Source: cosmopolitan.com

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Editor’s Note: Parts of this story were auto-populated using data from Curinos, a mortgage research firm that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our methodology here.

Both 30-year and 15-year fixed mortgage rates were up over the past week, according to Curinos data analyzed by MarketWatch Guides. Today, the 30-year fixed-rate mortgage stands at 7.45% and the 15-year fixed rate is 6.73%.

Though the Federal Reserve chose to hold interest rates steady in its first meeting of 2024, recent economic signals for prospective homebuyers continue to be positive. Last week, two promising pieces of economic data were released.

The Mortgage Bankers Association (MBA) published data on Wednesday showing that mortgage applications increased by 3.7% week-over-week. While this is still lower than a year previously, home-buying activity is trending upward. 

Additionally, Fannie Mae’s latest Home Purchase Sentiment Index shows that prospective homebuyers are increasingly optimistic about rates falling this year. The index increased 3.7 points in January, reaching its highest level since March 2022, and the share of consumers expecting mortgage rates to drop over the next 12 months increased from 31% to 36%.

Here are today’s average mortgage rates: 

  • 30-year fixed mortgage rate: 7.45%
  • 15-year fixed mortgage rate: 6.73%
  • 5/6 ARM mortgage rate: 7.01%
  • Jumbo mortgage rate: 7.24%

Current Mortgage Rates

Product Rate Last Week Change
30-Year Fixed Rate 7.45% 7.19% +0.26
15-Year Fixed Rate 6.73% 6.57% +0.16
5/6 ARM 7.01% 6.85% +0.16
7/6 ARM 7.22% 7.07% +0.15
10/6 ARM 7.37% 7.21% +0.16
30-Year Fixed Rate Jumbo 7.24% 7.06% +0.18
30-Year Fixed Rate FHA 7.24% 6.93% +0.31
30-Year Fixed Rate VA 7.21% 6.99% +0.22

Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Monday, February 19, 2024. Actual rates may vary.

>> View historical mortgage rate trends

Mortgage Rates for Home Purchase

30-year fixed-rate mortgages are up, +0.26

The average 30-year fixed-mortgage rate is 7.45%. Since the same time last week, the rate is up, changing +0.26 percentage points

At the current average rate, you’ll pay $695.79 per month in principal and interest for every $100,000 you borrow. You’re paying more compared to last week when the average rate was 7.19%. 

15-year fixed-rate mortgages are up, +0.16

The average rate you’ll pay for a 15-year fixed-mortgage is 6.73%, an increase of +0.16 percentage points compared to last week. 

Monthly payments on a 15-year fixed-mortgage at a rate of 6.73% will cost approximately $883.80 per $100,000 borrowed. With the rate of 6.57% last week, you would’ve paid $874.96 per month.

5/6 adjustable-rate mortgages are up, +0.16

The average rate on a 5/6 adjustable rate mortgage is 7.01%, an increase of +0.16 percentage points over the last seven days. 

Adjustable-rate mortgages, commonly referred to as ARMs, are mortgages with a fixed interest rate for a set period of time followed by a rate that adjusts on a regular basis. With a 5/6 ARM, the rate is fixed for the first 5 years and then adjusts every six months over the next 25 years. 

Monthly payments on a 5/6 ARM at a rate of 7.01% will cost approximately $665.97 per $100,000 borrowed over the first 5 years of the loan. 

Jumbo loan interest rates are up, +0.18

The average jumbo mortgage rate today is 7.24%, an increase of +0.18 percentage points over the past week. 

Jumbo loans are mortgages that exceed loan limits set by the Federal Housing Finance Agency (FHFA) and funding criteria of Freddie Mac and Fannie Mae. This generally means that the amount of money borrowed is higher than  $726,200.

Product Monthly P&I per $100,000 Last Week Change
30-Year Fixed Rate $695.79 $678.11 +$17.68
15-Year Fixed Rate $883.80 $874.96 +$8.84
5/6 ARM $665.97 $655.26 +$10.71
7/6 ARM $680.14 $670.01 +$10.13
10/6 ARM $690.33 $679.47 +$10.86
30-Year Fixed Rate Jumbo $681.50 $669.34 +$12.16
30-Year Fixed Rate FHA $681.50 $660.61 +$20.89
30-Year Fixed Rate VA $679.47 $664.63 +$14.84

Note: Monthly payments on adjustable-rate mortgages are shown for the first five, seven and 10 years of the loan, respectively. 

Factors That Affect Your Mortgage Rate

Mortgage rates change frequently based on the economic environment. Inflation, the federal funds rate, housing market conditions and other factors all play into how rates move from week-to-week and month-to-month. 

But outside of macroeconomic trends, several other factors specific to the borrower will affect the mortgage interest rate. They include: 

  • Financial situation: Mortgage lenders use past financial decisions of borrowers as a way to evaluate the risk of loaning money. 
  • Loan amount and structure: The amount of money that bank or mortgage lender loans and its structure (including both the term and whether its a fixed-rate or adjustable-rate).  
  • Location: Mortgage rates vary by where you are buying a home. Areas with more lenders, and thus more competition, may have lower rates. Foreclosure laws can also impact a lender’s risk, affecting rates.
  • Whether borrowers are first-time homebuyers: Oftentimes first-time homebuyer programs will offer new homeowners lower rates. 
  • Lenders: Banks, credit unions and online lenders all may offer slightly different rates depending on their internal determination.

How To Shop for the Best Mortgage Rate

Comparison shopping for a mortgage can be overwhelming, but it’s shown to be worth the effort. Homeowners may be able to save between $600 and $1,200 annually by shopping around for the best rate, researchers found in a recent study by Freddie Mac. That’s why we put together steps on how to shop for the best mortgage rate. 

1. Check credit scores and credit reports

A borrower’s credit situation will likely determine the type of mortgage they can pursue, as well as their rate. Conventional loans are typically only offered to borrowers with a credit score of 620 or higher, while FHA loans may be the best option for borrowers with a FICO score between 500 and 619. Additionally, individuals with higher credit scores are more likely to be offered a lower mortgage interest rate. 

Mortgage lenders often review scores from the three major credit bureaus: Equifax, Experian and TransUnion. By viewing your scores ahead of lenders considering you for a loan, you can check for errors and even work to improve your score by paying down balances and limiting new credit cards and loans. 

2. Know the options

There are four standard mortgage programs: conventional, FHA, VA and USDA. To get the best mortgage rate and increase your odds of approval, it’s important for potential borrowers to do their research and apply for the mortgage program that best fits their financial situation. 

The table below describes each program, highlighting minimum credit score and down payment requirements. 

Though conventional mortgages are most common, borrowers will also need to consider their repayment plan and term. Rates can be either fixed or adjustable and terms can range from 10 to 30 years, though most homeowners opt for a 15- or 30-year mortgage. 

3. Compare quotes across multiple lenders

Shopping around for a mortgage goes beyond comparing rates online. We recommend reaching out to lenders directly to see the “real” rate as figures listed online may not be representative of a borrower’s particular situation. While most experts recommend getting quotes from three to five lenders, there is no limit on the number of mortgage companies you can apply with. In many cases, lenders will allow borrowers to prequalify for a mortgage and receive a tentative loan offer with no impact to their credit score.

After gathering your loan documents – including proof of income, assets and credit – borrowers may also apply for pre-approval. Pre-approval will let them know where they stand with lenders and may also improve  negotiating power with home sellers. 

4. Review loan estimates

To fully understand which lender is offering the cheapest loan overall, take a look at the loan estimate provided by each lender. A loan estimate will list not only the mortgage rate, but also a borrower’s annual percentage rate (APR), which includes the interest rate and other lender fees such as closing costs and discount points. 

By comparing loan estimates across lenders, borrowers can see the full breakdown of their possible costs. One lender may offer lower interest rates, but higher fees and vice versa. Looking at the loan’s APR can give you a good apples-to-apples comparison between lenders that takes into account both rates and fees.

5. Consider negotiating with lenders on rates

Mortgage lenders want to do business. This means that borrowers may use competing offers as leverage to adjust fees and interest rates. Many lenders may not lower their offered rate by much, but even a few basis points may save borrowers more than they might think in the long run. For instance, the difference between 6.8% and 7.0% on a 30-year, fixed-rate $100,000 mortgage is roughly $5,000 over the life of the loan. 

Expert Forecasts for Mortgage Rates

Mortgage rates have cooled significantly over the past several months. After the 30-year fixed-rate mortgage hit 8% last October, it ended 2023 closer to 7%. In fact, the average for Q4 2023 was 7.3%. 

Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year. 

Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024. Meanwhile, the MBA’s forecast for Q4 2024 is 6.1% and 5.9% for Q1 2025.

More Mortgage Resources

Methodology

Every weekday, MarketWatch Guides provides readers with the latest rates on 11 different types of mortgages. Data for these daily averages comes from Curinos, LLC, a leading provider of mortgage research that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our comprehensive methodology here.

Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.

Source: marketwatch.com

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

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Hedging, Renovation, Home Equity, Accounting Products; U.S. Population Stats; Fannie Earnings of $3.9 Billion

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Thu, Feb 15 2024, 11:01 AM

In my travels I’ve eaten some unusual foods, although maybe not this unusual, but here in Boise the talk is about how unusual it is that applications and locks have suddenly shot up in the last several business days. It is nice to hear and see the hustle and perseverance from originators pay off some. Taking a look at the big picture, per the U.S. Census Bureau, nearly 40 percent of all homeowners own their homes free and clear, or 33.4 million mortgage-free, single-family homes and condos. And some percentage of those have credit card debt that is 25 or 30 percent, so a tax-deductible loan at 7 percent can be pretty attractive. Sure enough, refis are hitting the numbers: as reported last month, 89 percent of people with mortgages have an interest rate below 6 percent, down from a record 93 percent in 2022. (Today’s Commentary podcast can be found here and this week’s is sponsored by Lender Toolkit and its AI-powered AI Underwriter and Prism borrower income automation tools. By providing lightning-fast underwriting decisions, your market reputation with borrowers and Realtors will soar, which means more repeat and referral business. Hear an interview with Stavvy’s Angel Hernandez on industry and regulatory affairs, and the state of loss mitigation solutions.)

Lender and Broker Services, Products, and Software

Ready to sprint? After successfully automating the front end of the mortgage loan process, is the industry ready to conquer what remains? To those with the vision of responsible innovation, the answer is ‘yes.’ Much of the mortgage lifecycle is still reliant on outmoded, labor-intensive processes and fragmented legacy technology. To address this disconnect, FHFA convened industry participants to explore data digitization as the vehicle for change. Clarifire’s current blog, “Responsible Innovation – A Future Vision for the Mortgage Industry,” looks at the five correlating challenges that continue to impact lenders, vendors, and regulators. It’s time to implement responsible automation with CLARIFIRE® promoting borrower engagement, 24/7 self-serve access, dynamic automated rapid results, operational efficiencies, and meaningful cost savings. Meet us at MBA’s Servicing Solutions Conference & Expo and learn how to deliver cohesive innovation with a better approach, better results, and better software. CLARIFIRE®, truly BRIGHTER AUTOMATION®.

“When it comes to delivering a seamless mortgage experience, 2024 borrowers are looking for a swift, accurate and modern approach. How can you deliver on all three? That’s where automation comes in. In this new article from ICE Mortgage Technology®, we uncover common automation misconceptions and share the steps lenders can take to transform their mortgage processes and meet today’s borrowers where they are. Read the full article to learn how leveraging ICE Data and Document Automation™ in Encompass® can help lenders reduce manual efforts so they can reignite, reinvent, and refocus their business strategy to ensure its future-proof.”

Make your general ledger profitable and run your business more efficiently with Loan Vision and LV-PAM. Instead of “staying alive until ‘25”, with Loan Vision, a software built by the mortgage industry for the mortgage industry, you can “produce more in 24!” Customers on Loan Vision see improvements of 30 percent+ decrease in days to close the books, 20 percent+ reduction in accounting headcount, complete LOS to G/L automation, and improved reporting and visibility. Interested in learning how Loan Vision can help you run a more efficient and profitable company? Contact Carl Wooloff to schedule a call today.

Managing incoming referrals from a branch network is a pain… but not with LiteSpeed by LenderLogix! With LiteSpeed, each branch can have its own online loan application that seamlessly integrates into Encompass® by ICE Mortgage Technology™. All the tracking you need to make sure you’re getting the most out of your branch network. See why banks and credit unions are making the switch to LenderLogix.

TPO Products for Brokers and Correspondents

“Button Finance is excited to launch our new home equity loan offerings tailored for investor properties and those qualifying via bank statements, exclusively for our broker partners. We’re extending loans up to $500k with competitive CLTVs, up to 80 CLTV for investor properties and 85 CLTV for bank statement loans. Our flexible terms accommodate up to 50 percent DTI and extend up to 30 years, ensuring a fit for a wide range of financial situations. Importantly, these additions come without any changes to our existing programs, which continue to offer rates as low as 8 percent, with correspondents earning up to 7.85 percent of the loan balance. Please email us for more information or to sign up!”

Renovation lending fuels loan production, boosts profits, and fortifies housing inventory in competitive markets. Explore the rising demand for renovation loans with Planet Home Lending’s Guide to Renovation lending, tailored for correspondent lenders. From seizing opportunities to fostering robust partnerships, it offers a step-by-step roadmap. Request your exclusive copy today.

AmeriHome Mortgage, the 2nd largest correspondent investor in the country, is officially the #4 Overall Lender according to Inside Mortgage Finance! Backed by the strength of Western Alliance Bank, AmeriHome wants to speak to you about how a relationship with it will help you navigate and succeed in this ever-changing industry. By combining Western Alliance Bank’s Warehouse Lending and MSR and Note Financing tools, as well as its Treasury Management expertise, with AmeriHome’s industry leading loan purchase platform, this is a “must-have” relationship for mortgage bankers of all shapes and sizes. AmeriHome recently enhanced key overlays, including removal of their max cash out overlay on VA loans and their Best Efforts Relock policy… Connect with your sales rep for details. Don’t miss AmeriHome in Houston for TMBA Southern Secondary later this month as well as MCT Exchange in March! Check Upcoming Events for details, find your sales rep here, or send them an email to learn more about partnering with AmeriHome!

“Citibank N.A. remains committed to sustainable growth and responsible expansion of the Correspondent Lending channel. One of the elements we’re focused on is building new and existing relationships with Non-Delegated, Best-Efforts lenders who have a passion for supporting consumers in underserved markets. Following a significant investment in our Non-Delegated platform featuring enhanced capabilities and increased capacity, Citi Correspondent Lending is working to create opportunities for smaller mortgage bankers wanting to make a sustainable impact in their local communities. We offer a robust set of Community Reinvestment Act (CRA) pricing incentives (available at point of sale through Optimal Blue and ICE’s EPPS pricing engines) as well as a growing suite of community lending-focused programs. To learn more about these and all that Citi Correspondent Lending has in flight, contact us or complete and return our Prospective Correspondent Questionnaire.”

Demographics for Originators

The U.S. Census Bureau projected that the U.S. population has increased 1,759,535 (0.53 percent) from Jan. 1, 2023, and 4,443,957 (1.34 percent) from Census Day (April 1) 2020. In January 2024, the United States is expected to experience one birth every 9.0 seconds and one death every 9.5 seconds. Meanwhile, net international migration is expected to add one person to the U.S. population every 28.3 seconds. The combination of births, deaths and net international migration increases the U.S. population by one person every 24.2 seconds. The projected world population on Jan. 1, 2024, was 8,019,876,189, an increase of 75,162,541 (0.95 percent) from New Year’s Day 2023. During January 2024, 4.3 births and 2.0 deaths are expected worldwide every second.

The 2024 NextGen Homebuyer Report, a research project developed in partnership with National MI to provide practical insights into the behavior and preferences of the next generation of homebuyers, is out. “In partnership with National MI, Kristin Messerli has surveyed over 5,000 NextGen homebuyers over the past 4 years to bring fresh insights to the mortgage industry.

The 2024 report analyzes data from a January survey of 1,000 Gen Z and Millennial respondents to gain a deeper understanding of NextGen homebuyers’ challenges, motivations, and behaviors. Common themes of this report include skepticism about the market, lack of confidence in experts, and a desire for education.”

Per the survey, over half of Gen Z and Millennials are not confident homeownership will be accessible to the next generation. 51 percent of them are not confident in their knowledge of homebuying, and 54 do not trust lenders to help them make smart decisions about their future. So, if you’re a lender, you know where to put some resources!

Conventional Conforming Updates

Yesterday Freddie Mac announced its earnings, and today it was Fannie Mae’s turn. Fannie saw $17.4 billion in annual net income for 2023 and $3.9 billion in fourth quarter 2023 net income, with net worth reaching $77.7 billion as of December 31. Net income increased $4.5 billion in 2023 compared with 2022, primarily driven by a $7.9 billion shift to a benefit for credit losses in 2023 from provision for credit losses in 2022.

Freddie Mac announced that Eric Wilson and Jonathan Kunkle have been named vice presidents of Seller Engagement for the Single-Family Division. In their roles, Eric will oversee Eastern Regions of the country and Jonathan will lead Western Regions. Both will establish strategic direction and provide the primary source of market intelligence and seller business perspective within Freddie Mac for their regions.

Fannie Mae February Selling Guide SEL-2024-01 includes multiple topics such as expanding the value acceptance + property data offering to include condos, clarifies the qualifying rate for 7- and 10-year ARMS, allows cash-out refinances for manufactured homes with terms up to 30 years, updates eligible types of nontraditional credit references, clarifies policies for the use of business income, clarifies property insurance coverage requirements, updates mortgage origination definitions, and includes other miscellaneous updates.

Effective March 28, the process for submitting contribution credits with capitalized modification expenses with Fannie Mae will change. The new line-item Contribution to Cap Advances must be used for this type of contribution. In the interim, servicers may utilize the Escrow Balance line item. Fannie Mae’s Servicer Expense Reimbursement team offers fast and efficient reimbursement of expenses incurred while servicing Fannie Mae loans.

With AmeriHome Mortgage Announcement Number 20240204-CL, AmeriHome clarified that Texas Section 50(a)(6) loans are not eligible for temporary interest rate buydowns with Fannie Mae loan programs.

Capital Markets

Are you looking for tools to improve profitability and efficiency in your mortgage loan sale process? In a recent case study, Vellum Mortgage describes how they were able to save $50,000 through AOTs, add three new investors, and save twelve hours a month with MCT. “I always send my bid tapes out to my approved and unapproved investors in MCT Marketplace,” said Ashley Puckett, Senior Capital Markets Analyst at Vellum Mortgage. “It’s great to see those shadow bids come in and then decide if we want to sign up with a certain investor because their executions have been strong lately.” Vellum Mortgage was able to leverage MCT’s software and expertise to achieve their goals after switching from their previous hedge advisor. Read the full case study or join MCT’s newsletter for information on how MCT is helping clients achieve their goals.

Investors hoping for early and aggressive Fed rate cuts in 2024 sit disappointed, with the hotter than expected reading for both the headline and core inflation numbers forcing those investors to once again reconcile with a higher for longer interest rate environment.

Mortgage rates are on the rise, and now sit at a two-month high after a CPI-inspired selloff for risk assets earlier this week. Blame investor (over)optimism or blame the Fed, but the true blame lies with sticky inflation. The core inflation rate has been steadily rising on a month-over-month basis since the summer. Pricing in Fed Fund futures now implies between three and four 25 basis point cuts for the year, beginning in June, a significant departure from the seven rate cuts that were priced in just a month ago. The risk now is that inflation continues to accelerate, sending bond prices lower.

Bonds rebounded somewhat yesterday from the sell-off triggered by Tuesday’s inflation data and reset in Fed rate cut expectations. It’s much needed after U.S. mortgage rates rose last week to a two-month high. You may be asking yourself what is giving the Fed pause before it is willing to cut rates? There are a few key points of uncertainty for policymakers: A hot economy, geopolitical risk, and financial decisions. Fed Governor Barr said yesterday that the Fed needs to see more data indicating inflation is approaching 2 percent before it begins easing, supporting Fed Chair Powell’s cautious approach. Chicago Fed President Goolsbee said a few months of slightly higher prices would still be consistent with a path back to target. There was some assistance in bond pricing yesterday after the Bureau of Labor Statistics’ downward revision to December PPI to -0.2 percent from -0.1 percent.

Today’s economic calendar is jam-packed with data, including some of the “first-tier” variety. It is already under way with retail sales for January (-.8 percent, worse than expected, ex-auto -.6). Sales were expected to slip 0.1 percent month-over-month versus 0.6 percent previously in December. We’ve also received Empire manufacturing for February (-2.2 percent), import and export prices for January (), Philadelphia Fed manufacturing for February (5.2 percent, higher than expected), and weekly jobless claims (212k, down from 220k). Later today brings industrial production and capacity utilization for January, December business inventories, the NAHB Housing Market Index for February, various Treasury auctions headlined by 20-year bonds, 30-year TIPS, and reopened 2-year FRNs, and Freddie Mac’s latest Primary Mortgage Market Survey. Two Fed speakers are scheduled, Governor Waller and Atlanta President Bostic. We begin the day with Agency MBS prices better by about .125 and the 10-year yielding 4.21 after closing yesterday at 4.27 percent. The 2-year is at 4.53.

Employment

Spring EQ’s Retail & TPO divisions continue to experience rapid growth as demand for home equity solutions accelerates. To meet this demand, Spring EQ is hiring licensed MLOs in Pennsylvania, New Jersey, and Ohio for its retail channel and remote Senior Account Executives for its Wholesale and Correspondent channels. Explore Spring EQ job postings and come join our growing team of fun and experienced mortgage professionals! At Spring EQ our primary focus is second mortgages. So, think of us first for all your seconds. Don’t wait, start the application process today!

In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking to create lasting Realtor and builder relationships at a bank focused on the market today. Banner has opportunities for lenders looking for local decision making with FHA, VA, USDA, state bond and true Portfolio lending opportunities along with servicing retained Fannie and Freddie loans to assist in client retention. Additional highlighted products cover CRA lending with private label no payment down payment assistance to help assist all borrowers with the right opportunity. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.

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

Source: mortgagenewsdaily.com

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A bill introduced in the New Jersey Senate would require face-to-face counseling for the state’s reverse mortgage transactions and would void any loans executed without proof of such counseling having taken place. The bill is currently awaiting deliberation in the state Senate’s commerce committee.

The bill, S2520, would also offer a seven-day right of rescission on any reverse mortgage transaction, allowing a borrower to cancel the loan within that window without a penalty.

Bill proposal, lawmaker concerns

The current version of the bill was introduced earlier this month by state Sen. Shirley Turner (D), who represents New Jersey’s 15th district encompassing Hunterdon and Mercer counties. Turner originally introduced a similar bill in 2016, she told RMD in an interview.

Turner explained that her primary concern when initially introducing the bill came from a distressed constituent whose elderly mother lost her home after taking out a reverse mortgage without fully understanding the requirements of the loan, the senator said.

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New Jersey State Senator Shirley Turner (D).

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New Jersey State Sen. Shirley Turner (D)

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New Jersey State Sen. Shirley Turner (D)

“His mother had taken out a reverse mortgage unbeknownst to him and he was very distraught because he didn’t learn of the reverse mortgage until it was too late for him to intervene,” Sen. Turner explained to RMD. “That was when he contacted me and he also contacted the state attorney general. We both investigated and found out that there was nothing that we could do because it was too late in the process.”

The constituent had hired his own lawyer, but his mother ended up having to leave the home after falling behind on associated taxes.

“She just fell further and further behind, and did not tell [her son] until it was too late, when she was getting the notices threatening to evict her from the house,” Turner said. “And she was then, of course, extremely upset because that was the house that she had lived in — and thought she would die in — because she had lived there for 60 years.”

The home, Turner added, had been built by the woman’s late husband in the mid-1950s. That made the senator concerned about the reverse mortgage industry’s marketing activities to borrowers, particularly those who might be dealing with the recent loss of a spouse.

Industry response

Turner’s bill would have a “chilling” effect on reverse mortgage business in the state of New Jersey, according to a letter submitted to the lawmaker’s office on Feb. 13 by the National Reverse Mortgage Lenders Association (NRMLA).

When asked if she had seen the letter, Turner said it had not yet arrived at her office as Friday.

NRMLA contends that the in-person requirement would dampen reverse mortgage availability in the state, primarily since most reverse mortgages originated in New Jersey are Federal Housing Administration (FHA)-sponsored Home Equity Conversion Mortgages (HECMs).

FHA’s HECM program already requires counseling prior to the closing of a reverse mortgage from agencies approved by the U.S. Department of Housing and Urban Development (HUD), and HUD requirements dictate that “clients may receive telephone counseling unless such counseling is prohibited in their state.”

“[W]e further note that, as of today, it appears that only […] six counseling agencies in New Jersey are approved by HUD to provide reverse mortgage counseling,” NRMLA wrote.

NRMLA also points out that an in-person counseling requirement is not imposed by FHA or HUD for HECM loans, and that such a requirement in New Jersey would “have the unintended consequence of decreasing the availability of reverse mortgage counseling while simultaneously imposing unnecessary hardships on New Jersey seniors seeking a reverse mortgage loan,” the letter stated.

Turner explained that she would be happy to meet with NRMLA or any other organization that either supports or opposes any legislation she introduces.

“I always meet with everybody,” she said. “Not just those who support my bill but also those that oppose it. And hopefully, we can find common ground and everybody wins.”

In-person hurdles

An in-person counseling requirement remains law in Massachusetts, which contributed to the halting of reverse mortgage business throughout the state at the onset of the COVID-19 pandemic due to stay-at-home orders handed down by then-Gov. Charlie Baker (R) in an effort to arrest the spread of the virus.

Soon afterward, an emergency bill passed by the Massachusetts Legislature relaxed the in-person counseling requirement, particularly due to the susceptibility of older people to the effects of illness caused by COVID-19. Since that point, the legislature has considered permanently rescinding the in-person counseling requirement, citing post-pandemic challenges and a limited supply of HUD-approved counselors who serve the full state.

A permanent solution has not yet materialized, however, with the legislature instead opting for temporary extensions of the relaxed rule. The current extension is scheduled to expire at the end of March 2024.

Comparisons to Massachusetts

Reverse mortgage industry veteran George Downey of The Federal Savings Bank in Braintree, Massachusetts, has been a key figure in the industry’s efforts to change the law within that state. He offered his personal opinion on the New Jersey matter.

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George Downey

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George Downey

“Clearly, this is another well-intended but misguided initiative,” Downey said an interview, comparing the proposed New Jersey bill to the in-person provision in his state. “But in addition to the logistical reasons, attorneys I’ve spoken with agree with my opinion that the issue of disparate impact under the American Disabilities Act and Fair Credit Reporting Act (FCRA) could be a consideration.”

Disparate impact provisions in U.S. law refer to practices that may adversely affect one group of people within a protected class more than another, even though rules applied are ostensibly or formally neutral.

“As you bear down on this in-person counseling issue, it puts a protected class at a distinct disadvantage by requiring them to assume additional cost,” Downey said, primarily referring to transportation. Downey has had personal experience with disabled clients who had to shoulder high costs to reach an in-person counseling appointment.

“Just as easily, the counseling could have been accomplished with a phone call,” he said.

Source: housingwire.com

Apache is functioning normally

Shopping for your first home is an exciting time. You are choosing a place to plant yourself and bloom for many years to come.

However, home shopping is not all fun and games. Not only do you have to find the perfect home, but also the right financing terms for your new mortgage. If you have bad credit, you are likely worried about your mortgage options.

As a first-time homebuyer, the process of buying a home can be overwhelming. Before you lose hope, it is entirely possible to secure a home loan with bad credit. Many mortgage lenders offer subprime home loans that work specifically with borrowers with poor credit. We will dive into the details to help you get through the first-time home-buying process more easily.

How Bad Credit Can Affect Your Home Loan

Typically, lenders that approve loans to borrowers with bad credit offer less than favorable terms. In most cases, you can expect to pay a higher interest rate.

A slightly higher interest rate might not seem like a big deal. However, even a slight increase in your interest rate could result in thousands of dollars in interest payments over the course of your loan.

When you sort through your loan offers, make sure to run the numbers. You might not be willing to pay the premium rates for the opportunity to buy a home right now.

Other Factors that Mortgage Lenders Consider

As a borrower, your credit score is not the only factor lenders consider. Before a mortgage lender approves a large loan, it will look at various other factors, including:

  • The amount of money in your savings account. If you have a healthy savings account, that may offset your bad credit.
  • Income. The higher your income, the more likely you are to be approved.
  • Employment history. If you just landed a high paying job, then the lender might be less willing to work with you. However, consistently earning a high income for many years will strengthen your application.
  • Debt-to-income ratio. If you already have a high debt burden, then lenders may be less willing to work with you.
  • Current expenses. If your current rent payment is similar to the mortgage payment, then a lender may see that you are able to easily handle that expense.

When you go through the home buying process, expect to provide a lot of paperwork to verify this information. In many cases, you will be required to provide tax statements, paychecks, and more. However, if you stay organized throughout the process, your sanity will thank you later.

How to Secure Home Financing with Bad Credit

To qualify for a bad credit home loan, you will need to be willing to put in the time. Finding the best option for your situation may require some patience. Not all options will work for everyone, but it is likely that at least one option will work for everyone.

See Where You Stand

Before you start looking for homes, take a closer look at your financial health.

Start by checking your credit score. A free way to do this is through Credit Karma. Once you know where your credit score is, take the time to find your credit report. Once you have your credit report, read through for any errors. A mistake on your credit report may be dragging your score down. If you find any mistakes, you can dispute them.

After digging into your credit score, take a step back. Assess your savings. Have you grown it steadily? Either way, it is crucial to understand exactly how much house you can afford.

Consider Saving for a Larger Down Payment

One way to secure a mortgage loan with more favorable terms with bad credit is to provide a larger down payment. Bigger down payments give the mortgage lender reassurance that you are able to repay the loan.

For conventional loans, banks typically require a down payment of at least 20%, but there are many options for a lower down payment. But you can usually secure better terms if you wait until you’ve saved a sizable down payment.

Find A Lender that Will Work with You

Not every lender is willing to work with bad credit borrowers. Although, you may not be able to secure a conventional loan from a well-known bank, it is entirely possible to find a lender.

If you have bad credit, you’ll need to find a lender that offers subprime home loans or that works with government-backed programs.

Luckily, many mortgage lenders are likely willing to work with you. The tricky part can be finding your choices. Check out our top mortgage lenders to get started.

Financing Options for First Time Homebuyers with Bad Credit

The federal government offers several assistance programs for buying your first home. Take a minute to find out if you qualify for any of these programs.

FHA Loans

If you have bad credit, an FHA loan might be your best option. The minimum credit score to qualify for an FHA loan is just 500! Of course, some mortgage lenders may require a slightly higher score to approve you. But you can shop around to find a lender willing to work with you.

If your credit score is between 500 and 579, the Federal Housing Administration (FHA) requires a minimum down payment of at least 10%. However, if you have a minimum credit score of 580, you’ll only be required to put down 3.5%.

With FHA loans, a mortgage insurance premium (MIP) is required along with an upfront MIP fee of 1.75% of the loan amount.

As a first-time homebuyer with bad credit, the benefits of this program can help your home purchase go smoothly.

USDA Loans

If you are willing to live in a rural community, a USDA loan could be a suitable option. These loans are guaranteed by the United States Department of Agriculture, and don’t private mortgage insurance (PMI).

Typically, you’ll need a minimum credit score of 640 to score a USDA loan. However, a lower credit score does not automatically disqualify you.

If you have a low credit score, then the lender will look more closely at other contributing factors before deciding on your loan application. You may need to prove that your credit was damaged by something outside your control or provide credit references like utility statements to prove your creditworthiness.

VA Loans

A VA home loan is guaranteed by the Department of Veteran Affairs. If you meet the requirements of service, then you could qualify for a no down payment option to secure the home of your dreams.

In contrast to traditional lenders, the VA home loan program has less strict requirements when it comes to their loans. The goal of the program is to get the bravest in our nation into a safe home. With that, lenders that provide VA-backed loans can offer loans to borrowers with lower credit scores.

Almost every member or veteran of the military, reserve, or National Guard is eligible to apply for these loans. The first step you should take is to secure your Certificate of Eligibility. With that, you’ll be able to apply for a VA loan with an approved lender.

See also: How to Get a VA Loan with Bad Credit

Research State Assistance Programs

The U.S. Department of Housing and Urban Development works to provide affordable homeownership options throughout the country. In many states, they offer first-time homebuyers assistance.

Depending on your area and income, the type of assistance may vary. For example, in some areas, you may qualify for a down payment grant that will help you secure your home purchase. With a higher down payment, you may be able to offset the negative effects of your poor credit score.

Compare Mortgage Rates

Once you have determined the best path for you, it is time to compare lenders. If you take the time to shop around for the best loan terms, you stand to save thousands of dollars over the course of your loan.

Shopping around for the right lender might be the most important part of your entire home buying process. Find a lender that you are comfortable with and that is willing to work with your poor credit score.

Work on Your Credit Score

A surefire way to secure better mortgage terms is to improve your credit score. If you can wait on your home purchase, then you might have a stronger loan application.

Improving your credit score will take time. But if you put in the effort the long-term benefits are worth it. Not only will you be more likely to be approved for loans, but also will likely pay less in interest payments.

To start improving your credit score make sure to pay bills on time and work towards paying off your debt.

First-Time Home Buyer with Bad Credit FAQs

Can I buy a house with bad credit?

Yes, it is possible to get a home loan with bad credit. However, the interest rate and other loan terms may be more expensive than if you had good credit.

You may also need to have a bigger down payment and show proof of income. However, there are also lenders who specialize in offering mortgages to people with low credit scores.

What are the requirements for getting a mortgage with bad credit?

  • Have a steady income: Lenders want to know that you have a consistent income, so they will want to see evidence of your income such as pay stubs or W2s.
  • Have enough money saved for a down payment: With poor credit, most lenders will require a down payment of at least 5-10% of the purchase price.
  • Accept higher interest rates and fees: With a weak credit history, you may be required to pay higher interest rates and fees.
  • Find a cosigner: Having a cosigner can help you get approved for a mortgage with bad credit. The cosigner will be held responsible for the loan if you are unable to make your monthly mortgage payments.

What do mortgage lenders consider a bad credit score?

Lenders generally consider a credit score below 580 to be bad credit. Lenders may also consider scores between 580 and 669 to be fair credit. Credit scores of 670 or higher are typically considered good credit.

What is the minimum credit score needed for a mortgage?

Minimum credit scores needed for a mortgage varies by lender, but typically a score of 620 or higher is required for conventional loans, and a score of 500 or higher is required for FHA loans.

The minimum credit score needed for USDA loans is typically 640, and the minimum credit score needed for VA loans is typically 620.

What type of mortgage loan is best for someone with bad credit?

The best type of loan for someone with bad credit is usually an FHA loan. These loans are typically easier to qualify for than other types of loans, as they have more lenient credit score minimums and down payment requirements.

What other factors do lenders consider when evaluating my loan application?

Lenders will typically look at your credit score and credit report to assess your creditworthiness. They may also consider your down payment, debt-to-income ratio (DTI), income, employment history, and assets when evaluating your loan application.

Your down payment can show lenders that you are committed to the loan, and can also help to reduce the amount of the loan. Your DTI ratio is a measure of how much of your income is going towards paying off your existing debts. A higher DTI ratio can indicate to lenders that you may not be able to afford a loan.

Your income, employment history, and assets provide further evidence that you are a reliable borrower, and can help to establish your ability to repay the loan.

What is a conventional loan?

A conventional loan is a type of loan that is issued by private lenders and purchased by government-sponsored enterprises such as Fannie Mae and Freddie Mac.

How can I improve my credit scores?

  • Pay your bills on time: Payment history is the most important factor in your credit score, so be sure to make payments on all your bills on time.
  • Keep credit card balances low: Your credit utilization ratio, or the amount of available credit you are using, makes up 30% of your credit score. Try to keep your credit card balances low by using no more than 30% of your credit limit.
  • Don’t open too many new accounts: Opening too many accounts in a short period of time can be a red flag for lenders and can hurt your credit score.
  • Check your credit report: Make sure to regularly check your credit report for errors or other negative information that can hurt your score.
  • Consider a credit builder loan: Credit builder loans are designed to help people with no or low credit build a payment history and improve their credit score over time.

Bottom Line

Purchasing the home of your dreams with bad credit is not impossible. You will need to put in the time to figure out which path is the right one for you.

Once you see your financial path to your home, make steps towards that goal every single day. Your new home is not as far away as you think!

Source: crediful.com

Apache is functioning normally

A $150,000 mortgage will cost a total of $341,318 over the lifetime of the loan, assuming an interest rate of 6.5% and a 30-year term. It might be tempting to think that a $150,000 mortgage will cost…well, $150,000. But lenders need to earn a living for their services and mortgage loans come with interest.

What’s the True Cost of a $150,000 Mortgage?

The specific price you will pay to borrow $150,000 depends on your interest rate — which, in turn, is based on a wide range of factors including your credit score, income stability, and much more. Here’s what you need to know to get an estimate of how much a $150,000 home mortgage loan might cost in your specific circumstances.
💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Where Do You Get a $150,000 Mortgage?

Good news: There are many banks and institutions that offer $150,000 mortgages. For 2024, the maximum amount for most conventional loans is more than $750,000, so the loan you’re considering is well within reach. To see how your salary, debts, and down payment savings affect how much home you can afford, use a home affordability calculator.

However, it’s important to understand that even a $150,000 mortgage may cost far more than the sticker price after interest and associated fees. For instance, let’s say you purchase a $200,000 home with a 25% down payment and a $150,000 mortgage. If your interest rate is 7% and your loan term is 30 years, the total amount you’d pay over that time is $359,263.35 — which means you’d actually pay more than the home price ($209,263.35) in interest alone. (And that’s before closing costs, home insurance, property taxes, or mortgage insurance.)

At prices like that, it may seem like taking out a mortgage at all is a bad deal. Fortunately, property has a tendency to increase in value (or appreciate) over time, which helps offset the overall cost of interest. (Of course, nothing is guaranteed.)

Keep in mind that you can potentially lower the interest rate you qualify for by lowering your debt-to-income (DTI) ratio, improving your credit score, or increasing your cash flow by getting a better-paying job. Even a small decrease in interest can have a big effect over the lifetime of a loan. In our example above, with all else being equal, you’d pay only $139,883.68 in interest if your rate were 5% instead of 7% — a savings of nearly $70,000!

Recommended: The Best Affordable Places to Live in the U.S.

Monthly Payments for a $150,000 Mortgage

When you take out a $150,000 mortgage, you’ll repay it over time in monthly installments — of a fixed amount, if you have a fixed mortgage, or amounts that can change if you take out a variable rate loan.

Your monthly $150K mortgage payment includes both principal (the amount you borrowed) and interest (the amount you’re being charged), and may also wrap in your property taxes, homeowners insurance, and mortgage insurance if applicable. (You’ll only need to pay mortgage insurance if your down payment is less than 20%.)

But there is another caveat here that some first-time homebuyers don’t know about. Even if your mortgage payments are fixed each month, the proportion of how much principal you’re paying to how much interest you’re paying does change over time — a process known as the amortization of the loan. It’s a big word, but its bottom line is simple: Earlier on in the loan’s life, you’re likely paying more interest than principal, which increases the amount of money the bank earns overall. Later on in the loan, you’ll usually pay more principal than interest.

What to Consider Before Applying for a $150,000 Mortgage

Amortization is important to understand because it can affect your future financial decisions. For example, if you’re not planning on staying in your house for many years, you may find you have less equity in your home than you originally imagined by the time you’re ready to sell — because the bulk of your mortgage payments thus far have been going toward interest. It might also affect when it makes sense to refinance your mortgage.

Most lenders make it easy to make larger payments or additional payments against the principal you owe so that you can chip away at your debt total faster, but be sure to double-check that your lender doesn’t have early repayment penalties.

Of course, there are different types of home loans. Here are some sample amortization schedules for two $150,000 home loans. (You can also build your own based on your specific details with a mortgage calculator or an amortization calculator online.)

Amortization Schedule, 30-year, 7% Fixed

Years Since Purchase Beginning Balance Monthly Payment Total Interest Paid Total Principal Paid Remaining Balance
1 $150,000 $997.95 $10,451.73 $1,523.71 $148,476.29
3 $146,842.42 $997.95 $10,223.47 $1,751.98 $145,090.44
5 $143,211.82 $997.95 $9,961.01 $2,014.43 $141,197.38
10 $131,574.29 $997.95 $9,119.73 $2,855.71 $128,718.58
15 $115,076.63 $997.95 $7,927.12 $4,048.33 $111,028.30
20 $91,689.13 $997.95 $6,236.43 $5,739.01 $85,950.12
30 $11,533.47 $997.95 $441.97 $11,975.44 $0.00

Notice that, for more than the first half of the loan’s lifetime, you’ll pay substantially more interest than principal each year — even though your mortgage payments remain fixed in amount.

Amortization Schedule, 15-year, 7% Fixed

Years Since Purchase Beginning Balance Monthly Payment Total Interest Paid Total Principal Paid Remaining Balance
1 $150,000 $1,348.24 $10,314.21 $5,864.70 $144,135.30
3 $137,846.65 $1,348.24 $9,435.65 $6,743.26 $131,103.38
5 $123,872.65 $1,348.24 $8,425.46 $7,753.45 $116,119.20
7 $107,805.26 $1,348.24 $7,263.95 $8,914.96 $98,890.30
10 $79,080.41 $1,348.24 $5,187.43 $10,991.48 $68,088.93
12 $56,302.87 $1,348.24 $3,540.84 $12,638.07 $43,664.80
15 $15,581.80 $1,348.24 $597.11 $15,581.80 $0.00

While a shorter loan term may help you build equity in your home more quickly, it comes at the cost of a higher monthly payment.

How to Get a $150,000 Mortgage

To apply for a $150,000 mortgage, you can search for providers online or go into a local brick-and-mortar bank or credit union you trust. You’ll need to provide a variety of information to qualify for the loan, including your employment history, income level, credit score, debt level, and more.

The higher your credit score, lower your debt, and more robust your cash flow, the more likely you are to qualify for a $150,000 mortgage — and, ideally, one at the lowest possible interest rate. That said, mortgage interest rates are also subject to market influences and fluctuations, and sometimes rates are simply higher than others overall.
💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

The Takeaway

A $150,000 mortgage can actually cost far more than $150,000. Depending on your interest rate and your loan term, you may spend more than you borrowed in principal in the first place on interest, and you’ll likely pay a higher proportional amount of interest per monthly payment for about the first half of your loan’s lifetime.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much is $150K mortgage a month?

A 30-year, $150,000 mortgage at a 7% fixed interest rate will be about $998 per month (not including property taxes or mortgage interest), while a 15-year mortgage at the same rate would cost about $1,348 monthly. The exact monthly payment you owe on a $150,000 mortgage will vary depending on factors like your interest rate and what other fees, like mortgage insurance, are rolled into the bill.

How much income is required for a $150,000 mortgage?

Those who earn about $55,000 or more per year may be more likely to qualify for a $150,000 mortgage than those who earn less. Although your income is an important marker for lenders, it’s far from the only one — and even people who earn a lot of money may not qualify for a mortgage if they have a high debt total or a poor credit score. (Still, the best way to learn whether or not you qualify is to ask your lender.)

How much is a downpayment on a $150,000 mortgage?

To avoid paying mortgage insurance, you’d want to put down 20% of the home’s purchase price, which if you are borrowing $150,000 would be $50,000 for a home priced at $200,000. Some lenders allow you to put down as little as 3.5% of the home’s price. So if you had a $150,000 mortgage and put down 3.5%, your down payment would be $5,440 and the home price would be $155,440. (Keep in mind these figures do not include closing costs.)

Can I afford a $150K house with $70K salary?

Yes, as long as you don’t have a lot of other debt, you can probably afford a $150,000 home if you’re making $70,000 a year. There’s a basic rule of thumb to spend less than a third of your gross income on your housing. With an income of $70,000 per year, you’re making about $5,833.33 per month before taxes — and a third of that figure is $1,925. A $150,000 mortgage might have a monthly payment of as little as $998 per month, even with a 7% interest rate, so it should be affordable for you as long as you don’t have other substantial debts.


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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Source: sofi.com