The SCOOP! Blog by ChangeMyRate.com® 'Your Best Rate Guru'

Wondering why mortgage rates are suddenly going up? This is due to a variety of factors, but now could still be the perfect time to make a move if you are looking to buy a home or refinance at a lower rate.  

Since the start of the pandemic, mortgage and refinance rates steadily decreased, reaching a historical low of 2.65% for a fixed-rate 30-year mortgage in January 2021. However, over the past few months, we've seen an increase in mortgage rates. 

Rising mortgage rates are due to a number of factors. As rates slowly but consistently climb, potential homebuyers and those looking to refinance may still want to consider making a move and catching the tail-end of this season of lower rates. 

While the decision to purchase a home or refinance should be well-thought-out, with the housing market there’s always the risk of waiting too long and missing out on a good interest rate. You can compare mortgage rates across multiple lenders without affecting your credit score on an online loan marketplace like ChangeMyRate.com.

Why are mortgage rates increasing?

Mortgage rates can rise or fall due to a number of reasons. The strength of the economy is one of the biggest factors. Unemployment numbers have dwindled since their peak during the pandemic, and with more people receiving another stimulus check along with their dose of the COVID-19 vaccine, economic recovery is in full swing and the outlook is positive. 

Also, there is always concern for inflation. The Federal Reserve’s major rate cut in 2020 was intended to make it easier for people to borrow at lower rates. However, the Federal Reserve decisions affect mortgage rates by governing how much banks pay to borrow funds, which could in turn affect how much mortgage lenders charge borrowers. 

High inflation causes an increase in mortgage rates, as well as home prices. Even though the Federal Reserve plans to keep rates low near 0%, they can only influence the housing industry by directing the flow of money into the economy at large. When inflation increases too strongly, this causes the Federal Reserve to tighten the money flow and increase costs for banks to lend money, leading to rising mortgage rates.

Will mortgage rates go up for the rest of 2021?

Unfortunately, mortgage interest rates are higher than they were at the end of last year. Kevin Leibowitz, a mortgage broker in Brooklyn and founder of Grayton Mortgage, predicts that we might have some stabilization and a slight decrease in rates versus the one-sided uptick that we’ve been seeing for the past four to six weeks.

"Based on the current news and economic cycle, we still might be looking at lower mortgage and refinance rates for the near future," Leibowitz said. "The Federal Reserve sets the tone of the market by changing the rates that they administer."

"But, after setting the tone, the market does what it does," Leibowitz added. "The main driver at that point is the treasuries purchase of mortgage-backed securities. This is the actual instrument that mortgages — from Fannie Mae and Freddie Mac, which represent 80% of the housing market — get pooled into. As long as the Treasury continues on their asset purchase program, mortgage rates should remain at the relatively low level that they’re at now." 

If you want to take advantage of lower rates now, visit ChangeMyRate.com to view loan offers across multiple lenders without affecting your credit score. 

Is now a good time to refinance your mortgage?

For the past 12 months, mortgage refinance rates have remained low. At one point in December 2020, rates were at a record low of 2.625% for a 30-year mortgage refinance and 2.125% for a 15-year fixed-rate loan. As of May 6, 2021, mortgage refinance rates were:

  • 2.875% for a 30-year fixed-rate refinance
  • 2.250% for a 15-year fixed-rate refinance

While there has been an increase, the interesting thing is that rates are holding firm for now. This means if you’re like most people looking to refinance for a lower mortgage rate and monthly payment, now may be the time to act in case current mortgage rates get even higher over time. 

Of course, refinancing always depends on your personal situation, credit and income, among other factors. That said, it doesn’t hurt to shop around and get a good idea of what your loan terms could be like. To see how much a refinance could save you and estimate your monthly mortgage payment, check out ChangeMyRate.com’s mortgage calculator.

Can you negotiate mortgage rates?

Many things in life are negotiable to some degree, and this includes mortgage interest rates. You can start by shopping around and comparing terms from different mortgage lenders. If you settle for the first mortgage rate you qualify with for one lender, you won’t know if you’re missing out on a better rate with someone else. Even a slightly lower interest rate could lower your monthly payments and save you thousands on your mortgage over time. 

Another way to negotiate your mortgage rate is with discount points, as you have the option to buy discount points with most lenders. These "points" allow you to pay a little more upfront for a lower mortgage payment over the life of your loan. Typically, a point costs 1% of your total loan amount and can lower your rate by 0.25%. So if you have a mortgage interest rate of 3.5% and pay for one discount point, this means your rate could be lowered to 3.25%. 

Overall, an excellent credit score can help you negotiate the lowest mortgage rate possible, so be sure to maintain good credit by paying your credit card statements and other bills on time.

Get started by checking rates and gathering information

If you’re in the market to buy a home or refinance, odds are you want to play it smart and lock in the best interest rate and loan terms. The best way to start the process is by checking current mortgage interest rates across multiple mortgage lenders so you can make your decision with confidence.

Visit ChangeMyRate.com to get in touch with an experienced loan officer and get all your mortgage questions answered.

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Posted by Jackie A. Graves, President on May 13th, 2021 10:56 AM

Market watchers expected mortgage rates to be climbing toward 4 percent by now. In a break for borrowers, the anticipated run-up in rates hasn’t really begun.

Instead, mortgage rates have declined for each of the past five weeks, according to Bankrate’s national survey of lenders.
 

One reason? Lenders are flush with profits from a banner year in 2020, and they’ve decided offer better deals to borrowers to compete for business.

“There’s no question it’s good news for consumers,” says Guy Cecala, publisher of trade publication Inside Mortgage Finance. “It means we’re likely to have 3 percent or lower mortgage rates lingering around a little longer than we thought.”

For homeowners looking to refinance, price competition means the window of opportunity remains open. Rates are staying low enough that a refinance makes sense for a larger number of borrowers. And for buyers competing in a fast-appreciating housing market, even slight reductions in rates boosts their buying power.

“Any time there is heated competition, it is a win for consumers,” says Greg McBride, CFA, Bankrate chief financial analyst.

How lenders set mortgage rates

The calculus behind mortgage rates is complicated, but here’s one easy rule of thumb: The 30-year fixed-rate mortgage closely tracks the 10-year Treasury yield. When that rate goes up, the 30-year mortgage tends to do the same.

While the 10-year yield and the 30-year mortgage rate generally move in tandem, the relationship isn’t perfect. Last year, the gap opened as wide as 3 percentage points, or 300 basis points — well above the normal range of about 200 basis points.

Now, the spread has narrowed all the way to 155 basis points. It’s the smallest gap in a decade, according to Bankrate data.

Mortgage rates are influenced by other factors, such as demand for home loans and lenders’ ability to meet that demand. When mortgage lenders have too much business, they raise rates to slow applications. When business is light, they tend to cut rates to attract more customers.

That’s what’s happening now. Last year, plunging rates and an unexpected housing boom caused demand to soar far more quickly than lenders could ramp up their staffing levels.

After a hiring spree, lenders now have enough people to handle a heavy workload. But the mortgage refinance boom has eased.

“Although purchase mortgage activity is strong, there’s a lack of heavy refi activity,” Cecala says.

After last year’s record $3.83 trillion in mortgage originations, volume is likely to fall 14 percent this year to $3.28 trillion, according to the Mortgage Bankers Association.

That leaves lenders with a conundrum. They’d rather not lay off the people they just hired.

“Before they start jettisoning staff, they want to see what else they can do,” Cecala says. “The most obvious thing is to offer a better deal than the guy down the street.”

Strong profits give lenders some wiggle room

Lenders did very well last year. The Mortgage Bankers Association said the industry generated an average profit of $5,535 per loan in the third quarter of 2020, up sharply from the $1,924 lenders earned during the same period in 2019. However, by the fourth quarter of 2020, average profit had retreated to $3,738.

The profitability cycle follows a predictable pattern, says Gene Thompson, CEO of InterLinc Mortgage Services in Houston. Lenders bank their profits in boom times like the one they experienced last summer, then give some back as necessary.

“When that volume starts to dwindle, we will see companies starting to use some of their war chest to chase volume,” Thompson says. “That’s when things will start to change on the profitability side for lenders.”

That scenario is playing out now. Shares of publicly traded mortgage companies soared as industry profits rose. However, the stocks of Rocket Cos. and UWM Mortgage took a hit recently as this new reality became clear.

Rocket — the parent of Quicken Loans, the nation’s largest lender — reported a margin of 3.74 percent in the first quarter of 2021, a decline from 4.41 percent in the fourth quarter of 2020. The company said it expects further erosion of profitability in 2021, as margins fall below 3 percent.

That trend spooked investors, but Rocket CEO Jay Farner says plenty of wiggle room remains. “Margins, although moving back to more historical averages, are incredibly strong,” he said during an earnings call in early May.

What you can do to get the best mortgage rate

Before committing to a lender, do your research. To secure the most favorable mortgage rate, take these steps:

  • Compare offers: This advice is especially relevant now that lenders are competing on price. “This is why it is so important to shop around,” McBride says. “Not everyone offers the same price, and some lenders may have motivation to be very competitive on price.” Get offers from at least three lenders. If you live in an area with limited competition among local banks, that might require you to shop online. The upside: Comparison shopping can save you thousands of dollars over the life of the loan.
  • Look beyond brick-and-mortar lenders: The bank or credit union where you keep your cash might offer the best deal on a home loan, but make sure you do some comparison shopping. Rates and closing costs can vary widely by lender.
  • Spruce up your credit score: Improving your credit is the best way to lower your rate, and it’s more effective than boosting your down payment or improving your debt-to-income ratio. The best deals go to borrowers with credit scores of 740 or higher.

Source: Click here

Posted by Jackie A. Graves, President on May 11th, 2021 9:45 PM

Good negotiators are adept at gaining information from their opponent by asking questions. Good negotiators also know that they will be asked questions in return.

How we respond to questions can be critical to determining the final result of any negotiation.

To improve our capability in responding to questions, consider the following six rules, guidelines and suggestions.

Good negotiators always pause before answering a question. That pause sends a powerful message and provides time to consider the right answer.

Many questions are asked of us, not to gain information or a significant verbal response, but to put us on the defensive and take control. Focus any answer on tactfully regaining control. For example, there are times when we should delay answering their question and instead compliment their question and consider asking why they asked it.

Not all questions deserve an answer. Responding with silence, a pause or a puzzled look can be most disarming to our opponent. Ignoring their question and, after that pause, proceeding with a question of our own may be just the right technique or mechanism. This can work wonders when negotiating with your family, especially your kids!

Answers to questions should not be framed to please our opponent. Being too accommodating with our answers can send all the wrong messages, i.e. "I'm ready to concede." or "Keep asking and I'll keep making concessions."

If your answer is likely to come across as combative, soften it by first saying, "You may not like to hear me say this, but ...."

Consider answering questions like today's politicians do. They give an answer, but not to the question being asked. They typically answer the question they wished they had been asked. They stay "on message".

Go into negotiations thinking of what you'd hope your opponent would ask. Formulate that answer and be prepared to give that answer to some question they will ask. A bridging statement will make it work, such as, "You bring up a good point, but first let me say...."

The right answer is always a concise answer. Saying too much is the downfall of many a negotiator. Chose your words carefully. Use more short sentences. Think quickly if your response might be one you'll regret. Remember, a closed mouth gathers no foot. You can't 'unring the bell' and take back something you said in error.

Find one or more of these question response techniques and add them to your negotiating skills. They'll serve you well as you Keep Negotiating.

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Posted by Jackie A. Graves, President on May 10th, 2021 10:58 PM

There are two basic types of mortgage loan programs, conventional and government backed. A conventional loan is one where the issuing lender assumes the risk of making the mortgage. Should the loan ever go into default and the lender is forced to foreclose, the lender is on the hook for the entire loss. There is in fact private mortgage insurance used for low down payment conventional loans, but the insurance policy only covers the difference between 80% of the value of the property and the actual down payment. With a 5% down payment, 15% of the loan amount will be covered.

Not so with government-backed loans. These loans are FHA, VA and USDA. So, given these three choices which one is best? The answer is each one is best given the proper scenario. Let’s look at the first choice, the FHA loan. This is a program from the Federal Housing Administration. It’s highly popular with first time buyers because the loan only asks for a down payment of just 3.5% of the sales price, however the program can be used by anyone. Low down payment conventional loans will require private mortgage insurance. The FHA loan also asks for private mortgage insurance in the form of an upfront and annual mortgage insurance premium. This premium compensates the lender for the total loan amount.

The VA loan program is reserved for those who are eligible. Eligible borrowers are veterans of the armed forces, active-duty personnel, those with at least six years of service within the National Guard or Armed Forces Reserves and unremarried surviving spouses of those who have died while serving or as a result of a service-related injury. While the FHA loan asks for a 3.5% down payment, the VA program requires no down payment whatsoever. Zero. But again, only for those who are eligible. If someone is not a member of a qualifying group, the VA loan cannot be used. VA loans also provide a guarantee to the lender but at only 25% of the loan amount. This guarantee is financed by a one-time premium that is rolled into the loan amount. This is referred to as the Funding Fee.

The USDA loan is one managed by the United States Department of Agriculture and designed to finance homes that are located in rural or semi-rural areas. These areas are designated every 10 years after the latest Census Bureau counts are reviewed. USDA loans also require no down payment. The attraction of the USDA loan is its inherent ability to finance properties located in sparsely populated areas. Areas where a conventional loan would not be a fit. FHA loans are also more difficult to be used in rural areas. USDA loan guarantee to the lender compensates the lender for the remaining loan amount and financed by two separate mortgage insurance premiums, just like the FHA program. This program is the ideal choice to finance a rural property. 

Each of these three programs address an important need in the housing sector and each carries its own unique characteristics. Lastly, all three programs can only be used by those who intend to occupy the property as a primary residence and cannot be used to finance investment properties.

Source: Click here

Posted by Jackie A. Graves, President on May 9th, 2021 11:35 AM

The U.S. housing market is on a hot streak with double-digit annual gains in home prices, bidding wars, and surging buyer demand. That type of soaring housing market is prompting more “bubble” fears in some corners, but economists say the housing market isn’t getting overinflated.

“We have strong conviction that we are not experiencing a bubble in U.S. housing,” Vishwanath Tirupattur, a Morgan Stanley strategist, wrote in a note to clients this week.

Lawrence Yun, chief economist of the National Association of REALTORS®, agrees. He told Axios last month: “This is not a bubble. It is simply lack of supply.”

The rapid rise in prices may be concerning to home shoppers, however. The median selling price for a home is up $35,000 compared to a year ago, which is the fastest-paced increase since 2006, Tirupattur said.

But this isn’t 2006. Housing inventories are low, credit remains tight, and lenders aren’t issuing risky loans at rates like they did back then. Product risk—such as from mortgages with introductory periods, teaser rates, or balloon payments—comprised about 40% of the mortgage market between 2004 to 2006. More recently, those factors are now at only 2% of the mortgage market, according to Morgan Stanley.

Also, the housing market has a record low number of homes available for sale. At the end of March, there were 1.07 million homes available for sale, according to NAR data. For comparison, during the housing bubble, in July 2007, there were more than four times that—4 million homes available for sale.

Still, while home prices won’t keep climbing at the current pace. They are not expected to fall either, economists say.

“We are not at all suggesting that home price appreciation will maintain its current torrid pace,” Tirupattur writes. “Home prices will continue to rise, but more gradually.”

Source: Click here

Posted by Jackie A. Graves, President on May 8th, 2021 7:51 PM

As a testament to our mission, Freddie Mac has helped hundreds of thousands of America’s homeowners and renters stay in their homes during the ongoing covid-19 pandemic, while providing liquidity for home purchases, refinancing's, and the multifamily market. In the first quarter of 2021, we reported net income of $2.8 billion.

"We are proud of our role in maintaining a vibrant housing market while providing critical assistance to borrowers and lenders during a global crisis."

CFO Christian M. Lown, April 26, 2021

In this first quarter alone, we have helped 1.4 million Americans find the safety and stability of a home. Here’s how we have delivered on our mission so far this year:

family on a couch mother and young child looking at a computer screen

mother helping daughter with homework

young man holding a sleeping baby

woman at home playing with a white Labrador

man and woman sitting on a couch with dog

lady working with computer

See how we're building a better housing finance system for America’s homebuyers, renters, lenders and investors.

Source: Click here

Posted by Jackie A. Graves, President on May 7th, 2021 11:21 PM

If you’re facing a financial hardship and having difficulty paying your mortgage, many resources are available to help you.

Rest assured, help is available

Unexpected financial setbacks can be challenging and intimidating, especially when your ability to pay your mortgage is at stake – or you’ve already fallen behind. Before you panic, it’s important to know you have options and many people available to help you, including:

Your mortgage company

If you’re facing a financial setback that impacts your ability to pay your mortgage, your first call should be to your loan servicer (the company listed on your mortgage statement). The sooner you call, the more options will be available. Remember, your mortgage company does not want your home, they want to help you explore all options to avoid foreclosure.

Housing counselors

Every year, housing counselors help millions of people regain their financial footing. They often work for nonprofit organizations and are trained to help you with your financial needs – from budgeting to avoiding foreclosure.

Freddie Mac Borrower Help Centers

If you’re struggling to make your mortgage payments, help is available – in person or over the phone. Our HUD-certified housing counselors will help you understand your options, work with your lender and provide you with holistic financial counseling.

There should never be a fee from your mortgage company or HUD-certified housing counselor to obtain assistance about options to avoid foreclosure. Be wary of companies or individuals offering to help you for a fee and never send a mortgage payment to any company other than the one listed on your monthly mortgage statement. If you believe you’ve been the victim of a mortgage scam, call 1-888-995-HOPE (4673) and report it immediately.

Before you reach out for help, take the time to fully understand your financial situation and have your mortgage information readily available. Being well organized and prepared will help your loan servicer or housing counselor better understand your financial position and assess your eligibility for a workout option.

Tools and Resources

Brochure: Avoiding Foreclosure

Learn how to identify the early warning signs and pursue alternatives to foreclosure.

Loan Look-Up Tool

Find out if Freddie Mac owns your loan.

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Posted by Jackie A. Graves, President on May 6th, 2021 2:04 PM

Home buyers are up against limited inventories of homes for sale and struggling to triumph in a competitive market. But they’re hopeful for a turnaround over the next few months.

Thirty-three percent of prospective buyers recently surveyed are hopeful that it will be easier to find a home over the coming months—an improvement from 25% who said so a year ago, according to the latest Housing Trends Report, produced by the National Association of Home Builders. Still, the majority--61%—of buyers expect home searches to become more difficult or stay the same in the future.

But why are some buyers more hopeful? More new and existing homes were sold during the first quarter of 2021 compared to a year earlier.

Millennial buyers may be the most upbeat about more prospects opening up in the coming months: 26% in the first quarter of 2020 believed more inventory was coming, compared to 42% in the first quarter of 2021. Other age segments weren’t as hopeful that the market would usher in more housing inventory.

Buyers in the Northeast also were the most optimistic compared to other regions of the country.

A chart showing the share of buyers by all four U.S. regions who expect searching for a home to get easier

Some economists are more optimistic about more housing inventory coming to the market soon, too. New-home construction is ramping up and more homes likely will help relieve some of the pressure in the near future. Read more: Markets Seeing High Homebuilding Rates

However, demand remains high and that has fueled bidding wars across the country as buyers frantically search for a home to buy. Home shoppers are finding limited choices. Home buyers this spring have 52% fewer homes to choose from than last year, according to realtor.com®’s April Monthly Housing Trends Report.

Source: Click here

Posted by Jackie A. Graves, President on May 5th, 2021 11:44 AM

Homeowners are taking advantage of ultra-low interest rates to refinance their mortgage and lessen their monthly payments, but a large share of owners may have missed out on the refinance frenzy last year. More than a third—or 36%—of homeowners who missed the 2020 refinance wave say they regret not taking advantage of the lowest mortgage rates ever, according to a new survey of 1,210 homeowners from LendingTree.

Many may have missed out due to a lack of knowledge about the refinancing process, falsely assuming they had to work with their original lender to refinance or could only refinance their mortgage once. Eleven percent of homeowners said they have no clue what their current mortgage rate is and whether refinancing makes sense for them.

Where to Find Lowest Refinancing Rates Among Top Lenders

Study: 11M Borrowers Could Benefit From Refinancing

States Where a Refi Could Help Homeowners the Most

Millennial homeowners were the most likely to refinance their mortgages during the COVID-19 pandemic, according to the LendingTree study. Forty-two percent of millenials, 18% of Gen Xers, and 10% of baby boomers have refinanced their mortgage within the last year.

But mortgage rates are still at historical lows, even if they have ticked up over the past few weeks. Freddie Mac reported last week that the 30-year fixed-rate mortgage averaged 2.98%.

Just over a third—34%—of homeowners have a 4% mortgage rate or higher. They could be missing out on thousands of dollars in savings over the life of their loan, researchers note. Still, the message to refinance may be getting out: Nearly half—49%—of homeowners say they are considering a mortgage refinance in the next year, according to LendingTree.


Source: Click here

Posted by Jackie A. Graves, President on May 4th, 2021 8:25 PM

Once your finances are in order and you’ve found an agent to guide through the homebuying process, you may feel ready to start your search. But before you tour any homes, take some time to put pen to paper.

By creating a homebuying wish list, you'll give your agent a solid idea of what your ideal home looks like. Here's how to build an effective and thorough homebuying wish list.

Decide on a location

You have probably heard the first rule of real estate—location, location, location. It's a key factor in determining how much you can afford, how long your commute will be, what school district you're in and more. Consider the following:

  • Urban or Suburban: Do you want the convenience and walkability of city life? Or do you want a larger home with a yard, away from the hustle and bustle? Will these change over time as your household grows or shrinks?
  • Proximity to your job: Today's average commute is longer than ever before. Are you willing to make an hour-long drive to work, or do you want a short commute? Consider your current job and future opportunities.
  • Access to public transportation: Do you need access to public transportation to get to and from work, school or your primary health care provider?

Determine what type of home you want

Each home type has its advantages and disadvantages, and the right one for you will depend on your finances, lifestyle and stage of life.

  • Single-Family: Typically, these are the largest of the property types – providing you with the most privacy and space. If you buy a site-built, single-family home, you're responsible for every aspect of the home which requires both time and money but allows you more control over your home.
  • Townhome: Townhomes are oftentimes a good entryway to homeownership for first-time homebuyers as they are more affordable than single- family homes. They require little outside maintenance, and many townhomes include amenities such as parks and playgrounds.
  • Manufactured Home: Today's new generation of high-quality, factory-built homes are comparable to site-built homes and offer features such as garages, permanent foundations, and built-in porches. More affordable than site-built homes, they offer a good option for first-time homebuyers.
  • Condominium: Condominiums can provide you with a maintenance-free lifestyle, typically in an urban setting. They may provide access to amenities like pools and fitness facilities and are often within walking distance of shops, restaurants, and public transportation.

Make a list of other criteria

Once you decide what type of home you want, determine your "must-haves" and your deal breakers. Think about your household now and how your needs may change in the future. Ask yourself specific daily lifestyle questions that will help you rank items in order of importance. For example:

  • Do you or will you work from home? What type of workspace will be required for that?
  • If your home needs repairs, are you able spend the time/money on the fix?
  • Do you need off-street parking or a garage? How many spaces?
  • Do you want a yard, or do you prefer something low maintenance? How much and what type of outdoor space is ideal?

As you go through your wish list with your agent, be sure to tell them your reason(s) for buying. As a result, they may show you homes you wouldn't have otherwise considered.

Source: Click here

Posted by Jackie A. Graves, President on May 3rd, 2021 9:57 PM

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