27
Sep
By First Rate Financial Group
Mortgage

How Can You Invest in Real Estate?

How Can You Invest in Real Estate?Many people believe that investing in real estate is something reserved only for the super-wealthy. In reality, this is not the case. Investing in real estate is a smart idea because property can generate a consistent cash stream while providing significant capital appreciation combined with tax breaks. There are multiple ways to invest in real estate, and no single path is better than the others.

Consider Real Estate Investment Trusts (REITs)

A real estate investment trust is a low-cost alternative to buying an entire property. Usually shortened to REIT, this is a company that allows investors to pool their money together before the company purchases multiple properties. REITs bring in money by renting, leasing, or selling the properties they own. Instead of individual investors having to purchase properties on their own, they can pool their money with other investors, reducing the barrier to real estate investing. 

Rent Out Residential Properties

When people think about real estate investing, this is usually the first thing that comes to mind. You can purchase a residential property and rent it out to people. This generates recurring income that can cover overhead expenses tied to the house, such as the mortgage. Then, as the property goes up in value, you build wealth. You can decide to rent the property out for short-term stays, which is a popular option with a vacation home on the lake or the beach. Or, you can have long-term renters if you want more income security.

Think About Flipping Houses

If you have ever watched a TV show about houses, you have probably run into flippers. This is the practice of purchasing a distressed property, fixing it up, and then selling it for a significant profit. If done correctly, you can make a lot of money with a much shorter time horizon; however, this requires a lot more time and effort, as you will need to coordinate a lot of contractors to fix the property and list it in a reasonable time frame. 

Consider Investing in Real Estate

These are just a few of the many ways you can invest in real estate. Think about the benefits and drawbacks of each option, and decide which is best for you. 

 

26
Sep
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – September 26, 2022

What's Ahead For Mortgage Rates This Week - September 26, 2022Last week’s economic reporting included readings on housing markets, building permits issued, housing starts, and sales of previously-owned homes. The Federal Reserve released its scheduled monetary policy statement and gave a  press conference with Fed Chair Jerome Powell. Weekly readings on mortgage rates and jobless claims were also published.

NAHB: Home Builder Confidence In Housing Markets Lags for 9th Consecutive Month

The National Association of Home Builders reported lower builder confidence in housing markets in September; this was the ninth straight month that builder confidence fell. Readings of 50 and above indicate that most home builders surveyed reported positive views of the U.S. housing market.  Excluding readings during the pandemic, September’s reading was the lowest measure of builder confidence since May of 2014.

Component readings for the monthly housing market confidence reading were also lower in September. Builder confidence in housing market conditions over the next six months fell by one point and confidence in prospective buyer traffic in housing developments was also one point lower.

All four NAHB regions reported lower builder confidence readings in September than in August. The western region reported a ten-point drop in builder confidence and the southern region saw builder confidence in housing markets drop by seven points. The midwestern and northeastern regions each reported a drop of five points in builder confidence in September. Rising mortgage rates and home prices contributed to the dip in homebuilder confidence.

Federal Reserve Raises Target Rate Range and Mortgage Rates Follow

The Federal Reserve raised its target interest rate range again in an attempt to slow rapid inflation. The target interest rate range was raised by 0.75 percent to a range of 3.00 to 3.25 percent. The Federal Reserve has a dual mandate of maintaining inflation at or near two percent and achieving maximum employment.

Freddie Mac reported higher average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 6.29 percent and were 27 basis points higher than in the previous week. Rates for 15-year fixed-rate mortgages rose by 23 basis points on average to 5.4 percent. Rates for 5/1 adjustable rate mortgages averaged four basis points higher at 4.97 percent. Discount points averaged 0.90 percent for 30-year fixed-rate mortgages and 1 percentage point for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.

Initial jobless claims rose to 213,000 new claims filed as compared to the prior week’s reading of 208,000 claims filed.

What’s Ahead

This week’s scheduled economic reports include readings from S&P Case-Shiller Home Price Indices along with reports on pending home sales and inflation. Weekly readings on mortgage rates and jobless claims will also be released.

23
Sep
By First Rate Financial Group
Home Mortgage Tips

What is a Reverse Mortgage and How Does It Work?

What is a Reverse Mortgage and How Does It Work?If you’ve recently considered your options for taking some of the equity out of your home you may have heard about reverse mortgage loans. If you meet the requirements for a reverse mortgage it can be an excellent way to tap into the value of your home, freeing up that cash to be reinvested or used for other purposes.

In today’s blog post we’ll explore reverse mortgage loans, explaining how they work and whether or not you’re qualified to receive one.

How Does a Reverse Mortgage Work?

As the name implies, a reverse mortgage is the opposite of a traditional or “forward” mortgage in which you borrow a lump sum of money from a lender to buy a home, paying it back to them over time. With a “reverse” mortgage, instead of paying the lender you will receive money from them which does not have to be repaid until you are either no longer using that house or condo as your primary home or until you fail to meet the obligations of the mortgage contract.

Note that a reverse mortgage is still a loan, which means you will still be required to pay interest on it. As your loan balance increases with principal and interest each month the amount of equity you have in your home will decrease accordingly.

Do I Qualify for a Reverse Mortgage?

According to the federal Consumer Financial Protection Bureau, there are a number of requirements that you must meet in order to qualify for a reverse mortgage. You must be at least 62 years of age when you apply, the home you’re applying with must be your primary residence, and most or all of your outstanding mortgage debt on the home must be paid off.

If you still owe money on your original or second mortgage against the home note that part of the money from the reverse mortgage must be used to pay this debt off.

How Much Can I Borrow in a Reverse Mortgage?

Like any type of loan, the amount of money that you can receive with a reverse mortgage depends on a variety of factors. Your age, the value of your home, any outstanding mortgage debt, current interest rates and Federal Housing Administration requirements will all be taken into consideration when determining how much you will qualify for.

While a reverse mortgage isn’t terribly complex, there is certainly more to the process that can be covered in a single blog post. For more information, contact us today and we can share the specifics of how you might qualify for a reverse mortgage and whether or not it’s your best option for making use of some of your home equity.