Blog – Page 211 of 787 – Fred Gruber - First Rate Financial Group

29

Sep

Mortgage

An Overview Of the Digital Mortgage Process

An Overview Of the Digital Mortgage Process Changes are being made to the mortgage application process every year. With access to online-only lenders and a decentralized financial system, more doors are open to potential home buyers than ever before. For example, there are many institutions that are making it easier to apply for mortgages by allowing applicants to do so online. That way, buyers do not have to fill out any paperwork, and lenders can stay away from any inequalities or discriminatory methods. What are the benefits of a digital mortgage?

They Are Easier To Access

One major benefit of a digital mortgage is that they are easier to access. Now, buyers are not necessarily tied to a single geographic location. Furthermore, they do not have to worry about setting up an appointment at a physical location. They might not have to take time off work, and they do not have to worry about commuting back and forth. There are also numerous online tools available, allowing buyers to review what the market is doing. That way, they understand what they need to do to be competitive for the best rates possible.

They Have Lower Rejection Rates

Furthermore, digital mortgages tend to have lower rejection rates. Even though face-to-face lending still has its place, there are a lot of people who are unhappy with their local bank or credit union. They might be buried that their bank is not going to approve them for a home loan, particularly if there are issues related to bias. The digital mortgage process eliminates any potential biases, leading to lower rejection rates. This makes it easier for someone to apply for financing directly and purchase a home.

The Process Is Faster

Finally, another major benefit of applying for a digital mortgage is that the process is easier. Even though income statements and credit checks are still required, a computer algorithm can automate this process. Therefore, potential homebuyers can expedite the process, making sure they get approved as quickly as possible. This makes it easier for buyers to present themselves as competitive, and they can get to the closing table more quickly. This is important for reducing the chances of a potential home sale falling through.

28

Sep

By First Rate Financial Group

Mortgage

Borrowers With Student Loans Might Have An Easier Time Qualifying For An FHA Loan

Borrowers With Student Loans Might Have An Easier Time Qualifying For An FHA Loan In the past, a lot of potential borrowers were declined for FHA loans due to the presence of student loans. Now, the Biden Administration along with the FHA has eased a lot of their regulations surrounding student loans, making it easier for borrowers with student loans to qualify for a home loan. The FHA required that FHA mortgage companies calculated the monthly student loan payment as one percent of their outstanding loan balance if the loans were not fully amortized; however, this is now changing.

The One Percent Rule Is Not Always Accurate

Even though the one percent payment rule has been in place for a long time, it is not always the most accurate way of evaluating the size of a borrower’s potential loan payments. For example, a lot of students are on income-adjusted repayment plans, meaning they are not necessarily paying as much as one percent of the outstanding balance every month. This means that some borrowers were getting declined even though they may have had enough money to pay back the mortgage. With numerous borrowers owing more than $100,000 in loans, many applicants for homes were turned down.

New Guidelines Are Being Put In Place

Under the new guidelines, lenders can use a buyer’s actual monthly payment in terms of debt calculations even if that payment is less than one percent of the total balance of the loan. If the income-adjusted repayment plan means the borrower is not currently paying anything, then the lender will apply 0.5 percent of the outstanding loan balance every month instead of one percent.

A Boost To Borrowers With Student Loans

This change is significant because it alters the way lenders are calculating the debt-to-income ratio. If student loans are no longer making up a large portion of a borrower’s monthly debt payments in the calculation, they might have an easier time qualifying for a first-time home loan. Anyone with student loans who is interested in taking out an FHA loan should talk to a loan officer who is familiar with the updated guidelines. Even applicants who were denied in the past might have a chance to qualify for a home loan under the new rules.

27

Sep

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 27, 2021

What's Ahead For Mortgage Rates This Week - September 27, 2021 Last week’s economic news included reporting on housing markets, housing starts, and building permits issued. Data on new and existing home sales were published along with weekly reports on mortgage rates and jobless claims.

NAHB: Builder Confidence Ticks Up as Demand for Homes Holds Steady

The National Association of Home Builders reported a one-point gain in its Housing Market Index for September with an index reading of 76. Analysts expected no change based on August’s reading of 75. Component readings for the HMI were mixed; the index reading for builder confidence in current market conditions rose one point to 82. Builder confidence in housing market conditions over the next six months was unchanged at 81 and builder confidence in buyer traffic in new single-family housing developments rose two points to an index reading of 61.

Builders continue to face headwinds as materials costs and home prices continue to rise. Home prices present a challenge to would-be buyers who don’t want to pay inflated prices or cannot qualify for mortgages based on rapidly rising home prices. Persistent shortages of homes kept homebuilders busy, but shortages of building materials forced builders to pace construction according to materials availability.

Housing starts rose to a seasonally adjusted annual pace of 1.62 million starts in August; analysts expected a pace of 1.55 million starts, which was unchanged from July’s housing starts. Building permits were issued at a seasonally-adjusted annual pace of 1.73 million permits, which surpassed the expected reading of 1.62 million permits issued and July’s reading of 1.63 million permits issued.

Existing Home Sales Fall in August as New Home Sales Rise

The National Association of Realtors® reported fewer sales of previously-owned homes in August. 5.88 million homes were sold on a seasonally adjusted annual basis as compared to July’s reading of 6.00 million pre-owned homes sold. Slim supplies of previously-owned homes for sale, rising home prices, and competition with cash buyers sidelined buyers who preferred to wait for less challenging housing market conditions.

Limited options in available pre-owned homes boosted new home sales in August. 740,000 new homes were sold on a seasonally adjusted annual basis as compared to the expected reading of 720,000 new homes sold and July’s reading of 729,000 new homes sold.

Mortgage Rates Mixed, Jobless Claims Rise

Freddie Mac reported mixed readings for mortgage rates last week as average rates for fixed-rate mortgages rose and the average rate for 5/1 adjustable rate mortgages fell. Rates for 30-year fixed-rate mortgages rose by two points and averaged 2.88 percent. The average rate for 15-year fixed-rate mortgages rose by three basis points to 2.15 percent. The average rate for 5/1 adjustable rate mortgages fell by eight basis points to 2.43 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

New jobless claims rose to 351,000 initial claims filed from the previous week’s reading of 335,000 initial claims filed. 2.85 million continuing jobless claims were filed as compared to the prior week’s reading of 2.71 million continuing claims filed.

What’s Ahead

This week’s scheduled economic reporting includes readings from S&P Case-Shiller on home price growth, pending home sales, and construction spending. The University of Michigan will release its monthly Consumer Sentiment Index and weekly readings on mortgage rates and jobless claims will also be published.