May 9, 2022 | Financial Reports
Last week’s scheduled economic reports included readings on construction spending, the Federal Reserve’s Federal Open Market Committee statement, and the Fed Chair’s press conference. Readings on public and private-sector jobs growth and the national unemployment rate were released along with weekly readings on mortgage rates and jobless claims.
Construction Spending Slows in March, Fed Raises Key Rate
Construction spending fell in March according to the Commerce Department. Spending increased by 0.10 percent as compared to the expected reading of 0.80 percent and February’s reading of 0.50 percent. Less construction spending could indicate a slowdown in building as builders face rising operations and materials costs.
The Federal Reserve’s Federal Open Market Committee initially considered raising the federal rate to 0.75 percent, but Fed Chair Jerome Powell vetoed that option, and committee members agreed to raise the federal funds rate to 0.50 percent. This increase was the highest in more than 20 years.
Chair Powell said in his post-meeting press conference that he wanted to address the American people and that inflation was too high. “We understand the hardship it’s causing and we’re moving expeditiously to bring it back down. We have the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.” Mr. Powell declined to identify a specific number defining the Fed’s goal of achieving a “neutral” average interest rate.
Mortgage Rates Rise, Jobless Claims Data Mixed
Freddie Mac reported higher mortgage rates as the average rate for 30-year fixed-rate mortgages rose by 17 basis points to 5.27 percent; rates for 15-year fixed-rate mortgages averaged 4.52 percent and 12 basis points higher than in the prior week. Rates for 5/1 adjustable-rate mortgages averaged 3.96 percent and 18 basis points higher. Discount points for 30-year fixed-rate mortgages averaged 0.90 percent and 0.80 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable-rate mortgages averaged 0.20 percent.
New jobless claims rose to 200,000 initial claims filed last week as compared to 181,000 new claims filed in the prior week. Analysts expected a reading of 182,000 new claims filed. Fewer continuing jobless claims were filed last week with 1.38 million claims filed as compared to the prior week’s reading of 1.40 million ongoing jobless claims filed.
The economy added 428,000 public and private-sector jobs in April; the national unemployment rate was unchanged at 3.60 percent.
What’s Ahead
This week’s scheduled economic reporting includes readings on inflation and the University of Michigan’s consumer sentiment index. Weekly readings on mortgage rates and jobless claims will also be released.
May 9, 2022 | Financial Reports
Last week’s scheduled economic reports included readings on construction spending, the Federal Reserve’s Federal Open Market Committee statement, and the Fed Chair’s press conference. Readings on public and private-sector jobs growth and the national unemployment rate were released along with weekly readings on mortgage rates and jobless claims.
Construction Spending Slows in March, Fed Raises Key Rate
Construction spending fell in March according to the Commerce Department. Spending increased by 0.10 percent as compared to the expected reading of 0.80 percent and February’s reading of 0.50 percent. Less construction spending could indicate a slowdown in building as builders face rising operations and materials costs.
The Federal Reserve’s Federal Open Market Committee initially considered raising the federal rate to 0.75 percent, but Fed Chair Jerome Powell vetoed that option, and committee members agreed to raise the federal funds rate to 0.50 percent. This increase was the highest in more than 20 years.
Chair Powell said in his post-meeting press conference that he wanted to address the American people and that inflation was too high. “We understand the hardship it’s causing and we’re moving expeditiously to bring it back down. We have the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.” Mr. Powell declined to identify a specific number defining the Fed’s goal of achieving a “neutral” average interest rate.
Mortgage Rates Rise, Jobless Claims Data Mixed
Freddie Mac reported higher mortgage rates as the average rate for 30-year fixed-rate mortgages rose by 17 basis points to 5.27 percent; rates for 15-year fixed-rate mortgages averaged 4.52 percent and 12 basis points higher than in the prior week. Rates for 5/1 adjustable-rate mortgages averaged 3.96 percent and 18 basis points higher. Discount points for 30-year fixed-rate mortgages averaged 0.90 percent and 0.80 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable-rate mortgages averaged 0.20 percent.
New jobless claims rose to 200,000 initial claims filed last week as compared to 181,000 new claims filed in the prior week. Analysts expected a reading of 182,000 new claims filed. Fewer continuing jobless claims were filed last week with 1.38 million claims filed as compared to the prior week’s reading of 1.40 million ongoing jobless claims filed.
The economy added 428,000 public and private-sector jobs in April; the national unemployment rate was unchanged at 3.60 percent.
What’s Ahead
This week’s scheduled economic reporting includes readings on inflation and the University of Michigan’s consumer sentiment index. Weekly readings on mortgage rates and jobless claims will also be released.
May 6, 2022 | Real Estate
If you are thinking about purchasing an investment property, you probably understand this is a great way to diversify your investments. On the other hand, you also need to understand how to evaluate potential rental properties and how to make sure you can generate enough income to cover the overhead expenses related to the property. What do you need to know?
Pay Down Personal Debt First
Before you decide to take on a second mortgage, you need to pay down as much of your existing debt as possible. If you have unpaid medical bills, student loans, and car loans, you need to pay down the step before you decide to purchase an investment property. You need to have cash available to pay down your current and second mortgage, so you do not want to have other sources of debt dragging you down.
Have Enough Money For A Down Payment
Investment properties typically have more stringent requirements regarding down payments. Even though you might have qualified for a first-time homeowner loan for only 3.5 percent down, that is not going to cut it for an investment property. You will probably need to have at least 20 percent of the property’s value available for a down payment. Mortgage insurance generally is not available on rental properties.
Consider Location
Just as you did with your original property, you need to think carefully about the location of your rental property. You need to purchase a property that has the potential to go up in value. You should also think about properties that have a strong school system, easy access to amenities, and relatively low property taxes. You also need to pay attention to crime rates and the health of the job market.
Consider Rent And Unexpected Costs
Finally, after you find a lender who can help you, make sure you think about your rental stream and any unexpected expenses. You need to have enough rent coming in every month to cover your mortgage, real estate taxes, and homeowners insurance. You should also have money set aside to cover unexpected expenses such as roof damage, HVAC issues, and plumbing problems. Stay on top of these issues to protect the value of your property.
May 5, 2022 | Real Estate
If you are looking for a home, you might need to finance it using a lender, such as a bank or a credit union. There are a number of factors that will influence whether your mortgage application is approved. Then, these same factors will play a role in the terms the lender might offer you. One of the most important factors is called the debt to income ratio, or DTI. It is important to understand how this will impact your mortgage application.
What Is A Debt To Income Ratio?
Your DTI is important to the lender because this allows the lender to figure out the likelihood of you paying your mortgage on time. The less debt you have, the more financial stability you have to pay a potential mortgage.
To calculate your debt to income ratio, you need to calculate all the bills you have for the upcoming month. For example, if you have rent and a car payment, you add these numbers together. Then, you divide this number by your gross monthly income. If your rent is $900 and your car payment is $200, your total debt is $1100. Then, if you earn $3300, divide $1100 by $3300. This is about 33 percent.
Student Loan Debt Is A Driving Factor
With many members of the younger generation getting ready to purchase a house, it is important to understand the impact of student loan payments. Because a lot of potential home borrowers have student loans to pay back, their debt-to-income ratios will be significantly higher. This could make it harder for younger borrowers to get qualified for a mortgage, particularly one with favorable terms.
How To Improve Your Mortgage Application
Before you apply for a home loan, you should try to improve your debt to income ratio by paying down your existing bills. For example, if you have credit card debt, this will be included in your debt to income ratio. Try to pay this off before you apply for a mortgage. You should try to pay down your student loans as much as possible before applying for a mortgage as well. The less debt you carry, the more likely your mortgage application will be approved.
May 4, 2022 | Home Buyer Tips
A home inspection may be one of the last things that needs to be done before the deal is sealed. However, it’s very important to have a proper inspection done so that you can ensure you’re offering price is appropriate for the home you’re getting. If you’re prepping for an inspection soon, here are some things you’ll want to consider beforehand.
Choose A Good Inspector
Like a good agent, the right inspector is going to have expertise in what they do and know what to look for. They will not only find the small fix-ups, they’ll be able to highlight the potentially huge issues that may arise down the road.
Prepare Your Papers
Your inspector may be able to do their job well on their own, but if you’ve noticed any issues when you’ve visited the house, it’s important to address them. While they may amount to nothing, an inspector will be able to clear up any confusion.
Ask The Questions
Whether you’re experienced with real estate or not, ask the questions you want to ask whether or not they make you feel like a novice. Even if the answer is simple, it will give you the information you’re looking for.
Get The Lowdown
It might seem like a bridge too far, but talking to neighbors in the area can give you a good sense of the overall upkeep of the home. While it’s unlikely you’ll get any unfortunate tales, people in the area may be able to illuminate you on the house’s history.
Partake In The Inspection
It’s good enough for many a homeowner to get a written report, but going along to see the house can facilitate conversation and may give you insights into what to watch out for. It may also mean you have a clearer idea of any potential issues.
Facilitate The Discussion
In the event that there are significant issues with the home, it may be worth talking with the inspector about dealing directly with the contractor. While this may or may not be necessary, it’s a good way to ensure any problems will be effectively communicated and can be rectified.
A home inspection may be par for the course, but by asking the right questions and being involved you can ensure you’ll get the most out of your inspection. If you’re currently in the market for a home, contact your local real estate professional for more information.
