Blog – Page 4 of 860 – Fred Gruber - First Rate Financial Group

24

Feb

Financial Reports

What’s Ahead For Mortgage Rates This Week – February 24th, 2025

The most impactful report released last week was the regular Consumer Sentiment reports, which have indicated the more recent concerns rising food costs have soured the view on the current state of the economy for the U.S. The talks between the Federal Reserve members have also slanted in a negative direction as they feel they still do not have a strong grip on inflation. With the Trump administration also shaking things up in the office with their views on Tariffs, the land lending and broader markets have seen a lot of turmoil and uncertainty about the future. There should be dampened expectations going forward across all markets.

Consumer Sentiment

Consumer sentiment sours as worries grow over the outlook for the U.S. economy. Confidence drops 10% from January to the lowest level since late 2023. The second of two readings of consumer sentiment in February slipped to 64.7 from 67.8 earlier in the month, the University of Michigan said Friday. It’s the lowest level since November 2023. Sentiment has fallen nearly 10% from January.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.05% with the current rate at 6.04%
• 30-Yr FRM rates saw a decrease of -0.02% with the current rate at 6.85%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.25%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.28%

Jobless Claims

Initial Claims were reported to be 219,000 compared to the expected claims of 215,000. The prior week landed at 214,000.

What’s Ahead

The PCE Index inflation report, the Federal Reserve’s preferred measure for assessing inflation, will be released the following week. The overall outlook remains largely hawkish and pessimistic.

21

Feb

By Fred Gruber

Home Mortgages

How Do Mortgage Lenders Decide How Much You Can Borrow?

When buying a home, one of the most critical factors is determining how much you can borrow through a mortgage. Lenders evaluate multiple financial aspects to assess your borrowing capacity. Here’s what they consider:

1. Income and Debt-to-Income (DTI) Ratio
Lenders assess your income to ensure you can afford monthly mortgage payments. A common guideline is that your total housing costs (including principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income. Additionally, your total debt-to-income (DTI) ratio—including credit cards, student loans, car loans, and other debts—typically should not exceed 43% for most conventional loans. A lower DTI increases your borrowing potential.

2. Credit Score
Your credit score reflects your financial responsibility. A higher score can qualify you for a larger loan and lower interest rates, while a lower score may result in higher rates or stricter lending terms. Most lenders prefer a credit score of 620 or higher for conventional loans, while FHA loans may allow scores as low as 500 with a larger down payment.

3. Down Payment
A higher down payment reduces the amount you need to borrow and lowers your loan-to-value (LTV) ratio. Conventional loans often require at least 5% down, but putting down 20% or more can help you avoid private mortgage insurance (PMI) and may qualify you for better terms.

4. Loan-to-Value Ratio (LTV)
The LTV ratio measures the loan amount relative to the home’s appraised value. A lower LTV means lower risk for lenders, which can increase your borrowing power. Most lenders require an LTV of 80% or lower to avoid PMI.

5. Interest Rates
Prevailing interest rates impact how much you can borrow. When rates are low, you may qualify for a higher loan amount with the same monthly payment. When rates rise, your borrowing power decreases unless your income significantly increases.

6. Loan Term
The length of your mortgage affects borrowing capacity. A 30-year loan offers lower monthly payments, increasing affordability, while a 15-year loan requires higher payments but saves on total interest costs.

7. Financial Reserves
Lenders may require proof of financial reserves, such as savings or investment accounts, to ensure you can cover mortgage payments in case of income loss. Generally, having at least two to six months’ worth of mortgage payments in reserves strengthens your application.

Mortgage lenders evaluate multiple factors, including income, credit score, down payment, DTI ratio, LTV ratio, interest rates, loan terms, and financial reserves. Since lending criteria vary by institution, shopping around for the best mortgage terms can help you maximize your borrowing potential and secure the best deal.

Have questions about your mortgage options? Give me a call today, and let’s find the best financing solution for your home!

20

Feb

By Fred Gruber

Home Buying Tips

To Finance Or Not To Finance

Deciding to finance a new home can be exciting, and because of that buyers tend to want to jump right in. Not so fast! Before you start searching for your dream home, you need to get pre-approved and that means applying for a loan. You will need to get things in order by deciding how much home you can afford, mapping out your expenses, gathering all of your documents and then start looking for a lender that can help you decide what loan is best for you.

Some Pros of financing a home are:

? Buyer builds equity in the home

? Credit scores increase with positive payment history

? Mortgage interest and property taxes may be tax deductible

? Buyer has full control over home improvements and upgrades

On the flip side of this, you will also want to avoid a few things, like purchasing high-cost items on credit, looking for your dream home too soon when you are not approved or asking your friends for mortgage advice.

Some Cons of financing a home are:

? Requires upfront costs for down payment, closing fees, etc.

? Process can be complex

? Property taxes and HOA fees are the buyer’s responsibility

? Buyer incurs any maintenance and repair cost

? Typically a long-term investment

Financing a home is a significant decision that requires careful consideration. The process can be overwhelming, but with the right lender and financial plan, homeownership can be an achievable and rewarding milestone.

If you’re ready to start the pre-approval process or need expert guidance, reach out today to explore your options!