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What’s Ahead For Mortgage Rates This Week – June 28, 2021

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What's Ahead For Mortgage Rates This Week - June 28, 2021Last week’s economic reports included readings on sales of new and previously-owned homes.  Weekly readings on mortgage rates and jobless claims were also released.

New Home Sales Fall in May

New home sales dropped to their lowest reading in a year in May with 769,000 new single-family homes sold on a  seasonally adjusted annual basis.  May’s reading was 5.90 percent lower than April’s reading of 817,000 sales but was 9.20 percent higher year-over-year.

May’s decline in new home sales was caused by a 14.50 percent decrease in sales in the South; Sales rose by 33 percent in the Northeast and 4.80 percent in the West. The sales pace for new homes in the Midwest was unchanged.

Multiple factors caused fewer new home sales during what is typically a busy home-buying season. Rising costs of lumber, along with high demand for homes and affordability challenges presented obstacles to first-time and moderate-income buyers in recent months, but lumber prices fell in May. High demand for homes created opportunities for cash buyers who sidestepped making purchase offers contingent on mortgage approvals.

Analysts said that falling lumber prices will eventually provide relief for homebuyers, but short inventories of available homes coupled with high home prices continued to sideline first-time and moderate-income buyers. The median price for new homes rose to $374,000 as compared to $369,000 in April. Real estate pros reported a 5.1 month supply of available homes in May, which was the highest reading in a year.

Existing Home Sales Lower in May as Market Slows

Sales of previously-owned homes also fell in May; this was likely due to low inventories of available homes and the covid induced home-buying frenzy easing. Would-be home buyers have also left the market due to affordability challenges.

Lawrence Yun, chief economist for the National Association of Realtors® said: “Home sales fell moderately in May and are now approaching pre-pandemic activity.” Mr. Yun identified low inventories of available homes and affordability as the main obstacles facing prospective home buyers.

Mortgage Rates Rise; Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week; average mortgage rates surpassed three percent for the first time in 10 weeks. Rates for 30-year fixed-rate mortgages rose nine basis points to 3.02 percent; the average rate for 15-year fixed-rate mortgages rose 10 basis points to 2.34 percent. Rates for 5/1 adjustable rate mortgages averaged 2.53 percent and were one basis point higher. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 411,000 claims filed last week as compared to the prior week’s reading of 418,000 first-time claims filed. Continuing jobless claims also fell with 3.39 million ongoing claims filed as compared to the prior week’s reading of 3.53 million continuing claims filed. 

What’s Ahead

This week’s scheduled economic news includes readings from Case-Shiller Home Price Indices, and reports on pending home sales, construction spending, and consumer confidence. Weekly readings on mortgage rates and jobless claims will also be published.

Do You Have Enough Of A Down Payment Saved Up?

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Do You Have Enough Of A Down Payment Saved Up?If you are planning on purchasing a home in the near future, you need to make sure you have enough money saved up. While there are a lot of expenses that go along with purchasing a home, the biggest expense is the down payment.

The common belief is that people have to put 20 percent down; however, even if you don’t have 20 percent saved up, you might still be able to purchase a home. It will depend on whether you can get a lender to provide a loan that is greater than 80 percent of the purchase price of a home. If you have a strong credit history, you may be able to get one.

Getting A Loan With Less Than 20 Percent Down

First, many lenders realize that many people do not have enough money saved up to put down 20 percent. After all, this could be tens of thousands of dollars.  Although some people might be able to get a loan with only 10 percent down, those with outstanding credit might even qualify for a larger loan. There are certain people, such as veterans, who might have other options outside of conventional loans that might open other doors. If you are looking to get a home loan for less than 20 percent down, you will want to check all of your options.

How To Get A Loan For Less Than 20 Percent Down

Particularly if you are a first-time homebuyer, you might not know how to get a loan for less than 20 percent down. First, you need to have a strong credit score. If the lender is giving you a larger loan, they will want to make sure you can pay it back. Having a strong credit score can prove this to them. You may want to check your credit report ahead of time to correct any inaccuracies.

Second, you need to take a look at your debt to income ratio. If you have a lot of debt, consider paying this down before applying for a home loan.

Finally, trust an experienced lender to guide you through the process. You might be able to get a home loan for less than 20 percent down.

Deciding Whether To Move or Refinance: Which Is The Better Option?

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Deciding Whether To Move or Refinance: Which Is The Better Option?There are a lot of people who are wondering if now is the right time to move or refinance their current home loan. With interest rates still favorable, a lot of homeowners have the potential to save a lot of money if they are able to secure a home loan with a lower interest rate. There are two ways homeowners can secure a home loan with a lower interest rate. The first is to refinance. The second is to move. Which option is better? There are a few key points to keep in mind.

Taking A Closer Look At Refinancing

There are a lot of homeowners who have an abundance of equity currently built up in their homes, making this a great time to refinance. With a refinance, there are multiple options available. Some homeowners might refinance to access the equity in their homes, allowing them to complete a project. Some homeowners might refinance in an effort to pay off their home loan sooner. If homeowners are trying to access more equity, or are trying to shorten the term of the loan, then refinancing might be the smart move.

Looking At The Option Of Moving

The other option is to get a new home loan entirely by moving. This is an attractive option for homeowners who might have a dream house they would like to move to. In particular, any homeowner who currently has a home loan with a high interest rate should consider moving into their dream home now. Because mortgage rates are low right now, this is a chance for homeowners to move into a larger house while keeping their mortgage payments the same or less by obtaining a lower interest rate.

Every Situation Is Different

In the end, every situation is different. Because interest rates right now are so low, now could be the time for homeowners to consider moving or refinancing. Switching to a home loan with a lower interest rate could save tens of thousands of dollars over the life of the loan. Anyone with questions or concerns should reach out to a professional for help.

Moving to the City? How to Downsize from a Large House to a Smaller Condo or Apartment

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Moving to the City? How to Downsize from a Large House to a Smaller Condo or Apartment Many people make the decision to move from the country or the suburbs into the heart of the downtown area for a number of reasons, such as to enjoy proximity to work or to enjoy the urban lifestyle. With the higher cost of real estate in central urban areas and with real estate space at a premium, many who make the decision to relocate will need to downsize from a larger house to a smaller condo or apartment. While this can be challenging, it can be accomplished by following a few steps.

Choose The Right Pieces To Keep

When downsizing from a larger house to a smaller apartment or condo, it is often necessary to get rid of some furnishings. It is important to select furnishings that are best suited for the size of the new space as well as the individual’s needs. Items that will not have a place in the new home can be donated, stored in a storage unit or given to a family member or friend.

Think About Storage

When living space is downgraded, storage of everything from dishes to linens and clothing becomes a concern. Storage features in downtown apartments and condos is often minimal, and this means that those moving into these units may need to invest in special storage features. For example, storage bins that can slide under the bed, pull-out features for kitchen cabinets and various other types of storage features can all be put to use to improve organization and to maximize the limited amount of space available in the property.

Get Back To The Basics

While storage features can be useful, the fact is that most people who are making this transition will need to get rid of some of their items or store them in a storage unit. A smart idea is to consider only the basic items that are truly necessary for living as a first step. If space permits, additional luxury items can be added to the space provided there is room in the apartment or condo.

Downgrading from a larger home to a smaller living space can be frustrating and stressful, but eliminating the unnecessary items and improving storage and organization can go a long way toward streamlining this process. Those who are searching for a new place to live in the city can request personal assistance from their trusted real estate professional.

How Much Will Your Child Tax Credit Be?

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How Much Will Your Child Tax Credit Be?There are millions of homeowners that are parents waiting for their advance child tax credits to arrive; however, they might not be sure exactly how much money they are going to get. This makes it difficult to set a budget. Some parents could expect to receive $300 per month between now and December. The rest of the credit should arrive after filing their tax returns next year. How much will parents receive?

The Process Of Calculating A Child Tax Credit

Because of recent changes in federal tax laws, the expanded child tax credit has increased the limit from $2,000 (the limit in 2020) to a maximum of $3,600; however, not every parent is going to receive $3,600.

Children under the age of five years are eligible for the maximum amount of $3,600. Children who are in secondary school (between the ages of six and 17 years) are eligible for a maximum payment of $3,000 per child. Children who are 18 years of age or in college full-time (up to age 24) are eligible for a one-time payment of $500 each.

In addition, these payment amounts will vary depending on the adjusted gross income of the family. Keep in mind that these numbers are estimates only and could vary from family to family. Anyone with questions or concerns about how much money they are going to receive should speak with a tax professional for more information.

Will Expanded Child Tax Credits Be Expanded In The Future?

Fortunately, there are online payment portals available, saving families the trouble of filing an amended tax return for these payments; however, will these payments be extended into the future? There is a possibility that Congress could decide to extend the duration of monthly child tax credits in upcoming stimulus bills. With millions of people still collecting unemployment benefits, the government might be forced to extend child tax credits to make life easier for the millions of people who are suffering.

Right now, families should not assume these tax credits are going to get extended until Congress passes formal legislation. While the government might decide to pass another law similar to the American Rescue Plan, passed earlier this year, nothing is guaranteed. Families should budget for this year’s child tax credit accordingly.

What’s Ahead For Mortgage Rates This Week – June 21, 2021

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What's Ahead For Mortgage Rates This Week - June 21, 2021Last week’s economic news included readings from the National Association of Home Builders on housing markets and  Commerce Department readings on housing starts and building permits issued. Weekly reports on mortgage rates and jobless claims were also published.

NAHB: Home Builder Sentiment Slips Amid High Materials Prices, Labor Shortages

The National Association of Home Builders Housing Market Index fell two points to a May index reading of 81. Readings above 50 indicate that most home builders are confident in market conditions, but builder sentiment has fallen from its peak reading of 90 before the pandemic. The NAHB Housing Market reached its lowest reading of 37 during the pandemic. Readings above 50 indicate that most builders surveyed were confident about housing market conditions.

Homebuilder confidence slipped due to higher home prices caused by high demand for homes. Builders have pulled back the pace of building homes due to rising lumber prices and potential buyers facing affordability concerns. While lumber prices remain high compared to pre-pandemic levels, they were 42 percent lower year-over-year.

Chuck Fowke, chairman of the NAHB, said, “These higher prices have priced new homes beyond the budget of prospective buyers,  which has slowed the strong pace of home building.” Low mortgage rates prompt buyers to enter the market, but home prices in many areas require mortgage loans that many buyers cannot afford.

Homebuilders continued to face shortages of skilled carpenters and other workers. These shortages also impact the price of homes and building pace. Shortages of new and pre-owned homes created high levels of buyer competition with multiple offers on available homes. In addition, some metro areas are seeing more cash offers, which make buying homes more difficult for buyers who depend on mortgages to purchase homes.

In related news, the Commerce Department reported 1.57 million housing starts in May on a seasonally-adjusted annual basis. 1.52 million starts were reported in April and 1.63 million starts were expected in May. Building permits issued in May fell to 1.63 million permits issued on a seasonally-adjusted annual basis. 1.73 million building permits were issued in April and analysts expected the same number of permits to be issued in May.

Mortgage Rates Fall; Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week with rates for 30-year fixed-rate mortgages averaging 2.93 percent and three basis points lower. Rates for 15-year fixed-rate mortgages were one basis point higher on average at 2.24 percent; rates for 5/1 adjustable rate mortgages were three basis points lower on average at 2.52 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.30 percent for 5/1 adjustable rate mortgages.

Jobless claims were mixed last week as new jobless claims rose to 412,000 first-time claims filed from the previous week’s reading of 375,000 initial claims filed. Continuing jobless claims were unchanged at 3.52 million claims filed.

What’s Ahead

This week’s scheduled economic news includes readings on sales of new and previously-owned homes, inflation, and the University of Michigan’s Consumer Sentiment Index. Weekly readings on mortgage rates and jobless claims will also be released.