Lower Mortgage Rates Accessible With Consistent Employment

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Buying property is one of the largest purchases and biggest financial commitment that most Americans will make. With real estate values rising beyond inflation rates, this has become truer since the late 1990s. For borrowers, it’s important to take control of homeownership, including the costs involved.

One of the most important factors lenders look at is a borrower’s financial history. Perks are available for those who have worked in the same place for many years, or who have been growing their annual income at a consistent rate. …

Most Lenders Have Incorporated New Mortgage Regulations

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According to a statement made on Monday, by the Consumer Financial Protection Bureau (CFPB), a large number of mortgage lenders are now following the new regulations implemented last year by the Dodd-Frank Act. These new regulations govern mortgage originations and the dispersal of information to borrowers, among other things. Other rules apply to a borrower’s ability to pay their monthly mortgage payment.

According to Assistant Director of Supervision Policy, Peggy Twohig, most banks and nonbanks are following the new regulations and have set up compliance systems. There were a few exceptions, but the CFPB did not find any lender engaging in deceptive or unfair act…

Long-Term Mortgage Rates Hit A Seven-Year High

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It Will Cost You More to Buy A Home

The housing market topped a new threshold over the past week. Buoyed by a strong economy and a series of interest rate increases by the Federal Reserve, thirty-year fixed mortgage interest rates reached 4.61% – the highest number since May of 2011.

Rates crossed the 4% threshold in the week of January 11 and they have been on a relatively steady rise since then. If this pace continues, we’ll hit 5% before the year is out.

Should rising interest rates deter you from buying a home? Not necessarily, but it may cause you to re-think your definition of an affordable home.

How Much More?

To see the effect of higher interest rates, consider this example. Let’s assume you’re buying a $200,000 house with a 20% down payment. Your monthly principal and interest payment will be $764 at 4% interest, $821 at the current 4.61%, and $859 at 5%. For the $160,000 you are borrowing, the difference between 4% an…

Higher Credit Scores Needed For Home Purchase

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Welcome to the 2018 home-buying market. Rising demand and an extremely tight supply of homes, especially in the critical starter-home market, make it difficult to realize your goal of home ownership.

In this buyer’s market, you’ll need two important things to land your dream home – more money and a higher credit score.

Data from the Joint Center for Housing Studies (JCHS) at Harvard University highlight the credit score issue. According to the 2017 JCHS study, “The State of the Nation’s Housing – 2017,” the median credit score for successful mortgage loan applications increased from a FICO score of 700 in 2005 to 732 in 2016. Lenders are still conservative in their risk assessments – aided in part by regulations put in place during the housing crisis.

In the pre-crisis market of 2005, around 10% of conventional first lien mortgages went to borrowers with a credit score below 620. That number fell to nearly zero by 2009, and as of 2016, it…

Who Lives At Home?

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We know the stereotype of the unmotivated millennial, living at home with their parents without any long-term plan or concern about their situation. Is that a fair representation? Do millennials disproportionately live with their parents? If so, is this from necessity, lack of motivation, or part of a grander strategy?

It’s logical that younger generations are more likely to live with their parents in a non-caretaker capacity, even in the best of times. Millennials suffered the added indignity of coming of age during one of the worst recessions in history while dealing with prohibitive student loan debt.

Previous information from the Pew Research Center found that in 2016 – after years of economic recovery – 15% of millennials surveyed still lived with their parents. That’s well above previous generations at that same point in their lives (10% for generation X, 11% of late ba…

Interest Rate Acronyms

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APR and APY – are they new texting acronyms? IDK, you say – or rather, you text? (For the benefit of the textually-challenged, IDK means “I don’t know.”) If you think they are texting acronyms, or just “DK” what they are, it’s time to learn.

APR and APY are financial acronyms, short for Annual Percentage Rate and Annual Percentage Yield, respectively. Both are interest rates, but they have a significant difference. APR does not address how interest is compounded – the default is the interest that you earn if you are depositing money, or pay if you are borrowing it – in one year. APY takes into account how often the interest is compounded.

If interest is compounded once per year, there is no difference between APR and APY – interest is added all at one time. However, let’s assume an interest rate is compounded monthly. In that case, the interest payment is divided up into twelve equal increments.

If you are earning interest on a deposit, that adds a sma…