Debts Paid By Others

How Are Debts Paid By Others Handled On A Mortgage Application?

How are debts paid by others handled on a mortgage application? Sometimes when someone applies for a mortgage with me, they mention they have a debt paid by a parent. They may have a school loan that a parent pays. Or people may tell me they co-signed for someone else’s mortgage, but they do not make the payments. Read More

interest rates are up

Current mortgage rates

Everybody is asking about current mortgage rates these days. And everyone knows they are higher! But are they high? And what exactly are they? How are they determined? Let’s take these questions one by one.

Are mortgage rates high?

Looking at the historical numbers, today’s rates are average. You might possibly consider today’s rates a little above average. I wrote this blog with charts that show historical rates. This is a good reference point. You will see that mortgage rates don’t routinely get as low as 3% or 4% over history. Even 5% is rare. If anyone is waiting for rates to go as low as they were in 2020 and 2021, they’ll likely be waiting a long time.

You can click here to watch this video for a short review of my take on historical rates.

What exactly are mortgage rates now?

Mortgage rates can’t be quoted in generic terms. If you want to get a quote that is anywhere near accurate, you need to discuss details with a mortgage lender.

Mortgage rates change due to a few variables. Some of those variables are:

  • Credit score: Obviously a higher credit score is better to get more competitive rates.
  • Down payment: Surprisingly a larger down payment does not necessarily guarantee better terms. A 5% down payment loan typically has mortgage insurance. That mortgage insurance may cover the lender up to 30% of the value of the home. Between 5% down payment and 30% PMI coverage that is 35% of safety for the lender. And that 35% of protection is more valuable than a 20% down payment. This means that a 5% down payment loan may have slightly better terms than 20% down. But there are scenarios where higher down payments may provide better terms. This is why you need to talk to a mortgage lender in detail.
  • Loan Size: Mortgage rates will vary based on loan size. You need to talk to a mortgage lender to see if your loan amount is Conforming, Conforming “High Balance”, or Jumbo. Read more about loan size.
  • Debt ratios: There are times when higher debt ratios may impact your mortgage terms.
  • Property type: Certain property types can come with higher mortgage rates. Condominiums, 2-4 unit multi-family properties, and other property types can come with higher terms.
  • Mortgage type: Rates will vary depending on if you are considering a fixed rate, a buydown mortgage, or adjustable rate mortgage.

A mortgage borrower will pay a much higher rate who wants to buy a condo with 5% down, who has a lower credit score, for a condo. And a mortgage borrower will get lower terms who wants to buy a single family home, with 20% down, and a high credit score.

How are rates determined?

The Federal Reserve determines mortgage rates, correct? No. The Federal Reserve is one lever of many that may have an impact. Mortgage rates are more affected by the free market. Keep an eye on inflation, economic news, and the general economy. This blog I wrote discusses the Federal Reserve and the economy in more detail.

It is also important to note that mortgage rates can change each business day. Rates move up and down daily, just as frequently as you see daily stock market moves.

What are current mortgage rates? As you can see that is a complicated question. You can fill out this form to see terms for your scenario. There is no fee required, no credit pull needed, and no obligation. After seeing numbers you can decide if it is time to get pre-approved.

Conclusion

Contact me to discuss your scenario, your local housing market, or other questions. Click here to schedule a call or you can email me directly.

credit score

Rapid Rescore And Improving Your Credit Score

Mortgage lenders have the potential to improve a mortgage borrower’s credit score. A rapid rescore can improve your credit score. Having an improved credit score can possibly lower your interest rate and/or your Private Mortgage Insurance (PMI) if your loan has PMI. However, improving a credit score is no guarantee of getting lower mortgage terms. Also, improving your credit score may not even be needed. Why? Read on. Read More

lock and key

Mortgage Interest Rate Lock-In Information

You would think locking-in an interest rate for your mortgage is a very simple process. What is there to think about? You are given your choices, and you pick one and lock-in. Right? Not much to it?! It’s amazing what the average consumer doesn’t know, and what they should be thinking about. Read below to learn about what will be important for your next mortgage application and interest rate lock-in. Read More

Work with individual or a team

Work With An Individual Loan Officer or A Loan Officer Team?

Should you work with an individual Loan Officer or a Loan Officer team? This discussion will stir up some controversy. I will likely get some angry comments as well as some supportive comments. Keep it classy, and let’s discuss! Read More

interest rates going up

Home Price Reduction and Rates

How do home price reduction and rates affect one another? I have clients who have reported seeing price reductions in the asking prices of homes for sale. This is the first time I have heard of this in years and years. So, are real estate values about to correct? It probably depends on where you live. And of course, as with many of life’s answers, the answer is a matter of degree. Some markets may be in for a large correction, some a small correction, and some markets may still experience price gains.

Are housing values dropping?

Should they adjust the price of their home due to interest rates rising?

I have heard of some home shoppers say they feel home sellers owe it to homebuyers to drop prices just because of the interest rates increase. Read More

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2023 Much Higher Conforming Loan Limits Announced

2023 conforming loan limits have been announced! The Federal Housing Finance Agency (FHFA) sets the loan size limits each year on conventional mortgages that Freddie Mac or Fannie Mae will buy from mortgage lenders. In 2022 the conforming loan limit for a single-family home was $647,800. This year, the conforming loan limit for a single-family home has increased to $726,200. A little over a 12% increase! Read More