Mortgage Rate Watch

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

Mortgage Rates Catch a Break
Wed, 22 May 2019 20:53:00 GMT -

Mortgage rates moved higher at a pace that was probably quicker than the average homebuyer would like yesterday.  That was part of a 4 day move leading back up from the lowest levels in more than a year (or close to them, depending on the lender).  That 4-day move could have easily been quite a bit longer, and it still could be, as long as we overlook today's market movement.  Thankfully, it's taken rates back in a friendlier direction.

At issue is the unexpected flare-up in British politics surrounding Theresa May's referendum gambit yesterday.   To be fair, the gambit was unexpected, but the flare-up makes perfect sense.  Long-story short, if May is ousted (and that seems likely), it creates uncertainty surrounding a major economy and financial center.  It also makes a "no-deal" Brexit more likely, which is generally seen as detracting from European economic growth prospects.  All other things being equal, lower economic growth coincides with lower interest rates.

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Mortgage Rates Bounce Back
Tue, 21 May 2019 20:50:00 GMT -

Mortgage rates had a fairly decent day yesterday as far as most lenders are concerned.  A few lenders saw fit to bump rates up in the afternoon following a day of weakness in the bond market (which directly affects the rates lenders can offer).  Because a majority of lenders did NOT make that mid-day adjustment, they were always likely to do so with today's first rate sheets--especially if bonds didn't improve overnight.

Not only did bonds not improve today, but they weakened a bit more.  This made lenders' decisions easy.  With that, the average conventional 30yr fixed quote moved back up to levels last seen on May 9th and 10th.  In outright terms, some loan scenarios will be an eighth of a percentage point higher in rate while others will merely be looking at a reasonably big bump in closing costs (certain upfront costs can be increased in lieu of higher interest rates, depending on the lender).

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Mortgage Rates Mostly Hold Near Lows, But Things Could Change Tomorrow
Mon, 20 May 2019 21:18:00 GMT -

Mortgage rates moved microscopically higher today, depending on the lender.  In terms of underlying movement in the bond market, however, rates should have risen a bit more than they did.  This has to do with the timing of the bond market weakness and the amount of movement lenders typically want to see before changing their mortgage rate offerings for the day.  Simply put, weaker bonds suggest higher rates, but bonds didn't weaken fast enough for most lenders to see their "re-price" threshold.  

All of the above means that most lenders continued to offer rates that were very close to the lowest levels in more than a year.  Only a handful of days have been any better, and all of them have occurred in the past 2 months.  

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Buying an Investment Property

Buying an Investment Property

Don't Buy Your First Investment Property Until You Read This

Are you thinking of buying a rental property as part of your investment strategy? Here are a few things you need to think about.

Real estate can be an excellent part of anyone's investment strategy. However, before you buy your first house, condo, duplex, or apartment building to rent out, you need to have a good idea of what you're getting into.

Here are three things to be aware of before jumping into real estate investing -- and an alternative investment you could use instead.

The income can be inconsistent
When you buy just one investment property, you are effectively putting all of your eggs in one basket, just as if your entire portfolio consisted of stock in one company.

While owning an investment property can certainly be lucrative, it leaves you vulnerable to certain risks.

For example, if you buy a $100,000 investment property, you should be able to earn $1,000 in rental income per month, based on the general rule that properties should rent for about 1% of their value. However, what if you need several months to find your first tenant? Or what if your tenants stop paying rent and you have to evict them (which could take quite a while)?

If such a situation occurs, not only will your investment produce no cash flow, but you're still stuck paying for things like the mortgage, property taxes, insurance, and maintenance.

Do you really want to deal with tenants and maintenance?
The first mistake I made when I bought a rental property was underestimating how much work can be involved in dealing with tenants.

Finding quality tenants can be a challenge in itself, but the real issues tend to come up after they move in. For example, if your tenant is late on rent, do you really want to chase people down to find out what's going on? Do you have the first clue of what to do if you need to evict a tenant? And what if they are making too much noise, letting other people live there, or are violating any other part of the rental agreement?

Don't forget about maintenance and repairs. If you manage your rental property, be prepared for the phone to ring in the middle of the night if the tenants have a plumbing issue.

If you don't want to handle these situations, the alternative is to hire a property manager. This should cost you about 10% of the rental income you bring in. This can be well worth it, but it will cause your profits to take a serious hit.

Make sure that you account for "all" the costs
Speaking of the cost of a property manager, you might be surprised at how much it really costs to own a rental property.

In the example cited earlier involving a $100,000 rental property, let's say you put 20% down on the house and collect $1,000 in monthly rent. By financing the other $80,000, you can expect your monthly mortgage payments to be about $392 at today's rates, which might sound like an incredible profit margin. However, when figuring out the cash flow of your investment property, make sure to account for property taxes, insurance, maintenance costs, and property management.

These costs will vary based on your location and the condition of the property, but could easily add $500 or more to your monthly expenses. Also, bear in mind that many jurisdictions charge much higher property tax rates on investment properties, so make sure you take this into account as well.

Know what you're getting into
I'm not trying to talk you out of buying an investment property. In fact, if you do it right, buying an investment property can produce cash flow and build equity, creating wealth over time without a huge initial investment.

However, just like with any other investment, you need to make sure you know exactly what you're getting into and prepare for all the costs and the risks involved. If these seem like too much trouble, there is no shame in looking into alternatives, such as real estate investment trusts.

Buying an investment property can be a great opportunity.

Whether it be a house, cottage, farm, condo, or plot of land, buying real estate is traditionally a sound and profitable investment, offering both rental income and capital gains. The most obvious advantage of buying any income property is having other people pay off the debt on your investment property. And with interest rates low, there's no time like the present to jump in.

To buy an investment property you will need sound financing information and flexible loan options. When choosing a lender, loan rates are not always the most important. Because investment property mortgages are subject to specific governmental requirements, mortgages are constantly changing. It's a good idea to consult with a mortgage specialist at i Want a Better Mortgage who can bring experience and training to the table, helping you make an informed decision about your investment property mortgage options.

 

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