03
Mar
By support
Home Mortgage Tips

Buying a Second Home? Assessing Your Finances to Ensure You Can Afford a Second Mortgage

Buying a Second Home? Assessing Your Finances to Ensure You Can Afford a Second Mortgage The decision to buy a second home may be made for a number of reasons. For example, you may have a destination where you and your family love to spend free time in, and you may be ready to settle into your own space in this location. You may considering the tax benefits associated with a second home, and you may even have plans to live in the home as your primary residence after you retire.

While there may be numerous benefits associated with the purchase of your second home, you may be concerned about how affordable it will be for you to manage the additional expense of a second mortgage payment.

Consider All Of The New Expenses Related To The Purchase

A second mortgage payment may be a rather major expense to take on, but it is not the only expense related to buying the new property. In order to ensure that the mortgage payment is affordable, you need to ensure that all aspects of secondary home ownership are affordable for you.

For example, consider HOA dues, repairs and maintenance expenses, property taxes, insurance and cleaning or lawn care service since you will not be available to handle these chores on a regular basis. If you can comfortably take on all of these expenses, you may make your purchase with confidence.

Increase Your Emergency Savings Account Balance

While your current budget may easily accommodate the new mortgage payment and the related expenses, the unfortunate truth is that your income or expenses may not remain static in the future. You may suffer from unemployment or a serious illness that reduces your income. You may have extra expenses due to a car accident or severe damage to a home.

These are just a few of the many things that can happen, and it is important that you have an adequate cash reserve in your emergency savings account that allows you to pay for all of your expenses for at least several months. Because your expenses will increase substantially with your new mortgage payment, you may need to increase your emergency savings account balance.

While it can seem intimidating to take on a new mortgage payment and other related household expenses for a second home, you may be able to more comfortably take on this additional expense when you follow these tips. You may also speak with a mortgage professional to get a quote for your new mortgage payment and interest rate.

02
Mar
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – March 2, 2015

What's Ahead For Mortgage Rates This Week March 2 2015Last week provided several housing-related reports including New Home Sales, Pending Home Sales and Existing Home Sales reports. Case-Shiller and FHFA also released data on home prices. The details:

Sales of Pre-Owned Homes Hit Nine-Month Low

According to the National Association of Realtors® (NAR), Sales of pre-owned homes dropped to a seasonally-adjusted annual reading 4.82 million sales in January as compared to an estimated reading of 4.95 million sales and December’s reading of 5.07 million existing homes sold. This was a month-to-month decline of 4.90 percent, and represented the lowest reading for existing home sales in nine months.

Lawrence Yun, chief economist for the NAR, said that a short supply of available homes coupled with rising prices contributed to the drop in sales. While mortgage rates remain near historical lows, higher home prices and short supply are negatively impacting affordability; this puts home buyers who rely on mortgages in competition with cash buyers.

More encouraging news arrived with the Commerce Department’s new home sales report; new home sales reached 481,000 sales on a seasonally-adjusted annual basis in January. Analysts had expected new home sales of 467,000 new homes based on December’s reading of 482,000 new homes sold in December.

Pending Home Sales Highest Since August 2013

The National Association of Realtors® reported that pending home sales rose by 1.70 percent in January as compared to December’s reading of -3.70 percent. Pending sales were up 8.40 percent year-over-year. Job growth, a little more leniency in mortgage credit standards and slower inflation were seen as factors that contributed to higher pending sales. Pending sales represent under sales contracts that have not closed.

Case-Shiller, FHFA Post Home Price Data

The Case Shiller 20-City Composite reported that home prices rose by 0.10 percent month-to-month and 4.50 percent year-over-year according to its index report for December. San Francisco, California had the highest year-over-year price gain at 9.30 percent, while Chicago, Illinois had the lowest year-over-year home price appreciation rate at 1.30 percent as of December.

FHFA reported that home prices for properties connected with Fannie Mae and Freddie Mac loans rose by 5.40 percent on a year-over-year basis as compared to November’ year-over-year reading of a 5.20 percent increase in home prices.

Mortgage Rates Rise

Freddie Mac reported that average mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by four basis points to 3.80 percent; the average rate for a 15-year fixed rate mortgage increased by two basis points to 3.07 percent and the rate for a 5/1 adjustable rate mortgage was also two basis points higher at 2.99 percent. Discount points for all loan types were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

What’s Ahead?

This week’s scheduled economic news includes consumer spending, construction spending and the Labor Department’s non-farm payroll and national unemployment reports. Weekly jobless claims and Freddie Mac’s PMMS report on mortgage rates will be released as usual on Thursday.

27
Feb
By support
Market Outlook

FHFA House Price Index Rises for 14th Consecutive Quarter

FHFA House Price Index Rises for 14th Consecutive QuarterAccording to the Federal Housing Finance Agency (FHFA), U.S. home prices rose by 1.40 percent for the fourth quarter of 2014 and were up by 0.80 percent month-to-month from November. The seasonally adjusted FHFA House Price Index measures purchase transactions for homes connected with mortgages owned by Fannie Mae and Freddie Mac.

FHFA also reported that home prices rose 4.9 percent year-over –year from the fourth quarter of 2013 to the fourth quarter of 2014. FHFA Chief Economist Andrew Leventis described the report for the last quarter of 2014 as “relatively strong” and also cited low inventories of available homes and improving labor markets as contributing to home price growth.

FHFA House Price Index Identifies Significant Trends

FHFA’s expanded house price data, which adds data from county records and the Federal Housing Administration, to the FHFA House Price Index, indicated that home prices grew by 1.30 percent in the fourth quarter; year-over-year home prices grew by 6.0 percent according to FHFA’s expanded house price data report.

According to purchase-only indexes for the 100 most populated metro areas, the San Francisco-Redwood City-south San Francisco, California metro area posted the highest rate of year-over-year home price gains at six percent for the fourth quarter of 2015. The lowest reading was for the El Paso, Texas, which posted a loss of 6.60 percent in the fourth quarter.

The mountain division of the nine U.S. Census divisions posted the highest annual home price growth at 5.50 percent and 1.40 percent in the fourth quarter. House price appreciation was weakest in the New England Division, where home prices fell by0.03 percent.

FHFA also reported that its “distress free” home price indexes which the agency publishes for 12 metro areas have shown less price appreciation than the FHFA purchase only Home Price Index. Distress-free means that foreclosed homes and short sales were not included in these index readings.

FHFA has expanded its home price reports with a set of reports based on three-digit zip codes. Sorting house price data by the first three digits of a zip code provides more specific data for regional home price trends; mortgage and real estate pros can find house price data for specific neighborhoods and communities. FHFA described its three-digit zip code reports as “experimental” at present.