Navy Fellas Realty Group

Real Estate, Residential sales and purchase

What’s Ahead For Mortgage Rates This Week – March 18th, 2024

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Last week’s inflation data came in at a higher rate than expected, with Price Producer Index (PPI) numbers showing more than double the expected inflation gain.

With both CPI and PPI being over the target, the steadfast certainty that the Federal Reserve will cut rates has now taken a step back, resulting in more tamed expectations for the near future.

With a mixed response from lending partners, this may end up rapidly changing in the next round of discussions with the Federal Reserve’s Chairman Jerome Powell this coming week, as well as a final rate decision.

Consumer Price Index

Consumer prices matched the biggest increase in February in five months, leaving the yearly rate of inflation above 3% a week before the Federal Reserve meets again to consider when to cut interest rates. The consumer price index climbed 0.4% last month, the government said, largely because of higher gas prices and housing costs. It was the largest increase since last September.

Price Producer Index

The biggest increase in wholesale costs since last summer is the latest in a string of readings that suggest inflation might not slow quickly toward the Federal Reserve’s 2% goal. The producer-price index jumped 0.6% in February, the government said Thursday. The increase matched the largest gain since last August. This was double the expected 0.3% projections.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.06% with the current rate at 6.16%
• 30-Yr FRM rates saw a decrease by -0.14% with the current rate at 6.74%

MND Rate Index

• 30-Yr FHA rates are seeing a +0.22% increase for this week. Current rates at 6.60%
• 30-Yr VA rates are seeing a +0.22% increase for this week. Current rates at 6.62%

Jobless Claims

Initial Claims were reported to be 209,000 compared to the expected claims of 218,000. The prior week landed at 210,000.

What’s Ahead

The Federal Reserve Rate Decision will be the most important aspect of this coming week, as well as talks with other Federal Reserve board members — as whether there is a rate cut or not will help decide where many markets will be headed for the next quarter.

15-Year vs. 30-Year Loans Compared

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Choosing the right mortgage term is a critical decision when purchasing a home. The two most common options are 15-year and 30-year mortgage terms. Let’s compare the advantages and disadvantages of each to help you make an informed decision:

15-Year Mortgage Advantages:

Interest Savings: The most significant advantage of a 15-year mortgage is the amount of interest you can save over the life of the loan. With a shorter term, you pay less interest because the loan is repaid more quickly.

Faster Equity Building: Monthly payments for a 15-year mortgage are higher, but a larger portion of each payment goes toward the principal. This results in faster equity buildup, which can be beneficial if you plan to sell or refinance in the future.

Lower Interest Rate: Generally, 15-year mortgages come with lower interest rates compared to 30-year mortgages. This can contribute to overall interest savings.

15-Year Mortgage Disadvantages:

Higher Monthly Payments: The main drawback of a 15-year mortgage is the higher monthly payments. This option may strain your monthly budget as compared to a longer-term loan.

Reduced Flexibility: Higher monthly payments can limit your financial flexibility. If unexpected expenses arise, you may find it challenging to meet the higher mortgage payment.

30-Year Mortgage Advantages:

Lower Monthly Payments: The primary advantage of a 30-year mortgage is the lower monthly payments, making it more manageable for many homebuyers. This can free up cash for other investments or expenses.

Greater Flexibility: Lower monthly payments provide greater financial flexibility. You can allocate extra funds towards investments, emergency savings, or other financial goals.

Tax Deductibility: Mortgage interest is often tax-deductible, and with a 30-year mortgage, you may have higher interest payments, potentially resulting in a larger tax deduction.

30-Year Mortgage Disadvantages:

Higher Total Interest Paid: While monthly payments are lower, the total interest paid over the life of the loan is higher compared to a 15-year mortgage. This means you’ll pay more for your home in the long run.

Slower Equity Buildup: With lower monthly payments, a smaller portion of each payment goes toward the principal. This leads to slower equity buildup compared to a 15-year mortgage.

Considerations:

Financial Goals: Consider your financial goals and priorities. If you prioritize long-term savings and can comfortably afford higher monthly payments, a 15-year mortgage might be suitable.

Budget and Cash Flow: Evaluate your monthly budget and cash flow. If you need more flexibility and want to keep monthly payments lower, a 30-year mortgage may be a better fit.

Long-Term Plans: Consider your long-term plans. If you plan to stay in the home for a significant period, a 30-year mortgage may offer more financial flexibility.

Ultimately, the choice between a 15-year and a 30-year mortgage depends on your individual financial situation, goals, and preferences. It’s advisable to consult with a financial advisor or mortgage professional to make the best decision based on your unique circumstances.

Real Estate and Pets: Finding the Perfect Home for Your Furry Friend

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If you’re like many of us, your furry friends aren’t just pets; they’re beloved members of the family. As you embark on the journey of finding your dream home, it’s essential to consider their needs alongside yours. From spacious yards to pet-friendly communities, here’s a guide to finding the perfect home for both you and your four-legged companion.

Understanding Your Pet’s Needs

Before diving into the world of real estate listings, take a moment to consider your pet’s needs. Whether you have a playful pup or a laid-back feline friend, certain factors can significantly impact their happiness and well-being:

Space to Roam: Dogs, in particular, thrive in environments where they have room to run and explore. A fenced yard or nearby park can provide the perfect space for daily exercise and playtime.

Pet-Friendly Features: Look for homes with pet-friendly features such as durable flooring (like hardwood or laminate) that can withstand scratches and accidents. Additionally, consider the layout of the home to ensure it’s conducive to your pet’s comfort and safety.

Neighborhood Amenities: Research pet-friendly amenities in the surrounding neighborhood, such as walking trails, dog parks, and pet-friendly businesses. A vibrant community that welcomes pets can enhance both your and your pet’s quality of life.

Searching for Pet-Friendly Properties

When scouring real estate listings, keep your pet’s needs in mind. Here are a few key features to look for:

Fenced Yard: A fenced yard provides a safe and secure space for your pet to enjoy outdoor activities without the risk of wandering off.

Pet-Friendly Flooring: Opt for homes with pet-friendly flooring options that are easy to clean and maintain. Tile, laminate, and vinyl flooring are excellent choices for pet owners.

Proximity to Pet Services: Consider the proximity of the property to essential pet services such as veterinary clinics, groomers, and pet supply stores. Easy access to these services can save you time and hassle in the long run.

HOA Regulations: If you’re considering a property in a planned community or condominium complex, review the HOA regulations regarding pets. Some communities have breed or size restrictions, so be sure to clarify any restrictions before making a decision.

Communicating Your Needs with Your Realtor

When working with a real estate agent, be sure to communicate your pet’s needs and preferences upfront. A knowledgeable agent can help you narrow down your search to properties that meet both your and your pet’s requirements. Don’t hesitate to ask questions and voice any concerns you may have regarding pet-friendly features and neighborhood amenities.

Making Your New Home Pet-Friendly

Once you’ve found the perfect home for you and your furry friend, it’s time to make it pet-friendly:

Create a Safe Haven: Set up a designated space for your pet complete with their bed, toys, and food and water bowls. This will help them feel secure and comfortable in their new environment.

Pet-Proof Your Home: Take steps to pet-proof your home by securing cabinets, covering electrical cords, and removing any hazardous plants or objects that could pose a danger to your pet.

Explore the Neighborhood: Take your pet on walks around the neighborhood to familiarize them with their new surroundings. Introduce them to nearby parks and pet-friendly establishments to help them feel at home.

Finding the perfect home for you and your furry friend is an exciting journey that requires careful consideration and planning. By prioritizing your pet’s needs and seeking out pet-friendly properties and neighborhoods, you can ensure a smooth transition for both you and your beloved companion.

The Role of Mortgage Escrow Accounts in Property Tax and Insurance Payments

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A mortgage escrow account, also known simply as an escrow account, is a financial arrangement set up by a mortgage lender to manage and disburse certain payments related to the property on behalf of the homeowner. The purpose of an escrow account is to ensure that essential expenses, such as property taxes and homeowners’ insurance, are paid on time.

Here’s how a mortgage escrow account works:

Creation of Escrow Account: When you obtain a mortgage loan, your lender may require you to establish an escrow account. This account is typically separate from your mortgage loan account.

Monthly Payments: As part of your monthly mortgage payment, you contribute a prorated amount toward property taxes, homeowners insurance, and, in some cases, private mortgage insurance (PMI). The total amount is divided by 12, and a portion is added to each monthly mortgage payment.

Lender’s Responsibility: The lender is responsible for making payments from the escrow account when they come due. This includes paying property taxes and homeowners’ insurance premiums directly to the relevant authorities or insurance companies.

Annual Analysis: Each year, the lender performs an escrow analysis to ensure that the correct amount is being collected to cover expenses. If there is a shortfall or surplus in the account, adjustments may be made to your monthly payment to reflect the anticipated expenses for the coming year.

Changes in Taxes or Insurance Premiums: If there are changes in property taxes or insurance premiums, the lender adjusts the escrow account accordingly. This can lead to changes in your monthly mortgage payment.

Surplus or Shortage: If there is a surplus in the escrow account after all expenses are paid, you may receive a refund. Conversely, if there is a shortage, the lender may increase your monthly payment to cover the shortfall.

Homeowner’s Responsibility: While the lender manages the escrow account, it’s still the responsibility of the homeowner to stay informed about changes in property taxes and insurance costs. Homeowners should review their annual escrow statements and communicate with their lender if they have concerns or questions.

Having an escrow account can be convenient for homeowners because it spreads out the cost of property taxes and insurance over the year, making it easier to budget for these large annual expenses. Additionally, it helps ensure that these crucial payments are made on time, reducing the risk of liens on the property or lapses in insurance coverage.

Exploring the Pros and Cons of Using Personal Loans and Refinancing for Home Renovations

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Undertaking home renovations can be an exciting endeavor, whether you’re looking to enhance your living space, increase property value, or simply modernize your home. However, financing these projects can often pose a significant challenge. While personal loans and refinancing are popular options for funding renovations, it’s important to weigh the advantages and disadvantages before deciding.

Personal Loans Pros:

Accessibility: Personal loans are typically easier to obtain compared to other forms of financing, such as home equity loans or lines of credit.

No Collateral Required: Unlike home equity loans which use your home as collateral, personal loans are unsecured. This means you don’t have to put your home or other assets at risk to secure the loan.

Flexible Use of Funds: Personal loans offer flexibility in how you can use the funds. Whether you’re renovating your kitchen, or upgrading your landscaping, personal loans can cover various home improvement projects without restrictions.

Fixed Interest Rates: Many personal loans come with fixed interest rates, providing stability and predictability in your monthly payments.

Personal Loans Cons:

Higher Interest Rates: Compared to secured loans like home equity loans, personal loans often come with higher interest rates, especially for borrowers with average or below-average credit scores.

Loan Limits: Personal loans typically have lower borrowing limits compared to home equity loans.

Shorter Repayment Terms: Personal loans often come with shorter repayment terms compared to other types of loans.

Impact on Credit Score: Taking out a personal loan can impact your credit score, especially if you already have existing debt or a high credit utilization ratio.

Refinancing Pros:

Lower Interest Rates: Refinancing your mortgage allows you to take advantage of lower interest rates, which can significantly reduce your overall borrowing costs.

Extended Repayment Terms: Refinancing can also extend your repayment terms, resulting in lower monthly payments and improved cash flow.

Consolidation of Debt: Refinancing provides an opportunity to consolidate high-interest debt, such as credit cards or personal loans, into your mortgage.

Tax Benefits: Mortgage interest payments are often tax-deductible, providing potential tax benefits for homeowners who refinance.

Refinancing Cons:

Closing Costs: Refinancing typically involves closing costs, which can include application fees, appraisal fees, and other expenses. These upfront costs can add thousands of dollars to the total cost of refinancing and may take time to recoup through lower monthly payments.

Longer Loan Term: While extending your repayment terms through refinancing can lower your monthly payments, it also means paying interest for a longer period.

Equity Reduction: Refinancing can reset the clock on your mortgage, potentially reducing the equity you’ve built up in your home. If you’re planning to sell your home soon, consider how refinancing may impact your equity position and overall financial goals.

Credit Score Impact: Applying for a refinance can temporarily impact your credit score, as lenders will perform a hard inquiry on your credit report.

When considering financing options for your home renovations, both personal loans and refinancing offer distinct advantages and disadvantages. Personal loans provide accessibility and flexibility, while refinancing offers the potential for lower interest rates and extended repayment terms. Ultimately, the decision depends on your financial situation, renovation goals, and long-term objectives.

If you’re unsure about which option is best for you, it’s advisable to consult with a financial advisor or mortgage professional who can provide personalized guidance based on your individual circumstances.

 

What’s Ahead For Mortgage Rates This Week – March 11th, 2024

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With a focus on the upcoming inflation data reports with CPI and PPI this week, the previous week was very light on data. The only relevant reports released were the non-farm payroll and U.S. trade balance data releases.

Job reports are showing robust hiring numbers and the trade balance remains within expectations. There appears to be to not much to fear coming from this next round of inflation data. Lending partners are reflecting this sentiment as they continue to cut rates.

Non-farm Payrolls

The economy created a greater-than-expected 275,000 new jobs in February, in a seemingly bullish display that could complicate the Federal Reserve’s decision on when to cut U.S. interest rates. Economists surveyed by the Wall Street Journal had predicted a 198,000 increase in new jobs last month.

U.S. Trade Balance

The U.S. international trade deficit widened 5.1% in January to $67.4 billion, the Commerce Department said Thursday. It is the largest trade gap since April 2023; the widening was larger than expected. Economists surveyed by The Wall Street Journal had predicted the deficit would widen to a seasonally adjusted $63.4 billion from the initial estimate of a deficit of $62.2 billion in June.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.04% with the current rate at 6.22%
• 30-Yr FRM rates saw a decrease by -0.06% with the current rate at 6.88%

MND Rate Index

• 30-Yr FHA rates are seeing a -0.19% decrease for this week. Current rates at 6.38%
• 30-Yr VA rates are seeing a -0.17% decrease for this week. Current rates at 6.40%

Jobless Claims

Initial Claims were reported to be 217,000 which was right in line with expectations. The prior week landed at 217,000.

What’s Ahead

Upcoming we have the Consumer Price Index and Producer Price Index releases for next week; there will not be many other releases.