January 2014, financial experts and mortgage professionals said interest rates would rise by the end of the year. They remained fairly flat.
January 2015, same thing with rates remaining fairly flat.
January 2016, same thing and rates remained fairly flat until this month. At the beginning of November, interest rates started climbing, and they haven’t stopped. Day by day, we see small increases that add up over a week’s time.
One financial predictor has forecast 30-year fixed rates at 4.5% by the end of December.
The Federal Reserve Board has said they will likely raise rates in December. And remember, the market is anticipatory. So if higher rates are coming, lenders react now by raising rates so they aren’t caught short-handed.
If you have been thinking about refinancing — possibly into a shorter term or getting cash out — do not delay another day. Get your application in and get your interest rate locked.
If you want to be a home owner but are waiting until after the holidays, that’s a bad idea. You find less competition among home buyers and better rates now than in January. Get your home now, lock in your rate now, and set the closing for after the holidays. You can wait to move, but you can’t wait to get your financing in place if you want the best deal and lowest monthly payment.
If you are in California or Washington, I am happy to help you as I am licensed in those two states. If you live elsewhere, I suggest that you contact a full-service mortgage lender. Forget the Big Banks who have a terrible reputation on so many levels. A full-service mortgage lender has both their own money to lend and can shop wholesale lenders as needed.
My next post will be questions to ask your loan officer. I wanted to get this warning out about interest rates as soon as possible. No more procrastinating! Consider this is your last call before rates go even higher. Feel free to pass this on via social media.
The best time to get a map is before you walk into the forest. Likewise, the best time to get your mortgage map is before you go shopping for a house. If you work the system backwards, you are setting yourself up for possible disaster.
Here is a simple checklist for home buyers:
Notice that you take care of the financing first, then the house shopping second.
1. Choose a lender by asking for a cost estimate worksheet.
This is your very first step. Not, go house hunting. Not, get pre-approved. And certainly not, make an offer! Why? Because, you don’t want to shop for houses that you are not qualified to buy, so you take care of your financing first. And, you don’t want multiple lenders pulling your credit report, so you choose your lender first. The way to choose a lender is to review the estimate worksheet and speak with the loan officer to ascertain how they answer your questions. (What to ask a loan officer is a topic for my next blog post.)
2. Get pre-approved for financing.
Now that you have your trusted loan officer, you are ready to have your credit report checked, provide your financial documents, and receive your official pre-approval letter.
3. Choose a Realtor.
I recommend working with a certified Realtor rather than a real estate agent, because a certified Realtor has gone through extra training and is held to a higher standard of ethics and work practices.
4. Go house hunting and make your offer.
Your Realtor will guide you through the offer and negotiations. Your loan officer will guide you through the financing.
Thank you for stopping by my blog. Feel free to share this simple list via social media and with others who are thinking of buying a home. You would not believe the horror stories I’ve heard from people who have run headfirst into disaster by signing purchase contracts before they had their financing approved. I hope to save more people from that situation!
Since I don’t have a crystal ball to tell the future, let’s look at the principles and then see if we can come up with a conclusion.
Factors and Principles that Determine Interest Rates
- The election result was a surprise to investors. Investors don’t like surprises. This caused a rapid selling of bonds, which pushed interests higher by .125 percent overnight.
- Any rapid change in rates settles back down along with investors’ nerves. Remember what happened with Brexit?
- Uncertainty brings higher rates.
- Good economic news brings higher rates.
- Interest rates were trending upward anyway, irregardless of, and before, the election. Last year at this time, 30-year fixed rates were averaging 3.5%. Now they are closer to 4%.
- Sometimes the market just goes with the momentum — for awhile.
- Other factors, larger on the global economic stage, influence interest rates more than the U.S. election. Specifically, the European Central Bank Announcement coming next month (and the anticipation of it) is having a greater impact on interest rates than President-elect Donald Trump.
- The President does not set interest rates. The global economic condition sets interest rates.
- The market is anticipatory. Investors try to guess what will happen tomorrow and then react accordingly today.
Back to our headline question: Where are interest rates headed? I’m sorry I can’t tell you exactly what will happen, but your crystal ball is as good as mine. If you are nervous about rates going up, lock in your rate and be secure.
Thank you for stopping by my blog. Feel free to subscribe and to pass this info on via social media.
If I can help you with a refinance or home loan, I am licensed in California and Washington, NMLS 1294134. Send me at email telling me what you need.
Have you (or perhaps someone you know who got behind on bills) been charged an extra processing fee by the collection company? Have you been bullied by a debt collector? Has the collector blabbed your personal information to others?
In a report out today, the Consumer Finance Protection Bureau (CFPB) reveals that some collectors are guilty of the following:
- Charging a processing fee on the debt.
- Lying to consumers that if they don’t pay immediately their credit would be further harmed.
- Revealing information about the person’s debts to friends and family while trying to track them down.
- Failing to properly investigate and validate a disputed account.
As a result of these crimes plus illegal practices by some auto loan servicers and student loan servicers, the CFPB has recovered $11,000,000 in damages. This money is to be distributed to 225,000 consumers who have been harmed.
If this is you (or possibly someone you know), contact the CFBP here. Please feel free to post this on social media to help get the word out. You never know who among your acquaintances might be due a nice rebate check.
Good news for home buyers needing a zero down loan! The USDA has just announced that
funds are now available for 100 percent financing — and at better pricing than last year! Here are the details.
No down payment. 30-year fixed rate, no prepayment penalty. Interest rates are competitive with conventional loans.
The USDA Fee (now 1%, previously 2.75%) is financed into the loan. Other eligible closing costs may also be rolled into the loan, or you may use gift money, grant money, or a seller contribution to pay for the closing costs. This means you need very little out-of-pocket cash to become a home owner.
The monthly mortgage insurance (MI) fee has been reduced to only .35% (previously .5%).
Credit and Debt Ratio
Perfect credit not required. If you had a late payment, collection/charge-off, bankruptcy, or even a foreclosure in the past, you might still qualify. In general, underwriters want to see at least 12 months of good credit to show you have recovered from the past and are on track.
Debt-to-income ratio should not be over 41% unless your credit score is over 660. In that case, there is more flexibility. (DTI is calculated with your gross income before any deductions, using your proposed housing payment plus minimum required payments on your credit report. You do not count living expenses such as transportation, cell phone, food, etc.)
You can earn up to 115% of the area median income. Number of people in the family is taken into account.
97% of the U.S. is USDA-eligible. Homes located in large metropolitan areas are ineligible. Many suburbs, charming towns, as well as rural areas qualify.
To check both income and property eligibility, click here. Or, speak with your state licensed mortgage loan officer. If you are in WA or CA, I am available to help you.
Take a look at this list one of my book readers sent me today. She is buying a home in Southern California. The title and escrow company was chosen by the real estate agent, even though federal law says it is Buyer’s choice.
See if you can pick out the unnecessary fees:
Lenders Policy for $844,000 — $1,074
E Recording Service Fee — $15
Sub Escrow Fee — $100
Messenger/Overnight — $30
Endorsements — $150
Escrow Fee — $2,302
Loan Tie-In Fee — $250
Email Document Fee — $100
Archive Fee — $50
Document Handling — $50
Notary/Sign up Fee — $200
Wow!!! What a lot of fees, right?
This is like going to a restaurant and ordering a hamburger. Then you get charged extra for mayo, ketchup, lettuce, pickle, salt, and the bun. I mean, come on! Isn’t your $15 hamburger enough without collecting more for every tiny thing that is standard and should be included?
Response to the Objection
When the home buyer objected to the real estate agent (the one who chose this over-priced title and escrow company), here is what the agent said:
“The escrow officer is an amazing person. I would trust her with my kid.”
That’s fine if you’re looking for a babysitter! But what’s that got to do with all her needless fees?
The only thing I’d find amazing about her is how she can get away with over-charging home buyers and convince real estate agents to send her business! Makes one wonder… as in illegal kickbacks…? Just musing, not accusing.
Folks, it doesn’t matter if the seller’s agent has already opened title with a certain company. FEDERAL LAW says you, the Buyer, get to choose the title and escrow company.
It’s easy to do a Google search for “title insurance” + zip code. Then make three phone calls and get a quick quote right over the phone. No need to ask for anything in writing. If you shop with three, you should find a good, fair title company to work with.
Don’t bother asking Yelp or other review sites. People who post there are like the real estate agent who chose this high-priced title company because the person is “amazing” or “friendly” or “good with kids.”
As always, thank you for stopping by my blog. If you have a topic you’d like me to write about, send your request here.
No interest, no payback. This is a true gift for buying a home.
Here are the guidelines:
- Available in all 50 states. The home does not need to be inside the boundaries of the Chicksaw.
- Any loan type: FHA, VA, USDA, conventional.
- As long as you meet the credit, income, and other requirements for the loan type you want, you qualify for the grant. However, some lenders have overlays. For example, Envoy Mortgage requires a 640 credit score.
- Owner occupied homes only, cannot be used for a rental property.
Simply show your Chicksaw Citizenship card when you apply for your mortgage pre-approval. Your loan officer will process the grant for you.
If you know a Chicksaw member, pass this great news on to them. I will post about other grant money in the future, so feel free to subscribe to the blog.
- Your parent is on a fixed income and cannot afford to buy his or her own house.
- You have an adult child with disability income that is insufficient to qualify.
- You have another family member who is tired of renting but is on a fixed income too small to qualify.
How It Works
You present the family member’s income documentation to show they need help in qualifying for a mortgage. (The family member must be on a fixed income, not a low-paying job that could soon change into a higher paying job.)
You are then eligible get approved to buy the home using your own income and credit–without having to take the higher interest rate and larger down payment required for a non-owner occupied or investment property.
- The house is owned and occupied by family.
- You do not pay any more for the loan than if you were going to occupy it yourself.
- You can put as little as 3% down.
- You enjoy the tax benefits of ownership.
- Your family member stops paying for someone else’s mortgage in the form of rent.
- You benefit from increased equity.
- In the future, you may be able to sell at a profit or rent the house to someone else.
- You must be able to afford the payment, along with your own obligations. However, with 26% of Americans owning their homes free-and-clear, this option becomes a realistic opportunity. (Statistic Source: StatisticBrain)
Would You Like My Help?
I can help home buyers in the Western states. I am personally licensed in California and Washington (NMLS # 1284134) and I work with colleagues in Oregon, Idaho, Nevada, and Colorado. You can contact me here. If you are in another part of the U.S., contact your local full service mortgage lender.
There are two types of title insurance. Simply explained:
Lender’s Title Insurance protects the lender’s money they are loaning to you. If a previous owner fails to pay taxes or other obligation, the creditor may file a lien against the property. If the previous owner has an heir who says they own a piece of the property, that could be a problem. If someone with the same name or a similar name as yours owes for back taxes, child support, has a bankruptcy, or other financial mishap, that person’s lien might get attached to your property. (It happens fairly often, especially if you have a common name.)
Lender’s Title Insurance protects the money the lender has put out for your house. As you pay down the loan, the amount of protection is reduced accordingly. When the loan is paid off, the lender’s title insurance is finished and over.
So at the point when you have complete equity in the house, lender’s title insurance no longer exists. Lender’s title insurance does not protect your equity.
Owner’s Title Insurance protects you, the new home owner. It protects your equity in the home against false liens and judgments, false and undisclosed heirs, forgery and fraud, errors and omissions.
In some states, the home buyer pays for both title insurance fees unless otherwise stated in the Purchase Agreement. In the West where I do loans (California and Washington states), the current owner/seller pays for your owner’s title insurance; and you pay for the lender’s title insurance. Since the Owner’s Title Insurance is more expensive, this is good for you, the home buyer.
As you can tell, both types of title insurance are important. I do not know of any lender that does not require Lender’s Title Insurance. I do not know of any home buyers who have been too foolish to protect their precious home equity with Owner’s Title Insurance.
So no, title insurance is not a rip-off. What is a rip-off is when title insurance companies over-charge and add a boatload of junk fees. Unfortunately, that happens a lot, and I have taken a public stand against it! As a home buyer, it is YOUR LEGAL RIGHT to shop and choose the title insurance company. It is not the right of the real estate agent nor the seller to choose; nor do they have the legal right to bully you into using the services of a title company you do not want. If you are getting coerced or pressured, please send me an email with all the details, including the name of the companies here.
I hope this information helps, and thank you for subscribing to my blog.