Blog – First Rate Financial Group

21

Sep

Mortgage

Best Things To Do Now To Get Your Finances Mortgage Ready

Best Things To Do Now To Get Your Finances Mortgage Ready You probably already know that qualifying for a mortgage can be the biggest hurdle — aside from actually finding that dream property — along the path to home ownership.

Rather than agonizing about it, however, there are some positive actions you can take in advance to help you realize your dream.

Take A Close Look At Your Budget

If you don’t currently operate with a comprehensive household budget, get started now to analyze your income and monitor your spending habits. There’s no better way to prepare for home ownership than by being realistic about how you spend your money. If you don’t have a regular savings program, or if you’re constantly short on cash prior to the next payday, take steps to remedy the problem. Plan for the future by getting the present in check.

Gather Employment And Earnings Records

Mortgage lenders want to see stability and commitment. Finding and organize your employment records to show a consistent earnings pattern and, hopefully, a record of growth, both in terms of income and responsibility. Simplify the task of gathering required documents by collecting all records in a binder or notebook that can easily be copies when it’s time to submit them to a lender. It’s a confidence-building step as well.

Organize Your Banking Records

Lenders will not only want to see employment records, but they will require copies of all bank and investment accounts as well. Again, by being organized and getting a handle on your dollar inflow and outflow, you’ll gain insights into your individual spending habits and make the job easier for a mortgage specialist.

Make Copies Of Your Tax Returns

Tax returns confirm and validate all the other financial information that you will be required to supply. Typically, returns for the past two or three years will be required. If you own a small business or have income in addition to that from paid employment, make copies of those records as well.

Put A Halt To Spending

Perhaps the best way to demonstrate your serious intent to purchase — and pay for — a new home is by curtailing your spending on impulse purchases and expensive entertainment. This is not the time to buy a new car, book an exotic vacation, purchase major electronics or even home furnishings, or commit to time payments of any sort. Frugality should become your mantra in the months leading up to loan qualification.

Monitor Your Credit Cards

If your credit rating is within acceptable limits, do what you can to make all payments on time, pay down balances, minimize new purchases and demonstrate your continuing ability to “live within your means.” Do not apply for new credit cards, no matter how tempting the offers, because increased account activity can adversely affect your FICO score. In addition, if you have a blip on your credit report, do what you can to repair it prior to making a mortgage loan application, or be prepared to explain the circumstances, in detail and in writing.

Applying for a loan need not be scary; understanding the financial reality, however, is a great benefit.

Contact your trusted home mortgage professional who will be able to assist you in organizing your documents and aligning you with your best financing options.

20

Sep

By First Rate Financial Group

Home Mortgage Tips

Looking to Pay Back Your Mortgage Faster? Three Reasons to Consider Switching to Bi-weekly Payments

Looking to Pay Back Your Mortgage Faster? Three Reasons to Consider Switching to Bi-weekly Payments While there are differing schools of thought when it comes to whether or not a person should pay off a mortgage before the loan term ends, there may be some benefits to making payments on a bi-weekly basis as opposed to monthly basis. What are some of the reasons why it may be beneficial to make two payments a month instead of one? Here are three reasons why you should ditch the monthly fees and make payments once every two weeks.

You’ll Make An Extra Payment Per Year

If you’re looking to pay off your mortgage ahead of schedule, making bi-weekly payments means you’ll make an extra payment every year. Instead of making 12 large payments every year, you’ll make 26 small payments. These 26 small payments would be equal to about 13 large payments.

This is the equivalent of an extra payment per year and 10 extra payments over 10 years. If you have a 30-year mortgage, you could pay it off between two and three years early because you will make your last payment 30 months ahead of schedule.

You’ll Provide Yourself With Financial Flexibility

Making extra payments can provide you with financial flexibility that makes it easier to deal with unexpected expenses or a job loss. As you are making a half-payment every two week, you can make your payments in smaller, more manageable chunks.

It may be a good thing if you are self-employed and may not be sure when a client will pay for services rendered. Additionally, you may have your next payment reduced or advanced if you pay more than you owe in a given month.

You’ll Reduce the Amount of Interest Paid on the Loan

Paying off your mortgage faster reduces the amount of interest that you pay on the loan. Even if you only make one extra payment per year, you could still save thousands of dollars in interest by paying your loan several months or years early.

To determine exactly how much you will save, you can use an amortization table or calculator to see how much interest you pay over the full 30 years as opposed to taking only 27 or 28 years to pay for your home. It is also important to note that making extra payments adds to the equity that you have in the home.

Making two payments instead of one each month may help you achieve financial flexibility while building equity in your home. By paying off your mortgage as soon as possible, it may enable you to put more money into a savings or retirement account. Contact a mortgage professional for more information about whether bi-weekly payments are right for you.

18

Sep

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 18, 2023

What's Ahead For Mortgage Rates This Week - September 18, 2023 The previous week offered a blend of economic updates, encompassing data on inflation trends, the pulse of consumer sentiment, and the weekly oscillations in mortgage rates and unemployment claims.

August Sees a Slight Upward Trend in Inflation

The latest data on monthly inflation was made public on September 13th, revealing that core inflation in August experienced a jump of 0.3 percent over its July reading. This number is a tad above the anticipated 0.2 percent and also overshadows July’s reading, which was set at 0.2 percent relative to the preceding month. Drawing from the Consumer Price Index, August witnessed a year-over-year inflation of 3.7 percent.

In a broader perspective, the inflation rate observed a 2.4 percent increase in the past quarter when compared to the same timeframe a year ago. This is a downward shift from the 5.0 percent recorded in the previous quarter and marks the most modest inflation rate since March of 2021. As September progresses, all attention will turn to the Federal Reserve’s impending meeting. Given that the current inflation is above the Fed’s target of 2.0 percent, speculations are circulating about whether an interest rate rise is on the horizon or if the existing rate adjustments will be given more time to work.

A Shift in Mortgage Rates and Employment Dynamics

The current 30-year fixed mortgage rate hovers around 7.51 percent, one of the highest rates seen in two decades. This is an upward jump from August, where the rates averaged at 7.18 percent. This trend is impacting potential homeowners. Meanwhile, the 15-year fixed mortgage rate stands close to 6.51 percent, mirroring August’s average, which rounded off at 6.55 percent.

Comparing the current mortgage figures to those of the previous week, there’s been a marginal decline in the 30-year fixed rate from 7.55 percent to 7.51 percent. The 15-year fixed rate remains relatively stable at 6.51 percent, with the past week’s average being 6.52 percent. These rising interest rates seem to be impacting in the broader economy, with a projected 6.4 million individuals unemployed, translating to a 3.8 percent rate. The US Department of Labor’s Bureau of Labor and Statistics pinpointed 1.8 million claims for unemployment benefits in August.

Consumer Sentiment: A Mild Dip

The University of Michigan released its consumer sentiment report for the month, showing a slight drop in consumer optimism. While August’s index stood at 69.5, September witnessed a dip, bringing it down to 67.7.

This dip implies that despite the decreasing inflation rates, there remains a cloud of uncertainty amongst consumers. This could be attributed to potential interest rate hikes and a subtle slowing down of the job market. The prevailing mood is still optimistic, but the trend is shifting.

Looking Forward

The next week promises updates on mortgage rates, while September 20th is the Federal Reserve’s next meeting. The focal point for many will be the Fed’s decision on the interest rates—whether they opt for another raise or choose to hold them steady for the upcoming period.