5 Key Property Features When House Hunting

When shopping for a home, many of us know our basic focal points, such as identifying the right neighborhood or finding a house with the ideal number of bedrooms and bathrooms. These factors are important, but there are other home features (some very large and some very small) that can greatly contribute to the enjoyment of your new home. Let’s make sure you don’t miss any of them.

Here are five opportunities to maximize the benefits of your purchase that go beyond just the house and why each one deserves your consideration.

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Home Buying Consideration #1: The Garage

Garages are a very important feature for many homebuyers, and can even end up being a dealbreaker for some buyers. More than a parking spot, garages provide valuable storage and project space, as well as a way to protect your vehicles from all types of damage. When you are first shopping for a home, you may know that you want a garage, but you may not have considered all of the variables that go into the garage design, and which choice is right for you.

Garage Design: Why it Matters

When evaluating garage design, it’s important to start by considering what you may want to use the space for, and what external factors (such as weather) might impact your use. Here are several major garage design aspects to keep in mind as you house hunt.

Rental space: Depending on the size and layout of your garage, is there space that could be rented out full time, or used as a short-term rental to generate additional income? That extra income could be directed towards your mortgage payment.

Storage opportunities: Does the garage have room to store what you need to reduce in-home clutter? Is there space for shelves, or even room in the rafters?

Potential property value increase: According to the sales comparison approach (SCA), one of the most recognizable forms of valuing residential real estate, a “finished” garage that feels like an extension of the home’s indoor living space is one of several features that can increase overall home value. You may also want to consider the possibilities of eventually remodeling a bland garage in an otherwise perfect home.

Attached vs. Detached Garages: Pros vs. Cons

One of the biggest distinctions in garage design is whether a garage is attached or detached. Often influenced by lot shape (narrow lots on an alley often have detached garages, wider lots with a driveway often have attached garages) or the age of a home, having a detached or attached garage has both advantages and disadvantages.  

Attached Garages: Pros

  • Convenient access to your cars, storage, and other items, particularly if you live in an area with an extreme climate 
  • Attached garages are often less expensive to build, and can be climate controlled by accessing the electrical and HVAC systems that are part of the home
  • As attached garages are the most popular type of garage, having one typically increases the value of your home

Attached Garages: Cons

  • If you’re thinking of adding one, it may not be possible to fit on a narrow, urban lot
  • Since they offer direct access to the home, they can be a security and fire risk  
  • They can be hard to add onto or expand, and any additions or changes might require more expensive permits and extensive inspections
  • Adding an attached garage, particularly to a vintage home, may look strange or otherwise detract from the exterior look of the home
  • Noisy garage activities may be heard more inside the home

Detached Garages: Pros

  • More flexibility in size, layout and location, lot size and shape permitting
  • It’s easier to add room for cars, storage, and projects, and to add onto if needed
  • Less fire and security risk to your home 
  • Less of an impact to the look or curb appeal of your home
  • Can increase the resale value of your home

Detached Garages: Cons 

  • Particularly in bad weather, less convenient in terms of access 
  • Will require separate utilities, HVAC, and more
  • May not be allowed by your HOA or city permitting office

Now that we’ve examined the garage, let’s take a look at another key feature — what’s going on with the front and backyard?

Home Buying Consideration #2: The Yard

No longer limited to just a lawn, yards have now become an extension of the home. A convenient, well-designed outdoor living space is something that many homeowners desire. Yards can be great spaces for entertaining and are often much less expensive to create than comparable indoor entertaining spaces. Here are some important yard elements to consider. 

Trees and landscaping: Important for both aesthetic and practical reasons, trees and landscaping can increase your yard’s appeal. A mature, well-designed landscape is valuable, as it represents an investment of both time and money. 

Outdoor kitchen: Whether you are grilling for two or entertaining 200, an outdoor kitchen makes cooking fun and convenient. 

Fireplace or fire pit: This stylish focal point makes it easy to keep enjoying your yard, even after dark or in cooler weather. 

Automatic sprinklers, drip system, and misting system: Automatic sprinklers and drip systems can keep your yard looking lush for a low cost, and are particularly valuable in dry climates. Misting systems can also keep you cool on hot days. 

Deck or Patio: A stylish outdoor surface makes it easy to enjoy your yard, and many new construction materials require little to no maintenance. 

Shed: Well-designed sheds can go beyond storage, offering everything from a private workspace to extra space for guests to sleep. 

So, you’re considering the finer points of a yard. But what about adding a body of water to that yard for cooling off on hot days? Here’s the pros and cons of investing in a water element for your next home.

Just starting your home search? Here’s the best time to begin.

Home Buying Consideration #3: The Pool

Pools and hot tubs are perhaps the most controversial of all outdoor home features. Some homebuyers totally avoid them, and some won’t look at a house without them. Which side are you on? Here are some factors to consider. 

Backyard Pool and Hot Tub: Pros 

  • Pools and hot tubs can be aesthetically pleasing
  • Both are also useful for entertaining
  • In warmer climates, pools can provide a way to enjoy the outdoors comfortably
  • If you like to swim, engage in other aquatic exercises regularly for fitness, or use a hot tub for muscle and joint pain, having your own can be convenient
  • In hot climates where pools are common (i.e., Arizona, California, Florida), having a pool can significantly increase the resale value of your home 

Backyard Pool and Hot Tub: Cons

  • Both pools and hot tubs require regular maintenance that includes chemicals, cleaning, and repair
  • Many families with small children do not want a pool at home due to safety concerns
  • Your insurance cost may be higher, and your utility bills may go up as well, particularly for heating a pool 
  • When it is time to sell your home, there are many buyers who will not want a house with a pool

A pool is a big decision that comes with both maintenance and benefits alike. You can always opt for a different kind of water feature, like a backyard stream. But if you’re looking to streamline your life, investing in home tech devices is almost a no-brainer.

Home Buying Consideration #4: The Appliances and Tech Gadgets

As technology improves and designs continually evolve, having up-to-date appliances and other devices in your home has become increasingly important. For example, while attractive kitchens are near the top of many house-hunters’ wish lists, there are items within those kitchens that can help — and items that can hurt — when it comes to increasing a home’s value.

Appliances That Can Help Property Value

Commercial-grade appliances: Particularly in high-end properties, many buyers expect to see appliances from luxury or professional brands. 

Smart devices: Thermostats, fire detectors, carbon monoxide detectors, security cameras, door locks, and doorbells are just a few of the relatively new smart home devices that homebuyers are now beginning to appreciate and even expect.

Appliances That Can Hurt Property Value

Old and energy inefficient: These power-sucking products will cost you in both your utility bill, and the resale value of your home. 

Homes totally lacking certain appliances: Is your property missing a dishwasher, indoor laundry, or other key features? This can be a major turn-off for buyers who don’t want to have to complete a complicated remodeling and installation project. 

Mismatched appliances: Appliances from different eras or in different colors can make your kitchen look unfinished and low-quality, even if your other finishes are fantastic.

Looking to stock up on home amenities? We’ve targeted the seasonal best deals for doing so.

Now that you’ve considered the key interior and exterior components of your dream home, there’s one last important element to contemplate: the driveway.

Home Buying Consideration #5: The Driveway

Walkways and driveways connect your home to the outside world and play a crucial role in the curb appeal of your residence. Although often overlooked, they are important home features that can be messy and expensive to replace or update. 

If you are evaluating the driveway at a potential home, or considering an update at your current home, the first choice you will need to make is whether you want asphalt or concrete. Both have benefits and drawbacks that may vary depending on your climate, landscape, and usage needs.

Today, many homeowners and buyers are also looking for something beyond the basics, with driveway design trends including elaborate paving materials, irregular shapes, and additional features like extra parking for guests.

Know the Tricks, Now Land the House

Although these five features may not be your first considerations in the house-hunting process, they are important elements that you will use or interact with nearly every day. Add them to your consideration list, and you will be sure to end up in a customized home that you enjoy and treasure. If you’ve found your ideal home with all the right features, reach out to a PennyMac Loan Officer today or apply online to get pre-approved for the loan that’s right for you.

Source: pennymacusa.com

Homebuilder confidence fell to a four-month low in January

Homebuilder confidence slipped to a four-month low in January as firms became slightly less optimistic about sales against a backdrop of higher house prices and construction costs.

A gauge of builder sentiment fell to 83 from December’s reading of 86, National Association of Home Builders data showed Wednesday. The figure was weaker than the median forecast of 86 in Bloomberg’s survey of economists.

The second-straight decline in confidence shows the extent to which higher building materials costs, particularly lumber, and rising home prices tied to lean inventory are slowing momentum. Builders continue to face pandemic-related supply-chain challenges at the same time elevated asking prices hinder affordability, with many homes priced above what prospective buyers are willing to pay.

“While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” Robert Dietz, NAHB chief economist, said in a statement. “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”

A gauge of current sales fell to a three-month low, while measures of sales expectations in the next six months and prospective homebuyer traffic both declined to the lowest since August.

Confidence measures decreased across all four regions across the U.S.

Source: nationalmortgagenews.com

Mortgage and refinance rates today, January 19, 2021

Today’s mortgage and refinance rates 

Average mortgage rates had a good week last week with another small fall on Friday. They’re now 10 or 11 basis points (a basis point is one-hundredth of one percent) above the all-time low. But that’s still an exceptionally great rate.

Judging by markets first thing this morning, it looks as if mortgage rates might have a quiet day today, holding steady or just inching either side of the neutral line. But, of course, that could change as the hours pass.

Find and lock a low rate (Jan 20th, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed 2.745% 2.745% Unchanged
Conventional 15 year fixed 2.313% 2.313% Unchanged
Conventional 5 year ARM 3% 2.743% Unchanged
30 year fixed FHA 2.438% 3.415% Unchanged
15 year fixed FHA 2.438% 3.38% Unchanged
5 year ARM FHA 2.5% 3.226% -0.01%
30 year fixed VA 2.308% 2.479% Unchanged
15 year fixed VA 2.25% 2.571% Unchanged
5 year ARM VA 2.5% 2.406% -0.01%
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 here.

Find and lock a low rate (Jan 20th, 2021)


COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.

Should you lock a mortgage rate today?

We’re still in a position where discerning mortgage rate trends is impossible. Conflicting forces are currently acting on them (read on for details), one pushing them higher and the other dragging them lower. And nobody knows which will win out.

So we’re unusually uncertain about what to expect for weeks and months to come. But, for now, my personal rate lock recommendations, which are only my hunches, are:

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

Still, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your gut and your personal tolerance for risk.

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, compared with about the same time last Friday morning, were:

  • The yield on 10-year Treasurys held steady at 1.11%. (Bad for mortgage rates) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
  • Major stock indexes were higher on opening. (Bad for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite happens when indexes are lower
  • Oil prices edged lower to 52.83 from $52.89 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
  • Gold prices nudged down to $1,836 from $1,842 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
  • CNN Business Fear & Greed index — Inched down to 61 from 63 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 better than higher ones

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

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, 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. The Fed is now a huge player and some days can overwhelm investor sentiment.

So use markets only as a rough guide. They have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. But, with that caveat, so far mortgage rates today look likely to remain unchanged or barely changed.

Find and lock a low rate (Jan 20th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
  2. 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
  3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  4. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
  5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  6. Refinance rates are typically close to those for purchases. But some types of refinances are higher following a regulatory change

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Today and soon

I’m expecting mortgage rates to hardly move today. But that could change as the hours pass.

So what are those conflicting forces mentioned above? Well, the one winning out last week was the pandemic, which continues to cause serious damage to the economy. And struggling economies almost always have low rates.

The other force is the likelihood of higher government borrowing under the incoming administration. Now, this is a bit more complicated and involves the action of supply and demand in bond markets on prices and yields. But suffice to say that extra borrowing tends to increase yields on US Treasury bonds — and push up mortgage rates.

Unfortunately, nobody can confidently predict which of these forces will eventually prove stronger. We can be pretty sure mortgage rates will rise once vaccines turn the tide of the pandemic and return the economy to something close to normal.

But that’s likely to be several months in the future. And, in the meantime, we can only watch the two forces wrestle for advantage.

Recently

Over the last several months, the overall trend for mortgage rates has clearly been downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent such record occurred on Jan. 7. But that had already been overtaken by events, even before it was published. And rates are now appreciably higher, as the latest, Jan. 14, announcement from Freddie confirmed.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac 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 current rates forecasts for each quarter of 2021 (Q1/21, Q2/21, Q3/21 and Q4/21).

Fannie’s were released on Jan. 15, Freddie’s on Jan. 14 and the MBA’s on Dec. 21. The numbers in the table below are for 30-year, fixed-rate mortgages:

Forecaster Q1/21 Q2/21 Q3/21 Q4/21
Fannie Mae 2.7% 2.7% 2.8% 2.8%
Freddie Mac 2.9% 2.9% 3.0% 3.0%
MBA 2.9% 3.0% 3.2% 3.2%

But, given so many unknowables, the current crop of forecasts may be even more speculative than usual.

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Verify your new rate (Jan 20th, 2021)

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.

Source: themortgagereports.com

What to do when your CARES Act mortgage forbearance ends

Is your mortgage currently in forbearance?

Mortgage forbearance provided a lifeline for millions of homeowners during the difficult months of the pandemic.

But with the six-month end date for many forbearance plans rapidly approaching, homeowners will have to decide how to move forward.

Do you need to extend your COVID forbearance plan for another six months?

Or, are you ready to exit? If so, what are your options?

Here’s what you need to know if your mortgage forbearance plan is ending soon.

Millions of COVID forbearance plans are about to end

The CARES Act offered much-needed mortgage relief for U.S. homeowners.

Under the Act, if you have any mortgage backed by the federal government— including conventional, FHA, VA, and USDA loans — you can pause your mortgage payments for up to six months with no penalties.

As shown in the chart below, millions of homeowners opted in for CARES Act mortgage forbearance in March and April, when the economy took its first hard hit.

Chart showing the number of new forbearance plans over time. New forbearance plans spiked in March and April, then leveled off in May through August. Source: Black Knight

To date, the majority of homeowners who opted for mortgage relief are still in their forbearance plans.

But with the initial six month deadline nearing, many will be approaching their forbearance deadlines in September and October.

Chart showing the number of active forbearance plans for U.S. mortgages, which has hardly dropped since the initial spike in March and April. Source: Black Knight

So, what are you supposed to do if your forbearance plan is ending?

You’re free to exit forbearance if you’re able to resume making mortgage payments. If not, you might be able to extend your forbearance plan.

We’ll walk you through your optinos below.

Most forbearance plans can be extended for 6 more months

Six months of forbearance may have provided you a welcome buffer period to get back on solid financial ground.

But if you continue to experience money problems due to lack of employment, medical bills, or otherwise, you’re probably worried about how you’re going to pay the mortgage.

The good news? You can get a six-month extension on your loan forbearance.

That means a total mortgage forbearance period of 12 months on your government-backed loan if you need it.

Conventional, FHA, VA, and USDA loan holders can opt for another 6 months of mortgage forbearance if necessary, for a total of 12 months of mortgage relief

“From the date you seek to have forbearance, you will be entitled to that forbearance for up to one year, with an extension after the first six months of your forbearance,” explains David Shapiro, president and CEO of EquiFi Corporation.

“Forbearance plans are based on when you requested them. So if a homeowner requested forbearance in March or April at the beginning of the pandemic, September or October would be the end for the first 180 days.”

How do you request an extension?

Dongshin Kim, assistant professor of finance and real estate at Pepperdine Graziadio Business School, says your loan servicer should provide you an option to extend forbearance another 180 days if you need it.

“Loan servicers are supposed to reach out to borrowers 30 days before the forbearance plan is scheduled to end to help them understand what options they have for repayment,” says Kim.

Your loan servicer should reach out 30 days before your forbearance plan ends to discuss your options

But you shouldn’t necessarily wait for your lender or servicer to contact you about this option.

“If you need to continue your forbearance, contact your mortgage servicer well ahead of your forbearance end date,” recommends Jackie Boies, senior director of housing services at Money Management International.

“You need to prepare for relief to end now. Do not wait until you get your statement to ask a lender for help. Instead, contact them now, let them know your financial situation, and see how they can help.”

Strategies for exiting mortgage forbearance

If you are ready to exit your forbearance on time, after six months, be prepared for what happens next.

“Forbearance is not loan forgiveness. Borrowers will still owe the principal and interest that they didn’t pay during the forbearance period,” notes Kim.

“Borrowers will need to make both the regular mortgage payments and also all the payments they missed while the loan was in forbearance.”

You will typically have several options for repayment once forbearance expires:

  1. Full repayment, which is a one-time lump sum payment. It’s possible to pay back all the missed payments at once. But lenders are NOT allowed to require this. “If you are unable to pay the lump sum, you have other options,” says Boies
  2. Intermittent payments, where you arrange repayment with your servicer over three, six, nine, or 12 months –—whichever makes the most sense — on top of your regular payments
  3. Lengthen your loan term and pay off the missed amount at the end of the extended loan term, with additional mortgage payments
  4. Defer your repayment. This option lets you pay off the missed amount at the time the home is sold, refinanced, or the mortgage term ends
  5. Pursue a loan modification. “This helps borrowers who are at risk of default change their mortgage terms – usually including a lower interest rate, reduced length of the loan, or reduced monthly payment,” adds Boies

The right option for you depends on your current finances, employment status, and ability to resume mortgage payments.

When your loan servicer contacts you, be sure to discuss every option in detail so you know exactly what to expect with the repayment plan you select.

The experts warn that you should anticipate a few possible snags and setbacks post-forbearance, especially when it’s time to contact your loan servicer.

“Borrowers should expect very long delays and may experience inconsistency in customer support representatives,” cautions Shapiro.

“Loan servicing organizations are not all properly staffed for the expected volume of forbearances, and they can’t train support agents fast enough to meet their needs.

“Also,” Shapiro continues, “be prepared for process changes, as regulators react to the crisis in real-time and create new rules or modify existing rules.”

Even if you can’t get through on the first few contact attempts, don’t give up.

“Be patient, but be persistent. Mortgage servicers have struggled to keep up with calls during the COVID crisis, but many have made online options easy and added staffing,” says Boies.

Keep a close eye on your credit report and score

Also, if your mortgage has been in forbearance, check your credit report carefully.

CARES Act rules state that mortgages in forbearance should not be reported as having late or missed payments. And the forbearance plan should not harm your credit score.

But this is another area where mistakes can happen.

“Sometimes there can be mistakes and issues with credit scores that can pop up around forbearance,” Kim says.

Remember, lenders and servicers have never before had to deal with mortgage forbearances on this scale. So it’s up to the borrower to be extra-vigilant and make sure nothing slips through the cracks.

Check your loan statements every month and stay on top of your credit report.

Remember, you get one free credit report per week through April 2021. So you can keep a closer eye on it than usual.

What if you still can’t afford your mortgage payments after forbearance?

The worst-case scenario: Forbearance ends and you still can’t pay your monthly mortgage. What can you do?

“You’ll probably need to consider disposition options,” says Boies.

“This may include selling your home if you can no longer afford it. Foreclosure, short sale, and deed-in-lieu are other ways of disposing of a home you can’t afford.”

Boies warns, “These options may be damaging to your credit and should be reserved until you’ve exhausted all other solutions.”

You can end forbearance early, too

You don’t have to wait for a six- or 12-month forbearance period to come to an end. Instead, you can opt to exit forbearance earlier than expected.

Just be prepared to pay back the amount you weren’t able to pay while forbearance was in place, cautions Kim.

“The best time to end forbearance is when the borrower is comfortable and able to make payments, including the additional money for repayments they owe,” Kim adds.

If you’re ready to end forbearance, contact your loan servicer and request this.

“But be sure your financial foundation is strong enough, meaning you have some type of emergency fund to back up your ability to pay your mortgage,” suggests Shapiro.

Low rates can make mortgage payments more affordable

For those exiting mortgage forbearance in the next few months, there may be an opportunity to lower your mortgage payments below pre-pandemic levels.

Rates have hit record lows nine times in 2020, and are set to remain low for months — if not years — to come.

Some options for exiting mortgage forbearance would allow homeowners to secure a new, lower rate and make their monthly payments more manageable.

Ask your servicer about loan modification and refinancing.

If these options are avaialble to you, you might be able to exit forbearance much more confidently, knowing that you’ll have a more affordable mortgage payment on the other side.

Verify your new rate (Jan 20th, 2021)

Source: themortgagereports.com

Rates Rising at Fastest Pace in Months

Mortgage rates are coming off a rough week–the roughest, in fact, since June 2020 by some measures.  That’s the last time rates rose this quickly for market-driven reasons.  There were a few instances of bigger moves in Aug/Sept as the new refinance fee was announced, delayed, and ultimately implemented.  Either way, things aren’t great right now, relatively speaking.

The “relative” qualification is important considering this abrupt move higher has yet to threaten to take the average top tier 30yr fixed quote above 3%–far from it, in fact.  Most lenders can still offer 2.875% or better on refis and 2.625% or better on purchases.  This assumes an ideal scenario with 20%+ equity, strong credit, etc.

If this drama were to conclude right now, it wouldn’t be that big of a deal in the bigger picture.  The concern, however, is that it coincides with a potentially legitimate inflection point for rates.  Those concerns were fueled first and foremost by changing of the guard in Washington with strong supporting roles being played by vaccine optimism, deceleration in new covid cases, and slightly tougher talk from the Federal Reserve.  Qualitatively, it feels a bit early for “the big turn” in mortgage rate momentum for a variety of reasons, but it’s a threat that should be taken seriously until we see clear signs of a correction.

Source: mortgagenewsdaily.com

MBS Day Ahead: Waiting On Stimulus Details, Shrugging Off Early Reports of $2 Trillion

MBS Day Ahead: Waiting On Stimulus Details, Shrugging Off Early Reports of $2 Trillion

A few hours after markets closed yesterday, news began coming out regarding a Biden aide mentioning tonight’s stimulus proposal would be in the $2 trillion neighborhood.  That’s quite a bit more than the $1.3 trillion that had been making the rounds a few hours prior (the same number was thrown around more than a month ago as well).  Treasuries reacted to this overnight with a whopping sell-off of 3bps.  This reflects the fact that markets have largely priced in some sort of $1.3+ trillion in additional spending/relief.  We won’t get a chance to any additional reaction until tomorrow’s trading session, as Biden won’t be speaking until after 7pm ET.

It’s another light day in terms of economic data, with Jobless Claims already out at 965k vs 795k forecast and 784k previously.  Yes, this is the wrong direction for an economy that’s supposed to be healing from Covid.  It’s hard to sort out the caveats.  On the one hand, we might conclude that states with stringent lockdowns are having an outsized impact, but several states WITHOUT stringent lockdowns saw significant spikes in claims.  On the other hand, we could focus on seasonal adjustments and the fact that past trends in seasonal hiring won’t necessarily line up with the patterns seen during the pandemic. 

Any way you slice it, it looks like Jobless Claims bottomed out at the end of October and have been rising unevenly since then.

20210114 open2.png

Bonus chart for today: mortgage rates vs 10yr Treasury yields

20210114 open.png


MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS

UMBS 2.0

102-29 : -0-02

Treasuries

10 YR

1.1040 : +0.0160

Pricing as of 1/14/21 9:46AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Thursday, Jan 14
8:30 Import prices mm (%) Dec 0.7 0.1
8:30 Export prices mm (%) Dec 0.4 0.6
8:30 Jobless Claims (k) w/e 795 787

Source: mortgagenewsdaily.com

Mortgage Borrowers Should Know Their Rates

Not knowing your mortgage rate can be an expensive mistake, especially in this rising interest rate market.

Yet nearly three-in-10 mortgage borrowers (29 percent) either didn’t know their mortgage rate or wouldn’t say, according to a survey by Bankrate.

This is a big problem, says Martin Choy, operations manager at Westwood Mortgage in Seattle.

“Most homeowners should know what their rate is. If they have an adjustable-rate mortgage, then they should contact their lender immediately and get their current rate,” Choy says.

Rates are climbing, so borrowers should act now

As rates continue to rise, this could be your last chance for many years to lock in a lower rate.

“During the big boom, before this last election, we could refinance mortgages at no cost because the rates were so low, but now the rates are heading up,” Choy says.

The average rates on 30-, 15- and 10-year fixed refinances have risen from a year ago, according to Bankrate’s weekly survey of large lenders. The benchmark 30-year fixed-rate mortgage rose to 4.70 percent as of July 11, 2018 from 4.13 percent a year earlier.

A $200,000 mortgage with a 4.70 percent interest rate costs $119 a month more in interest than the same mortgage with a 4.13 percent rate. As rates and mortgage amounts go up, the impact on your bottom line increases. Over time, this difference in rates can cost you thousands of dollars.

Good Candidates for Refinancing
When you refinance your mortgage, you pay off the remaining balance on your current loan and get a new one. You can get a new rate, new terms, or a new rate and new terms. You can get a cashout refinance where you tap into the equity to extract cash and then get a new mortgage. You can even pay money in and take out a smaller mortgage.

Those with ARMs may be good candidates for refinancing. As mortgage rates climb, so will your monthly payments. If you lock in a fixed-rate mortgage now, you may be able to save thousands of dollars later.

The same is true for people with high-rate mortgages who have since improved their credit.

“There are many variables in determining whether refinancing is a good option,” says Choy. “How much do you owe? How much is your house appraised for? Is your credit score good? If you’re in better financial shape now, both with your monthly debt ratio and credit score than when you got your mortgage, then you could qualify for better rates.”

Today, most people aren’t getting ARMs because the rates are about the same as fixed-rate mortgages, says Choy. “It’s always better to get a fixed-rate loan than an ARM when interest rates are equal. Now is a good time to refinance an ARM before rates get even higher.”

Cashout Refinance Options
If you have outstanding higher-rate consumer debt and an above-market mortgage interest rate, a cashout refinance might be a good option. That way you can consolidate all the debt into one presumably more affordable monthly payment.

Not only are mortgage rates rising, so are interest rates for credit card debt. Because credit card interest rates follow in lockstep with mortgage rates, people with credit card debt might be looking at higher monthly payments.

“With a cashout refi, you can use that money to pay off debt and get a new mortgage with better rates. That is an option for some homeowners,” says Choy.

What does refinancing cost?

Refinancing fees vary by lender and state, so be sure to shop around for specific costs. Calculate when you’ll break even on the new mortgage by taking into account the costs of refinancing and any prepayment penalty for paying off your mortgage early.

On average, borrowers can expect to pay between 3 and 6 percent of their balance in refinancing fees. Costs might include:

  • Application fee: This charge varies by lender and is used to cover processing your application and credit report. The cost ranges from $75 to $300.
  • Loan origination fee: The lender charges this fee for preparing your loan. This may be between 0 percent and 1.5 percent of the loan principal.
  • Points: You might pay loan-discount points, which is a one-time fee for reducing the interest rate on your loan. Each point is equal to 1 percent of the amount of your mortgage. There is another point-based fee charged by lenders to earn money on the loan. This latter fee of up to 3 percent of the loan principal can sometimes be negotiated.
    Other fees might include:
  • Appraisal fee
  • Title search/title insurance
  • FHA, RDS, or VA fees or PMI
  • Homeowner’s insurance
  • Attorney review
  • Inspection
  • Surveys

Sometimes these fees can be rolled into your new mortgage, or the lender will pay them in exchange for a higher interest rate. Refinances that don’t require borrowers to pay these up-front fees are known as “no-cost” refinancing.

Source: mortgagedaily.com

Rising Rents, Stagnant Wages, and the Burden of Unstable Housing

With rents rising and wages stagnant, affording rent can be an insurmountable burden.

While homelessness may not be viewed as a looming issue for those who are financially stable, it’s not as distant as some might think.

With rents rising faster than wages, the burden of affording rent is looming larger and larger for many Americans and, in, some cases becoming insurmountable.

According to the Zillow Group Consumer Housing Trends Report 2017, 79 percent of renters who moved in the last 12 months experienced an increase in their monthly rent before moving to a new place. And over half (57 percent) said that hike was a factor in pushing them out the door and into another rental. Only 21 percent of renter households didn’t report experiencing a rent increase.

Nearly a third (30 percent) of households nationwide, representing roughly 73 million adults, report they’re struggling or just getting by financially. And it’s no wonder; Americans spend on average a median of 29.1 percent of their income on rent, including many who spend a higher percentage but have lower incomes.

Increasingly, major metro areas are becoming out of reach for those who aren’t earning more than minimum wage, and this is becoming increasingly true even in markets that have historically been more affordable.

Take Houston, for instance, where the median low-income earner spends 65.1 percent of their income on the median bottom-tier rent. Then there’s notoriously expensive New York, where — along with San Francisco and Los Angeles markets — the median low-income wage will not even cover a low-end apartment. In New York alone, to afford apartments with median bottom-tier rents, renters need to shill out 111.8 percent of the median low-income wage.

With such large percentages of household incomes going toward rent, saving for the future is less of a priority — and a possibility. More than half (51 percent) of Americans say they don’t have enough money saved to support themselves for three months, according to a Zillow analysis of the Federal Reserve Board’s 2016 Survey of Household Economics and Decision-making.

Millions struggle to afford stable housing

According to the Zillow Group Report on Consumer Housing Trends 2017, today’s median household income for renters is $37,500, which equates to about $18 per hour — or 2.5 times the federal minimum wage of $7.25. Nationwide, in 2016, 2.2 million people lived off wages at or below the federal minimum wage, according to the U.S. Bureau of Labor Statistics.

When it comes to renting, there is no state where a 40-hour minimum wage is enough to afford a 2-bedroom apartment, according to the National Low Income Housing Coalition.

While renting is becoming increasingly more difficult, buying a home becomes a distant dream.“Honestly, if you’re making $37,500 per year and have no savings, it’s probably not feasible for you to buy in most markets,” Zillow Chief Economist Dr. Svenja Gudell says.

Across all states, the median renter can expect to pay $1,430 per month on rent. It’s no wonder many Americans are struggling financially — particularly in New York, Los Angeles, Washington D.C., and Seattle, where there’s also a stronger relationship between rising rents and an increase in the homeless population.

Homelessness by the numbers

Coast to coast, there are an estimated 550,000 homeless people, according to the U.S. Department of Housing and Urban Development.

But Zillow Research used statistical modeling to estimate the uncounted homeless population, unsheltered homeless people often missed during the One Night Counts, to estimate the true number of homeless people, a number much higher than the official estimates. And as rents climb, the numbers will only grow, especially in large, tight metros, where the rent burden can become life-altering.

Take New York City, for example. The metro has the largest population of homeless people in the nation. Last year, there were an estimated 76,411 people experiencing homelessness, according to Zillow’s estimates. If rents were to rise 5 percent, an additional 2,982 people would be forced to the streets.

And Los Angeles doesn’t fare much better. Given the same rent hike, an additional 1,993 people would fall into homelessness. And a rent hike of 5 percent isn’t implausible, especially given that in L.A., rents rose 4.4 percent over the past year.

The geography of social mobility

Right now in L.A., renters dish out $2,707 per month for the median rent, which is almost twice the national median rent and amounts to nearly half of the median household income in the metro. With such a substantial chunk of money spent every month on rent, it’s no surprise the metro has an estimated 59,508 people without a home.

But rents haven’t always been so unaffordable. Just 17 years ago, three of the top 20 metros were rent-burdened, meaning renters paid more than 30 percent of their income on living expenses. Today, however, the number of cities that have become unaffordable have grown exponentially.

Currently, renters in nine of the same top 20 metros can expect to spend 30 percent or more of their income on rent. The biggest share spent on rent comes from Los Angeles, where renters pay nearly half (49 percent) of their income on rent.

“The places where social mobility — the ability to climb the income ladder — is the greatest are now in places that are unaffordable for most people,” said Gudell. “San Jose or the Bay Area in general, parts of Boston, for example — these places have gotten to be so expensive that a lot of people who have an income of $37,500 a year will not be able to buy a home or even afford a family-sized rental.”

The costs of housing instability go beyond financial

Unfortunately, for too many, lack of affordable housing can complicate other critical aspects of life, including health and future livelihoods.

Individuals living in shelters are more than twice as likely to have a disability compared to the general population. This includes serious mental illnesses, conditions related to chronic substance abuse, diabetes, heart disease and HIV/AIDS, according to the U.S. Department of Housing and Urban Development.

Gudell says people have better outcomes when they aren’t constantly moving from place to place.

“It’s been shown that you have better outcomes if you live in a stable environment with less frequent moves, which is easier to attain when you own versus rent,” Gudell said. “So, if you take stable environments away from people, their outcomes will most likely be worse than they are today, and that has an impact on education, on health and on income growth in the future.”

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Source: zillow.com

How to remove FHA mortgage insurance – Bankrate.com

If you have an FHA loan, you might be wondering how to get rid of the mortgage insurance premium you’re paying.

Unlike conventional loans, FHA loans come with mandatory mortgage insurance regardless of the amount of your down payment, and cancelling it can be challenging, and in some cases, impossible. Here’s how to do it if you’re eligible.

What is an FHA mortgage insurance premium (MIP)?

FHA mortgage insurance protects against the risk that you default, or stop making payments, on your FHA loan. The Federal Housing Administration (FHA) insures your FHA loan in the event that this happens and you wind up being unable to pay it back. Your FHA mortgage insurance premium (MIP), along with the premiums paid by more than 817,000 other FHA loan borrowers last year, helps cover the cost of that insurance.

You already paid one portion of the MIP when you closed on your home — that was your upfront insurance. The upfront MIP equals 1.75 percent of the amount you borrowed, and was likely bundled into your loan and all those papers you signed before you got the keys to your home.

The second portion of the MIP is the part you’re paying now, your annual MIP, which varies based on individual loan terms. Annual MIP rates depend on three key factors:

  1. The total amount of your loan
  2. The length of time you agreed to pay it back
  3. The loan-to-value ratio (LTV)

Based on these factors, you’ll pay between 0.45 percent and 1.05 percent of the loan principal for your annual MIP.

  • The 0.45 percent rate applies if you have a 15-year loan and more than 10 percent equity in your home.
  • The 1.05 percent rate applies if you have a loan term longer than 15 years, and the amount you borrowed exceeded $625,500.
  • More than likely, you’re paying an annual MIP of 0.85 percent, which is the rate that applies to borrowers who put down less than 5 percent on a 30-year FHA loan for $625,500 or less.

Conventional PMI vs. FHA MIP

FHA loan borrowers aren’t the only borrowers who have to pay mortgage insurance. Borrowers with a conventional loan who made a down payment of less than 20 percent typically have to pay private mortgage insurance (PMI) premiums, which currently range from 0.58 percent to 1.86 percent of the loan principal.

Getting rid of PMI is fairly straightforward: Once you accrue 20 percent equity in your home, either by making payments to reach that level or by increasing your home’s value, you can request to have PMI removed. (Once you accrue 22 percent equity in your home, your lender automatically stops charging for the insurance.)

Can you cancel FHA MIP?

“There are a number of factors that come into play when determining whether or not the FHA mortgage insurance can be cancelled,” explains Alan Aldinger, vice president of media relations for PNC Bank. “The biggest factor is when the case number was assigned for a borrower’s current FHA loan.”

The first place to look is your loan origination date:

  • July 1991-December 2000: If your origination date falls between these two markers, you can’t cancel your FHA mortgage insurance premiums.
  • January 2001-June 3, 2013: Your MIP will be cancelled once you reach an LTV ratio of 78 percent.
  • June 3, 2013-present: Your MIP will only be cancelled once your mortgage is paid in full, unless you made a down payment of at least 10 percent. If so, your MIP will be cancelled after 11 years.

How to get rid of FHA MIP

If you want to stop paying mortgage insurance on your FHA loan, contact your lender to see if you have the ability to remove it. The dates above play a key role in any type of flexibility in your loan terms.

If your lender determines that the MIP can’t be eliminated, it’s time to consider whether you should refinance your FHA loan to a conventional loan. Here are a few key considerations to make before refinancing:

  • Credit score – What does your credit look like now versus what it looked like when you took out your FHA loan? If you’ve made good strides, you might qualify for a conventional loan with a better rate, and no PMI if your LTV is 80 percent or less.
  • LTV ratio – In addition to how much you’ve paid on your existing FHA loan, the value of your home is critical. Is the home worth more today due to rising property values or a remodeling project?
  • Closing costs – Refinancing isn’t free. You’ll need to pay closing costs on the new loan, which can add up to thousands of dollars. While it will feel good to be rid of annual MIP, make sure that refinancing will also save you a good chunk of money and be worth it in the long run. Bankrate’s mortgage refinance calculator can help you decide.

Learn more:

Source: bankrate.com

Optimum First Mortgage Review: #1 in Price and Customer Service?

Posted on January 19th, 2021

You’ve got to pretty confident to say you’re #1 in both price and customer service, but that’s exactly how “Optimum First Mortgage” describes itself.

The Southern California-based mortgage lender isn’t afraid to say it has the lowest rates in the industry, or the best customer service.

It’s a bold claim (or two), but based on their stellar reviews from past customers, they might be on to something. Let’s discover more about them.

Optimum First Mortgage Fast Facts

  • Direct-to-consumer mortgage lender
  • Founded in 2008, headquartered in Fountain Valley, CA
  • Offers home purchase loans and mortgage refinances
  • Also able to broker out loans via its wholesale lending partners
  • Claims to offer the lowest rates in the industry and top customer service
  • Employs roughly three dozen loan officers
  • Licensed to lend in 14 states nationwide

Optimum First Mortgage is a direct-to-consumer mortgage lender based in Fountain Valley, California, which is situated pretty close to Huntington Beach.

As noted, they claim to be #1 when it comes to mortgage rates and customer service, which they claim is possible because of their high volume of business.

In short, because they originate more home loans, they’re happy to earn less per loan and make up for it by simply closing more loans.

They also have the advantage of brokering out loans via their wholesale lender partners, and say they’ve got about 30 different rate sheets at their fingertips to find the right home for your mortgage.

So unlike a retail bank that might just have one set of rates, they can shop on your behalf to ensure your rate is competitive enough to stick with them.

At the moment, they’re licensed in 14 states, including Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Michigan, North Carolina, Ohio, Pennsylvania, Texas, Virginia, and Washington.

It’s unclear if they plan to expand to additional states, or if they’re happy focusing on a smaller chunk of the country.

How to Apply for a Home Loan with Optimum First Mortgage

  • You can apply directly from their website without human assistance
  • But you need to select a loan officer first to get started
  • Their digital mortgage loan application is powered by LenderHomePage
  • They say most of their loans fund within 20 days during typical market conditions

To get started, you can either head over to the Optimum First Mortgage website or simply call them up on the phone.

While you don’t need to speak to a human to begin the secure online mortgage application, they do ask that you select a loan officer from a drop-down list first.

You can either research individual loan officers first (via Zillow and other reviews), or just pick a name at random.

A better suggestion might be to research their loan officers, then call and ask to speak to your desired individual, then get some mortgage quotes from them.

Once you’ve done that and you’re happy with what they’re offering, you can apply via the website.

Ultimately, it doesn’t make a lot of sense to apply until you know a price, just like anything else you’d purchase.

Anyway, their digital loan application, known as SmartApp 1003, is powered by LenderHomePage. It should allow you to complete most of the process electronically.

Additionally, once submitted you’ll be able to track loan progress and opt-in to alerts to stay in the know.

Optimum First Mortgage says it can fund loans within 20 days, assuming market conditions are normal (not too busy).

Loan Programs Offered by Optimum First Mortgage

  • Home purchase loans
  • Mortgage refinance loans: rate and term, cash out, and streamline
  • FHA loans and VA loans
  • Stated income loans
  • Reverse mortgages
  • Fixed-rate loans in the following terms: 30, 27, 22, 20, 15, 12, 10 and 8 years
  • Adjustable-rate mortgage options: 3/1 ARM, 5/1 ARM, 7/1 ARM, and 10/1 ARM

Optimum First Mortgage Rates

While they claim to have the lowest rates in the industry, they don’t post them on their website.

That’s fine, as long as the mortgage rate quote you receive is to your liking, but it’s always nice to see something advertised.

Optimum First Mortgage says its loan pricing is “second to none” because they shop other lenders in an effort to secure the best deal for their customers.

They say they can lock your mortgage rate the same day and if rates happen to improve, they offer a float down option.

It’s unclear what lender fees they charge, but my assumption is they do a lot of no cost refinance loans where the lender fees are absorbed via a slightly higher mortgage rate.

Still, it’d be nice to know what they charge, such as an application fee, origination fee, and so on.

You can fill out their “quick quote” form online, but it will require your contact information and likely an inbound call from one of their licensed loan officers.

Alternatively, you might want to call in first and ask for some quotes, then decide if you want to proceed.

As always, take the time to shop their rates/fees with other lenders to ensure you land the best deal on your mortgage.

Just because they say they’re the best doesn’t mean they are.

Optimum First Mortgage’s Lifetime Rate Protection Guarantee

Once you close a loan with Optimum First Mortgage, you will be able to take advantage of their Lifetime Rate Protection Guarantee.

Simply put, if mortgage rates fall and a refinance makes sense, they will offer you a no cost refinance for life.

They say you’ll pay “absolutely no closing fees,” which will be absorbed by them and not added to the loan balance.

While a deposit for the home appraisal fee is still required, it will be refunded upon closing.

As you might suspect, taxes, insurance, lender related payoff fees, and mortgage impounds will still remain the client’s responsibility (if applicable).

To qualify, you’ll need to supply your signed Rate Protection Guarantee Certificate from your previous loan, and at least 180 days must have passed since your previous loan funding date.

Additionally, the refinance must meet Fannie Mae’s conforming loan limit guidelines and the loan amount must be equal to or greater than $125,000 on an owner-occupied property.

As with all of these types of deals, you still technically need to shop around to see what other mortgage lenders can offer for a no cost loan.

Even if they don’t charge fees (or third-party fees for that matter), another lender might still offer a lower mortgage APR when all is said and done.

But it’s still a nice perk if you use them for one transaction, as you can always inquire about another mortgage refinance without the typical costs
(how soon can I refinance?).

Optimum First Mortgage Reviews

Optimum First Mortgage seems to be very consistent in terms of customer satisfaction. Remember, they say they’re #1 when it comes to customer service.

Lock in a lower rate.

On Zillow, they have a 4.96-star rating out of 5 from nearly 500 reviews, and a lot them indicate that the interest rate received was lower than expected.

And on Yelp, a 4.5-star rating from about 300 reviews. On Google, an even stronger 4.8-star rating from nearly 200 reviews.

On TrustLink, they scored 4.8 out of 5 from nearly 1,200 customer reviews, so again more of the same.

Lastly, while they are not Better Business Bureau accredited, they do have a pretty decent ‘A-’ rating based on complaint history. They’ve also got a solid 4.88/5 rating based on customer reviews.

So all in all, they seem to live up to their claim of providing excellent customer satisfaction, though they might not be perfect.

In closing, they might be a good choice for an existing homeowner looking to refinance a mortgage to obtain a lower rate and/or cash out.

Optimum First Mortgage Pros and Cons

The Good

  • Can apply for a mortgage online in minutes
  • Offer a secure digital loan application
  • Say they offer the lowest rates in the industry
  • Lifetime Rate Protection Guarantee
  • Excellent customer reviews
  • A- BBB rating
  • Very highly rated by past customers
  • Free mortgage calculators on their website

The Maybe Not

  • Only licensed in a handful of states
  • Limited physical branches
  • Do not list mortgage rates or lender fees on their website
Lock in a lower rate.

Source: thetruthaboutmortgage.com