Tag: mortgage rates

Why Michigan Mortgage Rates Dropped in 2019

Surprised about Mortgage Rates

March 2019 was the best month for Michigan Mortgage Rates in a Decade! Rates dropped the sharpest they had in a single month since the mortgage meltdown which led to a recession in the late 2000’s.

This is great for anyone that is buying a home or looking to drop their mortgage rate. Many are wondering why rates dropped and will they go up or down.

Why did mortgage rates drop in Early 2019?

The slow economy in Europe is a factor resulting in lower mortgage rates. With the effect of Brexit causing uncertainties for business and long term investment plans, Europe’s economy has been suffering.

When major global economies are halted, investors demand more predictable investments like bonds and mortgage backed securities which create lower mortgage rates.

The Federal Reserve Decided to Leave the Federal Fund Target Range Unchanged

The Federal Reserve does not directly set mortgage rates however they do have a major effect on them. The Federal Funds Rate is the rate at which banks can borrow money from Federal Reserve Funds.

Banks use this rate to base interest rates on loans. If banks can borrow money cheaper, they can lend it out in the form of mortgages and other loans at lower interest rates.

The Federal Reserve released its policy statement showing that they do not expect to hike Federal Reserve Rates for the rest of the year due to the slower growth in the economy.

This caused Treasury Yields to Fall which helps mortgage rates. The Treasury Yields dropped to levels not seen for 10 years which could indicate a future recession.

Home Sales Decline and Housing Inventory Increased

The National Association of Realtors (NAR) reported that the seasonally adjusted rate for sales of existing homes dropped 4.9% in March 2019 from the previous month and were also down year over year 4.7%.

NAR also confirmed that home inventory increased from 3.5 to 3.8 months’ worth which indicates slowing home sales.  Although sales appear to be slowing, this may be due to the 3.8% increase in median home sales prices.

Jobs Report Numbers Low

While the real estate market shows strength, job grown has dwindled. The headline nonfarm payrolls may have disappointed some with only 20,000 new jobs.

The average since taking the survey from 1939 is 125,000 new jobs created. This is the worst number in job growth since September 2017 when two major hurricanes hit.

US Trade Deficit Worst in 10 Years

Recent reports show that the U.S. trade deficit jumped to $59.8 billion. This is the largest it’s been in the last ten years. The uncertainty with Chinese trade tariffs have had a negative impact on US manufacturing and exports.

Will Mortgage Rates go Up or Down?

The million dollar question from all people considering a mortgage is, “Will Mortgage Rates go Up or Down?” If this were easily predictable then everyone would not be wondering this.

There are several factors pushing upward on mortgage rates for the long term. Progress in the US / China Trade Negotiations, Brexit decisions postponed, Oil Prices Rising, the US stock market hitting record highs; these all are negative forces on mortgage rates.

Mortgage Rate Lock Advice

No one can predict the future with certainty. My advice to my friends, family and clients is to review benefits of locking in a mortgage rate or refinancing right now.

  • If it makes sense do it!
  • Do not wait or you will be late!
  • No one can predict Mortgage Rates!

If your mortgage rate is over 5%, now may be a great opportunity to drop into the 4’s for a Conventional 30 year fixed mortgage or even 3’s for a 15 year home loan.

With upward pressure on mortgage rates, it is a risky gamble to wait to see if they will go lower.  If the numbers make sense and add benefit then take advantage of it immediately!

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Are Adjustable Rate Mortgages Still Too Risky?

I know what you’re thinking: Why would I ever want to get an Adjustable Rate Mortgage? Isn’t it too risky? Sure, it could be. But there are actually some circumstances in which it might be the best option. Let’s look at the pros and cons of ARMs, and you can decide whether it’s too risky or just the right fit for you.

Benefits of ARM Loans

When you choose an ARM, your mortgage rates and payments start out lower at the beginning of your loan and have the potential to gradually increase over time.  Because of the lower payment at the outset, you could qualify for a larger or more expensive home than you originally thought possible.

If you are planning on selling your home in a few years, an ARM may be your best option because you can lock in your low payment at a fixed rate for three or five years. Having that low payment may save you thousands of dollars more than you would with a traditional fixed rate mortgage.

Let’s say your ARM monthly payment is $200 less than you’d pay had you gone with a traditional mortgage. If you decide to invest that $200 you’re saving, you could end up earning interest instead of paying interest on your monthly savings. 

Also, with an ARM, you never have to refinance your home. After the initial three or five years with the locked-in fixed rate, the interest rates could drop on their own without you having to pay closing costs and refinancing fees.

Downsides of ARM Loans

With an ARM, your mortgage rate typically fluctuates with the economy after the first three or five years, depending on what kind of ARM you choose. When the interest rate adjusts, so does your mortgage payment. Your payment may go up or down depending on the current rate environment at the time of your adjustment period. If rates go up, your mortgage payment may rise accordingly. For your protection, Adjustable Rate Mortgages have built in Caps which will limit the potential increases in the rates.

With one type of ARM, a negative amortization loan, the minimum monthly mortgage payments may not include the full interest amount so they can be more affordable for borrowers. So, the unpaid interest gets tacked onto your principal balance. In this case, you’ll end up paying more on your overall mortgage — even if you make all your payments in time.

Generally, ARMs can be confusing. Thankfully, the Consumer Finance Protection Bureau has created a great Adjustable Rate Mortgage Resouce Book that explains the ins and outs of how they operate.

If an ARM still sounds too risky for you, you can always opt for an FHA, VA, USDA rural development loan, or conventional 15 to 30-year mortgage.

As long as you understand how it works and plan your finances accordingly, an ARM could be a great fit for you. Schedule an appointment with one of our mortgage professionals at (800) 555-2098 for more information or to find out which kind of loan best fits your needs.

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7 Mortgage Myths Debunked

7 Mortgage Myths Debunked

It is no secret that the home buying process is a long and complicated one. Getting started can be intimidating and confusing, so we’ve compiled a list of common mortgage myths we hear from our clients. Here, we’ll break them down and explain the truth about mortgages, in plain English.

1. Having my credit pulled will drop my credit score

Many prospective buyers are hesitant about having their credit pulled because they fear it will destroy their score, but it has far less affect than you’d think. Having your credit pulled for any reason may have an impact on your overall score, but it is usually very minor.

Did you know, you actually have many different types of credit scores? Depending on who accesses your credit report, from which bureau, and for what purpose, a different scoring model is reported. Mortgage inquiries are treated differently than other credit inquiries because you can shop around for the best rate and terms. The credit bureaus do not penalize consumers for rate shopping, so any mortgage inquiries that happen within the same 45 days are treated as only 1 inquiry on your credit report.

2. Credit Karma says my score is…

Popular sites like Credit Karma and Free Credit Report are great tools for monitoring trends in your credit report, but are simply not reliable sources for determining credit eligibility. We’ve compared Credit Karma’s “scores” to actual scores we’ve pulled, and seen as much as a 100-point swing in either direction—whoa!

Don’t necessarily trust information you obtain from these websites—talk to a mortgage loan officer! In addition to providing you with an accurate credit rating, your loan officer can provide insight into what factors may be affecting your score, and what you can do to improve it.

3. I haven’t been at my job for 2 years yet

If you haven’t been in your current job or position for the last two years, don’t worry! As long as you have had continuous employment for the last two years, you’ll still qualify. Any gaps in employment will have to be detailed with a signed letter of explanation, but do not necessarily doom your chances of being pre-approved.

4. I need to payoff and close out my credit cards first

For some unknown reason, many of our clients believe they should have all other debts paid off before buying a home. While this is a noble idea and paying off debt is rarely—if ever—a bad idea, closing revolving accounts will actually do more harm than good! Pay off—or pay down—as many accounts as you can, but do not close out your credit cards. Having unutilized credit positively affects your credit score and your borrowing profile!

5. I don’t have the funds for a down payment

It is a common misconception that borrowers must have 20% to put down on any home that they want to purchase—not to mention closing costs—but that simply isn’t true anymore. There are many mortgage programs available today that did not exist a decade ago. For example, the FHA now offers mortgages with as little as 3.5% down, and both USDA and VA offer programs with no down payment at all!

6. Owning is more expensive than renting

It is almost always cheaper to pay a mortgage than rent a comparable home in the same area. Owning a home also allows you to build equity. When your lease ends on your apartment, you are welcome to leave, but the rent you paid is long gone. Buying a place of your own allows you to build your own wealth over time, not your landlord’s.

7. My bank will give me the best deal

Many borrowers, when thinking of purchasing a home, start with their trusted bank or credit union first. It makes sense, right? They know you, you’ve banked with them for years, they already have all of your personal information, it should be easy peasy, right? Wrong! Loan guidelines are the same for everyone, no matter which bank or lender originates the loan. Your bank won’t be able to cut you any special breaks or give you an extra low rate, just because you’ve been a member for a while—even if they want to!

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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Mortgage Rates have Dropped to Recent Lows

average mortgage rates 2016

Interest rate chart data from Freddie Mac mortgage rates based on US weekly average survey.

Mortgage rates have dropped again officially hitting the lowest levels in one year which is near historic lows. According to the Freddie Mac weekly mortgage survey, rates are as low as 3.72% for a 30 year fixed rate mortgage and as low as 3.01% for a 15 year fixed rate mortgage.

If you have been considering refinancing your mortgage now is the time to lock in a low rate. With falling oil prices, stock investors have been getting nervous and fleeing to more stable and safe investments such as government bonds and mortgage backed securities. This demand to buy bundled mortgages has driven mortgage rates to recent record lows.

Refinance to Drop Mortgage Insurance

In additional to low mortgage rates, home values have been setting records for appreciation. The rise in home values may make it possible to drop mortgage insurance (PMI) which is required on most loans with less than 20% equity.

Refinance to a 15 Year Mortgage

Other homeowners may choose to refinance from higher rate 30 mortgages to low 15 year fixed rates and keep their mortgage payment low. Paying a mortgage off 15 years sooner has the potential to save thousands in mortgage interest.

Refinance from a FHA loan to a Conventional loan

Government backed mortgages, such as FHA loans, are a popular mortgage option for those with smaller down payments. While government loan rates may be low, they typically have higher monthly PMI than conventional mortgages.  Higher property values may allow homeowners to refinance from a FHA mortgage to a conventional loan and save significantly on their monthly payments.

For more information on your refinance options call a loan officer today at 800-555-2098 or request information below.

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How Mortgage Lenders Choose Your Mortgage Rate

Mortgage loans are detailed products and it is fair to say that one size does not fit all when it homes to home loans. The interest rate that you may qualify for on a mortgage may be different than what others qualify for based on their situation. This short video from MSNBC explains how mortgages work and ultimately how lenders choose your mortgage rate.

Because each homebuyer has a different financial situation, it is important to work with a local mortgage company that offers multiple home loan options.

Below is a short list of mortgage options and their benefits:

Conventional Mortgage: A great mortgage option for high credit score buyers that have 5% or more to use for a down payment. This is one of the only mortgage options that you can get rid of PMI (private mortgage insurance).

FHA Mortgage: FHA loans are great for homebuyers with bumps in their credit past of even first time home buyers. Qualification requirements are easier than conventional mortgages because these loans are insured by the federal government.

VA Loans: A great mortgage for military veterans is a VA Loan which is a zero down mortgage. While there is an up front guarantee fee charged by the Veterans association, there is no monthly PMI which helps to keep payments low and affordable.

USDA Rural Development Loans: The RD loan is great zero down home loan that is great for first time home buyers. This type of mortgage allows a homebuyer to buy a home with no down payment and the sellers can pay your closing costs. Qualifications are easier than conventional mortgages however there are restrictions on income and the location of the home.

What Mortgage Rate Will I Get?

To see what mortgage rate you qualify for call Riverbank Finance at 1-800-555-2098 or request information below.

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Mortgage Rates Higher After Stronger Then Expected Jobs Report

Jobs Report increases mortgage rates.The all important Jobs report just recently came out and beat Wall Street’s expectations by a large margin.  There were 195,000 new jobs last month and also more positive revisions to the last two months of reports.  This has caused the bond markets to react negatively which in turn has raised interest rates.  Some experts predict this may be the final nail in the coffin and cause rates to jump up above 5% in the near future.

2013 Jobs numbers and its overall impact to mortgage rates:

These strong job numbers which were just posted help keep in perspective just how far we have come since the great recession.  During the lowest point in the recession we had lost a staggering 7,300,000 total jobs.  This is a sobering number which takes a moment to set in.  Thankfully, we have gained back 6,300,000 of those lost jobs.  This is a positive step in the right direct and the stock markets have reacted positively to this better news.  This will definitely help our retirement account but unfortunately it will not help mortgage rates.

Typically, rates react negatively (get higher) to good news and react positively (go lower) with bad financial news.  So when the markets start to pick up steam like it now appears to be doing rates start to climb.  In other words, if you have been considering refining your home or buying but been holding out for better rates you may want to get off the fence before it is too late.  Some experts believe that rates should be even higher then what they currently are now.

The Federal Government is helping keep the rates artificially low to stimulate the economy.  The Fed is going to continue to keep them low until they feel the economy gets better.  These better job report numbers may be just the indication the Fed. needs to to take away this bond buying stimulus which ultimately will move rates up much quick then normal.

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Affect on Mortgage Rates from Bernanke Announcement

Federal ReserveFederal Reserve chairman Ben Bernanke announced today that they may be easing the quantitative easing programs as early as this year.  This program includes the purchases of mortgage backed securities (MBS) which are the packaged residential mortgages sold by banks and mortgage companies.  The slowing of these purchases would take affect if the unemployment rates hits 6.5% and inflation reaches 2%.  The phase out may be completed by 2014 which changes the mortgage lending landscape by pushing higher mortgage interest rates.

The quantitate easing programs were put in place to help stabilize the housing market and United States economy after the economic collapse a few year ago. Bernanke goes on to explain that the mortgage markets, Fannie Mae, and Freddie Mac, have become too reliant on the Fed’s buying program. Other than this crutch, the markets seem to be functioning well.

The effects on mortgage rates will be drastic which will lead to sharp increases in interest rates for both refinances and new purchase loans. Without the support of the government and the Fed’s buying program it is rumored that the 30 year mortgage may in itself be phased out. As it currently stands, the 30 year fixed rate mortgage is the most popular mortgage term as it allows low fixed payments.

Immediately following today’s announcement, both the treasuries and MBS market saw a massive selloff which has an immediate negative affect on interest rates.  If you are purchasing a home or considering refinancing your current mortgage it is highly recommended that you work with your loan officer to quickly lock your interest rate when possible to avoid further rate increases.

How to get a Low Rate Mortgage: April Mortgage Rates

mortgage-rates-2013

April Showers Low Mortgage Rates

Another month has passed by as we enter the month of April. For those buying a home or in the process of refinancing their mortgage you may be wondering what is in store for mortgage rates in April.
While quantitative easing continues with the Fed purchasing 85 billion dollars in Mortgage Backed Securities (MBS), mortgage rates remain to be artificially lowered. This coupled with the economic uncertainty in Europe and the possible bailout for Cyprus brings good news for low mortgage rates moving forward.

How to Qualify of Low Mortgage Rates

With the mortgage rates low, not all homeowners are able to automatically get a low rate. The specific mortgage rate that you may qualify will depend on several factors. While some program inherently have lower rates than other, there may be things you can do to qualify for a low rate mortgage.

Factors determining mortgage rates include:

  • Mortgage program (Conventional, FHA, VA, USDA)
  • Loan Term (15 year, 20 year, 30 year)
  • Credit Score (Higher the Better)
  • Loan-to-Value (Loan amount divided by Home Value)
  • Property Type (Stick Built Home, Condo, Manufactured)
  • and Residency Type (Primary, Secondary or Investment)

Qualifying for a Low Rate Mortgage

To get the lowest rate that you may qualify it is important to review the factors listed above and see what you can help do in qualifying for a low rate mortgage. While the value of your home is determined by recent home sales which is clearly out of your control, your credit score, loan term and mortgage program may be controlled by you when you apply for a mortgage loan.

How to get a Low Rate Mortgage: Improved your Credit Score

Paying off collections, paying down credit card bills and making on time monthly payments contribute to higher credit scores. Also be sure to not have your credit pulled many times within four months of applying for a home loan. Inquiries lower credit scores thus increasing your mortgage rates.
How to get a Low Rate Mortgage: Lower your Loan Term

Typically mortgage rates are lower with shorter loan terms. A 30 year fixed rate may be a lower payment however if you plan on paying your house off soon then you may want to consider a 15 year or even a 10 year mortgage to take advantage of lower mortgage rates.

How to get a Low Rate Mortgage: Review mortgage programs

You may be limited to what loan types you qualify for however many times homeowners have options to choose what mortgage program to apply for. For example a USDA Rural Development Mortgage or a FHA mortgage are two great loan options that may have different interest rates. Be sure to speak with your loan officer to see what home loan with have the best rates for your situation.

How to get a Low Rate Mortgage: Lock your Rate

Many time clients applying for a mortgage want to wait to see if mortgage rates will go down even lower. This is essentially gambling with your biggest investment, your mortgage. If you are satisfied with the current rates and it is bettering your situation then get locked in a rate now. Get started with a rate quote from Riverbank Finance and see what today’s mortgage rates can do for you.

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**NOTE: Rates and terms may vary based on each individual’s situation. Above example is for illustration purposes only and assumes a 100% or less loan-to-value, 740+ credit, and $200,000 loan amount for a 30 year fixed rate mortgage. Not all will qualify, call a loan officer at Riverbank Finance for additional information and details on programs based on your situation.

JOBS REPORT AND MORTGAGE RATES

us-mortgage-rates

One important financial which really helps shape the interest rate mortgage market is the jobs report.  This is a report that comes out once per month and is considered by most to be the main economic report for the economy.  Since 2010 the general trend in this job report has been a slow and steady increase to the number of jobs created.  Some are even stating the this job report may foreshadow a stronger ending in 2013 which will set us for great 2014… But lets not get ahead of ourselves shall we.

5.1 Million Jobs Added Since 2010

This report comes out the first Friday of each month and eagerly anticipated.  On Friday the rport is given before most financial markets open at 8:30.  The report is broken down into different sectors.  The Non-Farm payrolls are what experts take in the most consideration.  Most recently this job report has been getting better and better which some feel could start to be the end of great mortgage rates.

Since the bottom of the Great Recession the U.S. has added 5.1 million jobs.  This is a staggering number to think about but just remember that we lost 7.4 million jobs during the great Recession.  We are starting to get back to where we were before this great meltdown but still have a ways to go.  At this rate it could take us years to just gain bask the number of jobs that we lost and if our goal is to get better then we were before then we still have a ways to go.

RELATED: Michigan Mortgage Calculator– Figure your payment with current mortgage rates.

RELATED: Grand Rapids Mortgage Rates – See current mortgage rates in Michigan.

The Job’s report always shake up the Mortgage Rates

If you are in the middle of a mortgage loan you mnay want to condier locking in your interest rate before this report comes out.  This economic report really can make interest rates spike one or the other.  If you feel like you want to gamble you could really benefit for these numbers if they are lower then expected.  One thing is for certain you need to call the experst at Riverbank Finance today to discuss you rate lock options.  Call us at 80o-555-2098 today!

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THE FISCAL CLIFF AND MORTGAGE RATES

An mage depecting falling off the fiscal cliff.EXPERTS CONCERNED ON WHAT FISCAL CLIFF MEANS FOR MORTGAGR RATES

We can’t get through the end of the year without more drama coming from Washington and there more financial market drama.  The talk of the Fiscal Cliff has put shock waves in the markets and caused much uncertainty.  Whenever there is financial uncertainty rates start to spike almost uncontrollable up or down.  The low rates that we have all enjoyed have really help spearhead our countries way back from the Great Recession.

Our housing market is one of the pillars to our economy.  Housing is a huge industry employing many people and the stronger it is the more people are working.  Some are afraid that there may be job layoffs if the mortgage market slows down.  House values may also take a plunge if higher rates force potential homeowners to stop buying.  This affects our countries overall wealth because as we all know one of the best way to build wealth is to buy a house.  If our home prices go down as well that could really hurt the consumers overall outlook toward the economy which is dangerous.  There are already signs all this Fiscal Cliff talk may be slowing the housing market.

All experst seem to agree that the Fiscal Cliff will have some type of impact on rates.  What that impact will be is still be studied.  Keep vigilant if you are in the middle of a home loan.  Don’t allow your interest rate to go up and not be propared.

You may want to think today about Locking in your rate for the future!

Call the professional at Riverbank Finance today to go over your loan details.  We would love to help you figure out your best options and go over your personal rate today 800-555-2098!

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