Blog – Page 2 of 899 – Mike Pfefferman

04

Aug

Financial Reports

What’s Ahead For Mortgage Rates This Week – August 4th, 2025

There were several notable releases this last week, with the largest being the PCE Index — the Federal Reserve’s preferred inflation indicator. The PCE Index may be the more accurate indicator going forward, as data collection for the Consumer Price Index has been recently cut, thereby reducing its reliability. As expected, the inflation numbers have been steadily rising with the PCE Index, indicating that impacts from the tariffs are now filtering into prices for both producers and consumers.

As a follow up, Personal Income & Spending has had a light upturn after the initial panic with the tariffs. Lastly, the job numbers from last week have been unexpectedly weak, showing a slow down of the economy overall due to many factors.

PCE Index
A key measure of inflation posted the biggest increase in four months in June as the delayed effects of higher U.S. tariffs began to filter through the economy, raising questions about whether the Federal Reserve will cut interest rates soon. The PCE index, the Fed’s preferred inflation gauge, rose 0.3% last month, the Bureau of Economic Analysis said Thursday. It was the biggest increase since February.

Personal Spending & Income
Americans spent more money in June after U.S. trade wars began to simmer down, but they were cautious spenders amid all the turmoil caused by the Trump administration’s tariffs. Personal spending increased 0.3% last month, the government said Thursday, and partly recovered from a soft patch in May and April.

Employment Reports
The U.S. only added 19,000 jobs in May compared to an initial report of 144,000, and only 14,000 in June after an initial report of 147,000, according to the BLS. Those two paltry totals, plus a July jobs gain of 73,000, means the U.S. added just 106,000 jobs over the past three months.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw a decrease of -0.02% with the current rate at 5.85%
30-Yr FRM rates saw a decrease of -0.02% with the current rate at 6.72%

MND Rate Index

30-Yr FHA rates saw a decrease of -0.17% this week. Current rates at 6.22%
30-Yr VA rates saw a decrease of -0.16% this week. Current rates at 6.24%

Jobless Claims
Initial Claims were reported to be 218,000 compared to the expected claims of 222,000. The prior week landed at 217,000.

What’s Ahead
Next week will be a fairly light week, with the most significant releases being the Trade Balance as well as the Services PMI reports.

01

Aug

By Mike Pfefferman

Home Financing Tips

The Risks of Using a Mortgage for House Flipping

House flipping, the practice of buying a property, renovating it, and quickly selling it for a profit, can be an exciting and potentially lucrative investment strategy. However, financing a flip with a traditional mortgage carries significant risks that investors should carefully consider before proceeding.

Higher Interest Rates and Fees
Traditional mortgages typically offer lower interest rates for long-term homeownership, but they are not designed for short-term investments like flipping. Many lenders may charge higher rates or fees on loans for investment properties. This can increase your carrying costs, reducing your profit margin.

Longer Approval and Closing Times
Mortgage approval processes for primary residences can take weeks, while house flipping often requires quick acquisitions to capitalize on market opportunities. Delays in mortgage approval or closing can cause you to miss out on desirable properties or force you to pay higher prices.

Limited Loan Terms for Flippers
Some mortgage programs have restrictions on how soon you can sell or refinance the home after purchase. Selling too soon may trigger penalties or require repayment of certain fees. Additionally, lenders may require higher credit scores or down payments for investment loans, making financing more difficult.

Market Volatility Risks
The housing market can fluctuate rapidly. If property values decline during your renovation or holding period, you could end up selling at a loss. Mortgages with fixed monthly payments mean you must cover these costs regardless of market conditions, which can strain your finances.

Renovation Uncertainties
Unexpected costs or delays in renovation projects can increase your expenses and holding time. If your mortgage payments continue while the home is not generating income, your profits may shrink or disappear altogether.

Liquidity and Cash Flow Constraints
Using a mortgage increases your financial obligations, requiring steady monthly payments. If the property does not sell quickly, or if you cannot secure tenants for rental income, you could face cash flow challenges. This risk is especially high if you rely solely on financing without sufficient reserves.

Tax Implications
House flipping profits are often treated as ordinary income and may be subject to higher tax rates. Additionally, mortgage interest deductions may be limited on investment properties compared to primary residences. Consulting a tax professional is critical to understanding your specific situation.

Alternatives to Traditional Mortgages
Many flippers use hard money loans or private financing, which offer faster approvals and more flexible terms but come with higher interest rates. Balancing these options against traditional mortgages depends on your experience, capital, and risk tolerance.

While using a mortgage to finance house flipping may be tempting due to lower interest rates, the risks and constraints can outweigh the benefits. Careful planning, realistic budgeting, and consultation with mortgage and real estate professionals can help you navigate these challenges and improve your chances of a successful flip.

If you are considering financing a flip with a mortgage, it is important to weigh all risks and options before making a commitment.

31

Jul

By Mike Pfefferman

Mortgage

Should You Get a Mortgage If You Plan to Move Soon?

Deciding to buy a home when you know you might move within a few years can be a challenging choice. Many people wonder if it makes financial sense to take on a mortgage if they will not live in the property long term. The answer depends on several factors, including your personal goals, market conditions, and your financial situation.

Consider Your Time Horizon
Mortgage loans often come with upfront costs such as closing fees, appraisal costs, and sometimes private mortgage insurance. If you plan to move within a year or two, these costs can outweigh the benefits of homeownership. However, if your timeline extends beyond three to five years, buying a home may make more sense financially than renting.

Building Equity vs. Transaction Costs
One of the main advantages of buying a home is building equity with each mortgage payment. Over time, this equity can become a valuable asset. However, buying and selling a home involves transaction costs such as agent commissions, closing fees, and potential repairs or improvements needed before selling. If you move too quickly, these costs may reduce or eliminate any potential financial gains.

Market Conditions Matter
The state of the housing market also affects this decision. In a rapidly appreciating market, you might build equity faster and see gains even if you move within a few years. In a slow or declining market, you risk losing money if you sell too soon. Research your local market and seek advice from real estate and mortgage professionals.

Renting vs. Buying Costs
Compare the cost of renting with the total cost of homeownership, including mortgage payments, taxes, insurance, maintenance, and utilities. If renting is significantly cheaper, it may be better to wait until you plan to stay longer before buying. Conversely, if mortgage payments are close to or less than rent, buying could be more financially sound.

Flexibility and Lifestyle
Homeownership offers stability but less flexibility. If your job or family situation requires frequent moves, renting might be a better fit. However, if you have confidence in your ability to sell quickly or rent out the home, buying could still be a good option.

Financing Options and Strategies
If you do decide to buy with plans to move, consider mortgage options with lower upfront costs or loans that offer portability, allowing you to transfer the mortgage to a new property. Consulting a mortgage professional can help you identify programs tailored to your situation.

Buying a home when planning to move soon is a personal decision that requires weighing financial and lifestyle factors. It is important to consider how long you expect to stay, the costs of buying and selling, and your local housing market. Working with experienced real estate and mortgage professionals can help you make an informed choice.

If you are thinking about purchasing a home but expect to move within a few years, reach out to a mortgage expert to discuss your options and find the best path forward.