Mortgage Rate Watch

Provided courtesy of: http://www.mortgagenewsdaily.com/consumer_rates/

Mortgage Rates Move Modestly Lower Ahead of Holiday
Wed, 22 Nov 2017 19:55:00 GMT -

Mortgage rates fell modestly today, with bond market strength both before and after the release of the Fed Minutes (a more detailed account of the Fed meeting that took place 3 weeks ago).  Stronger bond markets correlate with lower rates. 

Bonds tend to benefit from weak economic data, low inflation expectations, and an accommodative monetary policy stance from the Fed.  Today's economic data was generally weaker, but of particular importance at the moment were the inflation expectations in the consumer sentiment data, which came in near the lowest levels since the financial crisis.  The Fed Minutes also mentioned some concern over intractably low inflation, though they continue to expect a rebound based on a strong labor market.

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Mortgage Rates Holding Steady in Recent Range
Tue, 21 Nov 2017 20:34:00 GMT -

Mortgage rates were unchanged today, on average, although a few lenders made small adjustments to rates sheets in response to bond market volatility.  Bond markets began the day heading into stronger territory (which implies lower rates), but gave up much of the gains by early afternoon.  That prompted a few lenders to raise the costs associated with prevailing rates.

In other words, markets didn't move enough for published interest rates to change.  Those tend to move in .125% increments and it takes an uncommonly big day in bond markets to push mortgage rates higher or lower by that much.  The "upfront costs" associated with a mortgage (origination and discount, typically) give lenders a way to...

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Mortgage Rates Higher to Begin Holiday-Shortened Week
Mon, 20 Nov 2017 19:46:00 GMT -

Mortgage rates moved slightly higher today against the backdrop of the unique bond market conditions seen on Thanksgiving week.  Bond markets underlie mortgage rates, and there's generally a certain level of participation that traders and mortgage lenders can count on.  That participation wanes on major holiday weeks and the remaining players tend to behave a bit more conservatively.  This is seen in the form of interest rates staying inside recent boundaries and mortgage lenders not getting too aggressive with pricing.  

Inside those boundaries, however, movement is far less predictable.  

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Mortgage Rates Unchanged Heading Into Holiday Week
Fri, 17 Nov 2017 21:53:00 GMT -

Mortgage rates barely budged today--not too surprising considering today's bond market levels (which underlie rates) were roughly in line with yesterday's.  The average lender is quoting conventional 30yr fixed rates of 4.0% or slightly lower for top tier scenarios.  Movement has been minimal since October with day-over-day change most frequently occurring at the "cost" level. 

In other words, bond markets don't move enough every day for lenders to change interest rates by their standard 0.125% increments.  Instead, the cost (or rebate) associated with any given rate serves as a fine-tuning adjustment.  The cost is typically calculated based on a percentage of the loan amount.  It can move by more than half a perfect in some cases ($500 for every $100k borrowed) before it would make sense for some borrowers to consider the next higher or lower rate.

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Mortgage Rates Slightly Higher
Thu, 16 Nov 2017 21:36:00 GMT -

Mortgage rates moved higher today, but the changes were minimal for most lenders.  Bond markets (which underlie interest rates) have been searching for inspiration recently and largely coming up short.  This morning contained several economic reports and the House passed its tax bill in the afternoon, but none of those events caused much of a stir for bonds.  In fact, all of the bond market movement responsible for today's higher rates occurred during Asian and European trading hours.  When US traders got in for the day, bonds were almost perfectly sideways through 3pm.

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Mortgage Rates Lower After Inflation Data
Wed, 15 Nov 2017 20:26:00 GMT -

Mortgage rates fell today, largely in response to the past two days of bond market improvement.  In other words, lenders had been keeping their guard up ahead of today's key inflation data (The Consumer Price Index, or "CPI").  While it's true that a strong CPI report had the potential to push rates back to the highest levels since this summer, today's data wasn't strong enough.  In fact, most of the metrics were roughly in line with forecasts. 

Still, the strength and resilience in bond markets shouldn't be discounted.  Bonds also digested strong Retail Sales data and managed to maintain stronger levels achieved overnight.  In general, "strength" in bond markets translates to lower mortgage rates, although there can be some lag between the two. 

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Mortgage Rates Mixed Depending on Lender; Volatility Ahead
Tue, 14 Nov 2017 21:09:00 GMT -

Mortgage rates didn't move much today, despite moderate improvements in bond markets.  Typically, stronger bond markets result in lower rates, but if anything, more lenders moved into slightly weaker territory.   That has a lot to do with the fact that bonds were in weaker territory around the time most lenders put out the first rate sheets of the day.  With bonds improving in the afternoon, several lenders have issued mid-day reprices, bringing their rate sheets more in line with the underlying market.  

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First Time Home Buyers

First Time Home Buyers

The challenge of buying a home for the first time can seem so daunting that it's tempting to either just go with the first house that falls in your price range or continue to rent. To help you demystify the process and get the most out of the purchase, we'll examine what you'll need to consider before you buy, what you can expect from the buying process itself, and some handy tips to make life easier after you purchase your first home.

Mortgage Basics

Considerations Before You Buy

The first thing you'll need to determine is what your long-term goals are and then how home ownership fits in with those plans. It could be that you're simply looking to transform all those "wasted" rent payments into mortgage payments that actually give you something tangible. Others see home ownership as a sign of their independence and enjoy the idea of being their own landlord. Narrowing down your big-picture homeownership goals will point you in the right direction. Here are five questions to ask yourself:

  1. What type of home best suits your needs?
    You have several options when purchasing a residential property: a traditional single-family home, a townhouse, a condo, or a multi-family building with two to four units. Each option has its pros and cons, depending on your homeownership goals, so you need to decide which type of property will help you reach those goals. You can also save on the purchase price in any category by choosing a fixer-upper, although the amount of time, sweat equity and money involved to turn a fixer-upper into your dream home might be much more than you bargained for.
  2. What specific features will your ideal home have?
    While it's good to retain some flexibility in this list, you're making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trust-worthy appliances.
  3. How much mortgage do you qualify for?
    Before you start shopping, it's important to get an idea of how much a lender will actually be willing to give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you're only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you've been at your current job.
  4. How much home can you actually afford? 
    On the other hand, sometimes a bank will give you a loan for more house than you really want to pay for. Just like with the purchase of a new car, you'll want to look at the house's total cost, not just the monthly payment. Of course, looking at the monthly payment is also important, along with how much down payment you can afford, how high the property taxes are in your chosen neighborhood, how much insurance will cost, how much you anticipate spending to maintain or improve the house, and how much your closing costs will be.
  5. Who will help you find a home and guide you through the purchase?
    A real estate agent will help you locate homes that meet your needs and are in your price range, then meet with you to view those homes. Once you've chosen a home to buy, these professionals can assist you in negotiating the entire purchase process, including making an offer, getting a loan, and completing paperwork. A good real estate agent's expertise can protect you from any pitfalls you might encounter during the process.

The Buying Process
Now that you've decided to take the plunge, let's explore what you can expect from the home buying process itself. This is a chaotic time with offers and counter-offers flying furiously, but if you are prepared for the hassle (and the paperwork), you can get through the process with your sanity more-or-less intact. Here is the basic progression you can expect:

1) Find a home.
Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online and driving around the neighborhoods that interest you in search of for-sale signs. Also put some feelers out there with your friends, family and business contacts. You never know where a good reference or lead on a home might come from.

2) Consider your financing options and secure financing.
First-time homebuyers have a wide variety of options to help them get into a home, including federally-backed loans and loans for homebuyers who don't have the standard 20% minimum down payment. Your state may also have its own programs for first-time homebuyers. Your mortgage interest rate will also have a major impact on the total price you pay for your home, so shop around.

3) Make an offer.
Your real estate agent will help you decide how much money you want to offer for the house along with any conditions you want to ask for, like having the buyer pay for your closing costs. Your agent will then present the offer to the seller's agent; the seller will either accept your offer or issue a counter-offer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. If you reach an agreement, you'll make a good-faith deposit and the process then transitions into escrow. Escrow is a short period of time (often about 30 days) where the seller takes the house off the market with the contractual expectation that you will buy the house - provided you don't find any serious problems with it when you inspect it.

4) Obtain a home inspection.
Even if the home you plan to purchase appears to be flawless, there's no substitute for having a trained professional inspect the property for the quality, safety and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, you'll generally be able to rescind your offer and get your deposit back. Negotiating to have the seller make the repairs or discount the selling price are other options if you find yourself in this situation.

5) Close or move on.
If you're able to work out a deal with the seller, or better yet, if the inspection didn't reveal any significant problems, you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.

Take these 5 steps to help make the process go more smoothly.

Now that you know how much you can afford, check out our current mortgage rate comparison-shopping tool today.

Check your credit

Evaluate assets and liabilities

So you don't owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

You've decided to go for it. Buying a home can be thrilling and nerve-wracking at the same time, especially for a first-time homebuyer. It's difficult to know exactly what to expect. The learning curve can be steep, but most of the issues can be resolved by doing a little financial homework at the outset.

Take these 5 steps to help make the process go more smoothly.

The homebuyer's credit score is among the most important factors when it comes to qualifying for a loan these days.

To get a sense of where your credit stands, go to Kredit Karma to collect your credit report and score today, free and with no obligation.

Scour the reports for mistakes, unpaid accounts or collection accounts.

Just because you pay everything on time every month doesn't mean your credit is stellar, however. The amount of credit you're using relative to your available credit limit, or your credit utilization ratio, can sink a credit score.

The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used.

Repairing damaged credit takes time -- and money, if you owe more than lenders would prefer to see relative to your income. Begin the process at least 6 months before shopping for a home.

Evaluate assets and liabilities

So you don't owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

"If I were a first-time homebuyer and I wanted to do everything right, I would probably try to track my spending for a couple of months to see where my money was going," he says.

Additionally, buyers should have an idea of how lenders will view their income, and that requires becoming familiar with the basics of mortgage lending.

For instance, some professionals, such as the self-employed or straight-commission salesperson, may have a more difficult time getting a loan than others

Organize documents

When applying for mortgages, homebuyers must document income and taxes.

Typically, mortgage lenders will request 2 recent pay stubs, the previous 2 years' W-2s, tax returns and the past 2 months of bank statements -- every page, even the blank ones.

Buying a home can take a long time, but knowing what you need and where to find it can save time when you're ready.

Qualify yourself

Ideally, as a first-time homebuyer, you already know how much you can afford to spend before the mortgage lender tells you how much you qualify for. "How much house can I afford?" calculator will help.

By calculating debt-to-income ratio and factoring in a down payment, you will have a good idea of what you can afford, both upfront and monthly.

Though there's not a fixed debt-to-income ratio that lenders require, the old standard dictates that no more than 28 percent of your gross monthly income be devoted to housing costs. This percentage is called the front-end ratio.

The back-end ratio shows what portion of income covers all monthly debt obligations. Lenders prefer the back-end ratio to be 36 percent or less, but some borrowers get approved with back-end ratios of 45 percent or higher.

Figure out your down payment

It takes effort to scrape together the down payment.

There are programs that can assist buyers with qualifying incomes and situations.

Finally, speak with mortgage lenders when you're starting the process. Check with friends, co-workers and neighbors to find out which lenders they enjoyed working with and ask them questions about the process and what other steps first-time homebuyers should take.

Congratulations New Homeowner ... Now What?

You've signed the papers, paid the movers and the new place is starting to feel like home. Game over right? Not quite. Let's now examine some final tips to make life as a new homeowner more fun and secure.

  1. Keep saving.
    With homeownership comes major unexpected expenses, like replacing the roof or getting a new water heater. Start an emergency fund for your home so that you won't be caught off-guard when these costs inevitably arise.
  2. Perform regular maintenance.
    With the large amount of money you're putting into your home, you'll want to make sure to take excellent care of it. Regular maintenance can decrease your repair costs by allowing problems to be fixed when they are small and manageable.
  3. Ignore the housing market.
    It doesn't matter what your home is worth at any given moment except the moment when you sell it. Being able to choose when you sell your home, rather than being forced to sell it due to job relocation or financial distress, will be the biggest determinant of whether you will see a solid profit from your investment.
  4. Don't rely on making a killing on your home to fund your retirement.
    Even though you own a home, you should still continue to save the maximum in your retirement savings accounts each and every year. Although it may seem hard to believe for anyone who has observed the fortunes some people made during the housing bubble, you won't necessarily make a killing when you sell your house. If you want to look at your home as a source of wealth in retirement, consider that once you've paid off your mortgage, the money that you were spending on monthly payments can be used to fund some of your living and medical expenses in retirement.

Conclusion

This brief overview should help put you on the path towards filling in any gaps in your home-buying knowledge. Remember that the more you educate yourself about the process beforehand, the less stressful it will be, and the more likely you will be to get the house you want for a price you can afford - and with a smile on your face.

 

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