Blog – Page 135 of 787 – Fred Gruber - First Rate Financial Group

07

Sep

Mortgage

Should You Buy Mortgage Points?

Should You Buy Mortgage Points? When you take out a home loan, you might have the option to purchase mortgage points. Essentially, this is money that you pay to the lender upfront in exchange for getting a lower interest rate over the life of the loan. If you got a great deal on the house, you might have some extra cash on hand. Should you use that money to buy down the interest rate? This is a math problem that you need to calculate for yourself.

How To Do The Math

If you want to figure out if the mortgage points are worth it, you need to do some math. For example, you may need to pay an extra $3,000 at closing to qualify for a lower interest rate. You need to figure out how long it will take you to get that $3,000 back in terms of interest savings. So, if you save $30 per month on interest in exchange for that $3,000 upfront, it will take you 100 months to get that $3,000 back. After that, you will come out ahead. That is about eight years. So, if you plan on staying in the home for eight years (or more), then it might be worth it. If you sell the house before that point, or if you decide to refinance your home loan, then you will lose that money.

Other Factors To Consider

There are other factors to consider as well. For example, if you decide to buy discount points, it might be tax deductible, but this is something that you need to talk about with an accountant. Furthermore, if you are not getting the lowest interest rate because of a low credit score, you might want to buy discount points as well. Finally, if you want to reduce your monthly payment, mortgage points might be a smart way to get a lower payment.

Do not forget that you need to think about other options for that cash. There is a chance that you might need that cash for another bill, such as tuition or a car repair, so think carefully before buying discount points.

06

Sep

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 6, 2022

What's Ahead For Mortgage Rates This Week - September 6, 2022 Last week’s economic reporting included readings on home price growth, federal data on public and private sector job growth, the national unemployment rate, and data on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case Shiller: Home Price Growth Slows in June

The S&P Case-Shiller National Home Price Index reported slower home price growth in June as home price growth slowed to a year-over-year pace of 18.0 percent as compared to May’s reading of 19.9 percent. The 20-City Home Price Index posted 18.6 percent growth in June as compared to May’s reading of 20.50 percent year-over-year growth in May.

The top three cities in June’s 20-City Home Price Index were Tampa, Florida, which posted the fastest year-over-year home price growth rate for the fourth consecutive month with a reading of 35.00 percent, and Miami. Florida with a year-over-year home price growth rate of 33.00 percent. Dallas, Texas completed the top three cities with year-over-year home price growth of 28.20 percent.

While all 20 cities reported double-digit percentages for year-over-year home price growth, 19 of 20 cities reported slower rates of home price appreciation in June. Craig J. Lazzara, Managing Director of S&P Dow Jones Indices, explained the difference between the deceleration of home price growth and home price decline. A deceleration in home price growth indicates that while home prices continue to increase, they’re doing so at a slower pace. A decline in home prices means that home prices are falling.

Analysts expect rising mortgage rates to negatively impact home sales as affordability issues increase. As demand for homes falls, home prices may also fall as the housing market cools.

Mortgage Rates Rise, Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages rose by 11 basis points to 5.66 percent. Rates for 15-year fixed-rate mortgages averaged 4.98 percent and 13 basis points higher. Rates for 5/1 adjustable rate mortgages averaged 4.51 percent and 15 basis points higher than in the previous week.

Initial jobless claims fell last week with 232,000 initial claims filed as compared to the previous week’s reading of 237,000 first-time claims filed. Analysts expected 245,000 new jobless claim filings last week. Job growth reports from ADP and the government’s Non-Farm Payrolls report showed sharp drops in job growth; ADP, which reports on private-sector payrolls, reported 132,000 jobs added in August as compared to July’s reading of 268,000 private-sector jobs added in July. The Non-Farm Payrolls report

The national unemployment report rose to 3.70 percent in August from July’s reading of 3.50 percent. Analysts expected a reading of 3.50 percent unemployment for August.

What’s Ahead

This week’s scheduled economic reporting is spare due to the Labor Day Holiday. Fed Chair Jerome Powell will give a speech and weekly readings on mortgage rates and jobless claims will be released.

02

Sep

By First Rate Financial Group

Home Mortgage Tips

Understanding Your FICO Score and Why Small Credit Mistakes Can Cause Huge Headaches

Understanding Your FICO Score and Why Small Credit Mistakes Can Cause Huge Headaches Many people all over the world are dealing with issues involving debt or poor credit history, but most aren’t necessarily aware of what exactly makes up their credit score. Unfortunately, it might seem like it’s the big stuff that counts when it comes to credit, but little things can have a significant impact on your financial health. If you’re looking to improve your understanding and your finances, here’s what you need to know about small mistakes and your FICO score.

Making Late Payments

The due date on your bills might seem like an advisory, but whether we’re talking about a student loan, a credit card payment or your telephone bill, late payments can add up. Your payment history constitutes 35% of your total FICO score, which means that even a couple of late payments can have a marked impact on your overall credit. Instead of leaving this to chance, set aside a day each month before your bills are due to ensure they’re all paid off.

Applying For New Credit

It’s often the case that a store will offer special deals if you sign up for their own in-house credit card, but this can cost you big since the amounts you owe make up 30% of your credit score. Also, because lenders will often assume that you’ve run out of credit if you apply for a new card, applying for new credit can be a red mark against your FICO score.

Forgetting Credit Altogether

It might seem like the best possible option for avoiding credit issues is to avoid using credit altogether, but your credit history constitutes 15% of your FICO score. This means that you should have at least one credit card in your possession so that you can use it to build a history of lending success. While you won’t want to use more than 30% of your credit limit, it’s important to show proven experience in paying back your lenders.

Many people think that bad credit is the result of overspending and huge debt amounts, but your FICO score is largely determined by your payment history and your available credit. If you’re trying to buy a home in the near future, contact your local real estate professional for more information.