Understanding Pre-Approval and Pre-Qualification
04/16/21 • 59 min
Previous Episode
Bank Statement Loans: Loan Program Information and Benefits
Mortgage Mom Radio airs weekly focusing on topics that will educate our listeners around mortgage lending. This week we continue the Homebuyer Workshop series by covering the details of the Bank Statement loan program and more! In this Issue "There is nothing I would not do for those who are really my friends. I have no notion of loving people by halves, it is not my nature." - Jane Austen As home prices continue to rise, those with their heart set on homeownership might seek non-traditional ways of climbing the property ladder. In this issue, we'll cover these ideas as well as the following: What to Watch - After weeks of lower bond prices and higher yields, the cure for higher rates may be higher rates, as the uptick in yield could be luring in buyers. Rent-to-Own Properties on the Rise - The popularity of rent-to-own properties has increased recently, but it remains a risky option for many homebuyers looking to purchase their home. Ways to Hang Plants Outdoors - You don't need a green thumb to hang plants outside as long as you have a few household items. Q&A: What Type of Market Is It? - How do you know if it's a buyer's or seller's market? Knowing which one it is can help you determine if you should buy, sell, or hold on to your property. What to Watch Where Are Rates Headed? After weeks of lower bond prices and higher yields, the cure for higher rates may be higher rates as the uptick in yield could be luring in buyers. Reports now read that Japan may become a net buyer of U.S. Treasury securities after being a net seller for quite some time. One of the continued tailwinds for relatively low rates here in the U.S. is the ridiculously low rates around the globe. Also on the radar in the weeks and months ahead could be the continued rise in the U.S. stock markets. The possibility of the bullish sentiment for stocks may be fueled by new stimulus on the way as states continue to reopen fully and if rates stabilize. The U.S. economy could be on track for a breakout year. The Atlanta Fed is forecasting a whopping 8.3% gain in Q1 2021 Gross Domestic Product! So what does this mean for mortgage rates? If we continue to see some stabilization in yields, we may see some modest improvement in rates. At the same time, we should expect a continued rise in rates as the economy improves. The Federal Reserve has said as much in the past few weeks. Sam Khater, Freddie Mac's Chief Economist, said, "While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March 2020, prior to the pandemic. However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season." Bottom line: Home borrowing costs remain historically low, and now is a good time to get off the fence and jump into home ownership. Source: Mortgage Market Guide Housing News Rent-to-Own Properties on the Rise The demand for these types of properties has increased recently. While opting for a rent-to-own property looks good on paper, since you don't need to plunk down a huge down payment, it comes with its own risks. One major risk is that unlike the typical buying or rental process, the rent-to-own doesn't have a standard contract as the terms are completely negotiable. This is known as the lease option, and both sides must agree to certain terms. With a rent-to-own home, you agree to rent a home for a specific time with the understanding that you gain ownership of the home. The timeframe can last from several months to several years. Another downside is that you will probably pay higher prices than if you were to rent. But if you think about it, a portion of your monthly payment is going toward the down payment on the home. You can use the accrued money to purchase the home at the end of your agreement. The money is typically non-refundable,
Next Episode
The Importance of Choosing the Right Real Estate Agent
Mortgage Mom Radio airs weekly focusing on topics that will educate our listeners around mortgage lending. This week Debbie is joined by newcomer to the Mortgage Mom team, Heather Kilpatrick, to continue the Homebuyer Workshop series by explaining the role of the real estate agent and why it is very important to find the best one for you. A Look Into the Markets "Oh yeah" - "Oh Yeah" by Yello ("Ferris Bueller's Day Off") In the absence of any meaningful economic report this past week, we watched bond prices rise while rates inched lower. Oh yeah!!! Let us break down what is going on and look into next week as the boredom ends. The Path of Least Resistance Rates have been steadily improving over the past few weeks as consumer inflation fears have waned. With a nice trend in place and no news to knock bonds down, prices continued their path of least resistance: higher. How high? Mortgage-backed securities, which are where home loan rates are derived, closed at their highest level since March 2nd this past week, and the 10-year yield hovered near 1.55%, also the lowest in nearly two months. FOMC Blackout Period The Federal Open Market Committee (FOMC), which meets eight times per year to discuss economic conditions and determine whether to hike or lower the Fed Fund Rates, can always move the market when they speak or during interviews. However, the FOMC has established a blackout period where FOMC members are to limit their public speaking and interviews. The current period is April 17 through 29th. When Fed members are not talking or sharing their views, the markets can't react to any perceived positive or negative statements. The quiet ends next week when the Fed delivers their Monetary Policy Statement on Wednesday at 2:00 p.m. ET. More on that below. Bonds Regaining Some Shine A couple of interesting trends happened this week which could bode well for rates in the near-to-intermediate term. First, stocks struggled a bit this past week, and when they dropped, rates also declined. This is a typical market reaction, but something we have not seen much of this year during the steady increase in rates. If stocks continue to stumble and we see a seasonal, "Sell in May and go away," reaction, it could leave room for further rate improvement. Second, the 20-year bond auction this past week was well received. This means the buying appetite for Treasury securities was very good despite the recent improvement in rates/yields. If this trend continues, it will help keep long-term rates relatively low. Housing en Fuego March existing-home sales showed the median price rose by an annual record-breaking pace of 17.2%. This scorching rise is due mainly to an anemic 2.1 months of available inventory for sale. Homes sold in 18 days on average, another record low. This is all good news for someone selling a home, but as we know, it is rough for folks purchasing one. With rates ticking back down, vaccinations administered, and economies reopening, we should expect continued strength in housing and hopefully more inventory available for sale. Bottom line: This is an amazing moment to take advantage of the current interest rates as the present improvement in rates could be short lived. Looking Ahead As mentioned, it's Fed Week. The FOMC will deliver its Monetary Policy Statement as well as its outlook on the economy on Wednesday. There is zero chance of a rate hike. And there is likely no chance the Fed mentions "tapering" of any bond purchases; let's hope so. For when the Fed stops buying bonds, rates will move higher in a hurry. We will also get some high-impact reports like Gross Domestic Product and the Fed's favored gauge of inflation, the Core Personal Consumption Index (PCE). Moreover, there will be a ton of corporate earnings, which could impact both stocks and bonds/rates. We are LIVE on YouTube every Wednesday at 5 PM. Watch us record our show! Ask us your questions right in the feed,
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