You are Officially On the Clock

If you have been holding off buying or refinancing your home in hopes of a lower monthly payment or perhaps to leverage some of the appreciation in equity your home undoubtable gained over the last 4-5 years, might I strongly suggest you start that process today. Like, this evening. When you get home. Today, the U.S. 10-year Treasury yield shot higher, taking mortgages and various consumer loan rates with it. There are a couple key reasons for this market movement and why this one has some legs. We are going go focus on two, both of which have little to do with the Fed.

1. The Bank of Japan (BOJ) who has been fighting negative interest rates in a market desperate for a steeping yield curve surprised the markets today (July 23rd) when the Japanese' Government pressed the 10-year Japanese government bond by 5 basis points, to 0.083 percent, the highest since February. The BOJ, which meets next week, announced it would buy bonds to curb the action, and the 40-year JGB also spiked, touching 0.92 percent. All Markets are interconnected. Fixed Income even more so.

2. The fight with China over US-China deficit GDP is just heating up. To understand how and why this affects US Mortgage rates is to simply understand that China is not only one of the largest buyers of US Treasuries, but they are also one of the largest owners of US Treasuries. The US buys over $500 billion in Chinese goods annually. China only buys $130 billion from the US. Quick math shows that a trade war focused on tariffs will hurt the Chinese more. How would they respond, we suggest they do it one of two ways. First by lowering or devaluing their currency (the Yuan). This is quick and they already do this as needed. Second, they slow or worse stop buying US Treasuries. Selling their $1 trillion in US Treasuries would also force bond yields could climb. That’s problematic as Treasury holders around the world, including the U.S. government and (you and I) will see their bond prices drop. Higher yields also make it more expensive for the U.S. government to borrow through new debt issues, while companies that issue corporate debt, would have to pay higher borrowing costs.

With the first already taking flight, we strongly suggest you move date night to another evening and spend some time getting your home loan in order.

30-Year Mortgage Rate Charges Above 4 Percent

2018 has started in a similar fashion to how 2017 finished.

The average 30-year, fixed mortgage rate charged to 4.04 percent this week, up from 3.99 percent the week prior, according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®). The 15-year, fixed rate averaged 3.49 percent, up from 3.44 percent the week prior, while the five-year, Treasury-indexed hybrid adjustable rate averaged 3.46 percent, the same as the week prior.

“The U.S. weekly average for the 30-year fixed mortgage rate rose above 4 percent for the first time since last summer to 4.04 percent in this week’s survey,” says Len Kiefer, deputy chief economist at Freddie Mac. “This is the highest weekly average for the 30-year fixed rate mortgage since May of 2017. Some may be wondering if this is the last time we’ll see a three handle on the 30-year mortgage rate. Never say never, but inflation is firming, the Federal Reserve’s Beige Book indicates broad-based economic growth, and labor markets are tightening. This means upward pressure on long-term rates, like the 30-year fixed-rate mortgage, is building.”

If rates continue as indicated, the home buying season may come early as potential homebuyers look to jump on the last set of historically low rates. From our perspective; all charts point to several Fed' increases in 2018 and 5% mortgage rates on the horizon.

Why Fall Is the Best Time of Year to Buy a Home

Few people know Fall is arguably the best time of year to buy a new home. The weather becomes cooler, the leaves begin to change, football season begins, and pumpkin-flavored everything is in abundant supply. But there's another great reason to love fall that might be less obvious...it's the best time of year to purchase a home.

Prices Are Typically Lower
The concept that buyers can get a better bang for their buck in the fall has been a popular notion for some time, but two recent reports validated that line of thought with data from actual home sales. According to a report by RealtyTrac, sales prices are typically 2.6% below fair market value during October — a steeper discount than any other month of the year. Another report by NerdWallet found that sales prices drop about 2.96% from summer to fall, which is roughly an $8,300 discount for the median home. It's also worth noting that while listing prices don't decrease much, sales prices do, and that's the price that counts for potential buyers.

There's Less Competition
The majority of people buy a home in spring or summer, when inventory is traditionally high. This gives families time to make their move before the school year starts, but the tradeoff is that buyers are faced with strong competition and often pay higher than asking price during that time. People who buy in fall, however, have less competition, and sellers are more motivated. This means more negotiating power for the buyer, which often results in a better deal.

There's Still Inventory
It's true that the inventory of homes for sale is at its peak during spring and summer, but when you buy in the fall, there's still a decent supply of homes left to choose from. Buying a home in the fall gives you the best of both worlds — lower prices and less competition but still enough inventory to find the home you want.

If you're serious about buying a home, doing so this fall may save you money or help you afford more than you expect. Plus, with interest rates on the rise, the longer you wait, the less buying power you may have. Click here to learn more about the impact that rising interest rates have on affordability. NMLS#1043983

The number of homes for sale is a problem; here's what to do about it!

In almost every major city in Texas there is solid demand from home buyers who struggle to find a home (any home) that meets both their housing and affordability requirements. This is especially true for first time home buyers. It’s a situation that requires both patience and creative solutions.

On the other hand, this may be an excellent time for you to explore options that may not be on your short list. Here are a few suggestions;

1.Look at a fixer-upper. That run-down house that’s been sitting on the market for months may be a diamond in the rough for a buyer with the vision to see its potential, especially if you have the time and skills to participate in renovations. Before making an offer, however, encourage your agents to assist in estimating renovation costs and identifying people in the trades to assist them. There are several different loan programs which make financing the improvements easy.

2. Buy a teardown and rebuild. If a thought of a fixer-upper doesn't excite you, perhaps a teardown, or a vacant lot, and building a new home. Fortunately, there are many ways to accomplish this without the expense of hiring an architect or a custom home builder. Learn who is supplying prefabricated and modular homes to your market—options that aren’t only economical and energy-efficient, but also increasingly popular with younger buyers.

3. Consider a duplex. While many don't love the idea of managing a property (much less a neighbor) the financial upside is hard to ignore. Improvements made to the property may be tax deductible and the additional income will never hurt.

Considering Buying or Refinancing a Home? Read This....

According to a survey conducted by J.D. Power, 27% of new homeowners ultimately came to regret their choice of lender. Twenty seven percent. The major reason for the dissatisfaction was overall poor customer experience. That's pretty vague so let's dive further. A lack of communication or unmet expectations (again back to communication) topped the "poor customer experience" sub list. Other regrets listed included pressure from the lender to choose a particular product/loan and not closing on time. Communication is a two way street. As a homeowner or potential homebuyer, you can remove some of the tension and turmoil of home loan process by carefully vetting potential lenders. Here are 5 questions to ask potential lenders before you make a commitment.

1. What mortgage programs do you offer? In many cases, choosing the best loan for your specific financial situation requires working with a lender who offers a wide array of loans. You don’t want to work with a lender who tries to push you into one loan simply because that’s the only option from their limited selection. Ask them if they regularly handle the type of loan you are looking for. If the type of loan you are looking for is more specific than say, a conventional fixed-rate mortgage, a little more expertise is useful — and in some cases, it might be necessary. An uncommon home loan like a United States Department of Agriculture loan, for instance, must go through an approved lender.

2. Inquire about the qualifications for the home loan you are seeking. There may be two lenders who offer the same type of loan, but their minimum requirements could differ. For instance, Department of Veterans Affairs loans require a minimum credit score of 620, but a lender might require a minimum score of 640. Comparison-shop. Don’t assume the same type of loan means the same terms.

3. Ask your lender to provide an estimate of the rates and fees expected to pay. Important note here; If you have taxes and insurance tied to your mortgage payment, an initial estimate will never guarantee your final, out-of-pocket expense. Numbers will change as things like title are received or surveys are approved or ordered. That said, it can be a solid jumping-off point for evaluating lenders. If the loan programs are the same, a helpful starting point is to compare the interest rate and total origination costs. It is important to know rates fluctuate, so try comparing lenders on the same day to get the most accurate mortgage rate comparisons. Speaking of rates....

4. Ask when you may be able to do a rate lock. As we mentioned above, mortgage rates can change multiple times a day. They can be as fluid as the stock market. Be sure to ask about the associated fees, including how much it costs to extend the lock should it expire before closing.

5. What is the time estimate for processing my home loan? This is critically important if you are selling a home or coordinating the end of a current lease with a new home purchase. Under the TRID guidelines, it's vitally important you receive your initial closing disclosure four business days before your closing date. In short, get the key dates of the appraisal and underwriting approval. Of course, it’s always a good idea to build in a small buffer if you can — and not just because loan preparation can take longer than expected. Along these lines, make sure you explain that you expect communication in a straightforward and timely manner.

As we indicated with our November 10th Blog,

https://efinitygroup.blogspot.in/2016/11/if-you-currently-are-or-have-been.html

the Federal Reserve voted yesterday (Wednesday March 15th) to again raise the key interest rate one-quarter percentage point. This is just the first of three hikes we anticipate for 2017. The rate was increased one-quarter percentage point just three months ago in December 2016. This was the probable outcome following encouraging employment figures in February.

We believe this consecutive increase marks a turning point in policy. The Fed raised the rate only twice in the past decade. Wednesday’s decision quickens the pace, signaling the potential for more aggressive action as the year unfolds.


Rising rates have been top of mind for members of the housing industry, especially those of us in residential finance. Raising interest rates with the unprecidented apprecition witnessed in Texas, makes the fear of affordability a viable concern. We know in speaking with many of our potential homeowners the anticipated monthly payments on homes in various price ranges have "felt" higher. This is something which will continue to play out throughout 2017.

First-Time Homeowners and our Existing FHA Clients

Federal Housing Administration announced they will reduce the annual premiums most borrowers will pay by a quarter of a percent. The new rates are projected to save new FHA-insured homeowners an average of $500 this year said U.S. Housing and Urban Development Secretary Julián Castro.


This announcement along with Efinity's Mortgage's pledge to get our FHA borrowers into homes for only the required 3.5% down payment makes this the time to call us and get your home loan started.



Efinity Group
817.581.8878 o
888.638.5030
817.581.8898 f
info@efinitygroup.com
www.efinitygroup.com
INSURANCE | INVESTMENTS | MORTGAGE


Announcement & Source: https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2017/HUDNo_17-003

Do You "Really" Want to Be a Landlord

This week was pretty unusual for the Efinity Mortgage staff. Seemingly out of nowhere we had several new clients come in requesting financing for investment (rental) properties. As if there was a sign on our door which read "Efinity Mortgage; The Rental King". It's not that we don't finance investment properties but to have several new transactions in a week is highly unusual as the majority (99%) of our business comes from realtors and builders seeking to assist a family in buying a primary residence. All of that said, I do want to share a story of one couple in particular who were kind enough to give me the ok to share their story.

The "Smiths" were existing homeowners and in the process of adding to their family of 5. Mrs. Smith was interested in leaving the workforce and to manage their properties. Noble concept especially since Mrs. Smith was a $200,000 wage earner! You see whether you’re going away on an extended vacation or considering downsizing into a smaller place, the popularity of websites like Airbnb has led many people to believe that there’s a lot of money in home rental. However, before putting your home on the market, it’s important to be aware of some of the factors that go into having a rental property. It may seem like extra money, but it’s the small details that can make it a more complicated process.

An Investment Property and Renting a vacation/second home have very different goals;

Is It A Short Term Solution

Many people plan on putting their home on the market for a short duration of time, but if you’re only planning on renting for 6 months or a year, it may not be as financially lucrative as you think. While tax breaks can go along with rental properties, the money you make off of this kind of investment is taxable so if you’re not in it for a slightly longer haul, you may not see the financial boost you’re looking for.

What Are You Willing To Deal With?

For those who are planning to put a home on the market, they still need some place to live, and this can mean that a certain amount needs to be made each month for the costs of having two homes even out. Before putting any serious considerations into this, ensure that you know it’s financially feasible. It’s entirely possible that you won’t have renters for certain periods of time and you could also run into problems with the renters you find, so you should sit down and put pen to paper to consider the investment potential.

Have You Considered The Maintenance?

Out of sight is often out of mind, but if you have a renter, you’re responsible for anything that goes wrong in the home. From small maintenance duties to sizeable but necessary overhauls, there are many things you’re legally obligated to do as a landlord and you’ll need to be prepared to take on these responsibilities. Since it will be the duty of the owner, in the event you don’t want to do it, you’ll have to hire a contractor who will be able to handle the work for you.

Having a house as a second property may seem like an ideal investment, but this can require you to take on the responsibilities of a landlord and you may even have to deal with problematic rental situations. If you’re searching for an additional property in the near future, contact us for more information. Everyone has different plans and goals and deserve to properly vetted.

Buying a Home and Have Questions?

Wonderful! Congrats on the decision. We have pulled together some helpful tips to get you started. These go pretty much in order, as most in the real estate industry will tell you it is important to stick with this road map to save yourself and others much anxiety.


How Much House Can You Afford?
Buying a new house is a big investment. You want to be sure that you have all the right finances before proceeding. Spend the time to do a serious audit of your finances and determine a budget. Use an Affordability Calculator to estimate how much you can afford on a house based on your income, savings, debt and assets. Any of Efinity's licensed mortgage professionals can also help with this. Check your credit score. Every year you are allowed one free copy of your credit report.


Get Preapproved For Mortgage
Now that you’ve checked your finances, it is time to see what kind of mortgages you qualify for. Many buyers make the mistake of assuming that being prequalified and preapproved for a mortgage are the same. They are NOT. At Efinity Mortgage at time of application we press deeply into your financial situation and certainly through the application process, an extensive financial background check and a current credit score report.


Find the Right Realtor
A realtor or real estate agent is another great person to have as you maneuver the home buying process. They have the in-depth knowledge on home buying and help you negotiate the purchase. This service is free for the buyer because the realtor is compensated by the seller. You can search online for a realtor at Realtor, Zillow, Trulia. Efinity Mortgage also works with a large number of realtors throughout our network.


Find a Home
You’re finally at the step you’ve been waiting for. Be sure to create a checklist of items you need and want in your future home. This will narrow down the endless choices of homes and help you focus on only the right ones. Also, make a list of your neighborhood preferences like safety, commute, type of schools, local shopping and grocery.


Get a Home Inspection
The home inspection is a step that many home buyers tend to skip over but this is a very important step once you’ve found a home you like. A home inspection checks for any damages to the home’s structure or foundation as well as any major or minor fix-ups that need to be done. Once a thorough home inspection is completed the buyer and seller will receive a report from the home inspector.


Make An Offer
Make an offer with the help of your realtor and don’t be afraid to negotiate price. This may take longer than you think but always be ready if the seller says yes.


Close the Sale
Before you close review all the costs associated with both the purchase and the expected monthly payments. No matter how much time and effort we put forth, it is still amazing to us how often clients gloss over these things. Spend the time and know what you are buying.

Why Wait??

Mortgage rates have been historically low for several years, but a surprising number of borrowers are still not taking advantage even though rates fell again at the start of this year. How many? Close to 7 million. After the Federal Reserve raised its target interest rate in early December, the common expectation was that mortgage rates would rise. Refinances had already dropped by nearly a third throughout 2015, as rates inched up in anticipation of the Fed's move. "Global economic shocks then sent investors looking for the safety of U.S. Treasurys, driving down yields on benchmark 10-year bonds. Mortgage interest rates began to fall in defiance of prevailing wisdom, and the "refinanceable" population grew by 30 percent in the first six weeks of 2016," said Ben Graboske, Black Knight Data & Analytics senior vice president. Mortgage interest rates dropped 30 basis points in that time. By the end of February, 6.7 million borrowers could have saved an average of $3,000 per year, representing a total of $20 billion in potential annual savings, according to an analysis by Black Knight. These borrowers have enough equity in their homes and high enough credit scores to qualify for refinances. "It's lack of awareness of the opportunity, and how to act on it," added Graboske. How much does that translate into on a monthly payment? More than 3 million borrowers could save $200 a month or more; nearly 1 million could save $400 a month or more. Mortgage refinance applications have increased in the past two months, but millions of borrowers are still sitting on the sidelines, perhaps unaware of the savings, or just too lazy to go through the process. "There are costs that come into play for sure and there is often the perception of costs," said Graboske. "Still, if you look at this population, we have 1.5 million borrowers that are sitting at almost a full point above what they could be." Black Knight broke borrowers up into rate clusters and found that about 3.4 million borrowers had active 30-year mortgages and interest rates of 4.5 percent to 4.75 percent. Of these, 1.5 million met broad-based underwriting criteria, and would be impacted when rates moved from 4 percent to 3.75 percent. When you look at the 4.25 percent to 4.5 percent rate range, 4.7 million had active 30-year mortgages, 2.1 million of which met underwriting criteria. They become "in the money" if rates drop from 3.75 percent to 3.5 percent. Mortgage rates did move slightly higher in the past week, but not enough to change most of the analysis here. Millions of borrowers are still choosing to pay more than they have to on their home loans. That opportunity is likely to vanish in coming months, should rates rise as expected. Of course, last year most expected mortgage rates would already be far higher than they are now, and that did not materialize. In closing, for many of the current mortgage products out there it may have taken you just as long to read this Blog as it would to start the refinance process. What are you really waiting for?

Learn the Facts & Myths of Reverse Mortgages

I had a lengthy conversation yesterday with one of my trusted realtors regarding Reverse Mortgages. While this is not been in Efinity Group's typical space, I was shocked at the misinformation that was understood as fact regarding this program. Similar to what we have done in the past I wanted to put something together to get the facts out there for our reading audience. Taking equity from a house is large decision for most seniors. It's not a decision that should be taken lightly. That said, a Reverse Mortgage is designed to allow seniors to improve their lives by freeing up the monthly obligations of a mortgage and whatever restrictive monthly cash flows that may present. Having access to funds to pay off credit cards, home equity loans and increasing cash flow for living expenses are a few benefits to having a reverse mortgage. Here are a list of facts and myths about reverse mortgages to help you make your decision.

Myth #1: It is the bank that owns the senior's home. Fact: When a customer has a reverse mortgage, their name will stay on the title unless a change in the title is made.

Myth #2: The bank has the right to make an elderly person leave their home. Fact: Reverse mortgages are insured and regulated by the Federal government. Any mortgage servicer has no authority to ask a senior to give up their home unless they fail to comply with the loan terms. Similar to any other mortgage, items like property taxes and homeowners insurance need to be paid and current. Texas Senior Lending wants to help customers stay in their homes as long as they can.

Myth #3: The senior’s heirs will eventually have to repay the loan if the customer passes away. Truth: A reverse mortgage is a non-recourse loan that gives the estate a year to sell the home at market value. Once the house is sold, the money from the sale will pay for the loan.

Myth #4: You will be responsible to make payments on reverse mortgage loans. Truth: Payments are due when the last living homeowner of the property permanently leaves the home.

Myth #5: Reverse mortgage proceeds are taxable and affect Social Security or Medicare. Truth: Although proceeds of a mortgage are not taxable and have no effect on your social Security or Medicare, you’re Supplemental Security Income (SSI) and Medicaid can possibly be affected. We hope some of what was provided above is beneficial.