15
Nov
By First Rate Financial Group
Home Mortgage Tips

Mortgage 101: How Interest-Only Mortgages Work and Why They’re A Good Solution for Some Buyers

Mortgage 101: How Interest-Only Mortgages Work and Why They're A Good Solution for Some BuyersWhether you’re a first-time homebuyer or an experienced real estate investor, if you are planning to borrow funds to buy a home you will want to choose the right mortgage product. In today’s blog post we’ll explore how interest-only mortgages work and why they’re the perfect choice for some homebuyers.

How Interest-Only Mortgages Differ From Conventional Ones

As the name suggests, interest-only mortgages are loans where you are only required to pay off the interest portion of the loan each month for some specific term. The length of these loans can be up to ten years, although five or seven is the most common. Once this period is over, you will have some options. Some choose to refinance their mortgage into a new term; others will make a lump-sum payment to pay off the balance. The most important item of note is that during the interest-only period, no principal is paid off unless you pay a bit extra.

The Pros And Cons Of Interest-Only Mortgages

Interest-only mortgages are a popular choice because of their many upsides. Your monthly payments are almost certainly going to be far lower during the interest-only period. This is because you’re not responsible for paying down the principal of the loan. A lower monthly payment frees up money that you can use for other purposes, such as investing. Also, your entire monthly payment during the interest-only period should be tax deductible, which may contribute to a refund each year.

Note that there are some potential downsides to interest-only mortgages as well. For example, if your mortgage interest rate is adjustable, you can end up paying more in interest than if you had locked in. You also need to stay disciplined financially. Once the interest-only period ends, your monthly payment may increase significantly to cover both interest and principal.

Who Should Consider An Interest-Only Mortgage?

Interest-only mortgages are a good fit for those individuals or families where you are confident that your income is going to grow significantly in five or ten years. Alternatively, if your income is somewhat sporadic and you want the option of paying lower payments in some months and more substantial payments in others. The key point is that these mortgages offer flexibility that other mortgage products do not.

As you can see, interest-only mortgages are an excellent choice in certain circumstances. To learn more about how an interest-only mortgage might be right for you, contact our professional mortgage team today. We are happy to share our experience to find mortgage financing that perfectly suits your needs.

07
Nov
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – November 7, 2022

Last week’s economic reporting included the Federal Reserve’s statement on its target interest rate range and Fed Chair Jerome Powell’s regularly-scheduled press conference. Data on construction spending and public and private-sector jobs was published along with weekly reports on mortgage rates and jobless claims.Last week’s economic reporting included the Federal Reserve’s statement on its target interest rate range and Fed Chair Jerome Powell’s regularly-scheduled press conference. Data on construction spending and public and private-sector jobs was published along with weekly reports on mortgage rates and jobless claims.

Fed Hikes Key Interest Rate Range, but Signals a Future Slowdown

The Federal Reserve increased its key interest rate range last week from 3.50-3.75 percent to 3.75-4.00 percent. While this was the highest interest rate range in 15 years, the Fed said it plans to continue raising the target interest rate range until it reduces the inflation rate to 2 percent “over time.” Analysts viewed the Fed’s latest comments as less aggressive than its stance earlier this year.

Fed chair Jerome Powell said during his scheduled press conference that at some time “it will be appropriate to slow the pace of increases.” Mr. Powell also cautioned that the target interest rate range will likely rise past the current expected rate range of 4.50 to 4.75 percent.

Mortgage Rates Fall, Jobless Claims Mixed

Average mortgage rates fell last week as the rate for 30-year fixed-rate mortgages fell by 13 basis points to 6.95 percent. Rates for 15-year fixed-rate mortgages averaged 6.29 percent and 7 basis points lower than in the previous week. Rates for 5/1 adjustable rate mortgages averaged one basis point lower at 5.95 percent; Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 1.20 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.20 percent.

 

Initial jobless claims fell by 217,000 claims as compared to the previous week’s reading of 218,000 new claims filed. Continuing jobless claims increased to 1.49 million claims filed from the previous week’s reading of 1.44 million ongoing claims filed.

Job Growth Data Mixed, Unemployment Rate Rises

ADP reported 239,000 private-sector jobs added in October as compared to expectations of 195,000 jobs added and September’s reading of 192,000 private-sector jobs added. The Commerce Department’s Non-Farm Payrolls reported 261,000 public and private-sector jobs added in October as compared to expectations of 205,000 jobs added and 315,000 jobs added in September. The national unemployment rate rose to 3.7 percent in October from September’s rate of 3.5 percent.

In other news, construction spending rose 0.2 percent in September; analysts expected spending to drop -0.6 percent based on August’s construction spending pace of -0.7 percent

What’s Ahead

 

This week’s scheduled economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be published.

Last week’s economic reporting included the Federal Reserve’s statement on its target interest rate range and Fed Chair Jerome Powell’s regularly-scheduled press conference. Data on construction spending and public and private-sector jobs was published along with weekly reports on mortgage rates and jobless claims.
Fed Hikes Key Interest Rate Range, but Signals a Future Slowdown
The Federal Reserve increased its key interest rate range last week from 3.50-3.75 percent to 3.75-4.00 percent. While this was the highest interest rate range in 15 years, the Fed said it plans to continue raising the target interest rate range until it reduces the inflation rate to 2 percent “over time.” Analysts viewed the Fed’s latest comments as less aggressive than its stance earlier this year. 
Fed chair Jerome Powell said during his scheduled press conference that at some time “it will be appropriate to slow the pace of increases.” Mr. Powell also cautioned that the target interest rate range will likely rise past the current expected rate range of 4.50 to 4.75 percent. 
Mortgage Rates Fall, Jobless Claims Mixed
Average mortgage rates fell last week as the rate for 30-year fixed-rate mortgages fell by 13 basis points to 6.95 percent. Rates for 15-year fixed-rate mortgages averaged 6.29 percent and 7 basis points lower than in the previous week. Rates for 5/1 adjustable rate mortgages averaged one basis point lower at 5.95 percent; Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 1.20 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.20 percent.
Initial jobless claims fell by 217,000 claims as compared to the previous week’s reading of 218,000 new claims filed. Continuing jobless claims increased to 1.49 million claims filed from the previous week’s reading of 1.44 million ongoing claims filed.
Job Growth Data Mixed, Unemployment Rate Rises
ADP reported 239,000 private-sector jobs added in October as compared to expectations of 195,000 jobs added and September’s reading of 192,000 private-sector jobs added. The Commerce Department’s Non-Farm Payrolls reported 261,000 public and private-sector jobs added in October as compared to expectations of 205,000 jobs added and 315,000 jobs added in September. The national unemployment rate rose to 3.7 percent in October from September’s rate of 3.5 percent. 
In other news, construction spending rose 0.2 percent in September; analysts expected spending to drop -0.6 percent based on August’s construction spending pace of -0.7 percent
What’s Ahead
This week’s scheduled economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be published.

13
Oct
By First Rate Financial Group
Mortgage

Finding The Best Mortgage Deal: What To Do

Finding The Best Mortgage Deal: What To DoYou have worked hard for your money, and you probably want to save as much of it as you possibly can. That means you need to find the best possible mortgage deal you can. What are a few steps you should take if you want to get the best loan terms possible?

1. Get Plenty Of Estimates

You need to get a lot of estimates from different types of lenders. Examples include private mortgage companies, commercial banks, and credit unions. If you have a real estate agent, you may want to see if they can refer you to a loan officer. Many of these institutions have forms you can fill out online. Then, they will give you a custom rate estimate. When you compare rates across institutions, you must make sure you use the same loan terms. For example, you might want to get a 30-year fixed-rate estimate from all of these institutions. 

2. Understand Closing Costs

When you get an estimate back from the lender, they will probably give you the total loan amount, the term (or length) of the loan, and the interest rate; however, you cannot overlook closing expenses. For example, some lenders will charge you a fee just for printing your loan documents. Pay attention to the closing costs and try to remove as many of them as possible.

3. Select A Lender

After reviewing the documents carefully, you should select a lender. Be sure to ask about the rate lock period, which guarantees your interest rate for a certain amount of time. You need to make sure your interest rate will not change before you get to the closing table. You should also ask about prepayment penalties, which refers to penalties you might have to pay for paying off your mortgage early. If you plan on making extra payments toward the principal, try to remove the prepayment penalty.

4. Finalize The Document

Once you are done with the negotiating process, go ahead and finalize the document. You cannot necessarily negotiate appraisal fees or government recording fees, but you can negotiate your closing expenses, interest rate, and points. Once you are done, work with your agent to get to the closing table and start the moving process.