Renting Archives - Page 24 of 571

Apache is functioning normally

June 12, 2024 by Brett Tams

Mortgage rates aren’t budging, and neither is the Federal Reserve… yet.

The Fed’s governing body, the Federal Open Market Committee, is meeting today and tomorrow (June 11-12) to decide whether to make any adjustments to its benchmark interest rate. But experts say the FOMC isn’t likely to break from its holding pattern.

Until inflation cools enough for the Fed to start cutting rates, homebuyers shouldn’t expect mortgage affordability to improve much. However, if inflation continues to decelerate and the Fed is able to make even one rate cut down the road, we may see some modest improvements in mortgage rates by the end of the year, according to Odeta Kushi, deputy chief economist at First American Financial Corporation.

That’s a big “if.”

On Wednesday, we’ll receive an updated Summary of Economic Projections, which could offer clues as to the direction of mortgage rates over the next several months.

“In the SEP, we’ll learn if Fed members still expect to be cutting rates this year or not, and get a sense of where they believe economic growth, unemployment and inflation will be headed for the remainder of 2024 and beyond,” said Keith Gumbinger, vice president of mortgage site HSH.com.

High mortgage rates have made buying a house prohibitively expensive. I spoke with several housing market experts about their expectations for Fed rate cuts and when we might see lower mortgage rates in 2024.

Why is the Fed holding off on rate cuts?

Since progress on inflation has been slow and the labor market remains strong, the Fed has reason to hold off on lowering rates for another month, if not more.

It’s a delicate balancing act. The Fed wants to see unemployment levels increase just enough to bring inflation down, but not so much that we fall into a recession. The Fed also wants to avoid cutting interest rates too soon, only to have inflation rear its head again. By holding interest rates steady, the Fed can continue to assess the overall economy.

“The Fed won’t cut rates until they have good reason to do so,” said Alex Thomas, senior research analyst at John Burns Research and Consulting.

The Fed doesn’t directly set mortgage rates. However, its policy changes, as well as investors’ expectations for future policy changes, influence whether rates on home loans move up or down.

What do inflation and labor market data have to do with interest rates?

The FOMC will be closely monitoring the Consumer Price Index for May, released Wednesday before its meeting concludes. The central bank wants to see inflation move closer to its target annual rate of 2%. The Personal Consumer Expenditures Price Index (the Fed’s preferred measure of inflation) showed prices growing at an annual rate of 2.7% in April.

The other big metric the Fed cares about is employment. Last week’s labor report showed the unemployment rate reaching 4% for the first time since January 2022, with the US adding 272,000 jobs in May, well above investors’ expectations. Another large increase in jobs indicates a still-growing economy, giving the Fed a reason to wait longer before cutting rates.

Economic data, like last week’s labor report and this week’s CPI numbers, may change expectations about the future of rate cuts this year, causing mortgage rates to dip down even before the rate cuts actually happen.

“If the labor data gets weaker, it doesn’t matter what the Fed does; mortgage rates will go lower,” said Logan Mohtashami, lead analyst at HousingWire.

When will the Fed start lowering interest rates?

The central bank may make its first cut in July, but that will only happen “if the labor market report is weak and inflation comes down significantly,” said Lisa Sturtevant, chief economist at Bright MLS.

A more likely scenario is for the Fed to cut rates in the fall or early winter.

“If the cuts happen, they will happen toward the end of the year,” said Mohtashami. He believes we’ll see only one or two cuts, as opposed to the three cuts previously penciled into the Fed’s outlook.

Another factor to consider is the general election in November.

“Typically, the Fed refrains from making monetary policy decisions too close to a presidential election, to avoid the prescription of influencing the outcome,” said Sturtevant. “If the Fed does not cut rates in July, it is possible there will not be any rate cuts until 2025.”

Where are mortgage rates going this year?

In December of last year, after the Fed indicated it was prepared to lower interest rates in 2024, mortgage rates moved down into the mid-6% range. Some early-year forecasts optimistically called for rates to fall below 6% by the end of 2024.

But then mortgage rates started to climb back up. Since mid-February, the average rate for a 30-year fixed mortgage has held above 7%.

Experts still anticipate that mortgage rates will moderate in the coming months, landing between 6% and 6.5% by the end of the year. But if new economic data shows higher inflation, investors may adjust their forecast for rate cuts, causing Treasury yields and mortgage rates to surge, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans. His baseline forecast calls for rates to fluctuate between 6% and 7% throughout the rest of 2024.

It’s also important to note that the Fed won’t cut rates all at once. Instead, it will be a gradual process over the next few years, meaning it may take a while before we see mortgage rates drop below 6%.

The bottom line? “Rates are going to remain higher than we had been predicting last year,” said Sturtevant.

When will affordability improve for homebuyers?

Today’s unaffordable housing market isn’t due to just high mortgage rates. Homebuyers are also being pinched by elevated home prices, limited housing supply and the pain of high inflation. Unfortunately, there’s no quick fix to all of these problems. But baby steps are better than no steps at all.

“Frustrating for some as it may be, it’s better that conditions continue to align slowly,” said Gumbinger.

For example, a rapid decline in mortgage rates would only spur more homebuying demand. Without the supply to support that demand, lofty home prices could press even higher, according to Gumbinger.

As mortgage rates gradually fall in the coming years, we should see more homeowners come off the sidelines and sell their houses. But most sellers are also buyers, so that won’t repair today’s housing shortage entirely.

Divounguy said the key to long-term affordability lies in boosting residential construction via land-use and zoning reforms. We’ve already witnessed how new construction is proving to be a bright spot in today’s difficult housing market: To lower the barrier-to-entry for homebuyers, many builders are offering sales incentives like discounted prices, closing-cost assistance and mortgage-rate buydowns.

If you don’t live in an area where there’s a lot of new construction (or you’d prefer to purchase an existing home), there are things you can do to make buying a house more accessible:

Build your credit score: Mortgage lenders reward borrowers with excellent credit scores with lower mortgage rates, which can affect your monthly payments. Paying your credit card bill on time and in full, and lowering your credit utilization ratio can help improve your score over time.
Save for a bigger down payment: With a larger down payment, you can take out a smaller mortgage, which will save you interest over the life of your loan. Depending on your timeline for buying a home, consider stowing your money in a high-yield savings account or certificate of deposit to take advantage of higher returns.
Explore first-time homebuyer programs: First-time homebuyer programs can offer assistance with your down payment, closing costs and more. Also consider government-backed loans, such as FHA loans, USDA loans and VA loans, which often have lower credit score and down payment requirements than most conventional loans.

Source: cnet.com

Apache is functioning normally

June 11, 2024 by Brett Tams

Pacific Investment Management Co. expects more regional bank failures in the U.S. because of a “very high” concentration of troubled commercial real estate loans on their books.

“The real wave of distress is just starting” for lenders to everything from malls to offices, John Murray, Pimco’s head of global private commercial real estate team, said in an interview. His division sits within Pimco’s $173 billion alternatives business.

Uncertainty over when the Federal Reserve may cut interest rates has exacerbated challenges faced by the commercial real estate sector, where high borrowing costs have hammered valuations and triggered defaults, leaving lenders stuck with assets that are tough to sell. Contrary to some market expectations, larger banks have been disposing of some of their higher quality assets first to avoid deeper losses, according to Murray.

“As stressed loans grow due to maturities, however, we expect that banks will start selling these more challenged loans to reduce their troubled loan exposures,” he said, adding his team has been snapping up CRE loans offloaded by some large US banks for the past 18 months.

The turmoil has been particularly felt among regional banks, which boosted their CRE exposure that in many cases is now worth only a fraction of their value at their peak. Smaller banks have continued to worry investors ever since the collapse of a few last year. Earlier this year, US Bancorp, the largest regional bank by assets, increased its provisions for credit losses in the first quarter to $553 million.

Regional banks were also the only lenders that didn’t demand extra down payments from commercial-property borrowers in recent years, highlighting their vulnerability to falling values, according to a report released by MSCI Real Assets in March. Deposit-taking institutions face an estimated $441 billion wall of maturing property debt this year.

For larger banks, the property exposures aren’t expected to cause systemic failures as their CRE lending was curbed after the 2008 crisis, Murray said. But borrowers’ failure to repay means they’re lending even less compared with 2021 and 2022, he added.

Meanwhile, many mortgage real estate investment trusts have become more sidelined as they deal with problems of their own. That’s limited their ability to underwrite new investments. Starwood Real Estate Income Trust tightened its shareholders’ ability to pull money last month in an effort to preserve liquidity and stave off asset sales, while Blackstone Inc.’s $59 billion property trust saw an uptick in withdrawal requests.

Lending volumes for major public mortgage REITs have plunged 70% from 2021 levels, according to Murray.

While banks tend to hog most of the headlines, another area that needs close attention is the more than $200 billion of loans made by debt funds in the US that are set to mature through 2025, Murray said. Many of these loans were originated during the peak pricing era of 2021, often with a three-year term and a three-year rate cap.

“The first catalyst for stress at the asset level is occurring right now, as assets will struggle to meet extension tests in this higher rate environment,” Murray said.

The Newport Beach, California-based asset manager is also keeping an eye on how German banks deal with their commercial real estate exposure.

“The combination of rising rates plus recessionary pressures creates real challenges for commercial real estate, from both a capital markets and fundamentals perspective,” Murray said.

Source: nationalmortgagenews.com

Apache is functioning normally

June 11, 2024 by Brett Tams

There’s been a noticeable uptick in mortgage rate volatility over the past two weeks with a quick spike at the end of May, a nice drop in early June and then another spike last Friday following the jobs report. Of course everything’s relative, so in objective terms, it was roughly a 0.30% round trip for conventional 30yr firxed rates.

Today’s move is microscopic by comparison with the average lender only 0.02% higher from Friday. That’s not too surprising considering the lack of actionable data on the calendar for bond traders (bond market movement drives day to day mortgage rate movement).

All that is about to change. The event calendar ramps up quickly from here and Wednesday will be the most important day of the month due to the release of pivotal inflation data and an updated rate announcement and outlook from the Fed. While there’s no chance of a rate cut or hike at this meeting, we should get more clarity on the Fed’s interpretation of the very latest trends in inflation.

Source: mortgagenewsdaily.com

Apache is functioning normally

June 11, 2024 by Brett Tams

Today’s mortgage rates

Average mortgage rates climbed appreciably last Friday following a surprisingly (if not shockingly) strong jobs report. That day’s rise all but wiped out the falls earlier in the week, sending those rates to their highest level so far this month.

First thing, it was looking as if mortgage rates today might barely budge. But that could change later in the day.

Current mortgage and refinance rates

Find your lowest rate. Start here

Program	Mortgage Rate	APR*	Change
Conventional 15-year fixed	6.565%	6.645%	+0.03

Conventional 30-year fixed	7.05%	7.1%	+0.02

30-year fixed FHA	7.009%	7.052%	+0.26

Conventional 10-year fixed	6.632%	6.713%	+0.02

Conventional 20-year fixed	6.88%	6.935%	+0.06

5/1 ARM Conventional	6.734%	7.896%	-0.03

30-year fixed VA	7.083%	7.126%	+0.24

Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.

Should you lock your mortgage rate today?

I’m truly sorry that my predictions last week of higher mortgage rates imminently turned out to be correct. But my feeling is that markets aren’t ready to deliver a consistent downward trend for those rates and probably won’t be ready to do so until much later in the year. And possibly not even then.

In the meantime, of course, there will be periods of falls as well as rises. And, over time, we can reasonably hope they’ll roughly balance each other out.

I don’t see any point in betting (by floating your rate) when the chances of wining and losing are approximately equal.

So, my personal rate lock recommendations remain:

LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60 days

Of course, don’t lock your rate when mortgage rates look likely to fall. My recommendations are based on longer trends. And, within those, there will be rate-friendly days and longer periods that you can take advantage of.

With so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:

The yield on 10-year Treasury notes edged up to 4.46% from 4.43%. (Bad for mortgage rates) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were falling this morning. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices rose to $75.97 from $75.76 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Gold prices fell to $2,321 from $2,338 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — Edged down to 42 from 44 out of 100. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to hardly move. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Find your lowest rate. Start here

What’s driving mortgage rates today?

Super Wednesday looms

Two of the three events that are most likely to move mortgage rates are due this Wednesday. They’re:

The monthly consumer price index — A crucial inflation report
A six-weekly update from the Federal Reserve on how its plans for future cuts to general interest are evolving. This time, it could be particularly influential because it includes a quarterly Summary of Economic Projections, complete with a highly valued dot plot, as well as a news conference

I’ll brief you tomorrow on what to expect from those. Or, if you’re in a hurry, check out the weekend edition (link below). But they’d need to be exceptionally friendly toward mortgage rates to fully counteract the effects of last Friday’s jobs report.

Today and tomorrow

No economic reports are due today. So any significant change in mortgage rates is likely to be a result of either continuing momentum from last Friday or some unscheduled news story that affects the economy.

Tomorrow may be similarly uneventful. The only report due is an optimism index from the National Federation of Independent Business, and that rarely affects mortgage rates.

Later in the week

We’re due the producer price index (PPI) on Thursday and the import price index (IPI) on Friday. These forward-looking inflation indicators can sometimes affect mortgage rates but usually only temporarily and in a limited way.

And the same goes for two other reports:

Weekly initial jobless claims on Thursday
The consumer sentiment index on Friday

Indeed, I suspect all reports this week will be eclipsed by Wednesday’s events.

If you’re hungry for more information about what’s moving mortgage rates, do click through to the latest weekend edition of this daily report. It provides a deeper analysis together with a preview of what to expect in the coming week. It’s published each Saturday morning soon after 10 a.m. Eastern.

Recent trends

According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.

Freddie’s Jun. 6 report put that same weekly average at 6.99%, down from the previous week’s 7.03%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures. Still, they’re a good way to track trends.

Expert forecasts for mortgage rates

Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the last three quarters of 2024 and the first quarter of 2025 (Q2/24, Q3/24 Q4/24 and Q1/25).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on May 22 and the MBA’s on May 17.

Forecaster	Q2/24	Q3/24	Q4/24	Q1/25
Fannie Mae	7.1%	7.1%	7.0%	6.9%
MBA	6.9%	6.7%	6.5%	6.4%

Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Important notes on today’s mortgage rates

Here are some things you need to know:

Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Find your lowest mortgage rate today

You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:

“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”

In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?

Verify your new rate

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

How your mortgage interest rate is determined

Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.

Factors that determine your mortgage interest rate include:

Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate

Remember, every mortgage lender weighs these factors a little differently.

To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.

Verify your new rate. Start here

Are refinance rates the same as mortgage rates?

Rates for a home purchase and mortgage refinance are often similar.

However, some lenders will charge more for a refinance under certain circumstances.

Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.

This creates a tidal wave of new work for mortgage lenders.

Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.

In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.

Also, cashing out equity can result in a higher rate when refinancing.

Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.

Check your refinance rates today. Start here

How to get the lowest mortgage or refinance rate

Since rates can vary, always shop around when buying a house or refinancing a mortgage.

Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.

Here are a few tips to keep in mind:

1. Get multiple quotes

Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.

Some simply go with the bank they use for checking and savings since that can seem easiest.

However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.

So get multiple quotes from at least three different lenders to find the right one for you.

2. Compare Loan Estimates

When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.

You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:

Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs

Remember, the lowest interest rate isn’t always the best deal.

Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.

Also, pay close attention to your closing costs.

Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.

3. Negotiate your mortgage rate

You can also negotiate your mortgage rate to get a better deal.

Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.

You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.

And if they’re not, keep shopping — there’s a good chance someone will.

Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?

Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).

Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.

Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.

With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.

Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.

In most other cases, a fixed-rate mortgage is typically the safer and better choice.

Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.

How your credit score affects your mortgage rate

You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.

This is because credit history determines risk level.

Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.

So, for the best rate, aim for a credit score of 720 or higher.

Mortgage programs that don’t require a high score include:

Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down
payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score

Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.

If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.

You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.

How big of a down payment do I need?

Nowadays, mortgage programs don’t require the conventional 20 percent down.

Indeed, first-time home buyers put only 6 percent down on average.

Down payment minimums vary depending on the loan program. For example:

Conventional home loans require a down payment between 3%
and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down

Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.

If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.

This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.

But a big down payment is not required.

For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.

Verify your new rate. Start here

Choosing the right type of home loan

No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.

The five main types of mortgages include:

Fixed-rate mortgage (FRM)

Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.

The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.

Adjustable-rate mortgage (ARM)

Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.

Your rate and payment can rise or fall annually depending on how the broader interest rate trends.

ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).

For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.

Jumbo mortgage

A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.

In 2023, the conforming loan limit is $726,200 in most areas.

Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.

FHA mortgage

A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.

VA mortgage

A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.

VA loans allow no down payment and have exceptionally low mortgage rates.

USDA mortgage

USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.

Bank statement loan

Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.

Portfolio/Non-QM loan

These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.

Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.

Choosing the right mortgage lender

The lender or loan program that’s right for one person might not be right for another.

Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.

Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.

Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.

Time to make a move? Let us find the right mortgage for you

Current mortgage rates methodology

We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.

Source: themortgagereports.com

Apache is functioning normally

June 11, 2024 by Brett Tams

The average annual cost for a homeowner to perform maintenance on their single-family property has grown 26% over the past four years, faster than the rate of inflation, a Bankrate study found.

Nationwide, the current average cost for maintaining a typical single-family home is $18,118 per year, the Bankrate Hidden Costs of Homeownership Study reported. Using an average property value of $436,291, it means the buyer is paying $1,510 per month in addition to their mortgage payment in homeownership costs.

Back in 2020, before the pandemic-fueled run-up in home prices, it cost $14,428 annually for maintaining or repairing a typical single-family home, equivalent to $1,202 per month.

The cumulative rate of inflation, as measured by the Consumer Price Index, from 2020 until now is 21.7%.

The report’s calculation assumes that the homeowner pays 2% per year of their home’s average value on these costs.

“While homeownership is worth the financial sacrifice, homeowners also need to be aware of the ongoing expenses that go along with owning property,” said Jeff Ostrowski, Bankrate analyst, in a press release. “After you achieve homeownership, you need to fatten up your emergency savings account for all those surprise repairs.”

Incentivizing homeowners to create emergency savings accounts to deal with unexpected events including job loss helped to reduce mortgage default rates, a 2018 JPMorgan Chase study claimed.

While describing these as the hidden costs of homeownership, some of the items used in the calculation are typical beyond maintenance costs, such as property taxes and homeowners insurance, the T&I portion of the mortgage payment. However, rising costs here have been seen as a stressor on troubled homeowners, a panel at a Mortgage Bankers Association conference noted earlier this year.

Some of these other costs are also common (although not necessarily a part of depending on the agreement) to renting a home, such as electricity, internet and cable television service. Many renters also have an insurance policy to cover their personal property.

In a related Bankrate report that came out at the end of May, while 24% of home purchasers said they put aside money to pay for home repairs and maintenance, 19% have needed to take out additional debt for these costs.

Of that second group, 60% financed through credit cards, one-third took out a personal loan, while 25% obtained a second mortgage (respondents were able to make more than one choice for this question).

There’s also a generational divide among those seeking financing. Gen Z makes up the largest cohort of those having to take out debt, at 31%, followed by 26% of millennial homeowners.

At the other end of the spectrum is Gen X, at 19%, and the baby boomers at 13%.

“There’s no question whether these hidden costs of homeownership, involving plumbing calls, appliance replacement or repair, or getting a new roof or HVAC, will occur,” said Bankrate Senior Economic Analyst Mark Hamrick in a press release. “The key questions involve timing and costs. Planning for the expenses, including through dedicated savings, can help affirm the positive experience of what many consider the American dream, which is homeownership.”

The same generational divide exists among the savers, with the younger groups actually claiming a higher rate, 30% of Gen Z and 25% of millennials, while the baby boomers had 24% and Gen X trailed at 20%.

“By avoiding the elevated cost of borrowing, homeowners can hold onto more of their money, which is almost always a good thing,” Hamrick said.

Source: nationalmortgagenews.com

Apache is functioning normally

June 10, 2024 by Brett Tams

TPO, MERS Review, LOS Products; Fannie/Freddie Changes; Rates React to Jobs Data

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TPO, MERS Review, LOS Products; Fannie/Freddie Changes; Rates React to Jobs Data

By:
Rob Chrisman

Fri, Jun 7 2024, 11:44 AM

Huh? Michigan passed California in legal weed sales? The folks here in San Diego don’t seem to mind, and many on the street are doing their part to keep up as they have for a long time. The only thing constant through time is change… And time flies. Chuck Norris is 84 years old. Jerry Seinfeld is 70. Vanna White is 67. “Captain Jack Sparrow” is 60. LOs and lenders know that business is cyclical and are working on positioning themselves for the next refi wave. Some top LOs and lenders are now doing 20-30 percent of what they were doing in the pandemic years of 2020 and 2021. The numbers over the months and years bear that out: Curinos calculates that May 2024 funded mortgage volume decreased 5 percent YoY and increased 9 percent MoM. In the retail channel, funded volume decreased 10 percent YoY and increased 9 percent MoM. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures.) Today’s podcast is found here, and this week’s are sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Hear an interview with reporter Steven Rappoport on the current home-equity market and how technology in the space is evolving to help originators win business.

Software, Products, and Services for Lenders and Brokers

If you’re tired of long contracts, failing implementations, or having to change your process to fit your Loan Origination System, maybe it’s time to see what happy Byte clients have known for years in this video. You don’t have to keep suffering with a slow, expensive LOS platform or sacrifice functionality to lower your costs. Designed to be both powerful and flexible, the Byte LOS platform gives you total control over your loan process and the freedom to do business the way YOU want. If you’re a savvy, independent-thinking lender with an uncompromising ideal of how you want to run your operation, request a demo or visit bytesoftware.com to learn more.

“Act now and unlock big savings! Schedule your firm’s 2024 MERS Annual Report Review with TENA Companies, Inc. today. Each year, MERS requires its members to submit an Annual Report. If you are the named servicer on 1,000 or more active MINs as of March 31st, 2024, you must have your MERS Annual Report reviewed by a qualified third-party review firm and completed by December 31st, 2024. Get ahead of the curve and secure a significant 40 percent discount on your 2024 MERS Annual Review by partnering with TENA and providing all required documentation by August 31st. Our streamlined process minimizes your workload: simply provide the required documentation, we’ll handle the rest! Since 1982, TENA Companies, Inc. has been the mortgage industry’s trusted leader in Quality Control Audit Services and Software. Ensure your firm remains in compliance for 2024: Contact TENA today to learn more and lock-in your early-bird discount.”

Rocket Pro TPO prioritizes affordability with its popular ONE+ by Rocket Mortgage product. Eligible clients can put just 1 percent down, with Rocket Pro TPO covering an additional 2 percent as a grant, not a loan or lien. This means clients start building equity from day one. As interest rates fall and clients choose to refinance, they benefit from built-in equity. Stay informed with the latest industry updates and market trends on the Rocket Pro TPO YouTube channel. Looking to elevate your business? For exclusive opportunities, partner with Rocket Pro TPO and gain access to its Pro Performance Sales Training on June 25th, designed to move buyers from no to yes, and boost success in the mortgage industry. Sign up now for Rocket Pro TPO’s IGNITE Live training on July 9th to discover more about their innovative offerings. Contact Rocket Pro TPO today to explore partnership opportunities that can benefit both your clients and your business.

Freddie and Fannie Updates

FHFA announced that Fannie Mae and Freddie Mac (the Enterprises) will enhance their Flex Modification policies to allow more borrowers facing longer-term hardships to achieve meaningful payment reductions. The updated Flex Modification policies will promote sustainable homeownership and the safety and soundness of the Enterprises.

Freddie Mac Resolve®: Deed-in-Lieu of Foreclosure Data Validation and Eligibility Error Messages Reference: This reference provides Resolve users with a quick way to view detailed, actionable feedback messages, including possible causes and next steps.

Freddie Mac Resolve®: Charge-Off Request Validation Error Messages Reference: This reference provides users with a quick way to view detailed and actionable feedback messages for data validation and eligibility errors, including possible causes and next steps.

Freddie Mac Loan Selling Advisor® Seller User Roles Job Aid: Learn about the Seller user roles for Loan Selling Advisor. Share this job aid with your administrator for user role provisioning in Freddie Mac Access Manager.

In alignment with Freddie Mac and at the direction of FHFA, Fannie Mae issued Lender Letter (LL-2024-02): Updates to Determining the Flex Modification Terms to expand borrower eligibility and provide more equitable payment reduction to eligible borrowers. Key changes include revising the mark-to-market loan-to-value (MTMLTV) based requirements and incrementally applying the terms to target 20 percent P&I payment reduction. Servicers may implement these changes starting Nov. 1 but must implement them by Dec. 1.

Fannie Mae Desktop Underwriter/Desktop Originator Release Notes, DU Version 11.1 July update.

Fannie Mae’s down payment assistance tool makes it easier to explore and compare various down payment assistance programs. You and your borrowers can compare up to four different options and see a side-by-side view of features, including maximum amount of assistance, household income limits, and more.

Fannie Mae’s May Quality Insider features the defect trends we are seeing in our post-purchase loan file reviews. Read the article to understand these issues and learn some of our best practices to help manage risk and improve loan quality.

Pennymac posted 24-53: Updates to Conventional LLPAs stating it will add a new ‘HomeReady’ LLPA to the ‘LLPAs by Product Feature for All Eligible Loans’ Grid, effective for all Best Efforts Commitments taken on or after Monday, June 3.

National MI announced updates to the TrueGuide® which include changes and clarifications on AUS and Non-AUS Loans. For details, view National MI Announcement: UW 2024-02.

Newrez announced Conforming Loans underwriting guideline updates in Newrez Correspondent 2024-033.

Effective with announcement 202405021-CL, AmeriHome has removed and clarified certain Conventional and Non-Delegated overlays.

Capital Markets

The global rate-hiking cycle is seemingly done as the strength of labor markets around the globe weakens. The European Central Bank, in a widely expected move, cut its benchmark rate 25 basis points to 3.75 percent yesterday. It was the ECB’s first rate cut since 2019, though the central bank was quick to caution investors that it is not committing to any predefined rate path and that forward looking policy will remain data dependent, all but ruling out another cut for July. That came on the heels of the Bank of Canada cutting rates on Tuesday. June fed funds futures don’t see a cut when the Fed meets next week. However, markets are now pricing in nearly two full 25 basis point cuts before year-end as this week’s weaker than anticipated private payroll readings from ADP and a decrease in job openings have investors excited about the prospect of rate cuts from the Fed. Today’s jobs data will give the Fed its last major indicator before next week’s meeting.

Speaking of that jobs data, the first Friday of the month brings payrolls, and the economy added +272k, much stronger than expected, jobs throughout the month of May versus 185k expectations and 175k previously. The unemployment rate was 4.0 percent when it was expected to remain static at 3.9 percent. Average hourly earnings (+.4 percent) when it was seen increasing 0.3 percent month-over-month and 3.9 percent year-over-year versus 0.2 percent and 3.9 percent previously. BLS data suggests that U.S. payroll gains were not as robust as reported in 2023, and the overestimate may have been 60k a month. This would indicate that the job market is weaker than the Fed thinks, though the central bank does understand that job gains and pay growth are slowing going into the second half of the year, and there are notable pockets of weakness tied to both producers and consumers.

Later today brings wholesale inventories and sales, the Fed’s release of Q1 Flow of Funds, and consumer credit for April. After the employment data Agency MBS prices are worse .250-.500 from Thursday’s close, the 10-year is yielding 4.41 after closing yesterday at 4.28 percent, and the 2-year is at 4.84.

Employment

“Are you exceptional at building and leading origination teams and are currently working for a company that doesn’t recognize your value as a manager? At Planet Home Lending, we understand that strong local leadership moves the dial on national success. You bring the insights from Main Street; we provide a dynamic platform where your ideas fuel product innovation and shape our operational strategies, all within the framework of a financially stable, multichannel ecosystem. Contact Senior Vice President Doug Long at (407) 399-5505 and explore how joining Planet can propel your career. Let’s build success together!”

A very well capitalized, mid-sized IMB servicing 100 percent of its loans in-house without a sub-servicer, headquartered in a Rocky Mountain State, is looking to acquire smaller retail IMBs who would prefer to focus on production and at the same time gain operational efficiencies. Understanding that every company has a very unique culture, the IMB is willing to allow these IMBs to operate with a large degree of autonomy, allow you to keep your trade name, and treat you as your own company. Geography is not an issue. We believe that a larger company forcing their culture upon the company being acquired never works over the long term. The vision is for this IMB to hit $5 billion in annual volume with likeminded people, and it has no desire to grow beyond that volume as the President “wants to be big enough to be a player, yet small enough to keep our soul.” Confidential inquiries should be sent to Chrisman LLC’s Anjelica Nixt for forwarding.

“Jim Bromwell has joined employee-owned USA Mortgage as a Regional Manager. Working from offices in the Mid-Atlantic and Northeast, the 29-year industry veteran is tasked with growing USA’s presence in markets in the Eastern United States. ‘USA Mortgage is a 100 percent employee-owned company where the employees truly have a voice and a genuine ESOP account,’ he said. ‘I feel USA Mortgage is one of the top platforms in the industry centered around adding value to Loan Officers and their partners. It has a significant presence in the Midwest and is well positioned to grow across the country, which is exciting! While the company is large, it has the “hometown” feel that is appealing in today’s market.’ Founded in St. Louis in 2001, USA has offices in 34 states and is licensed in 49 states plus the District of Columbia. To initiate a confidential conversation about joining USA, contact us here.”

A growing mortgage lender on a mission to be a top player in the wholesale channel is in search of a Head of Operations who’s a strategic mastermind. With at least 5 years of experience leading and wrangling the complexities of wholesale and non-delegated lending, you see technology as your key to unlocking growth (think AI, automation, the whole efficiency toolkit). You thrive on streamlining processes, making approvals super-fast, and motivating your team to break records with infectious enthusiasm. You must be obsessed with the customer experience. This ain’t your average mortgage gig. We’re on a quest to change the game. Ready to join the adventure? Confidential and serious inquiries can email Chrisman LLC’s Anjelica Nixt; please specify the opportunity.

Vienna and now Norway? SNMC Sets the Standard for Industry President’s Trips. Upon return from the SecurityNational Mortgage Company’s 2024 President’s Trip to Vienna, Austria, SNMC President Andrew Quist unveiled an equally extraordinary journey for 2025. How can we possibly top the unforgettable experience of Vienna? An exclusive 7-day cruise from England to Norway. SVP, Joel Harward noted, “Vienna was a fantastic trip where so many great memories were created. The 2025 Norway cruise we just announced reaffirms SNMC’s dedication to motivating our top salespeople and the value we place on celebrating our President’s Club qualifiers.” To explore more about SecurityNational Mortgage Company’s commitment and track record of renowned sales trips, you can click here to learn more today!

Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

June 10, 2024 by Brett Tams

The upcoming Fed meeting could have an impact on whether mortgage rates decline in the near future, experts say.

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After the latest report revealed that inflation remains high at 3.4% — and after the May Consumer Price Index All Urban Consumers report showed a 0.3% increase in April — the Federal Reserve elected to hold the federal funds rate steady for the sixth consecutive meeting. This, in turn, further delayed the anticipated rate cuts that had, at one point, been expected to occur in mid-2024.

While the Federal Reserve doesn’t directly set mortgage rates, the rates offered by lenders tend to follow the agency’s lead. As such, mortgage rates remain elevated, and once again have climbed over the 7% mark on average, with the 30-year fixed-rate mortgage rate averaging 7.18% as of June 4, 2024.

The Fed’s next meeting is set for June 11 and 12, and many potential borrowers are hopeful that a rate cut will occur, followed by a drop to mortgage rates. Late last year, the agency hinted at multiple rate cuts in 2024, but persistent inflation has delayed such cuts. So, any rate drop would be welcome news for potential homebuyers looking for lower borrowing costs. But will mortgage rates fall after the June Fed meeting? Here’s what experts say.

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Will mortgage rates fall after the June Fed meeting? Here’s what experts think

We consulted several experts to get their take on the Federal Reserve’s potential course and how it could influence mortgage rates. Here’s what they had to say.

Joseph Camberato, CEO at NationalBusinessCapital.com:

“I highly doubt we’re going to get a rate cut just yet. I really believe we’re finally headed in the right direction, albeit very slowly. Inflation still rose 0.3% in April, which was better than expected, but it’s still up 3.4% for the year and unemployment remains the same. The Fed is looking for it to worsen to lower rates.

If the Fed keeps rates the same, mortgage rates will probably remain unchanged in the short term.”

Daniel McKeever, assistant professor at the School of Management at Binghamton University, State University of New York:

“I think the probability of a June rate cut is pretty low. Just take a look at the minutes from the Fed’s most recent policy meeting (April 30 and May 1). There appears to be a pretty clear consensus to continue chasing a 2% inflation target, even if it takes longer than initially thought. Rate hikes aren’t off the table, either, in the event that persistent rates in the 5.25% to 5.50% range don’t appear to have the same impact that they once did.

The most probable outcome is that the Fed doesn’t change rates. Mortgage rates track extremely closely with the Fed’s benchmark rate. Since the Fed completed the bulk of its aggressive rate hikes in spring 2022, average 30-year fixed-rate mortgage rates have hovered around 7% pretty consistently. I’d expect to see them stay there if the Fed keeps its benchmark rate the same at the upcoming meeting.”

Find out the best mortgage rates you could qualify for now.

Van Hesser, chief strategist at Kroll Bond Rating Agency:

“No (the Fed will not cut rates). Inflation remains meaningfully above the Fed’s 2% target, and it is taking longer than usual for restrictive rates to slow the economy. That has a lot to do with the extraordinary amount of stimulus deployed in the pandemic era.

Over the near term, with the Fed keeping rates elevated, we do not expect mortgage rates to fall materially. As the economy slows in 2024’s second half and the Fed begins to ease monetary policy, we would expect mortgage rates to fall gradually and modestly but remain well above the sub-3% lows hit during the pandemic.”

Emily Overton, capital markets analyst at Veterans United Home Loans:

“It is widely expected that the Federal Reserve will keep rates unchanged at this month’s meeting. While this decision is expected, markets eagerly anticipate what the Fed’s new dot plot and summary of economic projections will reveal.

Markets currently anticipate one cut this year, so if the Fed keeps three cuts on the table, we should see a small improvement in mortgage rates. However, if the Fed were to match market expectations, then mortgage rates should remain relatively unchanged.”

The bottom line

The consensus among these experts suggests the Federal Reserve is likely to keep the federal funds rate where it is, but it could lower rates later in the year. Consequently, mortgage rates are likely to stay in the current 7% range, with little room to drop much lower, at least in the near future, experts say.

“If a prospective buyer is looking to buy a home this year, waiting for lower rates may not necessarily result in more savings as rates are likely to hover near current levels,” says Overton. “For a seller, waiting for home prices to rise may also not be a feasible option because we haven’t seen a huge uptick in buying activity, and recent data suggests home prices may have peaked as delistings and price drops are increasing.”

Source: cbsnews.com

Apache is functioning normally

June 10, 2024 by Brett Tams

If you’re currently thinking about buying a home, or somehow in a position to refinance an existing loan, current mortgage rates don’t look great.

While they might not be as high as they were in the 1980s (when they averaged 18%), the rapid ascent from sub-3% to 7% is no doubt painful.

The obvious issue is that a higher mortgage rate equates to a much larger monthly payment.

You pay more each month and that’s both undesirable and potentially unaffordable.

But assuming you are still able to qualify a mortgage, there’s another huge downside to a higher rate.

Look at the Mortgage Payment Composition

Home buyers tend to focus solely on the total monthly mortgage payment
But it’s important to look at the allocation between principal and interest
When mortgage rates are high a large portion of the payment goes toward interest
When mortgage rates are low much more of the payment goes toward principal (aka paying down the loan!)

As I’ve written before, a mortgage payment consists of four components: principal, interest, taxes, and insurance.

For short, we refer to it as PITI (see more mortgage lingo here).

The tax and insurance piece is mostly driven by the purchase price, while the principal and interest is dictated by the loan amount and mortgage rate.

Simply put, the higher your mortgage rate, the higher your monthly payment, all else equal.

So if you took out a $500,000 (30-year fixed loan) at 7%, it’d be a lot more expensive than the same loan amount at a rate of 3%.

In fact, it’d be roughly $1,200 more per month, which is clearly nothing to sneeze at.

It’d be more difficult to qualify for the loan thanks to a higher DTI ratio, and harder to make monthly payments during the loan term.

But perhaps just as important, a much smaller portion of your monthly payment would go toward paying off the loan.

Payment 1 @3%: $858.02 in principal, $1,250.00 in interest
Payment 1 @7%: $409.84 in principal, $2,916.67 in interest

For example, the very first payment on the 7% mortgage would consist of a staggering $2,916.67 in interest and just $409.84 in principal.

Meanwhile, the 3% mortgage would consist of just $1,250.00 in interest and $858.02 in principal.

In other words, about 40% of the 3% rate mortgage consists of principal in month one. That means nearly half of your monthly payment from day one is going toward paying off the loan.

Conversely, only about 12% of the 7% rate mortgage goes toward the principal balance in month one. And interest accounts for the other 88%. Ouch!

Here’s what’s even crazier.

It would take more than 10 years of paying down the loan at the higher rate for the principal portion to be equal to what it was on the first month of the lower-rate loan.

That just gives you an idea of how far behind a higher-rate home loan can make you.

What You Can Do About It

Paying More to Save on Interest
$500,000 Loan Amount	Standard repayment	Paying $500 extra monthly
Mortgage Rate	7%	7%
Monthly Payment	$3,326.51	$3,826.51
Extra Payment	$0	$500
Loan Balance After 60 Months	$470,657.95	$434,861.50
Total Interest Over Full Term	$697,544.49	$445,008.69
Possible Savings		$250,535.80

By now, you probably realize that a higher mortgage rate isn’t just a higher monthly payment.

It’s also a lot more interest paid over the loan term, and a lot less of your outstanding loan balance whittled down for many years to come.

While this is unfortunate, there is something relatively simple that you can do about it, assuming you’ve got some extra cash handy.

Simply pay extra toward the mortgage and you can substantially reduce the interest expense and ensure a lot more goes toward principal as opposed to interest.

Using the same example from above, imagine if you put $500 extra toward the principal balance each month from the very beginning of the loan term.

In month one, you’d pay $909.84 toward the principal balance, which would be about $50 more than the 3% rate loan.

And while you’d still pay more interest overall versus the 3% rate loan, you could cut your total interest expense by more than $250,000.

Total interest would fall to around $445,000 compared to $698,000 if you just paid the loan as scheduled.

Not quite as good as the $259,000 in interest on the 3% rate loan, but we’re talking about an interest rate that is 133% higher. So it’s still a decent win.

You’d also pay off the mortgage early, by about a decade, turning a 30-year fixed into a 20-year loan.

In the meantime, you could look for an opportunity to do a rate and term refinance to get a lower rate, assuming rates ease in the future.

Speaking of, your loan balance would be a lot lower in just a few years, potentially making it easier to qualify at a lower LTV, which could result in an even lower rate.

Source: thetruthaboutmortgage.com

Apache is functioning normally

June 10, 2024 by Brett Tams

Artificial intelligence is making the appraisal space, which has been marred by instances of bias, more transparent.

According to Kenon Chen, executive vice president of strategy and growth at Clear Capital, his company is using machine learning and other AI tools to attain fairer assessments of properties.

“[We’re] trying to solve a national problem, but also make it accurate at a community level,” he said. “These types of tools help us build a national standard for how this should be approached and in the underwriting process, ensure that we’re measuring the quality of the appraisal and the quality of the condition ratings against a repeatable standard.”

Apart from implementing machine learning and computer vision to analyze and compare property values, the real estate valuation technology company is also pondering how generative AI can be integrated into the appraisal and underwriting process.

“There’s a lot of great new possibilities that are being explored with generative AI and we’re certainly looking at that as well,” Chen said.

“There’s still obviously very real challenges that we as an industry need to tackle, particularly in the racial housing gap,” he added. “We still have a long way to go in closing that gap for especially black and brown homeowners and it’s important to ensure that the techniques that we’re using for underwriting for other types of decisioning like appraisal are consistent and accurate in every community.”

National Mortgage News sat down with Chen to talk about how artificial intelligence is helping to create fairer standards of valuing homes and also how technology is set to change the appraisal space going forward. This interview has been edited and condensed.

Source: nationalmortgagenews.com

Apache is functioning normally

June 10, 2024 by Brett Tams

There’s a strong case to be made for the fact that interest rates had a sunny predisposition this week. In practical terms, that simply meant giving more credence to rate-friendly news and trying harder to overlook unfriendly news.

But the predisposition was put to the test in a major way with the week’s most significant economic report today. Nonfarm Payrolls (NFP) is the headline component of the Labor Department’s Employment Situation report. There are many reports that pertain to the jobs market, but this one is infinitely more important than the rest and this time around, NFP came in much higher than expected.

While the chart of nonfarm payrolls looks range-bound, and while the job count has been much higher in the past few years, Friday’s result of 272k represented an uncommonly large “beat” versus the median forecast of 185k, and a big jump from the previous reading of 165k.

A move like this makes it seem like the labor market is too resilient to offer much help to the inflation problem (more jobs, more money, more spending, etc.). Finally, the bond market’s sunny outlook saw a cloud too big to ignore.

With that, mortgage rates had their first (and only) motivation of the week to move higher.

But the chart above also illustrates the silver lining. Specifically, even though rates jumped on Friday, they’re not even halfway back to last week’s highs, let alone the higher highs seen at the end of April. Part of the justification for such resilience is that the bond market will defer to inflation data (and the Fed’s interpretation of it) above all else in deciding how worried to be about impediments to lower rates.

On that note, the timing couldn’t be much more highly charged. Next Tuesday brings the Consumer Price Index (CPI), which is the only economic report on any given month that’s been more of a market mover than the Employment Situation in the current environment. One day later, we’ll get an updated “dot plot” from the Federal Reserve (a chart of each Fed member’s projections for the Fed Funds Rate for the end of the year and the next few years).

The Fed will also be releasing a policy statement, but there’s no chance of a rate cut/hike this time. As such, the market’s reaction to Fed Day will be all about the dots and Fed Chair Powell’s customary press conference that follows 30 minutes later.

Source: mortgagenewsdaily.com

Why is the Fed holding off on rate cuts?

What do inflation and labor market data have to do with interest rates?

When will the Fed start lowering interest rates?

Where are mortgage rates going this year?

When will affordability improve for homebuyers?

Today’s mortgage rates

Current mortgage and refinance rates

Should you lock your mortgage rate today?

Market data affecting today’s mortgage rates

Caveats about markets and rates

What’s driving mortgage rates today?

Super Wednesday looms

Today and tomorrow

Later in the week

Recent trends

Expert forecasts for mortgage rates

Important notes on today’s mortgage rates

Find your lowest mortgage rate today

How your mortgage interest rate is determined

Are refinance rates the same as mortgage rates?

How to get the lowest mortgage or refinance rate

1. Get multiple quotes

2. Compare Loan Estimates

3. Negotiate your mortgage rate

Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?

How your credit score affects your mortgage rate

How big of a down payment do I need?

Choosing the right type of home loan

Fixed-rate mortgage (FRM)

Adjustable-rate mortgage (ARM)

Jumbo mortgage

FHA mortgage

VA mortgage

USDA mortgage

Bank statement loan

Portfolio/Non-QM loan

Choosing the right mortgage lender

TPO, MERS Review, LOS Products; Fannie/Freddie Changes; Rates React to Jobs Data

Option 1: Copy and send this link

Will mortgage rates fall after the June Fed meeting? Here’s what experts think

The bottom line

Look at the Mortgage Payment Composition

What You Can Do About It