29
Aug
By First Rate Financial Group
Mortgage Rates

What You Need to Know About Mortgage Rates This Week – August 28, 2023

Property interest rate,finance loan increase.investor planning.business real estate.profit of banking.businessman thinking strategy analysisUnderstanding the dynamics of mortgage rates is crucial in assessing the affordability of a home. These rates aren’t isolated figures; they pivot on a variety of economic and market stimuli, and they can exhibit volatility from one week to another. Let’s delve into the current scenario of mortgage rates and what it signifies for potential and existing homeowners:

  • Current data indicates that while mortgage rates are elevated, there’s potential for stabilization or a dip later this year if inflation undergoes moderation.1.
  • As of August 25, a 30-year fixed mortgage stood at 7.57%. This is a marginal reduction from the prior week, yet it hovers close to a 22-year peak.2 3.
  • To regulate inflation, the Federal Reserve heightened its primary interest rate by 0.25% in July. A similar action might be on the horizon for September.4.
  • The median value of an existing house in July escalated to $410,200, marking it as the second most elevated record ever. This price indicates an 8.5% increase from the last quarter.
  • In July, sales of existing homes dipped by 3.3%. This slump was ubiquitous across all major U.S regions when juxtaposed with sales data from the previous year.1.
  • The present housing market exudes an aura of competition and tightness, courtesy of the high demand and insufficient supply dynamics.

Decoding the Mortgage Situation: Questions Homeowners Should Ask
How these trends impact you is contingent on your specific objectives and situation. Consider the following:

  • Duration of Stay: Are you eyeing your home as a prolonged investment? Locking in a fixed-rate mortgage might be judicious as dramatic rate reductions seem improbable soon. Conversely, those seeking short-term flexibility might find adjustable-rate mortgages appealing, though one should brace for potential hikes in rates.
  • Monthly Payment Affordability: Elevated mortgage rates translate to steeper monthly outflows. It’s essential to reevaluate your financial strategy or explore homes that don’t strain your finances.
  • Equity Positioning: When considering refinancing, substantial equity can pave the way for qualifying at a competitive rate and trimming closing expenses. This equity can also be leveraged for cash withdrawals to serve diverse needs, including home enhancements or consolidating debt.
  • Credit Metrics: Your credit rating and the ratio of your debt to income are pivotal in securing a mortgage at an attractive rate. Superior credit scores and minimized debt ratios amplify the prospects of a beneficial contract. Regularly monitor your credit score, and if required, embark on enhancement strategies.

In Conclusion

Despite the current elevated mortgage rates in comparison to past norms, this scenario may not be perpetual. For those contemplating buying or refinancing, acting promptly might be judicious before any further rate surge. However, it’s paramount to undertake thorough research and solicit multiple lender proposals to secure a mortgage tailored to your fiscal requirements and goals.

Sources:

1: Current Mortgage Rates: August 28, 2023 | Rates Stabilize

2: Current Mortgage Rates for Aug. 25, 2023: An Important Rate Eases

4: Mortgage Rate Forecast August 2023 | Bankrate

3: Mortgage Rates Surge to a 22-Year High, but We See a ‘Glimmer of Optimism’ Ahead

: Housing Market Predictions For 2023: When Will Home Prices Be Affordable Again? – Forbes

08
Aug
By First Rate Financial Group
Mortgage Rates

Understanding the Distinction Between Mortgage Interest Rates and APR

Understanding the Distinction Between Mortgage Interest Rates and APRWhen it comes to securing a mortgage, borrowers are often confronted with various terms and figures that may seem confusing at first glance. Two key components that play a significant role in determining the cost of a mortgage are the interest rate and the APR (Annual Percentage Rate). Though they are related, it is crucial to understand the difference between them to make informed decisions while comparing different loan offers. This article aims to shed light on the dissimilarities between the mortgage interest rate and the APR, helping borrowers navigate the mortgage landscape more confidently.

Mortgage Interest Rate

The mortgage interest rate is the fundamental percentage charged by the lender to lend money to the borrower. This rate is applied to the loan principal, and it determines the amount of interest that the borrower will pay over the life of the mortgage. For instance, if a borrower takes out a $300,000 mortgage with a 5% interest rate, they will pay $15,000 in interest in the first year (5% of $300,000).

APR (Annual Percentage Rate)

The APR, on the other hand, encompasses a broader perspective of the overall mortgage cost. It is expressed as an annual percentage and includes not just the interest rate but also additional expenses associated with obtaining the loan. These supplementary costs may involve:

Loan Origination Fees: Fees charged by the lender to process the mortgage application.

Points: Optional fees paid upfront to lower the interest rate over the loan’s duration.

Private Mortgage Insurance (PMI): Required insurance for some loans with a down payment below a certain threshold.

Closing Costs: Fees related to the closing of the mortgage, such as appraisal fees, title fees, and attorney fees.

The APR presents borrowers with a more comprehensive understanding of the total cost of the mortgage, making it easier to compare different loan offers from multiple lenders. By considering the APR, borrowers can better assess the overall financial implications of each mortgage option.

The mortgage interest rate and the APR serve distinct purposes when evaluating mortgage loans. The interest rate represents the cost of borrowing the principal amount, while the APR provides a more inclusive view of the total cost of the mortgage, encompassing additional fees and charges. Borrowers must carefully consider both figures to make well-informed decisions that align with their financial goals and circumstances.

Borrowers should take time to compare various offers, paying attention to both the interest rate and the APR. By doing so, they can select the most suitable mortgage option, ensuring a more secure and financially sound future.

03
Sep
By First Rate Financial Group
Mortgage Rates

FICO Scores and Your Mortgage: How to Bump Your FICO Score to Secure a Better Mortgage Rate

FICO Scores and Your Mortgage: How to Bump Your FICO Score to Secure a Better Mortgage RateIs your credit score holding you back from getting the best rate on your next mortgage? The good news is that there are actions that you can take to increase your credit score and improve the interest rate offered on your next home loan.

Here are a few easy and effective tips to help you get your credit score to where you want it to be.

Increase The Amount Of Credit Available To You

The easiest way to increase your credit score is to increase your credit limit, as this reduces your utilization ratio. To do this, you can either apply for another credit card or ask a current credit card provider to increase your credit limit. Those who have a stable income and have made their monthly payments on time should have no problem getting an increase of their credit limit.

Pay Down The Balances On Your Credit Card

Paying down your credit card balances can help you increase your credit score, as a large portion of your score is determined by the percent of available credit that you are using. Ideally, you want each card balance to be under 30 percent of the total limit while also keeping your total credit usage to less than 30 percent of available credit. A utilization ratio under 30 percent tells lenders that you can manage credit responsibly.

Settle Past Due Debts

Roughly one-third of your credit score is determined by your ability to make payments in a timely manner. If you have any payments that are 30 or more days past due, you may wish to settle those debts or make arrangements to pay them.

Creditors who allow you to roll past due payments back into your loan may update your credit report to say that you are current on your payments. This could have a huge impact on your credit score and help you qualify for a better rate on a home loan.

Increasing your credit score is one of the best ways to get the best rate on a mortgage. This may enable you to gain additional leverage when negotiating for a better rate that may lower your monthly payment to a more affordable level.

For more information about how to get a great mortgage rate for your next home purchase, or for advice on how to improve your credit score, contact your local mortgage professional today.