Will More Rate Cuts Follow?

Thursday, August 1st, 2019

The Federal Reserve cut interest rates 0.25% yesterday for the first time since 2008. The average 30-year, fixed-rate mortgage has fallen to 3.75% as of last week from 4.94% last November. For home buyers or owners looking to refinance their mortgages, the lower rates could easily save thousands of dollars over the life of a loan or enable them to purchase a bigger house than they could have afforded in December. The decline in mortgage rates since then would shave $175 off the monthly payment on a $250,000, 30-year loan. As for further rate cuts ahead, Fed Chairman Powell commented […]

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Applying for a Condo Mortgage? Don’t Forget the HOA Charges

Tuesday, July 2nd, 2019

Monthly charges, whether condominium or homeowners association (HOA) fees, can make a big impact on a buyer’s ability to qualify for a loan. All HOA charges have the same impact on the debt-to-income ratio. The monthly housing obligation includes principal, interest, taxes, insurance and HOA fees. Condo fees typically cover amenity charges. Real estate taxes are charged separately.  It all gets added up and calculated as debt in the debt-to-income ratio, which helps determine how much a customer can borrow. Lenders have two considerations when a customer wants to borrow for a property with HOA fees. The first is whether […]

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Mortgage Rates Fall Below 4%

Tuesday, June 4th, 2019

Mortgage rates dropped below 4% for the first time since early last year, adding to hopes for a revival in the housing market. The average rate last week on a 30-year fixed rate mortgage was at 3.99%, according to Freddie Mac, and some lenders have been offering rates below that. That marks a fall of nearly a full percentage point from the highs of November 2018. Lower rates stand to make mortgages more affordable for buyers, and the sharp fall so far in 2019 has lifted optimism for a market that has cooled after years of torrid home price growth […]

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New Second Home Rental Rules

Wednesday, May 1st, 2019

Second-home mortgage closings just got less stressful for borrowers. On April 3, Fannie Mae updated a document called the “Second-Home Rider.” The previous version of the rider, in force since 2001, was interpreted by many lenders and homeowners as completely prohibiting second-home owners in mortgages backed by Fannie Mae or Freddie Mac from renting out the property. The rider’s new language now explicitly allows homeowners to rent a second home after one year of ownership, and it allows short-term renting in the first year under certain conditions. According to the Wall Street Journal, a Fannie Mae spokesman said the new […]

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No Fooling, 4% 30 Year Mortgages Are Back!

Tuesday, April 2nd, 2019

Mortgage rates reached 4% last week, a rate low enough that economists and lenders believe it will help jump-start the housing market again according to The Wall Street Journal (WSJ). Just a few months ago, average rates were on the verge of hitting 5%, drying up refinancing activity and putting a damper on home price growth. While the housing market remains cooler than it had been at its peak, lower mortgage rates are again raising hopes for a rebound as the spring selling season gets under way. Mortgage rates have been declining along with the yield on the benchmark 10-year […]

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Recast Your Mortgage to Reduce Payments

Friday, March 1st, 2019

A ‘recast’ refers to a borrower who makes an additional principal payment and then asks the lender to re-amortize the loan at the existing interest rate. The result is that while the loan term remains the same, monthly payments are reduced. Not all lenders offer mortgage recasts on their loans. Recasts aren’t well known for a few reasons. Record-low interest rates in recent years made refinancing the go-to approach for borrowers looking to save on monthly payments. Also, lenders make little or no money when recasting—the lenders that allow it usually charge a $250 fee at most. As interest rates […]

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Time to Revisit Reverse Mortgages

Friday, February 1st, 2019

It’s time to let reverse mortgages out of the doghouse. This loan option got a lot of negative publicity in the past — but many of those issues have been addressed. Today, for the right borrower — a senior homeowner who wants to age in place, for example — reverse mortgages can be useful. We live in a world where people don’t have pensions anymore, and the cost of home health care is really expensive. The reality is that reverse mortgages are something that can work for a small percentage of people who fully understand what they’re getting into — […]

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Cash Out Refis Reach A Record

Wednesday, January 2nd, 2019

Rising mortgage rates are crushing much of the refinancing market. But Americans are still using refis to pull cash out of their homes. More than 80% of borrowers who refinanced in the third quarter chose the “cash out” option, withdrawing $14.6 billion in equity out of their homes, according to government-sponsored mortgage corporation Freddie Mac . That is the highest share of cash-out refis since 2007. The trend attests to the current state of the U.S. economy, which is more than nine years into an expansion that has lifted home values sharply but raised worker pay at a much slower […]

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Navigating the ‘1031’ Tax Break

Monday, December 3rd, 2018

The tax overhaul enacted last year made a lot of changes, but one provision cherished by real-estate investors survived: so-called 1031 exchanges. It’s the name for a tax break that lets you defer capital-gains taxes on the sale of a property used for business or investment if you reinvest the proceeds in another business or investment property. Individual investors—even those who own a single rental-income property—can take advantage of it. The “1031” name refers to section 1031 of the U.S. tax code. One typical way small investors use the provision is by selling one rental property and buying another. An […]

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Should Retirees Pay Off Their Mortgages?

Thursday, November 1st, 2018

Many homeowners dream of hosting a “mortgage-burning” party as they approach retirement. But paying off the mortgage isn’t always the best strategy. Sometimes, it’s better to keep that money in the bank for other purposes, such as building retirement savings or paying down higher-interest debt. In other cases, paying off a mortgage makes sense, especially when you have ample retirement savings and plan to stay in the home for a while. The analysis depends on the terms of your mortgage, the amount of your savings, and your expected retirement income. An increasing number of Americans are facing decisions about what […]

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