27
Aug
By support
Home Mortgage Tips

Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the Money

Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the MoneyRefinancing your existing mortgage may provide you with the opportunity to lower your interest rate, reduce your mortgage payment and adjust your loan term. For those homeowners who have lived in their home for more than a few years, pulling equity out of the property for everything from a luxurious vacation to making home improvements is a tempting potential benefit.

However, with property values and interest rates adjusting frequently, you may wonder if now is the best time to refinance your mortgage.

Using Equity From Your Refinance

One factor to consider when debating between refinancing now and waiting relates to pulling equity out of your home. If you need access to the cash now for home improvements or other purposes, refinancing now may be ideal. Even if you do not need access to your equity for several months or longer, you can lock in today’s rates and invest the money in other vehicles, such as CDs or bonds, until you need the cash.

Anticipating Market Changes

You may have heard that the interest rates for home mortgages have been slowly rising, and while they remain close to historic lows, they are projected to continue to rise. Nobody can predict with certainty how interest rates will adjust in the next few months and years, and locking in today’s rates may be beneficial. Keep in mind that if rates decline significantly in the near future, you can always look into refinancing again.

Reducing Your Principal

If you have a higher interest rate on your existing mortgage, your principal balance may be reduced at a slower rate than if you refinance to a lower interest rate. In addition, if you refinance from a 30-year term to a shorter term length, your principal balance will also be reduced more quickly in most cases. In many situations, refinancing your home mortgage today may establish a more efficient repayment schedule that allows you to accrue equity at a faster rate.

Each homeowner has unique factors to consider when refinancing based on property value, credit rating, existing loan terms and other factors. While many will benefit by refinancing an existing mortgage today, you can speak with a mortgage professional for specific advice and recommendations regarding your situation. Call your trusted mortgage representative today to inquire about the options and to begin working on your refinance loan application.

26
Aug
By support
Housing Market

DOC New Home Sales and NAR Existing Home Sales

DOC New Home Sales and NAR Existing Home SalesThe Department of Commerce reported July sales of new homes dropped by 2.40 percent over June to a four month low. Analysts noted that although July’s reading of 412,000 new homes sold fell short of expectations and June’s reading, the new homes sector is volatile and subject to change.

June’s reading of 406,000 new homes sold was revised to 422,000 new homes sold; expectations were based on the original reading. Three of four regions posted a slower rate of growth for home prices with only the South posting a gain.

The average price of a new home in the U.S. rose to $269,800, which is 2.90 percent higher than June’s average home price. Inventories of new homes increased to a six-month level based on current sales pace.

This was the highest inventory of new homes available since 2011. Strict mortgage credit requirements and an elevated national unemployment rate contributed to the lower rate of home value appreciation and higher inventories of new homes.

The good news: New home sales increased by 12.90 percent year-over-year in July.

Existing Home Sales Rise: Steady Mortgage Rates, Rising Rents Cited

The National Association of REALTORS® reported that July sales of previously-owned homes rose from June’s revised figure of 5.03 million sales to 5.15 million sales and achieved the highest reading for 2014.

The existing home sales readings are calculated on a seasonally adjusted annual basis. Existing home sales were 4.30 percent lower than for July 2013, which had the highest reading for existing home sales in 2013.

Lawrence Yun, chief economist for the NAR, said that a growing inventory of available pre-owned homes for sale and strengthening labor markets contributed to sales growth. Mr. Yun said that July’s pace of sales was expected to continue based on mortgage rates holding steady and rising rents for apartments.

The inevitable rise of mortgage rates and increasing home prices were cited as factors that could cool existing home sales in coming months. With the Fed scheduled to complete its asset purchase program in October and changes to the Fed’s target federal funds rate expected within months, mortgage rates are expected to rise. Affordability looms as an obstacle to sales; home prices continue to rise as wages grow at a slower pace than home prices.

The national median price for existing homes was $222,900, which was a year-over-year increase of 4.90 percent. This was the 29th consecutive month for year-over-year price gains for existing homes. The inventory of existing homes for sale increased by 3.50 percent to 2.37 million available homes and represents a 5.50 month supply. Unsold inventory of existing homes is 5.80 percent higher year-over-year. As compared to July 2013’s reading of 2.24 million available pre-owned homes.

Homes sold through foreclosure or short sales have steeply declined from 36 percent of existing home sales in 2009 to approximately 9 percent in July and were down from 15 percent of existing home sales in June.

25
Aug
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – Aug 25, 2014

Whats Ahead For Mortgage Rates This Week Aug 25 2014Last week’s economic news brought several reports related to housing. The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index for August rose by two points to 55, which was its highest reading in seven months.

Components of the NAHB HMI include builder surveys on conditions related to upcoming sales of new homes, which rose by two points for a reading of 65. Builder sentiment concerning present sales conditions also rose by two points to 58.

Builder views on prospective buyer traffic rose from 39 to 42. Readings above 50 indicate that more builders viewed housing market conditions as positive as negative.

NAHB cited job growth and low mortgage rates as conditions driving higher builder confidence in market conditions.

Housing Starts, Building Permits Up in July

According to the Commerce Department, housing starts and building permits rose in July. Housing starts increased to 1.09 million from June’s reading of 945,000 and exceeded expectations of 975,000. This reading reflects higher builder confidence and could contribute to easing demand for housing as new homes expand the inventory of available homes.

Construction of single family homes accounts for about 75 percent of new home construction. July’s reading was 656,000 single family housing starts on an annual basis. Regionally, housing starts declined by 25 percent in the Midwest, but rose by 44 percent in the Northeast, 29 percent in the South and 18.60 percent in the West.

Building permits issued in July rose to an annual rate of 1.05 million, which was an increase of 8.10 percent over June’s reading of 973,000 permits issued. Permits for single family homes increased by 0.90 percent to a reading of 640,000 permits annually.

July’s readings for housing starts and building permits are in line with overall economic growth and suggest that housing markets may improve in coming months as the supply of new homes increases.

Let’s add more icing to the cake. The National Association of REALTORS® reported that existing home sales rose to 5.15 million on a seasonally adjusted annual basis against predictions of 5.00 million existing homes sold and June’s reading of 5.05 million sales of previously owned homes.

Mortgage Rates Fall, FOMC Minutes Indicate Economic Improvement

Freddie Mac’s weekly survey of mortgage rates reported that average rates fell across the board: The average rate for a 30-year fixed rate mortgage dropped by two basis points to 4.10 percent with discount point lower at 0.50 percent.

The rate for a 15-year mortgage dropped by one basis point to 3.24 percent with discount points unchanged at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.95 percent with discount points unchanged at 0.50 percent.

The Federal Open Market Committee (FOMC) of the Federal Reserve released minutes from its July meeting. Highlights included the committee’s 9-1 vote in favor of continuing the slow pace of reducing economic stimulus.

The minutes indicated that the committee intends to keep the federal funds rate below normal levels for “some time.” Previous FOMC statements have consistently indicated the Fed’s intention to maintain very low short-term interest rates after asset purchases under QE3 end in October, but FOMC has not released a specific time frame or details of its intentions concerning the federal funds rate.

The Fed acknowledged economic improvements, but cited lingering concerns over unemployment, which remains higher than average.

More Good News: Jobless Claims Lower, Economic Indicators Up

Weekly jobless claims fell to 298,000, lower than expectations of 300,000 new jobless claims and the prior week’s reading of 312,000 new claims. Leading economic indicators (LEI) rose by 0.89 percent in July after increases in May and June. Analysts interpreted this reading as a further indication of stronger economic conditions.

What’s Ahead

This week’s scheduled economic reports include New Home Sales, the Case-Shiller Home Price Index and FHFA House Price Index. General economic reports include the Consumer Confidence Index and the University of Michigan Consumer Sentiment Index. It will be interesting to see whether consumer views of the economy are consistent with recent economic improvements.