If you live in Colorado or surrounding states, there’s a good chance you’ve heard of Cherry Creek Mortgage Company.
The retail mortgage lender is headquartered in Greenwood Village, Colorado, and does nearly half its total loan volume in the Centennial State.
They also have a sizable presence in California and Texas, along with Illinois, Oregon, Washington, and Wisconsin.
In all, they’re licensed in 41 states nationwide, which helped them generate nearly $9 billion in home loan origination volume in 2021.
Let’s learn more about Cherry Creek Mortgage to determine if they’re the right fit for your home loan needs.
Cherry Creek Mortgage Fast Facts
Retail mortgage lender founded in 1987
Headquartered in Greenwood Village, Colorado
Offer home purchase, refinance, and reverse mortgages
Originated over $70 billion in home loans since inception
Closed nearly $9 billion in home loans during 2021
Licensed in 41 states nationwide and D.C.
Acquired by Guild Mortgage on March 13th, 2023
Cherry Creek Mortgage Company has a pretty deep pedigree for a mortgage company, having been founded all the way back in 1987.
During those 33 years in business, the company managed to fund $60 billion in home loans for some 260,000 families across the nation.
The company offers home purchase loans, refinance loans, and reverse mortgages via the retail channel.
As noted, they’re licensed in 41 states (and D.C.), including Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, and Wyoming.
Their mission is to deliver a digital mortgage experience with a human touch, with a commitment to honesty and integrity in all that they do.
And their ultimate goal is to provide a mortgage to one out of every 100 home buyers in America.
Other than the Cherry Creek brand, they run several DBAs, including Premier Mortgage Group, America’s Mortgage, Reverse Mortgage USA, Rocky Mountain Mortgage, Swanson Home Loans, and Blue Spot Home Loans.
Update: In March 2023, Guild Mortgage acquired Cherry Creek Mortgage, including 68 branches in 45 states in order to expand its retail network.
Cherry Creek Mortgage Loan Process
You can apply online, by phone, or in person at one of their branches
Use their online loan officer directory to find an originator near you
They offer a digital mortgage experience powered by FasTrac
Streamlined underwriting process aimed at getting you approved fast
To get started, you can visit their website and click on the “Get Started” button. From there, you need to register to begin filling out a loan application online.
Alternatively, you can simply call them up on the phone to get connected with a loan officer, or use the “Find a Loan Expert” tab to find someone specific and/or nearby.
Cherry Creek also has physical branches in many of the states where they do business, so it may be possible to visit one and speak to a loan officer in person if that’s your thing.
They rely on their own proprietary technology known as FasTrac, which “streamlines the documentation required for submitting a loan to underwriting.”
It’s unclear if this is similar to some other technologies that allow you to link bank accounts, import W-2s, and so on, but it sounds like it.
The company says it offers a digital mortgage experience, so I assume you can upload documents, get real-time status updates, and conduct most of the process remotely.
Cherry Creek Mortgage Loan Options
Home purchase loans and refinance loans
Conventional loans backed by Fannie Mae and Freddie Mac
Government-backed mortgages (FHA/USDA/VA)
Jumbo home loans
Renovation loans (Fannie Mae HomeStyle and FHA 203k)
Construction loans
HUD-Section 184 Loans for Native Americans
Physician mortgages
Reverse mortgages
Cherry Creek offers home purchase financing, mortgage refinancing, home renovation loans, and reverse mortgages for seniors.
A good chunk of their production consists of conventional loans backed by Fannie and Freddie, with FHA loans their second most common offering.
They also offer jumbo loans for those with large loan amounts, VA loans for veterans and active duty, and USDA loans for those in rural areas.
If refinancing an existing mortgage, you can get a rate and term refinance or a cash out refinance.
Those purchasing a home with limited down payment funds can take advantage of their knowledge of down payment assistance programs, grants, and interest-free second mortgages.
And those building a new home can take advantage of long rate lock periods with float-down options.
They also have a Union Advantage Program that offers benefits to union members and their immediate family, including a $500 gift card after closing on a new purchase loan or refinance.
And they offer HUD-Section 184 Loans for Native Americans interested in purchasing a home, along with physician mortgages specially tailored for doctors.
You can get a fixed-rate mortgage or an adjustable-rate mortgage, with all the common varieties available such as a 30-year fixed or 15-year fixed, or a 5/1 ARM, 7/1 ARM, and so on.
Cherry Creek Mortgage Rates
Like a lot of other mortgage lenders, they don’t openly advertise their mortgage rates on their website for one reason or another.
As such, it’s difficult to determine how competitive they are mortgage pricing wise. The same goes for lender fees.
It’s unclear what they charge in the way of fees, such as a loan origination fee, so you’ll need to inquire about it and/or review your Loan Estimate if you get pricing from them.
Definitely take the time to shop around if getting a quote from Cherry Creek Mortgage to see low they stack up against other lenders.
Cherry Creek Mortgage Reviews
On Zillow, there are nearly 900 Cherry Creek Mortgage reviews at the moment and the company has a 4.97-star rating out of 5.
Many of the recent reviews indicated the interest rate was lower than expected, and others mentioned that fees/closing costs were also lower than expected.
If you want to see a specific Cherry Creek Mortgage loan officer’s reviews, look for their name on Zillow to fine-tune your results.
It’s difficult to find other companywide reviews, so you might be better served searching for reviews of local branches located near you.
The company is also Better Business Bureau accredited at both its headquarters and all its company-owned locations.
It enjoys an A+ rating from the BBB and had just a handful of customer complaints and reviews at last glance.
Cherry Creek Mortgage Pros and Cons
The Good Stuff
Offer all types of loans including reverse mortgages
Excellent reviews from past customers
Free mortgage calculators and eGuides on site
Offer a digital mortgage experience
Can apply directly on the website or visit a branch
If you reside in Arizona, there’s a really good chance you’ve driven by a billboard advertising NOVA Home Loans. I don’t even live in Arizona but always see their advertisements when visiting.
The direct-to-consumer mortgage lender has a huge presence in the Copper State, and actually generated about 65% of its business there last year. They are a top Arizona mortgage lender.
While they also have brick-and-mortar locations in nearby states like California, Colorado, Nevada, and Texas, the lion’s share of mortgages are on properties located in Arizona.
And that’s a big deal because the company originated nearly $8 billion in home loans in 2020, meaning everyone in Arizona has probably heard of them, and lots have a NOVA Home Loans mortgage.
Their second biggest state is Colorado, where they do about a quarter of total volume, so it’s clear that much of their mortgage lending happens between these two states.
NOVA Home Loans Fast Facts
Independent nonbank retail mortgage lender based in Tucson, Arizona
A top-100 mortgage lender nationally founded in 1980
Originated nearly $8 billion in home loans during 2020
About two-thirds of its volume came from Arizona, and a quarter from Colorado
Licensed in 14 states including Arizona, California, Colorado, Florida, Illinois, Indiana, Kentucky, Nevada, New Mexico, Oregon, Pennsylvania, Texas, Utah, and Washington
Also offers financing on commercial and multi-family properties via NOVA Commercial Loans
Sponsors the annual NOVA Home Loans Arizona Bowl
Applying for a Mortgage with NOVA Home Loans
The company prides itself on efficiency and a commitment to professionalism, thriving to provide the best customer experience possible.
To better manage expectations, they process all loan applications in-house from start to finish.
They also allow you to apply for a home loan directly on their website via a digital application powered by Ellie Mae.
This makes it easy to fill out a loan application from any device, securely upload documents, link financial accounts, eSign documents, and more.
Once approved, you can track loan progress, receive updates, and make contact with your loan team if you have questions.
If you’ve been referred to someone specific, or want to work with someone nearby, you can browse the loan officer directory on their website, then hit apply. Or just send that individual an email first.
Those who aren’t quite ready to apply can click on the “request consultation” button instead and provide some basic contact information, at which point a loan officer will reach out.
As always, you can simply pick up the phone and call them directly as well.
What Types of Mortgages Does NOVA Home Loans Offer?
Home purchase loans, renovation loans, construction loans
Rate and term and cash out refinances
Reverse mortgages
Bridge loans
Fixed-rate mortgages and adjustable-rate mortgages
Conforming loans and jumbo loans
Government loans: FHA, USDA, and VA
NOVA Home Loans has you pretty well covered no matter what type of mortgage you’re in need of.
They offer both home purchase loans and mortgage refinance loans, along with renovation loans, construction loans, and even reverse mortgages.
Those purchasing or refinancing a particularly expensive home can take advantage of a jumbo loan from the company.
And borrowers with limited funds set aside for a home purchase can get information about the many down payment assistance programs available.
You can also get a mortgage pre-approval from them if you’re thinking about buying a home. My assumption is they’re well-liked by Arizona real estate agents since they do so much business there.
They offer conforming loans backed by Fannie Mae and Freddie Mac, along with government-backed home loans including FHA loans, USDA loans, and VA loans.
NOVA also offers bridge loans if you want/need to buy a replacement house before selling your old one.
In terms of loan programs, you can get a fixed-rate mortgage in various terms, ranging from 10 to 30 years, or an adjustable-rate mortgage, such as a 5/1 or 7/1 ARM.
NOVA Home Loans Mortgage Rates
Like a lot of mortgage lenders, NOVA Home Loans doesn’t advertise their mortgage rates directly on their website or elsewhere as far as we know.
So if you want a mortgage rate quote, you’ll need to reach out to them directly for pricing.
Additionally, they don’t seem to disclose lender fees on their website, so again you’ll need to inquire with them regarding any fees they charge.
Because we don’t know their interest rates or lender fees, it’s impossible to know how competitive they are relative to other mortgage lenders.
So always take the time to shop around with other banks, credit unions, and so on to ensure you don’t miss out on a better deal.
The one hint we have about their rates and closing costs comes from their many reviews, which are generally very favorable.
NOVA Home Loans Reviews
NOVA Home Loans has a 4.98-star rating out of 5 on Zillow, based on nearly 3,000 customer reviews.
After scanning many of the reviews, it appears that most of the past customers indicated that the mortgage rate was lower than expected, along with the closing costs.
If checking out the reviews on Zillow, you can click on the names of individual loan officers to filter results to just one specific person. This can be helpful if you want to handpick who to work with.
On SocialSurvey, they have a 4.91 rating out of 5 based on nearly 25,000 customer reviews. Again, you can filter by individual loan officer if you want to see their specific performance.
The company has been accredited with the Better Business Bureau since 2011, and currently has an A+ BBB rating.
NOVA Home Loans was also a Good Neighbor Award recipient for the 2014 Better Business Bureau Torch Awards based on its commitment to southern Arizona via support of local charities.
At the moment, they don’t have any active customer complaints on the BBB website, which is typically a good sign.
All in all, they appear to be a well-liked company with lots of quality feedback.
NOVA Home Loans Pros and Cons
The Good
Can apply for a home loan directly from the website
Offer a digital mortgage application powered by Ellie Mae
Lots of excellent reviews from past customers
Plenty of different loan programs to choose from
Free mortgage calculator and mortgage tutorials on-site
Free smartphone app
The Possible Bad
Only licensed in a handful of states (14 at the moment)
When homebuyers take out a conventional mortgage but don’t have a 20% down payment, they will likely need to get private mortgage insurance. PMI is usually required when the down payment is less than 20% of the home’s value.
In some situations, a lender may arrange for PMI coverage. It then becomes known as lender-paid mortgage insurance. For some homebuyers, LPMI can work in their favor. But for others, having a lender secure private mortgage insurance can end up costing them.
Read on to learn more about LPMI and the pros and cons for homebuyers.
How Does Lender-Paid Mortgage Insurance Work?
Unless 20% or more of a home’s value is paid upon closing, homebuyers can typically expect to be required to purchase private mortgage insurance, or PMI.
While government-back loans tend to have their own insurance programs (for instance, most FHA loans require a mortgage insurance premium for 11 years or the life of the loan), most loans not provided by the government with a loan-to-value ratio higher than 80% require PMI to protect the lender in case of default.
PMI is typically purchased in one of four ways, and it’s a home-buying cost you’ll want to budget for. PMI can be paid:
• Along with monthly mortgage and insurance payments
• In one annual premium
• With one large payment and corresponding monthly payments
• By the mortgage lender in a LPMI policy
While it may seem that the last option, LPMI, eliminates a task on a homebuyer’s to-do list, there is some fine print to be aware of.
Having LPMI for a loan doesn’t mean the cost is absorbed by the lender. A homebuyer will still pay for the coverage in one of two ways:
• A one-time payment due at the beginning of a loan.
• A slightly higher interest rate — usually 0.25% — which increases the monthly mortgage payment. This is the more common arrangement of the two.
So while many homebuyers accept an LPMI arrangement in hopes of saving money, that isn’t automatically the case. Sometimes LPMI is more about convenience than savings.
In fact, unless they’re paying a one-time lump sum, homebuyers could end up spending more for LPMI over the life of their loan than if they had chosen a traditional PMI route. That’s a potential home-buying mistake you’ll want to avoid.
LPMI might be a good choice for a homebuyer planning to keep the mortgage for five to 10 years or stay in the home. It usually takes 11 years to build enough equity to cancel a borrower-paid PMI policy.
Recommended: How to Get a Mortgage in 2023
A Pro of LPMI
Before a homeowner writes off lender-paid mortgage insurance altogether, it’s best to look at a potential benefit the arrangement offers over traditional monthly mortgage insurance.
More Affordable Monthly Payment
With LPMI, the monthly payment could be more affordable because the cost is spread out over the entire loan term rather than bunched into the first several years.
Here’s an example. If Sarah buys a home with a 10% down payment and it takes her 10 years to get the loan-to-value ratio down to 78% (a lender automatically drops PMI payments at this percentage if the borrower is in good standing), those 10 years of payments could all include several hundred dollars in addition to her premium and interest payments.
While LPMI may not save Sarah money overall, she may have smaller monthly payments because the additional payments for coverage are stretched out equally over the entire life of her loan rather than the start.
… and Potential Cons
In the right situation, LPMI can make sense. But there are potential downsides homebuyers should know about as well.
Rate Never Drops
While having mortgage insurance stretched out over the life of a loan can save some homebuyers money, it can cost others. The higher interest rate — as mentioned, a 0.25% rate increase is common — will never drop, even once the loan balance is less than 80% of a home’s purchase price.
LPMI can end up costing homebuyers more than if they had bought PMI on their own. Much depends on how long the borrower expects to hold the mortgage.
Refi Costs
Some homebuyers navigate toward LPMI because of the initial savings and hope they can refinance in the future.
While this may be a possibility, they must consider the sizable out-of-pocket costs that go along with refinancing, and that refi rates may be higher in the coming years.
No Itemizing
LPMI can’t be itemized if you deduct mortgage interest at tax time.
PMI vs LPMI
There are several numbers to take into consideration when choosing between traditional PMI and LPMI, including:
• the down payment
• remaining mortgage
• interest rate (for LPMI, a 0.25% rate increase is common)
• average mortgage insurance rate (PMI is typically 0.5% to 1.5% of the loan amount per year)
• anticipated life of the mortgage loan
• monthly budget.
A borrower may want to not only consider the monthly payment but also the lifetime loan costs.
The difference between PMI and LPMI is different for every homeowner and situation. Taking the time to crunch the numbers is the only way to fully understand the pros and cons of each option.
LPMI Alternatives
LPMI isn’t always the clear winner when choosing between mortgage insurance options. There are alternatives to consider.
Put More Down
A down payment of at least 20% will eliminate the need for PMI entirely. There are several other benefits that go along with larger down payments as well, such as a better loan rate, making this a great option for those who can afford it.
Shop Around
One main disadvantage of LPMI is that the homeowner has little to no control over the price and provider. So when homeowners are responsible for their own PMI, shopping around for the best price becomes an option.
Piggyback Mortgage
A piggyback mortgage makes it possible to avoid PMI with a combination of loans.
It’s important to understand the pros and cons of a piggyback mortgage before deciding on one as an alternative to LPMI to avoid potential financial pitfalls.
Recommended: Second Mortgage Explained: How It Works, Types, Pros, Cons
The Takeaway
If mortgage insurance is necessary to secure a loan, understanding all the options is the first step any house hunter should take. This includes lender-paid mortgage insurance vs. PMI. While LPMI may serve as an overpriced convenience for some, it can be the financially smarter option for others.
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.
*SoFi requires 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. Minimum down payment varies by loan type.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products 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.
The racial gap in denial rates for home-purchase loans widened last year as the Federal Reserve began tightening credit conditions via interest-rate increases, according to new data from U.S. regulators.
Black Americans experienced denial rates of 16.4% in 2022, up from 15.7% the year before, the Federal Financial Institutions Examination Council said last week. Rates for non-Hispanic-identifying White applicants ticked up to 5.8%, from 5.6%.
Rising disparities in denial rates help underscore the impact of tighter credit on progress toward a more inclusive economy. Even before the Fed began raising rates, the homeownership gap had been widening over the previous decade. By 2021, homeownership for Black Americans was nearly 29 percentage points less than that for White Americans, according to National Association of Realtors data published earlier this year.
Banks have failed to live up to promises to support Black homeowners in recent years. Major home lender Wells Fargo & Co. pledged in 2017 to lend $60 billion to generate 250,000 Black homeowners in a decade, though in 2020 the lender approved fewer than half of Black homeowners’ refinancing applications.
Hispanic and Asian individuals also face challenges securing home loans. Hispanic-White applicants saw denial rates of 11.1% last year, and Asian applicants faced denials at 9.2%. “Hispanic-White” identifies individuals with Hispanic ethnicity and White race, while “non-Hispanic-White” identifies individuals with non-Hispanic ethnicity and White race.
The FFIEC data are based on mortgage-lending transactions reported by U.S. financial institutions and are reported for first-lien, one-to-four family, site-built, owner-occupied conventional, closed-end home-purchase loans.
If you live in Texas or the Southeast, you’ve likely heard of Regions Mortgage. In fact, you might already be a banking customer with parent company Regions Financial.
The company is a banking leader in the states of Alabama and Tennessee, so if you’re the type that likes to do all your business in one place, Regions Mortgage might be for you.
Aside from their strong presence in the Southeast, they also provide banking and home loan services in Indiana, Illinois, and Missouri.
Their basic pitch is that you should get your mortgage from a lender you can trust, namely a massive billion-dollar bank with a near 50-year history.
Let’s learn more to see if Regions Mortgage could be a good fit for your home financing needs.
Regions Mortgage Quick Facts
Publicly traded commercial bank serving customers in the Midwest, South, and Texas
Founded in 1971, headquartered in Birmingham, Alabama
One of the largest banks in the United States (top 40)
A top-50 mortgage lender nationally by volume
Funded nearly $7 billion in homes loans via retail channel during 2019
Florida accounted for 25% of total home loan volume
Also a major mortgage lender in the states of Alabama and Tennessee
Regions Mortgage is the retail mortgage banking arm of Regions Financial, a full-scale depository bank.
The company, which is one of the largest banks in the United States, was founded in 1971 and is headquartered in Birmingham, Alabama.
Last year, they funded almost $7 billion in home loans, allowing them to just sneak into the top-50 mortgage lender list nationally.
That’s actually more impressive than it sounds since they only focus on one region of the country.
They used to operate a wholesale mortgage division, which they sold to M&T Mortgage Corporation back in 2005.
Additionally, they exited their correspondent home loan lending business in 2018. So it’s clear they’re entirely focused on originating home loans via the retail, direct-to-consumer channel.
Interestingly, Regions also sells homes and you can search for Regions-owned properties on their website. So it might be a one-stop shop for some home buyers!
Getting a Home Loan with Regions Mortgage
You can apply for a mortgage directly from their website or on your phone
They say it takes about seven minutes to complete the application
Their digital mortgage process is known as Regions Loan Accessway
Allow you to view loan details, check application status, and upload documents
You can start a few different ways. Obviously, you can head down to a brick-and-mortar branch if that’s your thing, or simply call them up on the phone.
Or you can visit their website and search for a loan officer near you. It’s also possible to inquire about a home purchase or mortgage refinance by using their online form.
Assuming you go the online route and select a specific loan officer, you can apply for a mortgage directly on their website without any human interaction.
Like other digital mortgage applications, you’ll need to sign up, provide basic contact information, then provide additional financial information like your income, bank details, employment history, and so on.
They allow you to link financial accounts using Finicity, which provides automated verification of income and assets.
Once your loan is submitted, you can manage it via the borrower portal at any time. You’ll be given a to-do list and the option to receive status updates to stay in the know.
All in all, it looks like a sleek and easy-to-use mortgage dashboard that should make it fairly painless to get your loan to the finish line.
If you’re looking for a mortgage pre-qualification, the Regions “Purchase Power” tool will provide a general idea of how much you may be eligible to borrow.
What Types of Home Loans Does Regions Mortgage Offer?
Home purchase and refinance loans
Renovation and construction-to-perm loans
Conventional loans (Fannie Mae and Freddie Mac)
Government-backed loans (FHA, USDA, VA)
Jumbo home loans
HELOCs
Fixed-rate mortgages and adjustable-rate mortgages
Regions Mortgage offers lots of different types of mortgages, including home purchase financing, mortgage refinances, renovation loans, and construction-to-perm loans.
You can access the equity in your home via a cash out refinance or a home equity line of credit (HELOC).
And first-time home buyers can take advantage of low-down payment programs, such as the 3% down required by Fannie/Freddie, or the 3.5% down required by the FHA.
They also offer USDA home loans for those buying in rural parts of America, and VA loans for both active duty and veteran home buyers or existing homeowners.
You can get a fixed-rate mortgage such as a 30-year fixed or 15-year fixed, or an adjustable-rate mortgage such as a 5/1 or 7/1 ARM.
Those purchasing a particularly expensive home or refinancing a larger existing loan can take advantage of their jumbo loan offerings.
Finally, because they’re a depository bank, they might be able to offer stuff the other guys can’t since they can keep it in their loan portfolio as opposed to selling it.
Regions Mortgage Rates
Similar to many other banks and mortgage lenders, Regions does not post daily mortgage rates on their website.
But unlike other companies, they take the time to explain why, saying it’s “due to the constant fluctuation of mortgage interest rates.”
I tend to agree that advertised mortgage rates aren’t worth a whole lot, but it’s still nice to see something.
They direct customers looking for current mortgage rate information to get in touch with a Regions Mortgage loan officer.
In other words, you won’t know how competitive they are until you make contact and get a free rate quote.
So they lose some points for transparency, especially since they also don’t mention anything about lender fees.
This means we don’t know their interest rates or fees, and they don’t appear to offer any discounts to existing Regions Bank deposit customers like some other large banks do.
To summarize, be sure to shop around to ensure they offer a good mix of rate and closing costs relative to other banks and mortgage lenders.
Regions Mortgage Reviews
Their parent company, Regions Financial Corp., is accredited with the Better Business Bureau, and has been since 1956. Not sure why longer than when they were founded.
They currently enjoy an A+ BBB rating, which is based on complaints history and how a company responds to said complaints.
There are quite a few complaints against the company, but they’re also a massive bank and not all of them pertain to their home lending division.
Their BBB customer review rating is just over 1 star out of 5, based on some 55 reviews.
Regions Bank has a 4.3-star rating out 5 on Trustpilot based on around 100 customer reviews, which again aren’t limited to their home loans business.
They also have a 3.9-star rating out of 5 on WalletHub based on nearly 2,000 reviews. Again, you’ll need to comb through them to see which actually pertain to mortgages.
Your best move might be to look up individual loan officer’s reviews who work at Regions Mortgage on Zillow to see how a particular individual has fared in the past.
Since they’re such a big bank, companywide reviews probably won’t do you much good as experiences will vary widely.
Regions Mortgage Pros and Cons
The Good
Lots of loan programs to choose from
Can apply for a home loan online
Offer a digital mortgage experience
Regions HomeBonus program provides cash back for buying/selling a home in select states
Free mortgage calculators on site
They service their mortgages
A+ BBB rating
The Possibly Not Good
Only lend in select states mostly in the Southeast
Large bank may result in bureaucratic process with strict underwriting guidelines
Do not provide current mortgage rates on their website
Average mortgage rates fell just a little last Friday. But last Thursday’s massive jump means they finished that week — and last month — higher than when they started them.
First thing, it was looking as if mortgage rates today might again barely budge. But that could change as the hours pass.
Markets will be closed tomorrow for the Independence Day holiday. And we’ll be back on Wednesday morning. Enjoy your celebrations!
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.129%
7.158%
Unchanged
Conventional 15-year fixed
6.638%
6.651%
Unchanged
Conventional 20-year fixed
7.506%
7.558%
Unchanged
Conventional 10-year fixed
6.997%
7.115%
Unchanged
30-year fixed FHA
6.672%
7.303%
Unchanged
15-year fixed FHA
6.763%
7.237%
Unchanged
30-year fixed VA
6.729%
6.937%
Unchanged
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
Recent reporting in the financial media makes me think mortgage rates are unlikely to see any significant and sustained falls until at least the fourth (Oct.-Dec.) quarter of 2023 and probably not until 2024.
And that’s why my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:
The yield on 10-year Treasury notes edged down to 3.82% from 3.85%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mostly lower. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices inched up to $70.61 from $70.25 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,930 from $1,919 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 84 from 80 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic 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. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might again hold steady or close to steady. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Currently
To see sustained lower mortgage rates we need to see the inflation rate halving, the economy weakening, and the Federal Reserve stopping hiking general interest rates. And none of those looks likely anytime soon.
Some progress is being made on inflation. But not enough.
And the economy is showing extraordinary resilience. Last week’s gross domestic product (GDP) headline figure was 50% higher than many expected.
Meanwhile, the Fed seems highly likely to hike general interest rates by 25 basis points (0.25%) on Jul. 26. And there may well be at least one more increase after that in 2023.
Recession
As I’ve written before, our best hope for lower mortgage rates is a recession. That should weaken the economy, reduce inflation and perhaps cause the Fed to at least hold general rates steady.
Economists have been predicting an imminent recession for ages. And, not so long ago, I bought that line and was expecting one at any moment.
But, now, many big hitters aren’t expecting a recession until 2024. Yesterday, CNN Business listed a few of those making that prediction:
Bank of America CEO Brian Moynihan
Vanguard economists
JPMorgan Chase economists
Of course, others disagree, as economists always do. Some think a recession will still land later this year. And others believe there will be no recession at all.
This week
There are a few reports this week that could send mortgage rates up or down a bit. But Friday’s jobs report is the one most likely to have a decisive impact.
The consensus among economists is that the report will show 240,000 new jobs created in June compared with 339,000 in May. Anything lower than 240,000 might see mortgage rates tumble, which would be great.
However, we’ve witnessed economists making similar predictions for employment several times over recent months. And, nearly every time, their forecasts have greatly underestimated the resilience of the American labor market and therefore the American economy.
Of course, they might be right this time. Let’s hope so. But I shouldn’t hold my breath if I were you.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jun. 29 report put that same weekly average at 6.71%, up from the previous week’s 6.67%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on May 23 and the MBA’s on Jun. 21.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.4%
6.2%
6.0%
5.8%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Other than possible lender-imposed waiting periods after a mortgage loan closes, you can generally refinance your home as many times as you like. But you’ll want to do the math first.
Homeowners choose to refinance for a number of reasons: to lower monthly payments, take advantage of lower interest rates, get better terms, pay the loan off more quickly, or eliminate private mortgage insurance.
Refinancing involves paying off the current mortgage with a second loan that has (hopefully) better terms. Borrowers don’t have to stay with the same lender—it’s possible to shop around for the best deals.
Mortgage rates seem to be constantly in flux, moving mostly in parallel with the federal interest rate. In 2021, the average rate of a 30-year fixed mortgage was 2.96%. In 2022, as the Federal Reserve raised interest rates to try to tame inflation, mortgage rates began to rise and jumped to more than 7%. By mid-June 2023, the average rate of a 30-year fixed mortgage was 6.69%.
So is now the right time for you to refinance? Here are some things to consider before taking the plunge.
The Basics of Mortgage Refinancing
Because a homeowner who chooses to refinance is essentially taking out a new loan, the cost of acquiring the new loan must be compared with potential savings. It could take years to recoup the cost of refinancing.
As with the initial mortgage loan, a refinance requires a number of steps, including credit checks, underwriting, and possibly an appraisal.
Typically, however, many homeowners start with an online search for the rates they qualify for. (A lower average mortgage rate doesn’t necessarily translate to an individual offer—creditworthiness, debt-to-income ratio, income, and other factors similar to what’s required for an initial mortgage will matter.)
The secret sauce that makes up a mortgage refinance rate might seem like a mystery, but there are some common factors that can affect your offer:
• Credit score: As a general rule, higher credit scores translate to lower interest rates. A number of financial institutions and credit card companies will give account holders access to their credit scores for free, and a number of independent sites offer a free peek, too. • Loan term/type: Is the loan a 30-year fixed? A 15-year? Variable rate? The selected loan repayment terms are likely to affect the interest rate. • Down payment: A refinance doesn’t typically require cash upfront, as a first-time mortgage usually does, but any cash that can be put toward the value of a loan can help reduce payments. • Home value vs. loan amount: If a home loan is extra large (or extra small), interest rates could be higher. But generally speaking, the less the mortgage amount is compared with the value of the home, the lower the interest rates may be. • Points: Some refinance offers come with the option to take “points” in exchange for a lower interest rate. In simplest terms, points are discounts in the form of a fee that’s paid upfront in exchange for a lower interest rate. • Location, location, location: Where the property is physically located matters not only in its value but in the interest rate you might receive.
What Types of Refinance Loans Are Out There?
As with first-time home loans, consumers have a number of refinance mortgage options available to them. The two most common types involve either changing the terms of the original loan or taking out cash based on the home’s equity.
A rate-and-term refinance changes the interest rate, repayment term, or sometimes both at once. Homeowners might seek out this type of refinance loan when there’s a drop in interest rates, and it could save them money for both the short term and the life of the loan.
A cash-out refinance can also change the terms or interest rate, but it includes cash back to the homeowner based on the home’s equity.
Within those two basic types of refinance options, conventional mortgages from traditional lenders are the most common. But refinancing can also happen through a number of government programs.
Some, like USDA-backed loans , require the initial mortgage to be a part of the program as well, but others, such as the VA, have a VA-to-VA refinance loan called an interest rate reduction refinance loan and a non-VA loan to a VA-backed refinance , so it’s important to shop around to find the best option.
How Early Can I Refinance My Home?
If a home purchase comes with immediate equity—it was purchased as a foreclosure or short sale, for example—the temptation to cash out immediately with a refinance may be strong. The same could be true if interest rates fall dramatically soon after the ink is dry on a mortgage. Especially for conventional loans, it may be possible to refinance right away. Others may require a waiting period.
For example, there can be a six-month waiting period for a cash-out refinance. Or, refinancing via government programs like the FHA streamline refinance or VA’s interest rate reduction refinance loan can require waiting periods of 210 days.
Lenders can require a waiting period (also called a “seasoning period”) until they refinance their own loans for a number of reasons, including assurance insurance that the original loan is in good standing.
For a cash-out refinance, some lenders may also require that the home has at least 20% equity.
Questions to Ask Before You Refinance
Just because you can refinance doesn’t necessarily mean you should. First, ask yourself these questions.
What Is the Goal?
Identifying the endgame of a mortgage refinance can help determine whether now is the right time. If a lower monthly payment is the goal, it can be wise to play around with a refinance calculator to see just how much a lower interest rate will help.
For years, it has been a general rule that a refinance should lower the interest rate by at least 2 percentage points to be worth it. Some lenders believe 1 percentage point is still beneficial (each percentage point amounts to roughly $100 a month in payment reduction), but anything less than that and the savings could be eaten up by closing costs.
What Is the Total Repayment Amount?
It’s important to remember that a lower monthly payment—even if it’s significantly less—doesn’t necessarily equal savings in the long run.
If a mortgage with 20 years remaining is refinanced to lower the monthly payment, for example, the most affordable option could be a 30-year mortgage. But is the lower monthly payment worth it if you’ll be paying it off for 10 additional years?
Will I Need Cash to Close?
One of the biggest differences between a first-time mortgage and a refinance is the amount it costs to close the loan. Many times, closing costs for a refinance can be rolled into the loan, requiring no cash at the outset.
Closing costs typically come in at 2% to 5% of the loan amount, and although they can be rolled into the loan and paid off over time, that could mean the new monthly payment isn’t as low as planned.
One way to make sure the investment is worth the cost is to consider how long it would take you to reach the break-even point, which is when you recoup the costs of refinancing. For instance, if it takes you 24 months to reach the break-even point, and you plan on living in your home for at least that long, refinancing may make sense for you.
Considering refinancing your home? SoFi offers mortgage refinance loans with competitive interest rates.
Whenever you’re ready to refinance, SoFi is here to help.
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The average 30-year-fixed rate mortgage declined one basis point from the week prior to 3.55% during the week ending Jan. 27, according to the latest Freddie Mac PMMS Mortgage Survey.
A year ago, the 30-year fixed-rate mortgage averaged 2.77%. Most economists believe rates will continue to climb in the weeks and months ahead.
“Following a month-long rise, mortgage rates effectively stayed flat this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “We do expect rates to continue to increase but at a more gradual pace.”
The rise in mortgage rates moved in concert with the 10-year Treasury yield, which reached 1.85% yesterday, compared to 1.83% on the previous Wednesday.
The expectation of higher mortgage rates is based on the fact that the Federal Reserve will raise interest rates. On Wednesday, the central bank said it will happen “soon,” though an exact timetable has not yet been disclosed.
“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Federal Open Markets Committee said in a statement.
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The FOMC decided to keep the target range for the federal funds rate at 0 to 0.25%, but will likely take action on rates in early March.
The PMMS report is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.
The 15-year-fixed-rate mortgage averaged 2.80% last week, up from 2.79% the week prior. A year ago at this time, it averaged 2.20%.
According to Khater, recent increases have yet to significantly impact purchase demand, as history demonstrates that potential homebuyers who are on the fence will often enter the market at the start of rate increase cycles.
“Therefore, a fair number of current homeowners could continue to benefit from refinancing to lower their mortgage payment.”
The Mortgage Bankers Association (MBA) showed on Tuesday that mortgage applications decreased 7.1% for the week ending Jan. 21. The decline was buoyed by a 12.6% decrease in the trade group’s seasonally adjusted refinance index. On the purchase front, the index fell by 1.8% from the previous week.
Economists expect rates to increase in 2022 but will still be close to record-low levels. The MBA forecasts that 30-year mortgage rates will reach 4% by the end of 2022.
LOS ANGELES — The average long-term U.S. mortgage rate rose this week, snapping a three-week pullback after reaching a high for the year in early June.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.71% from 6.67% last week. A year ago, the rate averaged 5.70%.
The increase brings the average rate back to where it was three weeks ago. On June 1, it averaged 6.79%, its highest level so far this year.
High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory.
The median monthly payment listed on applications for home purchase loans in May rose to $2,165, up 14.1% from a year ago and a 2.5% increase from April, the Mortgage Bankers Association said Thursday.
The average rate on a 30-year home loan is still more than double what it was two years ago, when the ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4% from as year earlier, marking 10 consecutive months of annual declines of 20% or more, according to the National Association of Realtors.
Low mortgage rates helped fuel the housing market for much of the past decade, easing the way for borrowers to finance ever-higher home prices. That trend began to reverse a little over a year ago, when the Federal Reserve began to hike its key short-term rate in a bid to slow the economy to lower inflation.
Global demand for U.S. Treasurys, which lenders use as a guide to pricing loans, investors’ expectations for future inflation and what the Fed does with interest rates influence rates on home loans.
All told, the Fed raised its benchmark rate 10 times, starting in March 2022. The central bank opted to forgo another increase at its meeting of policymakers earlier this month. Still, the Fed warned that it could raise interest rates two more times this year in its battle against inflation.
That open-ended approach has heightened uncertainty about the Fed’s next moves, which could lead to more volatile moves for mortgage rates.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, also rose this week, increasing to 6.06% from 6.03% last week. A year ago, it averaged 4.83%, Freddie Mac said.
A reverse mortgage may help older Americans who find they need more money in retirement. It’s common for inflation and rising medical costs to be issues. A reverse mortgage allows them to convert some of their home’s equity into cash, which can benefit their financial situation.
Protections established over the past few years by the U.S. Department of Housing and Urban Development (HUD) focus on lowering the risk previously associated with reverse mortgages. What’s more, the federal and state governments have taken aim at deceptive marketing practices that can minimize the complex aspects of reverse mortgage agreements.
That said, it’s wise to proceed with caution. There are still considerable cons to reverse mortgages, and borrowers may be unaware of the finer points. One important fact: It is possible to lose one’s home if you don’t comply with all the loan terms. Take a closer look at this topic here.
Why Do People Choose a Reverse Mortgage?
A reverse mortgage allows qualifying homeowners age 62 and older to convert part of the equity they’ve built up in their primary residence into money they can use to pay off their existing mortgage or for any other expenses that come up in retirement (from health-care costs to home repairs).
The big selling point for reverse mortgages is that the loan usually doesn’t have to be paid back until the last borrower, co-borrower, or eligible non-borrowing spouse dies, moves away, or sells the home. And when it is time to repay the loan, neither the borrower nor any of the borrower’s heirs will be expected to pay back more than the home is worth.
Main Types of Reverse Mortgages
There are three basic types of reverse mortgages. The most common is a home equity conversion mortgage (HECM), which is the only reverse mortgage insured by the U.S. government and is available only through an FHA-approved lender. An HECM can be used for anything, but there are limits on how much a homeowner can borrow.
There are also proprietary reverse mortgages, which are private loans that may have fewer restrictions than HECMs — including how much a homeowner can borrow.
And there are single-purpose reverse mortgages, which are typically offered by nonprofit organizations or state or local government agencies that may limit how the funds can be used. Most of the time, when someone refers to a reverse mortgage, though, they’re talking about an HECM.
Reverse Mortgage Terms to Know
There are safeguards in the reverse mortgage process that protect borrowers, but there are also loan terms borrowers are required to uphold or risk defaulting and potentially triggering a mortgage foreclosure. They include:
Staying Current With Ongoing Costs
Borrowers must stay up to date on property taxes, homeowners insurance, homeowners association fees, and other costs, or they could risk defaulting on the loan. An assessment of a borrower’s ability to pay for those ongoing expenses is part of the reverse mortgage application process, and if it looks as though money might be tight, a lender may require a borrower to set up a reserve fund, called a “set-aside,” for those costs. (In this way, it’s akin to an emergency fund, which is there to cover expenses if needed.)
Maintaining Full-Time Residency
Borrowers (and eligible non-borrowers) must use the home as their primary residence — the home they occupy for most of the year. If they move out of the house or leave the home for more than six months, or receive care at a nursing home or assisted living facility for more than 12 consecutive months, it could result in the lender calling the loan due and payable.
The lender also may choose to accelerate the loan if the borrower sells the home or transfers the title to someone else, or if the borrower dies and the property isn’t the principal residence of a surviving borrower.
Keeping the Home in Good Repair
Because the home is collateral and may have to be sold to repay the loan, lenders may require borrowers to do basic maintenance that will help the property keep its value (e.g., repairing a leaky roof or fixing a problem with the electrical system). If an inspector feels the home is not being properly maintained, the lender could take action.
What Happens If a Reverse Mortgage Borrower Defaults?
If the homeowners default, the first thing that could happen is that future loan payments may be stopped. And if the problem isn’t corrected within the lender’s stated timeline, the loan may become due and payable, which means the money the lender has distributed to the borrower, plus any interest and fees that have accrued, must be repaid. In that case, the borrower typically has four options:
• They can pay the balance in full and keep their home.
• They can sell the home for the lesser of the balance or 95% of the appraised value and use the proceeds to pay off the loan.
• They can sign the property back to the lender.
• They can allow the lender to begin foreclosure.
No matter what the homeowners decide to do, the process could take months to complete. HECM lenders may offer borrowers additional time to fix the problem that put them into default, or the borrowers may qualify for extensions or a repayment plan.
But in the meantime, there could be other implications — if the homeowners are no longer getting money they need to pay their bills or if the lender reports the default to credit monitoring agencies — that could affect the homeowners’ credit scores.
A Few Alternatives to Consider
The advertisements some lenders use to sell their reverse mortgages can be convincing, and some seniors may see these loans as a convenient way to get some extra cash or as a much-needed lifeline.
But, as with any financial decision, there are advantages and disadvantages — and alternatives — to be considered. There are other ways homeowners may be able to get help that could be less complicated and less limiting than a reverse mortgage.
Here are a few options:
• Borrowers may wish to tap into their home’s equity with a traditional home equity loan or home equity line of credit. They’ll have to make monthly payments, and their income and credit history will be considered when they apply, but the terms may be more flexible and the overall cost may be lower than a reverse mortgage. Because the home is used as collateral, there’s still a risk of foreclosure.
• Low interest-rate personal loans might be another option for homeowners who qualify for a competitive interest rate based on their income and credit. Borrowers who don’t have much equity in their home may choose to look into this type of loan, which is unsecured and is paid out in a lump sum. While foreclosure is not a worry with a personal loan, there still may be consequences to the borrower’s credit rating if they don’t uphold the loan terms.
• Borrowers who are struggling to keep up with their bills in retirement may find that refinancing a mortgage with a new, lower-cost mortgage might be an option to help them lower their monthly payments and stay on track with their budget.
Or, if they need extra cash right away and can get a low enough interest rate, they may want to look into a “cash-out refinance,” which would involve taking out a new loan for a larger amount based on the equity they’ve built up during the years they’ve lived in the home.
Unfortunately, no matter which type of loan homeowners might choose, there could be risks.
The government requires a counseling session for reverse mortgage borrowers for a reason: They’re complex, and it can be helpful to have someone cover all the rules and costs involved.
Homeowners also may want to pay a financial advisor and tap their expertise about what type of loan, if any, fits with their needs, goals, and where they are in their retirement.
Though reverse mortgages are available to homeowners starting at age 62, borrowers who expect to have a long retirement may choose to wait until they’re older to tap into their home equity, so they don’t risk running out of money in their later years.
How SoFi Can Help
For many retirees, the equity they have in their home is their biggest asset. Armed with knowledge about the pros and cons of each type of loan and a long-term plan, borrowers can better protect that asset and their financial security.
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.
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*SoFi requires 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. 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.
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