21
Jan
By Fred Gruber
Financial Reports

What’s Ahead For Mortgage Rates This Week – January 21st, 2025

Recent economic data brought significant relief, with both the CPI and PPI indicating that inflation was running cooler than expected. In the context of the current administration, this was welcome news, helping to ease concerns about potential monetary policy changes. The Federal Reserve has very frequently signaled they will follow the data and this time it was a positive result towards reducing rates further this year. The change in administration, however, still remains unknown and there is a lot of unrest across lending partners and markets alike. This was also followed by a better than expected Retail Sales report which has shown 2025 to start off with some economic momentum. Both reports are critical factors in shaping future rate adjustments. Despite this, lending partners have been raising rates in the last few months, driven largely by uncertainty tied to the transition of administrative positions.

Consumer Price Index

The increase in the core rate in the last 12 months dipped to 3.2% from 3.3%. But that still leaves it well above the Fed’s goal of 2% inflation. Meanwhile, overall consumer prices showed a sharper 0.4% increase largely because of higher food and energy prices. Those prices are expected to taper off in January.

Producer Price Index

Producer-price index rises just half as much as forecast. The producer-price index, where the seeds of inflation are planted, rose a mild 0.2% last month, the government said Tuesday. Wall Street had predicted an increase double that size.

Retail Sales

Retail sales grew steadily in December 2024, rounding out a strong holiday shopping season and signaling that the economy entered the new year with solid momentum. According to government data released Thursday, sales at U.S. retailers rose by a seasonally adjusted 0.4%, slightly below Wall Street’s expectations.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.13% with the current rate at 6.27%
• 30-Yr FRM rates saw an increase of 0.11% with the current rate at 7.04%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.47%
• 30-Yr VA rates saw a decrease of -0.09% for this week. Current rates at 6.48%

Jobless Claims

Initial Claims were reported to be 217,000 compared to the expected claims of 210,000. The prior week landed at 203,000.

What’s Ahead

We should expect the Manufacturing PMI preliminary this week, as well as the University of Michigan’s Consumer Sentiment report. Given the bank holiday from Martin Luther King, there is a relatively light release schedule otherwise.

17
Jan
By Fred Gruber
Home Buyer Tips

How Mortgage Rates Affect Your Home Buying Power

Mortgage rates play a significant role in determining how much home you can afford. These rates influence the cost of borrowing money for your mortgage, which directly impacts your monthly payment and, ultimately, your home buying power.

The Impact of Mortgage Rates on Affordability

When mortgage rates are low, the cost of borrowing decreases. This means you can afford a larger loan or purchase a more expensive home without substantially increasing your monthly payment. For example, a lower rate might allow you to upgrade to a home with additional square footage, a better neighborhood, or extra features that would otherwise be out of reach.

On the other hand, when mortgage rates rise, your purchasing power decreases. Higher interest rates mean higher monthly payments, which may require you to adjust your budget or consider less expensive properties. Even a small increase in rates can significantly affect affordability. For instance, a 1% rise in rates could reduce the loan amount you qualify for by approximately 10%.

Timing is Key

Mortgage rates fluctuate based on various factors, including the economy, inflation, and Federal Reserve policies. While it’s impossible to predict the exact movements of rates, staying informed about trends can help you make smarter financial decisions.

Locking in a rate when they are favorable can save you thousands over the life of your loan. If rates are expected to rise, acting sooner rather than later could maximize your home buying power. Conversely, if rates are stable or expected to decrease, you might benefit from waiting or negotiating better terms.

The Value of Professional Guidance

Understanding mortgage rates and their implications can be overwhelming, but you don’t have to navigate it alone. A mortgage professional can:

  • Analyze market trends and provide insight into rate fluctuations.

  • Explain how different rates impact your monthly payment and loan costs.

  • Help you develop a strategy to secure the most advantageous terms for your situation.

Partnering with an experienced professional ensures you’re making informed decisions and taking full advantage of the opportunities available to you.

Tips to Maximize Your Buying Power

To make the most of your home buying journey, consider these strategies:

  1. Boost Your Credit Score: Lenders offer the best rates to borrowers with strong credit.

  2. Increase Your Down Payment: A larger down payment reduces the loan amount and can qualify you for better rates.

  3. Compare Lenders: Shopping around can reveal competitive offers and lower rates.

  4. Plan Strategically: Work with your mortgage professional to determine the best time to act based on market conditions.

Mortgage rates significantly influence how much home you can afford, making it essential to understand their impact. By staying informed, timing your purchase wisely, and working with a trusted mortgage professional, you can maximize your home buying power and achieve your homeownership goals.

Have questions about mortgage rates and how they affect your buying power? Contact us today to get personalized guidance and take the next step toward your dream home.

16
Jan
By Fred Gruber
Home Mortgage Tips

Path to Homeownership With FHA Loans

For many potential homeowners, the dream of buying a house can feel out of reach, especially when saving for a large down payment or dealing with credit challenges. That’s where FHA loans come in. Backed by the Federal Housing Administration, these loans have become a go-to option for first-time homebuyers and others looking for accessible and flexible financing options.

Low Down Payment 

One of the most attractive features of FHA loans is the low down payment requirement. With as little as 3.5% down, you can move closer to owning your dream home. This is a game-changer for borrowers who may not have substantial savings but are ready to take the leap into homeownership.

For example, if you’re purchasing a $250,000 home, an FHA loan requires just $8,750 as a down payment compared to the higher amounts typically required by conventional loans. This affordability makes FHA loans particularly appealing to younger buyers and those navigating tight budgets.

Flexible Credit Requirements

Another significant benefit of FHA loans is their lenient credit score criteria. Unlike conventional loans, which often require higher credit scores, FHA loans are designed to accommodate borrowers with less-than-perfect credit. Even if your credit history includes some blemishes, such as late payments or limited credit history, you may still qualify.

For many aspiring homeowners, this flexibility removes one of the biggest hurdles to securing a mortgage. It allows individuals to focus on improving their financial situation while still moving forward with their home-buying goals.

Competitive Interest Rates

FHA loans often come with competitive interest rates, even for borrowers who might not qualify for favorable rates through conventional financing. The government backing of these loans helps lenders offer lower rates, which can result in significant savings over the life of the loan.

Mortgage Insurance

While FHA loans offer numerous benefits, it’s essential to understand the mortgage insurance premium (MIP) that comes with them. This insurance protects the lender in case of default and includes two components:

Upfront MIP: A one-time premium paid at closing, typically 1.75% of the loan amount.

Annual MIP: An ongoing premium added to your monthly payments.

Although MIP adds to your overall costs, the advantages of lower down payments and flexible credit requirements often outweigh this expense for many borrowers.

Is an FHA Loan Right for You?

FHA loans are an excellent option for:

  • First-time buyers looking to enter the housing market with minimal savings.

  • Individuals with lower credit scores who need more flexible approval criteria.

  • Buyers seeking affordable monthly payments through competitive interest rates.

However, if you have a strong credit profile and substantial savings for a larger down payment, exploring conventional loan options might be beneficial to avoid mortgage insurance costs.

Take the Next Step Toward Homeownership

Navigating the home-buying process can feel overwhelming, but you don’t have to do it alone. As a loan originator, I’m here to help you explore all your financing options, including FHA loans, to find the best fit for your needs. Together, we’ll turn your dream of owning a home into reality.