MAKING SURE YOU ARE IN GOOD STANDING BEFORE PREAPPROVAL

 Preapproval for a home mortgage can be confusing, especially if you are a first-time homebuyer.  Many homebuyers want to know if they are preapproval ready.  In order to know, here are some things that lenders look for when preapproving someone for a home loan.

Mortgage pre-approval is not a mortgage pre-qualification.  A preapproval is more in-depth than just answering a few questions from your lender.  There is a lot of paperwork involved which includes employment verification, checking records, savings records and investment records.  Lenders nationwide will like for the same elements when pre-approving for a loan. These include a minimum of two-year employment history in the same job or field, a credit score of 620 or higher, a savings track record, financial asses records, proof of down payment  (3% to 20% of home price), and an all-in debt to income ratio fo 43% or less.  The majority of lenders nationwide will not charge for a pre-approval, however, there are some out there that will ask for reimbursement to pull your credit report.

Your job and credit history play a big part in the pre-approval process.  The two year employment rule is very strict.  If you are a current graduate and can prove future income from your employer this will suffice, but if you change from W-2 pay stubs to self-employment this is a no go.

A credit score of at least 620 is also the rule of thumb.  Before you go to a lender to get pre-approved, you can check your credit score for free through the credit unions.  In today’s market, the loan approval for credit scores is every strict.  For a mortgage, the middle score is what counts and is derived from all three of the provideers, TransUnion, Equifax, and Experian.  If you and your partner are purchasing the home together, the worst middle score of the two will be used to determine preapproval.

Another important factor is your assests and downpayments.  “The ability to budget and save shows financial discipline,” says Staci Titsworth, a regional manager for PNC Mortgage in Pittsburgh.  If you received a big bonus, or an intertance, the lender will also have to show the underwriter where the money came from and that it is not borrowed.  Lenders know that life is not perfect and there will be bumps in the road.  Examples include job loss, job changes, and unexpected expenses.  For many of these reasons, people have to dip into their savings to cover these unexpected expenses. In a nutshell you want to be able to have enough info for the lender to explain to the underwriter your financial ability to repay a loan.

Your debt and income ratio is also very important aspect of the process. Lenders desire to see a debt-to-income rati of 43% or less.  If you make $10,000 a month gross before takes, and $4,300 of it goes towards your debt you are okay. This needs to include you future house payment, monthly property taxes and homeowners’ insurance. There is some room to negotiate when it comes to this. Let’s say your DTI is 46% but you have a great credit score and 5% in the bank for a downpayment.  More than likely most lenders would approve you.

Starting the process early is a good idea in case you need to work on some areas to help with your credit, this will give you time to do so.  If you are going to purchase within the next year, then you will want to start looking at getting preapproved now. Note that preapprovals usually are only valid for 60 to 90 days but can be extended if you keep updating with your current financial situation.

If you are in the market to purchase a home, remember to use both a real estate agent and a lender who can help you with all your homebuying needs.  Going to see a home with a preapproval in hand will show that you are a serious buyer.

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Last Three Months of 2021 Saw Growth for U.S. Builders

 

December 2021 date shows that the construction of new homes climbed for the third consecutive month. Reports find that new construction homes are at a seasonally adjusted annual rate of 1.7 million units. Close to 1.6 million housing units were started at a 15.6% increase over 2020.

Even with the rising interest rates, the housing market is still going strong. The average long-term U.S. mortgage rates rose to the highest levels since March 2020 in January 2022. Lawrence Yun, chief economist for the National Association of Realtors, says economists expect to see an increase in mortgage rates this year. This is due to the Federal Reserve slowing down on purchasing monthly bonds.

Applications for building permits rose 9.1% to a seasonally-adjusted rate of 1.87 million units. This is the strongest month for permits since the beginning of the year in January 2021. Applications for building permits can forecast future building activity. Housing starts in the Northeast and the Midwest rose the most at 20% and 36%.

The National Association of Home Builders and Wells Fargo monthly survey, which gauges builder sentiment, reported that it still remained stable. This is good news since builder sentiment was down slightly to 83 at the beginning of 2022.

“Demand exceeds supply, and builders are working as hard as they can to catch up, a process that was always going to be measured in years, not months, after the massive shift in demand toward single-family homes sparked by the pandemic,” said Stephen Stanley, chief economist for Amherst Pierpont.

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Several To Follow Tips For Single Homebuyers

 Just because you are single doesn't mean owning a home is not a reality. In fact, Freddie Mac reported that 28% of all households are sole-person. That is roughly 36.1 million and is still increasing.

“Our calculation suggests that there will be an additional 5 million sole-person households in the United States by the next decade. This means 42% of the household growth will be contributed by sole-person households," concludes Freddi Mac.

Here are several tips to follow if you are single and want to make the dream of homeownership come true.

1. Know Your Credit Score

When you purchase a home solo, you will only have your credit score to depend on. In order to qualify for a loan, you will need stable finances and good credit history. According to Investopedia, since lenders are only looking at one score it needs to be in tip-top shape. They recommend reviewing your credit report before starting the lending process.

Knowing where your credit score falls will help your decision on if and when you should take that leap of faith in purchasing. If your credit is not so good, focus on improving it before starting the home buying process.

2. Explore Down Payment Options

A down payment is another factor to consider. If you do not have enough saved up, there are down payment programs that can help you determine how much and how to save for a home. A loan officer can help you determine which loan program best suits your personal financial needs.

3. Think About Your Future Home and Your Needs

There are so many homes to choose from when it comes to styles and options. Spend time thinking about what type of home will fit your lifestyle. Here are some questions to think about when considering what type is best for you. Do you want a short commute to and from work? Do you want a big yard for a pet or space for outdoor entertaining? Do you want an extra bedroom for guests? Do you want a home office due to working from home? Do you want a condo with lower maintenance than a detached home?

The process seems daunting and can be a challenge but with a Realtor on your side, it becomes a much easier process. A professional sales agent can help you make the best choice for the right price.

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Several Questions To Ponder Before Buying a Home

Purchasing a home is one of life's biggest and most stressful events. With that said, it is also one of the most exciting events. When it comes to advise, everyone has it and while friends and family have your best interest in mind, to make the best decision, you need to ask yourself these three questions.

1. What's Going on with Home Prices?

Home prices are a big part of the housing market. Home prices directly affect how much it will cost you to buy a home and how much you stand to gain as a homeowner when prices appreciate. Waiting might not be in the best interest of the buyer.

The current market is seeing big home price surges and looks like they will continue. Keeping Current Matters reveals Home Price Forecasts for 2021. This is a good tool to use to predict just what it will cost you to buy a home. Today the average of all forecasts is 12.46%. This means a median-priced home that cost $350,000 in January of 2021 will cost an additional $43,610 by the end of the year. So in a nutshell the longer you wait to purchase a home the more it will cost you.

2. Are Today's Low Mortgage Rates Going To Last?

Due to record-low mortgage rates, today's market is booming. Interest rates also put a big dent in the market. The lower the rate the better the market, the higher the rate the slower the market. Just a slight increase can make a big impact on the overall cost of a home.

3. Why Is Homeownership Important to You?

The answer to this question is not the same for everyone. This is a personal decision and can only be answered by you. Financial benefits are important but emotional benefits are also. According to the 2021 National Homeownership Market Survey, there are nine reasons homeowners value homeownership.

These nine reasons directly affect how you feel about your home. Six of the nine reasons include stability, safety, a sense of accomplishment, a life milestone, a stake in the community, and personal pride. The National Housing & Financial Capability Survey from NeighborWorks America reports that Americans believe owning a home provides a sense of safety and security and an increase in financial stability.

Remember owning a home is a life-changing event and will have a big impact. This is a big decision and all options should be well thought out. Using a trusted Realtor can help you with the decision.

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Rates Stay Near Zero Due to Fragile Recovery

 The Fed has determined that rates will stay close to zero for several years to come due to the long recovery ahead from the pandemic. The key short-term rate was close to zero after the latest Federal Reserve policy meeting last Wednesday.

American consumers and businesses are struggling because of COVID-19 and will continue to struggle if Congress, the White House and the Fed do not do more to help stimulate the country’s economy.

The Federal Reserve has already slashed the interest rates and started many lending programs as well as other stimulus efforts to support the national economy. It will continue to buy Treasury bonds and mortgage-backed securities.

“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said in its statement.

The Fed believes that the course of the virus can determine the path the economy will take. There is hope from the American people with the COVID-19 vaccines becoming available. People will begin to go back to normal spending habits and activities.

The country’s gross domestic product is anticipated to a 4.2% rebound next year. The Federal Reserve also predicts the unemployment rate will go back down to 5% in the year 2021.

“With vaccines on the horizon, the Fed’s economic projections for the next few years all got an upgrade, but don’t gloss over the immediate challenges still confronting the economy,” said Bankrate chief financial analyst Greg McBride in a report after the Fed announcement.

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Mortgage Rates at a New All-Time Low

Mortgage rates have been at record lows for a while now, but with a new emergency rate cut from Federal Reserve rates are at historic lows. Now is the time to refinance or buy a home with the half percentage point cut by the Fed this week which puts the benchmark interest rate range at 1% to 1.25%.

“It’s definitely a good time for someone looking to buy a home to get financing,” said Mark Hamrick, senior economic analyst for Bankrate.

Hamrick believes that rates will still go lower. According to Freddi Mac, last weeks are at an average

3.45% for a 30-year fixed-rate mortgage and 2.95% for a 15-year fixed-rate mortgage.

“If you’re trying to look for the silver lining in the midst of the current climate,” said Hamrick, “the mortgage interest rate is close to the top of the list.”

The spring market is looking up with the help of the rate cuts. Those that are on the cusp of purchasing a new home might move a step quicker with the favorable rates. The entire real estate sector, not just individual buyers will benefit.

“Hesitant home buyers will be enticed to take advantage of low-interest rates,” said Lawrence Yun, chief economist at the National Association of Realtors, in a statement.

As mentioned earlier, rates will drop even more but should home-buyers wait for lower rates? Those that are in the market to refinance or secure a new mortgage need to weigh the benefits. According to Mike Hennessy, a certified financial planner with Harbor Crest Wealth Advisors in Fort Lauderdale, “if you can meaningfully save on your interest costs, build equity quicker, or extract equity at a reasonable cost to fund a renovation project, then take the bird in hand today.”

Run the numbers to see if it would be beneficial to refinance. Comparing your current rate with the rate that is being offered on a mortgage refinance will help answer your question.

“If the new rate is 75 basis points (0.75%) lower than the current rate, that it’s generally going to be worth it to refinance after the costs of the refi,” said Cynthia Meyer, a certified financial planner with Real Life Planning in New Jersey.

“If you’re planning to stay in your home, run the numbers to see if it makes sense to refi from a 30- to a 15-year mortgage as well,” she said. “You may be able to pay around the same amount every month and get your house paid off a lot sooner, with lower total interest costs.”

Even with the historic low rates, always shop around. Lenders offer competitive rates and some will include closing cost.

“You shouldn’t assume you’re going to get a good deal from a big bank just because you have your checking and saving account with them,” Danielle Seurkamp, a certified financial planner with Well Spent Wealth Planning in Cincinnati, Ohio said. “Often the smaller, community banks offer the best deals.”


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A 4.1% Rise From November 2018 In Construction Spending

The Census Bureau reported the November 2019 U.S. spending rate for U.S. construction is 4.1% above 2018’s rate for last November. According to the report construction spending amounted to a seasonally adjusted annual rate of $1.324 trillion.

Out of the total construction spending, spending on private construction was 1.6% above November

2018’s and is at a seasonally adjusted annual rate of $985.5 billion. Residential construction spending came in at a seasonally adjusted annual rate of $536.1 in November making it 2.7% up from a year ago.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.

Homebuilders are confident in the current housing market. The National Association of Home Builders and Wells Fargo suggest the sentiment levels are at 70 points making the rate the second-highest level in 2019. The points are 10 points higher than reported this time in 2018.

The positive housing market is expected to continue in 2020. This forecast is based upon the number of applications for new building permits which were at the highest level in November 2019 than they have been in a decade.

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Interest Rates Hold Steady For 2020

To aid in the country’s economic expansion, the Federal Reserve announced they are holding interest rates between 1.5% and 1.75% at the December meeting. There will be no more rate cuts but this is a positive, shifting the fears that there will be a recession.

With the nation’s economic expansion in its 11th year, the Fed will watch closely to the U.S.Federal Open Market Committee’s policy-setting body, thirteen agreed with keeping the rates steady going into the new year. Only four on the committee feels that rates should be increased.

economy. Of the seventeen participants on the

Federal Reserve Chairman Jerome Powell is also in agreement with keeping interest rates level. According to Powell, “the Fed can hold rates steady, because historically unemployment has been able to remain at very low levels for an extended period of time without having an effect on inflation.”

The Commerce Department announced in the meeting that consumer prices are up by 2.1% over 2019 but overall  inflation has remained below the Fed’s 2% target range. Powell comments that the monetary policy is in a “good place”. The Fed’s predict the US economy will grow at 2.2% and slow to 2% the next year.

Although the global economic growth is sluggish and there is uncertainty with global trade, the US economy is a “star performer” says Powell. This is thanks to the nation’s strong consumer spending and steady job growth.

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Millennials Dominate When It Comes to Homebuying

When it comes to moving more, spending more and buying more, Millennials outpace the older generations.

Millennials have been in the lead for a year now when it comes to purchasing homes. According to , they have acquired more mortgages than previous generations. In the third quarter report, Millennials reached a share of 46% of mortgage originations, and 44% in primary home loan originations. Gen X was only reported at 17% and the Baby Boomers fell to 18% share in mortgage originations. As for primary home loan orginitations, Gen X was at 39% and Baby Boomers hit 16%.

Realtor.com

Several factors are driving the Millennial consumers. According to Porch.com, Milliannials move once every two years. They are also buying more expensive homes and increasing the size of their loans. Realtor.com’s Director of Economic Research Javier Vivas explains that Millennials are getting older, with better jobs and deeper pockets which give the ability to expand their collective purchase power.

Millennials median home price went up this year 6% to $250,000, while Generation X went up 5% and Baby Boomers increased only 2%. Millennials median loan amount is up to $231,590 which is a 7.3% increase from this time last year. Growth in mortgage debt for Millennials is also greater than

the 2.6% by the Baby Boomers and 4% by Generation X.

It will be interesting to see how the Millennials purchasing trend continues in the housing market. So far, Millennials dominate the housing market and it is said this will continue for years to come.

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End of September Seeing Lowered Rates

The year is coming to an end and we have now seen the second cut in rates in 2019. The Federal Reserve announced that there will be a reduction in the key, short-term federal funds rate by 25 basis points to a top rate of 2%. The cut stems from a set of increases enacted in 2018.

Another big move on the Fed’s part was a reduction in the interest rate it pays on bank reserves. This move came in hopes to improve the ability of the Fed to target the federal funds rate in markets.

Concerns in the future economy has the Fed’s leadership in disagreement and their hold on the interest rate it pays on bank reserves in a weaker state. Fed regional presidents, members of the FOMC, had a disagreement that was the highest number since the year 2014. Three of the Fed regional presidents voted no for the change in in the rate. Two opposing it altogether and one urging a 50 basis point reduction.

Even with a few concerns the Fed’s still believe the labor market is strong and the economy is still rising at a “moderate” rate. This fares the same in the home building industry. Household spending is still going strong.

The action of reversing the high cycles of 2018 has been a positive in the decline in rates this year. This has been a net positive for what the future holds for the housing demand and home construction. This comes off the 10-year low for housing affordability that occurred last Fall.

The National Home Builders Association forecast there will be another cut before year end.

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Tips to Find the Best Loan for A First Time Homebuyer

There are many different kinds of mortgages to choose when purchasing a home. Not every mortgage is right for you. Here are some tips to follow when choosing which mortgage best fits your needs.
Do your homework. You will want to first research special mortgage programs. There are a great number of programs out there which can assist first-time home buyers. Programs can help with down payments, lower your interest rate or help with other expenses you might have such as a student loan. These programs can help you along the way by allowing you to build equity in your home. Professionals can help with finding the best program to suit your needs, check with your lender or Realtor.

Go with a local. Big programs such as federal programs are more well known but there are many programs for first time home buyers through their city or state. Detroit and Baltimore have used first-time home buyer programs to promote revitalization in their downtown areas. Many states have used

programs to urge first-time homebuyers to purchase their first home in rural areas. Always check your city or state government’s websites to see if there are any programs available to assist you. Another resource would be the community development or housing department.

Don’t overlook your mortgage rate. An obvious focal point is the price of your home. This is not the only thing you should focus on. Your mortgage rate is just as important. This number can tell you how much you will pay in interest every month. The lower the rate, the less you will pay. The easiest way to lower your rate is by a good credit score. Not every first-time buyer has a solid 20 % to put down with an excellent credit score. Many lenders allow you to purchase discount points with can lower your interest rate. Purchasing points is prepaying your interest rate which lowers your overall interest rate by approximately .25%. There are positives and negatives to buying down your rate with discount points. Your lender can help you with this decision.

There’s always an adjustable-rate mortgage (ARM). This can be a great way to start off your first home buying experience. How an ARM works is simple. You will start off with a set period with a fixed rate which will then adjust after a certain period of time. In other words, if you have a 5/1 ARM, you will have a fixed rate for 5 years and then after the 5 years, your interest rate will adjust every year. The rates will not always rise but can also fall. If the rates have gone down you could end up paying less but if it goes up, you will pay more. This is a great way for a first-time to use the first 5 years to improve credit, lower debt and raise your income in order to get a 15 or 30-year fixed-rate mortgage.

Just like an employer interviews for the right employee, the same goes for the right lender. You need to talk to several lenders about getting a mortgage. Shopping around can give you negotiating power and the lowest mortgage rate. You will want to research average rates for your area.

Have your paperwork in order. When applying for a mortgage, your lender will want your monetary life story. Get all your documents together before meeting with a lender. Many lenders will not lock in a rate and start your application until they have all your documents.

Keep your finances the same. Do not make a huge financial change when you are in the process of obtaining a mortgage. Do not apply for a new credit card, get a new car loan, or change jobs. If you do this, the mortgage lender will have to start your application process all over again. You will need to wait even longer to close on your new home.

Getting a loan for a home can be a daunting task but if you do your due diligence, the process will be a lot less painful in the end.

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Lowered Interest Rates Are Favorable For the Economy

Most Americans are affected by interest rates whether through a mortgage or credit cards. July 2019, marked the first time the Federal Reserve lowered interest rates since the crash in 2008. Pressured by President Trump and the possibility of an economic downturn, policymakers voted 8-2 for the small cut in federal rates.

“Should trade negotiations turn positive and economic data, especially inflation, firm in coming

months, July’s move could be a one-and-done easing,” said nationwide senior economist Ben Ayers in a note. “Still, given the slowing trajectory for the economy and precedence from previous mid-expansion easing cycles, a further rate cut (or two) by year-end may occur.”

Investors are eager to see the out turn of the rate cut and are hoping for more rate cuts in the near future. They are watching for any clues that there will be a future rate cut. Wall Street has already been pricing another rate cut for the year end.

The economy is strong as seen in job gains and retail and economic growth on the rise. If there is another cut, the Federal Reserve will need to justify their decision.

Policymakers vocalized that they will “continue to monitor” any data which would have an effect on the US economy and “act as appropriate” to retain “the country’s longest economic expansion in history.” The central bank believes these steps are necessary to keep America’s economy strong.


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Pending Home Sales on the Rise

Spring is not the only thing warming up this year, the National Association of Realtors (NAR) just reported that the pending home-sales rose 3.8% in March 2019 (April 2019 will be released May 30, 2019.)

“There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years,” said Lawrence Yun, NAR’s chief economist.

The Pending Home Sales Index reported its findings based on a forward-looking indicator of the contract signings which rose to 105.8 in March from 101.9 in February. Yun notes that the increase

The break down by region is contrasting. In the Northeast there has been a decline in pending sales of 1.7% in March to 90.5. In the Midwest however, pending home sales grew 2.3% to 95.3 in March. The two regions with the biggest jump in March were the South which rose to 127.2 (a 4.4% jump) and in the West to 95.1 an 8.7% rise.

So far spring is looking up for the housing market and only time will tell if the selling season will remain a hot market.
has been influenced by the influx of mortgage applications and favorable mortgage rates.


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Lower Than Expected Mortgage Rates

Homebuyers have better than expected lower rates this Spring. For the first of the year many potential homebuyers called it quits with rising house prices, low inventory and mortgage rates above 5%.

“It was somewhat of a surprise to see the degree and intensity of the pullback,” said Robert Dietz, National Association of Home Builders. “Five percent at those pricing levels was enough to take the wind out of sails of the housing market.”

chief economist of the

The current 4.5% rate is predicted to not rise much for the remainder of the year which means several positive outcomes for the homebuying market.


To begin, there will be more buying power. Lower mortgage rates along with rising wages gives homebuyers more leverage in the current residential real estate market. Current 4.5% rates make a $200,000 30 year-fixed mortgage $71 cheaper than at 5% which means total interest savings over the life on the loan would total $21,699.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.

Sellers will want to take the gains and run. According to evidence move-up buyers are purchasing more. The average mortgage balance for purchases has reached record levels. This is also good news for homebuyers in the lower priced home market. The move-up buyers will open up inventory in lower priced homes.

“It’s a musical chairs game,said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “You need someone in the higher end to move, and it works its way down the ladder, eventually opening up an entry-level home.”

Potential homebuyers cannot control the Fed or rising home prices but there are several factors they can control when it comes to determining the interest rate they will get on a mortgage. Homebuyers can reduce their rate by the amount of money they put down. The larger a down payment the lower the rate giving the homebuyer more risk than the lender. The higher your credit rating the better the rates. For example a person with a high credit score (760 – 850) would get a 4% rate while a person with a credit score of 660 to 679 would receive a 4.5% rate on a $216,000 price with a 30-year fixed-rate mortgage.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.


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An Economic Balancing Act

After the fall of the economy in 2007, policymakers want to keep a healthy balance in today’s economy. The Federal Reserve does not want to repeat what some economist consider to be the worst financial crisis since the Great Depression of the 1930s.

According to a statement released by the Federal Reserve, the labor market is continuing to strengthen and the “economic activity has been rising at a strong rate.”

This week Fed policymakers agreed to keep the rates the same for November 2018.  The reason for

this decision was based on the continued growth of the American economy.  The Federal Reserve wants to make sure the growth stays at a healthy rate, neither too fast nor too slow. The benchmark rate, the determining factor for the cost of borrowing on credit cards, mortgages and other loans, will stay between 2% to 2.25%

Markets have gone up this month and the Fed will more than likely raise rates at the final 2018 meeting. This also suggest the rates will raise several more times in 2019. Policymakers explain that this is a standard reaction to the strong economy.  This will give central bankers some cushion if a downturn were to occur.

Not all of the aspects of the economy are at full force. Business investments have risen very little and the investors are curious to see if the Fed officials will anticipate a lower growth in next year’s forecast.

The job market is strong. In October, employers added 250,000 jobs.  Wages have also gone up 3.1% year-over-year. While this is good news for Americans, officials fear that low unemployment and higher wages might speed up inflation which could force the central bank to raise rates aggressively.

Residential Real Estate Investing Tips & Tricks

They say that investing in real estate is one of the most secure investments you can make. However, many people who have heard this adage and are used to working within the investment system of stocks and bonds can be unsure as to how exactly to go about investing in real estate.  Below are some tips on how, when, and where to begin the real estate investing process.

The first thing you need to do is to make sure that the timing of your investment is right.  For years, since the Recession, and slightly before the Recession, interest rates have been at record low and historically low rates. In fact, interest rates are still at low levels compared to the lifelong statistics of interest rates, so now may be a good time to invest in real estate.

The next thing, as an investor, you need to consider is the health of the market in which you are investing.  The way to tell about the health of the market is the stability of home prices, economic opportunity, and employment rates.  Many investors will start with what they know, in an area that they know.  This sometimes means checking out the opportunities around where they live.  Once an investor has taken the plunge on real estate investment, the same formula can be applied to other markets while doing research.

Simply said, areas in which there is strong economic growth, new commercial construction with chain box stores of new chain restaurants being built in an area, that is where residential real estate may soon move in.  The economic studies done by these big companies indicate the opportunity for growth of people and jobs, which will bring them the business and eventually the home buyers.
Another way to tell if growth is happening is the employment rate of an area. The more jobs offered and the more businesses cropping up, the higher the employment rate. Jobs bring people who need to rent or buy homes, which indicates a great place for real estate investment.

Once you have considered the economic and employment factors in residential real estate, the next thing to do is to find the actual real estate itself.  If you are skilled at construction and renovations, the more profit you can make out of a home that needs a little TLC because the cost of buying and “flipping” the home in a sale will be lower for you if you don’t have to higher a construction manager to do the work.  If you don’t have this skillset, you might want to consider a home that might be in foreclosure or a bank-owned home which doesn’t require a lot to get it sale ready.  Looking for deals where you can purchase a house for much lower than appraised value is the name of the game here.
So, wherever you live and whatever your skills, as long as you have good credit, money to invest, and even potential investment partners, there are opportunities to invest in residential real estate is the market conditions are right.

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What to Know About Researching Your Loan

An article written on a popular website begins with the assumption that you, as the home buyer, are aware that you have the choice to shop your lender.  So let’s start there with the discussion of what you should be learning from the company which is going to be lending you money for what could be the most important investment of your life.

Researching Your Loan

As a home buyer, you have the right to shop your mortgage.  You can and should contact as many lenders, banks, and / or mortgage companies as possible and ask them the costs on application fees, appraisal fees, and the breakdown of your closing costs.  Specifically with your closing costs, you will want to check to see if they are a mortgage broker or if they are the company that has the underwriter who will approve your loan.  A mortgage broker can incur additional fees on top of your loan origination fees. When you contact your lender, you are going to be asking them what their loan origination fees are.  This is a way to “weed out” any unknown loan companies which may have higher fees.

Know Your Title Company

You, as the home buyer, do have some say in the title company that is used by the lender.  The lender works with specific title companies, therefore sometimes gets a better rate that you would as an individual.  However, if you are interested in cross-checking their rates, you can get quotes from title companies as well to make sure that you are not overpaying for those services.

Another big chunk of your closing costs is the cost of your escrow account, if you are doing one.  There is a deposit into your escrow account that is for your taxes and insurance.  If you haven’t yet shopped for the most competitive rate for your homeowner’s insurance, you should definitely do that before you choose your lender or title company.  Your insurance rate accounts for the amount of money that is added to your loan each month in order to pay your annual premium.  The better the rate, the lower the deposit and the lower monthly payment.

On the flip side, you should find out if there are any credits available to you depending on the type of loan that you are getting.  Some lenders are authorized to credit up to a certain amount of money depending on the loan-to-value ratio or the type of loan they are doing. If you are pulling money out of the loan for renovations or to create a home equity line of credit, make sure you get the most amount of money you can at the best interest rate.

Hidden Fees / Down Payment

Once you have done all of your research mentioned above, don’t forget to check with your lender on the following items:

You should find out what interest rates are offered and how much points would be if you chose to “buy down” your interest rate.  Many people don’t know about points, and lenders can sometimes add them into the cost of the loan in order to advertise a better rate to the home buyer.  Make sure that you are getting the base cost of the loan and then the cost of points.  Your lender can break down for you how the cost of points can save you money in the long run by showing how you “pay off” your points and still ssave money of your monthly payments.

Secondly, when you are finding out about the type of loan available to you, find out the specific information about the down payment.  Lending restrictions have loosened up in the last couple of years, so a 20% down payment is not necessarily required anymore to get a loan.

If you are able to obtain a fabulous rate, make SURE to find out exactly when you are required to close if you lock-in your rate in order to be able to keep that excellent rate for closing.  Locking in your rate means, though, that you can’t get a better rate later on, so if you feel like your closing can happen fast, and you have the best rate, go ahead and lock it down to get the most savings.

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Record Low Interest Rates to Increase With Fed Decision

Real estate is selling fast and prices are still competitive.  Builders and homeowners alike have taken advantage of the great rates seen after the 2008 economic crunch. These record low interest rates might soon be a thing of the past.  The Federal Reserve has decided it’s now time to rethink the rates because the economy is stronger, and more people are in a position to borrow money.  The Fed already bumped the key interest rate up by 0.25% in December 2015.

Fortunately the Fed plans to raise the rates at a slow, steady pace.  In fact, this is the first rate hike in almost ten years. Even with the slow increase, everyone will be affected. Anyone who has a credit card, savings account, invest in a 401(k), invest in the markets, or wants to make a big purchase with a loan needs to know how the rate increases will affect them.

Just because there has been a raise in the rate does not mean you should rush out and make a big purchase tomorrow.  Owning a new home is a big deal and you should research to find the right one that suits you.  Even if the rates are higher in a year, they still will be lower than historical averages.
“Rates are pretty low and they’re not going to change much in the short term,” says Dean Croushore, a University of Richmond professor and former Fed economist. Do start your research now and pay attention to the Fed’s actions.  If they do start to increase rates out of your comfort zone, it might be time to make that leap into home ownership.

Years ago many remember the advantages of putting their hard-earned cash into a savings account.  It would yield them a little bit of extra cash on top of what they had saved – imagine that!  In the past decade there has been almost zero interest earned.  With the Fed’s rate change, we will also see a higher interest income on your deposits. So a benefit to the rate increase means an increase on the money you put away in your savings account.

Not so smooth sailing for the stock markets. This Fed hike could cause major ups and downs in the stock and bond markets.  This trigger coupled with failing oil prices, China’s continued economic slowdown and decisions made by central banks around the world should be of great concern. According to MSCI Emerging Market Index, the stock market performance was down approximately 20% at the end of 2015.

With the new year comes good news for the U.S. dollar. The increase in the interest rate is predicted to make the dollar stronger. While the dollar is gaining many other global currencies are lowering.  This will have a negative impact on the global economy. U.S. companies will lose money on products sold in other countries.  Investors are already putting all of their money in U.S. investments rather than putting some money into global investments. The U.S. manufacturing sector has already shrunk due to the weak global economy.

All in all it seems to be more good news than bad for those wanting to invest or make big purchases such as a new home. “We’ve come a long way from the depths of the recession, but we’re still not quite back to where we’d like to be,” says Croushore, the former Fed economist.

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Conventional Mortgages for New Homes Increase for the 5th Month in a Row

When the bottom dropped out of the real estate market, the biggest indicator that the economy was in trouble was that home owners and new home buyers found themselves paying more for their home than what it was worth.  One of the biggest indicators that the housing economy has been in recovery has been the increase in house pricing regionally nationwide.  These home prices went up steadily during the end of 2013 and 2014, so much so, that investors were concerned that they would cause a housing bubble and throw the entire economy back into a Recession.  Once again, though, supply and demand allowed for free market commerce to dictate the real estate market, and prices started to stabilize in the 1st quarter of 2015.

For the 5th month in a row, conventional mortgages for new homes have increased to an all-time high of $352,500 in June, and this is also a record for the average loan amount which has not yet so far been above $350,000 after the Recession.  In addition to the average amount of a loan going up, home prices also increased in June to $462,100 from $447,600 which is a 3% increase.  Also a record-breaking statistic, this is the first time that new home prices have been above $460,000 since the Recession as well.

Even though the average initial fees and charges on loans decreased by 3 basis points to 1.08%, the effetive interest rate on conventional mortgages went up to 3.98%.  Home buyers and people interested in refinancing their homes have been “spoiled” with the phenomenally low interest rates over the past 5 years, but an average overall interest rate in the 4% range is still a historically low rate and will probably not be seen again for quite some time.  The Fed was set to increase interest rates in September, but this is not a guaranteed move and has been in limbo for over a year.  Interest rates are still low, credit is easing allowing higher borrowing amounts for conventional mortgages, and Ron Lee Homes is building new, custom homes in St. Tammany Parish for interested home buyers.  Contact Us today to help you start building the home of your dreams.  Call 985-626-7619 or e-mail Info@RonLeeHomes.com.

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