What’s Ahead For Mortgage Rates This Week – October 23, 2017

Last week’s economic reports included NAHB Housing Market Indexes along with readings on housing starts, building permits and existing home sales. Weekly readings on mortgage rates and new jobless claims were also released.

NAHB: Builder Sentiment Jumps in September, Housing Starts and Building Permits Fall

The National Association of Home Builders reported a four-point increase in its Home Price Index for October. Builders surveyed reported higher confidence in overall market conditions, which resulted in a reading of 68. Analysts had expected no change in the September reading of 64. Natural disasters have raised builder opportunities for new projects, but the industry continues to be swamped with labor shortages and rising materials costs.

While stronger builder confidence is expected to impact housing starts and building permits issued, both reports had lower readings in September. Housing starts were calculated at 1.215 million starts on a seasonally-adjusted annual basis. An expected reading of 1.170 million housing start was based on August’s reading of 1.183 million starts. Single-family housing starts were lower than for August but were 9.10 percent higher year-over-year.

Building permits issued fell in September; 1.215 million permits were issued on a seasonally-adjusted annual basis as compared to 1.272 million permits issued in August. Higher readings for building permits are expected in the aftermath of recent hurricanes and wildfires, but increased starts and permits will include replacing damaged structures as well as building new developments.

Mortgage Rates Mixed, Existing Home Sales Rise

Fixed mortgage rates were lower after the 10-year Treasury rate fell six basis points. The average rate for a 30-year fixed rate mortgage was three basis points lower at 3.88 percent the average rate for a 15-year mortgage dropped by two basis points to 3.19 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.17 percent, an increase of one basis point. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Sales of existing homes rose in September according to the National Association of Realtors®. Previously-owned homes sold at a seasonally-adjusted annual rate of 5.39 million sales. Which surpassed August’s reading of 5.35 million sales and expected sales of 5.30 million previously-owned homes. Any increase in sales is a welcome sign that the severe shortage of homes for sale may be easing. It’s too early to know how hurricanes and fires will affect housing markets and it will take months to rebuild all homes destroyed.

Weekly jobless claims fell to 222,000 and were lower than the expected 244,000 new claims and the prior week’s reading of 244,000 new jobless claims filed. Fewer jobless claims suggest that jobs markets continue to expand and may help renters decide to buy homes.

Whats Ahead

Next week’s economic readings include reports on new and pending home sales and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released. 

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Buying a New Home? Here’s Why Mortgage Pre-Approval Should Be Your First Step

Buying a New Home? Here's Why Mortgage Pre-Approval Should Be Your First StepAre you thinking about buying a new house, condo or apartment? Whether you are upgrading, downsizing or investing, if you intend on borrowing the funds you’ll need to be pre-approved for a mortgage. In today’s blog post we’ll explore mortgage pre-approval and why this should be one of your first steps in buying a new home.

Pre-Approval Helps To Determine Your Budget

Do you know your budget? Mortgage lenders consider many factors when deciding how much they are willing to lend to a home buyer. While your employment status, salary, assets and credit rating are important, they are all pieces of a larger puzzle that help a lender to determine your risk. So regardless of how spotless your credit rating might be, you’ll want to get pre-approved for a mortgage before trying to figure out your total purchase budget.

The size of your down payment will also be a factor in determining your overall budget. If you still have a bit of time before you’re ready to buy a home, continue to put money aside for your down payment. The more you have, the less you’ll need to borrow.

Once Pre-Approved You Are Ready To Make An Offer

Once you’re pre-approved for your mortgage, you’re ready to submit an offer for the home. Note that you do not need to bid high just because you are approved for a large mortgage. Work with your real estate agent to determine the right asking price for the home. Submitting a bid that’s a bit lower than you’re willing to pay leaves you with a bit of room in case the seller makes a counteroffer.

Many Sellers Will Demand Pre-Approval

Finally, don’t forget that many sellers will require that you are pre-approved for mortgage financing before they’ll accept a bid or offer. Many listings end up receiving multiple offers, especially those in hot real estate markets or popular communities. So if you table an offer without pre-approval, you may find that it is rejected in favor of another buyer who is ready to go.

Once you’ve been prequalified for mortgage financing, pre-approval is the final step in the process before you’re ready to make an offer and purchase your new dream home. For more information about the pre-approval process, contact your trusted mortgage professional today.

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The Cost of Renting vs. Buying a Home [INFOGRAPHIC]

The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | Simplifying The Market

The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Historically, the choice between renting or buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (29.2%) vs. the percentage needed to buy a median-priced home (15.8%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

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Still Feeling Hurricanes’ Impact on Economy

Economic Observer
Hurricanes Continue to Impact Economic Data Overview: 
During a relatively quiet week, investors focused on major reports on inflation, retail sales, and housing starts. The data was mixed, and mortgage rates ended with little change.

The economic data for September should be evaluated with an eye toward the impact of the recent hurricanes. In September, the Consumer Price Index (CPI) posted its largest monthly increase since June 2009. This was mostly due to a hurricane-related 13% increase in gas prices during the month. Core CPI, which excludes food and energy, rose less than expected. It has held steady at an annual rate of 1.7% for five straight months. The tame inflation data was good for mortgage rates.

Retail sales posted a better than expected 1.6% increase in September. Strength was seen in car sales, as people replaced vehicles lost in the hurricanes. Overall, though, it was difficult to determine the impact of the hurricanes. According to the Commerce Department, companies reported that “the hurricanes had both positive and negative effects on their sales data.” Since stronger economic activity raises the outlook for future inflation, this report was negative for mortgage rates.

There was little doubt that Wednesday’s report on housing starts was heavily influenced by the hurricanes. In September, single-family housing starts in the U.S. declined 5% from August. Starts rose in the Northeast, the Midwest, and the West. By contrast, they dropped an enormous 15% in the South, which includes Texas and Florida. Since the shortfall was so clearly connected to the hurricanes, there was little investor reaction to the data.

Week Ahead

Looking ahead, the Existing Home Sales report will be released on October 20, followed by New Home Sales on October 25. The Durable Goods report, an important indicator of economic activity, will also come out on October 25. The first estimate of third-quarter gross domestic product (GDP) will be released on October 27. In addition, there will be a meeting of the European Central Bank on October 26, which could affect U.S. mortgage rates.


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Economic Observer

Commentary provided by MBSQuoteline. For live MBS pricing visit www.mbsquoteline.com.

This letter is for information purposes only and is not an advertisement to extend customer credit as defined by Section 12 CFR 1026.2 Regulation Z. Program rates, terms and conditions are subject to change at any time.

Mid America Mortgage Assists Lenders, Borrowers Affected By Recent Disasters

ADDISON, Texas, Oct. 19, 2017 (SEND2PRESS NEWSWIRE) — Mid America Mortgage, Inc. (Mid America) announced measures it has taken to provide assistance to both lenders and borrowers that were impacted by recent federally declared disasters. In addition to $20,000 in donations from employees and the corporation toward relief efforts, Mid America will also purchase loans on properties located in areas impacted by the recent storms or fires. This includes both government and conventional loans underwritten to agency guidelines.

For government loans, Mid America will purchase insured loans, as well as loans pending endorsement, for properties that have been damaged. In addition, the program allows for the sale of loans for properties without damage where the borrowers may have experienced a temporary hardship related to a disruption in income or unforeseen expenses. On conventional loans, Mid America will purchase loans with property damage if it does not impact the safety, soundness or structural integrity of the property. If there is extensive property damage, the program includes a repurchase line of credit to allow lenders time to manage the repair and re-inspection process.

“Mid America has established itself as a valued partner to mortgage originators by providing liquidity for loans that traditional investors may not be willing or able to purchase. This announcement complements our current program to purchase loans that may have missed other investors’ overlays or have minor underwriting or compliance issues,” said Michael Lima, managing director of whole loan trading for Mid America.

The company also announced that its retail origination and correspondent channels will be providing assistance through the Federal Housing Administration (FHA) 203(h) program, which provides borrowers with 100 percent financing to purchase a new residence or refinance an existing residence impacted by a disaster.

“Helping consumers and mortgage lenders recover from these unfortunate events should be the goal of every entity in the housing industry, and our announcement today is our step toward that objective,” said Mid America Owner and CEO Jeff Bode. “Mid America is dedicated to helping victims through its charitable donations, the origination of loans under federal programs or by offering loss mitigation options to our current borrowers. We will also continue to work with our industry partners to provide an outlet for loans that traditional investors may not purchase.”

For more information on the Correspondent Whole Loan Program, please contact Michael Lima at michael.lima@midamericamortgage.com or 214-261-3336. For all other inquiries, visit https://www.midamericamortgage.com/get-started/ or call 866-544-7013.

About Mid America Mortgage, Inc.:
Mid America Mortgage, Inc., Addison, Texas, is a multi-state, full-service mortgage lender serving consumers and mortgage originators through its retail, wholesale and correspondent channels. In operation since 1940, Mid America has thrived by retaining its entrepreneurial spirit and leading the market in innovation, most recently with its adoption of electronic mortgage closings (eClosings) and promissory notes (eNotes). We offer a wide range of residential home loan programs to meet the needs of most home buyers and homeowners, and are also the nation’s leading provider of Section 184 home loans for Native Americans.

Mid America is looking for tech-savvy, service-oriented mortgage professionals to join its growing team. We are dedicated to providing our employees with industry-leading tools and technology to deliver a great package of competitive pricing, programs and knowledgeable service. Want to join our team? Visit https://www.midamericacareer.com/.

Additional information about Mid America Mortgage, Inc. can be found on the company’s website at https://www.midamericamortgage.com/about/.

Twitter: @midamericamtge

Buying a New Home? Four Key Questions to Ask Your Mortgage Advisor

Buying a New Home? Four Key Questions to Ask Your Mortgage AdvisorAre you in the market for a new home? If you are planning on borrowing some or most of the home’s purchase price, you’ll want to prepare yourself for the mortgage process. Let’s take a look at four key questions that you will want to ask your mortgage professional when you first meet to discuss your home loan.

What’s The Best Mortgage Option For Me?

As you probably know, there is a wide variety of mortgage loan options and programs on the market today. You may qualify for a number of mortgage loans along with certain government programs or specialty mortgages. Your mortgage advisor will be able to share the pros and cons of each type of mortgage loan so you can decide which option best suits you.

What Interest Rate And Amortization Period Fit My Budget?

Next, you’ll want to determine what loan term and interest rate combine to produce a monthly payment that fits your budget. For example, in some cases, you may prefer a lower interest rate over a longer amortization period like 15 or 20 years, which can reduce the amount you pay each month. Conversely, you may decide that you want to pay the loan down faster and take a shorter term with a slightly higher interest rate.

What Fees And Closing Costs Will I Incur?

When you borrow a mortgage to buy a home, you will inevitably incur some additional costs and fees. Some are connected to the home itself, such as home inspection or home appraisal fees. Others are due to the mortgage and might include loan origination fees or discount points that you choose to buy to lower your interest rate. Your mortgage advisor will be able to give you an honest assessment of what fees you’ll need to pay and which you can potentially avoid.

What Documents And Paperwork Do I Need To Prepare?

Finally, you’ll want to get an idea of what documents and other paperwork that you’ll need to prepare. Your mortgage lender will require a number of items to verify your income, credit history and for risk assessment purposes. This might include past income tax forms, pay stubs, bank statements or other materials if you’re self-employed.

These are just a few of the talking points you’ll want to cover when you first meet your mortgage advisor. For more information about the mortgage process and to get things started, contact us today. Our mortgage team is happy to share our insight and answer any questions you might have.

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Hiring an Agent to Sell Your House May Cost You NOTHING!

Hiring an Agent to Sell Your House May Cost You NOTHING! | Simplifying The Market

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:

  • Greater exposure to more buyers
  • The skills of a professional negotiator
  • A layer of protection from possible legal liabilities
  • Professional guidance in navigating any pitfalls that may arise
  • A level of safety while showing the home

There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny?

A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money on their own than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

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Home Builder Sentiment Highest in Five Months

Component readings used for calculating Housing Market Index readings also rose in October. Builder sentiment for current market conditions gained five points for a reading of 75. The index reading for builder perception of market conditions in the next six months also rose five points to an October reading of 78.

Builder sentiment for home buyer traffic in new home developments rose one point to 48. Buyer traffic readings seldom exceed a Home Builder Index reading of 50.

NAHB Chairman Granger Mc Donald said builders were recovering from the initial shock of damage caused by hurricanes, but this was prior to numerous wildfires adding to demand for contractors and home builders.

National Disasters Add to Ongoing Materials and Labor Shortages

Factors contributing to stronger builder sentiment included an industry concentration of building homes for purchase instead of multifamily rental projects. Single-family homes have been in short supply in recent years and building more homes is the only remedy for a market skewed in favor of sellers and rapidly rising home prices fueled by high buyer demand and few choices available to buyers.

Recent hurricane damage is likely to raise materials prices and worsen labor shortages; Widespread damage caused by wildfires in California is expected to increase demand for contractors and skilled laborers as they work to repair and rebuild homes and buildings ruined in storms and fires.

Regional Readings Mixed

Three-month rolling averages of builder sentiment for regions tracked by NAHB were mixed. In the Northeast, builder sentiment rose one point to 50. The South gained two points for a reading of 68. The reading for builder sentiment in the South was unchanged at 63; the reading for the West was also unchanged at 77.

Winter weather and challenges caused by higher demand for services against rising materials costs and ongoing labor shortages can be expected to challenge builders, but the need for new housing caused by multiple national disasters will likely create many new jobs for builders.

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Moving-Up to a Luxury Home? Now’s the Time!

Moving-Up to a Luxury Home? Now’s the Time! | Simplifying The Market

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control. 

The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer which can eventually lead to a price change.

Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.

The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

But not all who are buying luxury properties have a home to sell first.

In a Washington Post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:

“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

Bottom Line

The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.

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Current Servicemember or Veteran? 4 Reasons Why a VA Home Loan Is an Excellent Choice

Current Servicemember or Veteran? 4 Reasons Why a VA Home Loan Is an Excellent ChoiceAre you current or former member of the US military service who is looking to buy a new home? If so, you will be pleased to know that there are some special mortgage programs that are open to you. Let’s take a look at five reasons why a mortgage backed by the Department of Veterans Affairs is an excellent choice when buying your new home.

You Can Borrow Up To 100% Of The Home’s Value

You read that correctly! VA-backed mortgages are available to you even if you choose to put no money towards your down payment. This can be a huge benefit for those individuals and families who are looking to buy a new home but don’t have a large chunk of cash on hand to fund the down payment. Instead, you can work with your VA mortgage advisor to get financing for the entire purchase price of your home.

You Can Qualify For A ‘Jumbo’ Loan

Depending on the real estate market in your city, the size of home you need and how luxurious you want it, you may need a larger mortgage. The great news is that there are ‘jumbo’ options available with VA-backed home loans. In some cases, you may qualify for over $1 million in mortgage financing, which is likely to put most homes in your area within reach.

You Can Avoid Mortgage Insurance Fees

Home buyers using a conventional mortgage with less than 20 percent down are typically required to buy private mortgage insurance or “PMI.” However, this is not a requirement with VA-backed mortgages. If you qualify for a VA home loan, this can save you a significant amount of money over the loan’s term.

You Can Accelerate Your Payments At No Cost

If you decide that you want to pay your VA mortgage off a bit faster by accelerating your payments, you can do so without incurring fees or penalties. For example, if you are gifted a large sum of money or have a significant income tax return, you can contribute that amount directly against your mortgage.

These are just a few of the many great reasons to explore using a VA-backed mortgage to fund your next home purchase. For more information about VA home loans and to see if you qualify, contact your trusted mortgage professionals today.

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