November Sees the Largest Drop In Mortgage Rates Since 1981

 According to reports, the 30-year fixed-rate mortgage was down 7.8% from the beginning of November 2022. Freddie Mac says this is the largest drop since 1981.“While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market,” said Sam Khater, Freddie Mac’s chief economist. “Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact.”

Inflation does appear to be easing up according to the Consumer Price Index and Producer Price Index which reported that prices rose slower than predicted in October 2022. Even though interest rates are not directly changed by inflation, it does play a part. Mortgage rates are based on the track of the yield on 10-year US Treasury bonds.

“The 10-year Treasury dropped from 4.15% last Wednesday to 3.68%, as capital markets seemed to cheer the slowdown in inflation as a sign that the Federal Reserve’s monetary tightening is having its intended effect,” said George Ratiu, Realtor.com’s manager of economic research.

“Signs of slowing inflation pushed mortgage rates below 7% for the first time since mid-October, but with rates still relatively high and affordability correspondingly reduced, the average loan amount is now at its lowest level in nearly two years,” said Bob Broeksmit, president and CEO of the MBA.

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Tips on How To Choose the Best Mortgage Lender

 The current housing market is super hot and has reached record highs and looks to continue this way for the near future. The U.S. housing market is the highest we have seen in 15 years making 2021 the strongest year. This means tons of competition for buyers. This means finding the right lender is a must. The right lender can save both time and money for you as a buyer. Here are some important tips to follow when choosing a mortgage lender.

Look for a straightforward Pre-Approval Process

A pre-approval is very important when it comes to purchasing a home in this market. In fact, this should be one of the first steps in the mortgage lending process. A mortgage lender can help with understanding the requirements and give you a clear picture of how much you can afford.

Most pre-approval processes take into account your income, your debt-to-income ratio (DTI), your FICO score, and your employment history. The right lender can help you get your answers efficiently. They can get you a pre-approval to show sellers when you make an offer.

Think Beyond Mortgage Rates

Mortgage rates are very important but it is not the only factor to look at when you are choosing a lender. Lenders can offer different fees and commissions so shop around and see what different lenders have to offer. You will want to find a lender who is great with communication. This will simplify the process for you and help the process home faster.

Consider the Full Range of Offerings

Almost every lender can offer excellent rates, however not every lender provides a vast array of services. You want to choose a lender that can support you through every stage of the process. A dedicated lender with an online application process makes for great repeat customers. Lenders take pride in their honest rate quotes, instant loan estimates, and lack of loan officer commission. This means that you will get upfront pricing and a clearer sense of how much you can truly afford.

Remember the right mortgage lender can help you find your dream home for the right price and in a shorter amount of time. A good lender will not only help you with low costs and transparency but will put your best interest first.

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2022 Tax Deductions For Homeowners

 Everyone in America will be filing for taxes if they earned any money in 2021. Current homeowners have tax incentives that will help protect their investment and make homeownership easier for everyone. If you are a homeowner then you will want to understand how these tax incentives will benefit you.

Mortgage interest deductions are one of these incentives. This will reduce your taxable income. A homeowner can deduct mortgage interest on the first $750,000 of their mortgage. Premiums paid on qualified mortgage insurance and home equity loans that are specifically used to buy, build or improve your home can also be itemized under deductions. If you are married but filing separately, the maximum deduction will be $375,000 for each.

A homeowner can also deduct state and local taxes. You can deduct up to $10,000 in state and local taxes. In fact, this includes property taxes! Remember again, if you are married and filing separately you will receive $5,000.

Another tax incentive for a homeowner is residential energy credits. There are two kinds, residential energy credit, and non-business energy credit. For residential energy credit, a homeowner can get 26% of the cost of residential energy property equipment plus labor. This includes solar, wind, and geothermal equipment. Examples of geothermal equipment are solar panels, advanced circulation fans, or natural gas water heaters. Non-business energy credits will give homeowners 10% of the cost of qualified energy efficiency improvements and 100% of residential energy property costs. There is a maximum of $500 from the time the credit was created in 2006 to 2022.

Homeowners have many financial benefits when it comes to owning a home. During tax season you need to add up your tax breaks. Speaking to a tax professional will help you with potentially getting thousands of dollars in tax deductions.

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The 2022 Housing Market and How Interest Rates Will Change It

 For the past few years, the housing market has seen historically low-interest rates but this might change. Sources report that we will be faced with rising interest rates throughout 2022. Here are some tips that professionals in the industry look at when determining the change housing market.

This year the market is starting to slow down on refinancing and pick back up with purchasing housing. The 30-year loan average interest rate jumped from 3.5% to 3.64% in just two weeks int the beginning of the year. Home prices also increased close to 8% due to the fear rates will start to rise.

Fortunately, we no longer have stay-at-home orders and the unemployment rates are down 2.8% from this time last year. More homes are being built so the low inventory problem is resolving. Data shows that there is a 34% increase in new homes being built across the country. Job security and more inventory should encourage hopeful homebuyers.

The shift in remove work has also changed what homebuyers deem important in a home. As of September 2021, 45% of full-time employees worked remotely. More people are looking for a single-family home with more bedrooms and a finished basement.

The 2022 market is looking good. Just because interest rates are rising, doesn't mean now is not a good time to purchase a home. There are many factors that come into play that help balance the housing market event with high home prices and rising interest rates.

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FHA Reducing Loan Costs for Credit Challenged Buyers

There is no question that the Recession affected both the mortgage industry as well as the home buying process when it comes to obtaining a loan to buy a new home.  Mortgage companies, lenders, and banks had their feet “held to the fire” and were required to jump through multiple hoops in all categories and steps to the loan procurement process.  Even now, on average, it takes 6 weeks to 3 months just to refinance your existing home even if you have (and have had) a steady job, money in the bank, equity in your home, and excellent credit.  The strict requirements that lenders are applying

to loan applicants are also being applied to their own corporations with stiff penalties and sanctions in store for any bank or mortgage company that even comes close to “bending the rules.”

With that being said, Fannie Mae and Freddie Mac who were able to restructure and survive the housing market falter have now found a way, along with the FHA (Federal Housing Administration) to finally bring some relief to first-time home buyers by offering loans with either a 3.5% or 3% down payment of the loan.  Now, the FHA has reduced the cost of its loan for first-time home buyers, dropping from 1.35% of the loan value to just .85% of the loan value.  The FHA provides an affordable loan to all home buyers and does not, for the most part, discriminate against home buyers who are “credit challenged,” those who may have a less than stellar credit score.  Therefore, as long as you are above the threshold of the credit score required by the FHA, your loan cost will be the same whether you are 5 points above the threshold or 200 points above the threshold.

FHA loans are the most beneficial for custom home buyers who cannot afford a 10% down payment on their loan, who may have had struggles with credit in the past, and first-time home buyers.  Fannie

Mae and Freddie Mac were established just after the Great Depression as lenders backed by government bonds in order to allow low-income Americans to be able to buy a house.  They have since privatized and restructured, but they are still focused on helping low-income or struggling families afford and pay for their new house.  With the latest reductions in down payments and loan costs, it could now be affordable and plausible for younger professionals to graduate from college, start their careers, and form their own households by buying a new home for the first time.

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