyer competition. Let’s connect today to explore the financing options available to you.

Moving From An Apartment To A House? Here’s What You Need To Remember About Your Lease

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Moving From An Apartment To A HouseThe major problem that the vast majority of buyers will run into – especially when purchasing their first home – has to do with a lease agreement that is still active with their apartment complex at the time of the purchase. If you locate the perfect home in February but your lease isn’t over until August, you can’t be expected to wait around.

But at the same time, the remainder of that lease agreement could represent thousands of dollars that you’ll be paying to essentially “live” in two different places at the same time.

Luckily, all hope is not lost. There are a variety of steps that you can take to help mitigate your remaining financial risk at your apartment as much as possible.

Breaking Your Lease Early: What You Need to Know

First, look at your existing lease agreement and make sure you understand their early termination policy. This will outline the various acceptable ways, usually dictated in large part by state and other local laws, that you can break a lease early without being forced to pay through the duration of the agreement itself.

Much of this will vary based not only on the state, but also the property manager in question. Your property manager may very well allow for early termination for home buyers – particularly if they’re in an area where they know they can rent the apartment quickly.

This is not always the case, though, which is why you need to begin by reviewing the situation thoroughly so you know what you’re dealing with.

Next, you should review what state laws have to say about your landlord’s duty to find a new tenant in the area of the country that you’re living in. In some states, for example, your landlord MUST make “reasonable efforts” to re-rent your unit as quickly as possible, regardless of the reason you’ve decided to leave.

Many state housing laws require landlords to make every effort to keep their own losses at a minimum – meaning that you may not have to pay much, if anything at all, to break your lease early provided that you give said landlord enough notice. 

Why Conversations Matter

Finally, you’ll want to sit down with your landlord face-to-face (if you haven’t already done so) and explain to them exactly what is going on. Landlords are people too and oftentimes they can be more sympathetic than you think.

According to an authority on the matter, the “worst case scenario” for most renters-turned-buyers breaking a lease agreement is often that they’ll need to pay an early termination fee to break their agreement early. This can be as little as one month’s rent to “a few month’s rent” depending on the situation.

At the very least, this is better than being forced to pay every month for the remainder of your term.

In the end, it’s important for you to understand that you should not let anything get in the way of buying the home you’ve always wanted – even if you’re currently living in an apartment with an active lease agreement.

You just need to know as much about the specifics of that agreement as possible so that you can move into your new home while mitigating as much risk as possible for both yourself and your landlord at the same time.

It’s wise to consult with your trusted home financing professional about the implications of your specific situation.

What’s Ahead For Mortgage Rates This Week – February 27, 2023

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What's Ahead For Mortgage Rates This Week - February 27, 2023Last week’s economic reporting included readings on sales of previously-owned homes, the minutes of the Federal Reserve’s most recent Federal Open Market Committee meeting, and weekly readings on average mortgage rates and jobless claims.

Federal Reserve leaders raise key interest rate range

The Federal Open Market Committee of the Federal Reserve raised the Fed’s key interest rate range by 25 basis points to 4.50 to 4.75 percent. Fed officials cautioned that failure to ease inflationary pressure by raising interest rates could lead to inflation remaining higher than the Fed’s target inflation pace of two percent per year.

In other matters,  the minutes of the Fed’s most recent Committee meeting indicated  “a number” of  Fed officers said that “a drawn-out period of  negotiations to raise the federal debt limit could pose significant risks to the financial system and the broader economy.” Failure to increase the federal debt limit could cause the government to default on its loan obligations and lead to political implications as the 2024 election year approaches.

Sales of previously-owned homes fall in January

Previously-owned homes sold at their lowest level since 2010 and declined for the twelfth consecutive month in January. This was the longest consecutive streak of monthly price declines since sales of previously-owned homes were first tracked in 1999.  Previously-owned homes sold at a year-over-year pace of 4 million sales; analysts expected an annual pace of 4.02 million sales based on December’s reading of 4.03 million sales.

New homes sold at a pace of 670,000 sales in January, but year-over-year sales were down by 19.4 percent. This was the fourth consecutive month when new home sales rose on a month-to-month basis.

Mortgage rates rise, jobless claims fall

Freddie Mac reported higher average mortgage rates as rates for 30-year fixed-rate mortgages averaged 18 basis points higher at 6.50 percent. Rates for 15-year fixed-rate mortgages averaged 5.76 percent and 25 basis points higher than for the previous week.

New jobless claims fell last week with 192,000 initial claims filed as compared to the expected reading of 197,000 first-time claims filed and the previous week’s reading of 195,000 first-time claims filed. 

Consumer sentiment rose to an index reading of 67  in February as compared to the expected reading of 66.4, which matched January’s reading. The University of Michigan’s consumer sentiment index is based on a benchmark reading of 50; readings above 50 indicate that a majority of consumers surveyed held positive views of current economic conditions.

What’s ahead

This week’s scheduled economic news includes readings from S&P Case-Shiller home price indices and data on pending home sales. Weekly readings on mortgage rates and jobless claims will also be published. 

The Top Reasons To Stop Renting And Buy Today

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The Top Reasons To Stop Renting And Buy TodayBuying a house can be expensive, and it can take a long time to save up money for a down payment; however, it might be time for you to stop renting and buy your own place. What are some of the top reasons why it might be time to put down some roots?

Your Rent Is Going Up

The reality is that your rent will go up with time. Every time you renew your lease, it can be frustrating to see that rent check continue to increase. If you are tired of your rent going up, get a mortgage. You could lock in the same payment for 30 years.

You Are Going To Stay Put For A While

Are you planning on staying put for a while? If so, you don’t have to worry about buying a selling a house too quickly. Go ahead and purchase a house! You are going to be here for a while anyway, so you might as well get a stable mortgage.

You Don’t Want To Pay Someone Else’s Mortgage

Did you know that you might be paying someone else’s mortgage with your rent check? Why not use that money to pay off your own mortgage? After all, there’s no reason why you should feel obligated to use your money to pay down someone else’s home loan.

You Want To Build Wealth

If you want to build wealth for yourself and your family, one of the best ways to do so is to own property. Your property should go up in value over time, and 100 percent of the capital appreciation is yours because the value of your loan will remain the same, regardless of the capital appreciation of your house. If you want to build wealth, owning property is one of the best ways to do so.

Stop Renting And Buy Today

Clearly, there are plenty of reasons why you might want to stop renting and consider buying a house. You need to work with an expert who can help you find the right loan option to meet your needs. There are attractive opportunities out there, so if you are ready to build financial wealth, consider buying a house today.

What Items Can Change My Mortgage Pre-Approval Status?

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What is a mortgage pre-approvalWhen you are purchasing a home, your lender may recommend you obtain a mortgage pre-approval before you find the home of your dreams. There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.

So the question many buyers have is what exactly is a mortgage pre-approval? In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.

What Do I Need For Pre-Approval?

In order to obtain a pre-approval for your home purchase, you will have to provide your lender all of the same information you would need to show for qualifying for a mortgage. This means providing tax returns, bank statements and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.

What Conditions Are Attached to a Pre-Approval?

Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a pre-approval letter:

  • Interest rate changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease
  • Property passes valuation and inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements
  • Credit check requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval
  • Changes in jobs/assets – after a pre-approval is received, a change in your employment status or any substantial assets may result in the pre-approval becoming worthless

What Items Can Change My Mortgage Pre-Approval Status?

One of the major issues that affect some borrowers as they are preparing to purchase their new home is financing large ticket items before the home purchase loan is completely funded.  Even if you are buying new furniture or other items for the home, it’s best to wait until after your home loan is entirely complete before purchasing any of these new items.

Work changes can also drasitically affect your pre-approval status.  Make sure your loan professional is well aware of any changes well in advance of them happening in order to plan effectively.  There are ways to work with job changes but it is a delicate matter during the mortgage underwriting process.

Getting pre-approved for a home mortgage may allow you more negotiation power with sellers and may help streamline the entire loan process. It is however important to keep in mind there are still things that may have a negative impact on actually getting the loan.

It is important to make sure you keep in contact with the lender, especially if interest rates increase or your employment status changes after you are pre-approved.