The Federal Reserve just made another emergency cut to the Federal Funds Rate, but it may not be clear how this will affect you. Below are things that you need to know:
- The Federal Reserve does not control mortgage rates.
- The Federal Reserve sets the Federal Funds Rate and Discount Rates. These are the costs for overnight loans from bank to bank or from the Federal Reserve to member banks.
- When the Fed’s cuts their rates, mortgage rates can actually rise.
- Lower Federal Reserve rates can be good for stocks, so investors often sell mortgage bonds to raise cash for stock investments.
- When bond prices fall, mortgage rates rise.
How does this affect you? Last week was a bad week for rates, but I believe this was a market overreaction to the massive influx of refinance applications that were submitted. With this new Federal Rate Cut announcement, there is a good chance we will get back to the lower rates of the previous week. We are optimistic things will settle again soon.
I’m always monitoring the markets to know what’s happening with mortgage rates, and keeping my customers protected is my number one goal. With that in mind, here is what you should be doing to be ready for a drop in rates:
- Get your application in NOW. Click ‘Apply Now’ in this link to get started: Online Questionnaire
- Start gathering required documents that are listed in the ‘Apply Now’ link above.
- When you receive the request to send in Loan and Income Documents – Get them in ASAP!
Most Importantly, Be Armed & Ready for us to lock your loan rate in.
Call or email with any questions. I’m here to help!
Retail Producing Branch Manager
Cardinal Financial Company, Limited Partnership
It’s a major responsibility, but owning a home comes with some big-time benefits – one being peace of mind. Here are a few other benefits to owning versus renting:
You’re Building Up Equity Every Month
What is equity? It’s the amount you sell your home for, minus the money you still owe on it at the time of sale. The amount you owe reduces each time you make a mortgage payment. Your principal payment increases each month, too, meaning that as time goes on, you’re paying more toward the actual loan amount versus interest. Equity in your home is typically lowest at your first mortgage payment and highest at your last payment.
It’s Cheaper to Own a Home Than Rent – In the Long Run
Buying and owning a home may be a little overwhelming at the very beginning because of interest rates, mortgage payments and the paperwork that goes along with it. You may think it’s easier – and cheaper – to rent a house, but it’s really not. After a while, your interest rate will decrease. Plus, each month that you’re making a payment, you’re putting money toward your own home, not sending hard-earned cash into a landlord’s pocket.
As a Homeowner, You’ll Enjoy More Stability
Owning a home actually brings much freedom and a sense of independence. The house belongs to you and you can do whatever you want to it. You don’t have to worry about a landlord hiking up your rent at the beginning of a new year or risk being kicked out of the house. Any improvements that you wish to make benefit no one else but you! Plus, if you have kids, you’ll have to worry less about having to switch school districts on-the-fly because you won’t have to worry about being asked to vacate.
Improvements Are Made for Your Own Good
Let’s talk about this a bit more. Once you a buy a house, you’re no longer restricted by a landlord’s guidelines or requirements on paint, decor or design. You get to decide what type of construction, design or maintenance professionals you’ll hire to work on the home. Any improvements made to a rental are enjoyed by you for only as long as you’re living in the home. Once you leave, your updates will benefit the next renter.
Are you you in the process of looking for a new home? Give us a call today at 480-759-1500 to discuss your options!
With mortgage rates still trending low, we’re seeing a huge uptick in refinancing applications – almost 2.5 times more than this same time last year, according to Mortgage Bankers Association. If you bought your home within the last two years and have been considering refinancing, now is a great time and here’s why:
- Home loan interest rates are still at their lowest point since 2016.
- Buyers who took on a mortgage over the last year and a half are more likely to have a higher interest rate as 30-year, fixed-rate mortgages offered through 2018 were around 4.54%, according to Freddie Mac.
- Black Knight estimates that roughly 10 million borrowers could save at least 0.75 percentage points by refinancing
Shorter Loan Term
If your current interest rate is around 4.5% or higher, there is a strong possibility that refinancing could help you lower your monthly expenses and shave five years off of your current loan term and keep your monthly payment the same. (See graphic below. Savings based on a $250,000 loan amount.) For those considering refinance as an option, be sure to speak with your mortgage adviser about loan-origination fees as those fees could potentially outweigh the savings.
Have you been dreaming of a new kitchen or adding square footage to your home, but worried that a new cash out mortgage payment will kill your monthly budget? With today’s rates, not only can you borrow for less, but your new payment is likely to be less than your existing one simply because of the lower interest rate.
Ideally, when it comes to cash out refinancing, we recommend putting that cash toward something that improves your home’s overall value versus spending it on new living room furniture, clothing or a Caribbean vacation. Other great options are to pay down high interest credit card debt or put the extra cash towards your family’s emergency fund in the event of an unforeseen hardship.
Whether you’re looking to lower your monthly living expenses, shave time off of your mortgage or do a cash-out refinance for home improvements, we wouldn’t recommend waiting. Speak to your mortgage adviser today and find out if refinancing is the right option for you.
I hope everyone has had a great 2019 so far and your lives, families and businesses are all thriving and doing well. Every year about this time many of us find ourselves in the midst of Chaos that we call the Real Estate & Mortgage Industry. This craziness usually runs through the Summer and we have a resting period around August. This letter was supposed to go out in April and you’re sitting here reading this in May. That pretty much sums up my current work life. Recently in my business mastermind group the question was proposed, “What does Success Look Like to you?” Heavy question, right?? Here are my thoughts.
When I answered what Success looks like to me, what came to mind was obviously influenced my current state of mind within my business. My response was “Well today its arguments, long hours with a lot of overtime expenses, high blood pressure and the occasional tear… or three.” Half the group was laughing, and the other half was looking at me like a deer in headlights.
There are many ways that we can measure success. I had written a few months ago about the success I/We had in raising a lot of money in for the community while I was the chair for Rock The Cause for Kids. I expressed how it affected my business, but we raised a lot of money (just shy of One Million) so it was very easy to say that it was a HUGE Success. Now we are smack dab in the middle of the buying season. Rates are low and will remain that way all year (per the Feds) and consumer/buyer confidence is up. This leads to the Chaos of business we have today.
My team came to me in one of our Daily Team Meetings and said, “Matt, we need you to make a call and get us an extension on Client X.” My response was layered with frustration and disappointment, but I knew I had to make that call. BTW – We NEVER close late! That’s our thing! Fannie Mae put out a stat in the last year or so that said the 60-70% of Mortgage Loans originated in the US close late, but that’s not us. We do not close loans late EVER. After I hung up the phone with my Realtor Referral Partner sat there and thought about the last time I had to make that call. Honestly, I still can’t remember when I had to do that. It’s literally been years. My team and I have closed 100’s of loans over the years together. We will move mountains to ensure we close every loan on time every time and we pride ourselves on that.
So what does Success Look Like to me? It looks like a Duck! In the Midst of Chaos (picture duck legs going 100 miles an hour under the water), make sure you show you have it ALL under control (picture floating like a Duck on top of the water). That deal we closed late was a very tough deal and the client and referral partner love us still. My team, in the midst of Chaos did everything they could do to close a tough loan on time. Outside of this tough deal, our loans close 100% on time. Not remembering the last time I had to make that call…….That’s what success looks like to me!
I truly believe I have the best team around. If you’d like to share what success looks to you, I’d love to hear it. Shoot me a message….
Be Like a Duck! Wishing you a great 2nd half to 2019!
(5 min read)
Over the past decade, Baby Boomers (those born from 1944 to 1964) have been the generation to watch both as consumers and home buyers. Although a shift is taking place and many industries (including real estate) are beginning to focus on the Millennial generation – their housing needs, preferences and purchasing behavior — the Boomers still represent a significant portion of overall home sellers and buyers in 2019. Why? With their children out of the house, many Boomers are looking to downsize.
While they may be looking to transition into smaller homes, they still expect the same high-end amenities, finishes and offerings that come standard in a larger multifamily residence, and complements their modern, active lifestyle.
In this article, we’re sharing a couple of tips for those Baby Boomers looking to downsize, as well as mortgage options that complement their next forever home.
Reverse Mortgages hit the scene in 1961 and really gained popularity in 2018. It is a type of loan available to homeowners that are 62 years of age or older and have a high amount of equity built up in their current home. Borrowers are not required to make monthly principal and interest payments to their bank or lender, as they would be required to do with a traditional purchase or refinance mortgage. Instead, their bank or lender pays them in a lump sum(s) or via a line of credit based on their home’s equity.
Why is this a good option for the Modern Boomer? Picture a couple that would love to find a smaller home with less maintenance, etc. They no longer need to live in the best school district and want a lifestyle that allows them the freedom to travel and be more active. The amount of equity they have in their current home, although high, may not allow them to buy a small house or townhome outright because of their desired area’s higher home values. A reverse mortgage would allow them the opportunity to purchase the home they want, and still have money left over to travel because they are receiving their equity as additional income vs. rolling it into a traditional purchase.
Many of today’s higher-end condo communities offer a variety of upscale amenities to complement their convenient location and accessibility – making it a very desirable option for the modern Boomer. However, it has been difficult in the past to acquire a loan on a condo because of factors like community occupancy percentage (how many units are owner occupied versus investment properties) and HOA status – including financial reserves and arrearages. Good news, tools like Freddie Macs Condo Project Advisor now lets the buyer request unit-level exceptions for existing condominium projects early in the loan origination process so condo sales and financing are more streamlined.
There are many finance options available to homebuyers looking to downsize. If you have questions regarding any of the loan programs mentioned above, be sure to contact a Cardinal Financial expert today at 480-759-1500 and we’ll be happy to assist in finding your client a solution that works best for their lifestyle.