How To Save $$$$s On Your Home Purchase

As home prices have risen dramatically the last few years (yes, they are starting to inch down now), many people find their dream house seemingly out of reach. Don’t despair, here are some tips to save a thousands on your home purchase and lower costs.
Move Out Of Your Comfort Zone
Ok maybe not your comfort zone, but expanding your search area can make a big difference. If you are priced out of your preferred neighborhood, try expanding your search to nearby areas where housing prices can be significantly lower.
Credit Check?
Check your credit score and see if there are any issues that need to be addressed. Since your credit score has a big impact on getting lower interest rates, if there are fixable issues it can make a difference!
Down Payment Support
If you need help with your down payment, there are a number of different programs as well as local ones that maybe able to provide support for the down payment.
For help on your specific situation, fill out our home purchase qualifier on our website to help find your best fit in todays environment.

Considering An ADU?

As we continue to see low inventory in the housing market and high rent prices, many home owners are adding ADUs (which stands for Accessory Dwelling Units).
ADUs often called granny flats, are guest houses or rooms added to garages to create rental income for home owners. Home owners typically add ADUs to increase cash flow, as well as looking for their property value to appreciate. Whether ADUs are right for you, depends on a number of factors. ADUs often costs at least $100,000 to build so being in a high rent market helps to offset the initial investment. You’ll also need to make sure local ordinances allow them and what the regulations are.
The old real estate adage about location stays true for ADUs as well. If you are in an area where rents are high or a popular vacation destination, then ADUs can make sense. Again you’ll need to check the local zoning and if you build one you will also need to have updated insurance to cover the ADU. Check with us to learn more and to see what financing terms you qualify for.

Joint Mortgages Explained

You may not be familiar with a joint mortgage – this is where there are two or more parties on a mortgage. Commonly friends, family or a partner will combine their incomes and assets to buy a house. This is often done when one party cannot qualify or can’t afford a property on their own. Unlike a typical mortgage all parties are on the mortgage and all assume responsibility for paying it.
The main benefit of a joint mortgage is being able to afford or qualify for more of home than one party is able to on their own.
As you may have guessed this creates a more complicated situation where you can have co-ownership, and may be dependent on multiple parties making payments. Further you could have one party wanting to sell or refinance in the future. It can also affect one parties ability to get a loan in the future as they are tied to the joint mortgage.
So its best to be aware of all the requirements and scenarios before applying. And make sure you have a strong relationship between both parties including having similar interests and goals regarding the property.

Application Volume Plunges to 25 Year Low

Application Volume Plunges to 25 Year Low

October 5, 2022

There were two storms brewing last week and each contributed to driving mortgage applications to generational lows. The Mortgage Bankers Association (MBA) said the continuing rise in interest rates and the devastating hurricane that hit Florida and the Carolina’s contributed to a double-digit decline in its indices that measure mortgage application volume. The Market Composite Index for the week ended September 30 was down 14.2 percent on a seasonally adjusted basis from one week earlier and 14 percent before adjustment.

The Refinance Index fell 18 percent from the previous week and was 86 percent lower than the same week one year ago. The refinance share of mortgage activity dipped to 29.0 percent from 30.2 percent the previous week.

The Purchase Index dropped by 13 percent week-over-week on both an adjusted and an unadjusted basis. It was down 37 percent from the same week in 2021.

MBA’s Associate Vice President of Economic and Industry Forecasting, Joel Kan said, “Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006. The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace. Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications.”

Added Kan, “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis.”   

Anchor Mortgage
Jack Leachman
(w) 828-251-9190 (c) 828-242-6276
NMLS #70356 Company NMLS:192247

WTD If Mortgage App Denied

If you were recently denied for a mortgage application, it doesn’t mean you can’t get approved somewhere else. There are some application issues that are fixable. The first thing you’ll want to know is why you were denied. We can take a look and shop for other loans options.
Credit issues are a common reason for getting denied. The first thing to do is to examine your credit report to see if there are any errors that can be fixed. There are also other loan programs if your score doesn’t fit conventional loans.
Debt to income ration or DTI that is too high is another common reason to be denied. The first thing if possible, would be to pay down debt. Another common source of debt is student loans – you may want to look into applying for the new student loan forgiveness program.
Simply being denied once does not mean the end of the road, we can consider multiple loan options. A co-signer is another option to consider, although this will make the application process less streamlined. Complete our quick qualifier and we can schedule a consultation to see what you can qualify for and for how much.

Pre-Approved Or Pre-Qualified

If you’re in the market for a new house, you’ve probably heard that you want to get pre… qualified or pre-approved?
What’s the difference anyways?
There’s actually a big difference. Pre-qualified is more of a preliminary step. It gives you a general idea of much home you can afford. We will examine your credit, income, assets, and debts and you’ll have a general idea of the price range you’re looking for. You may also see that you need to increase your savings or lower debts before you buy. While pre-qualifying is an initial step, pre-approval is a deeper dive and being pre-approved carries more weight with sellers.
To get pre-approved we will verify you income, assets, etc. and you will be more official (of course you still have to apply for a mortgage). Being pre-approved is almost a necessity in competitive housing markets, as realtors do not want to waste time and you will have a better chance of having your bid accepted. Now that we know the difference you may wonder what’s the point of getting pre-qualified – why not just get pre-approved? Good question – basically its much faster and it gives you a good starting point to start your home search. Pre-qualify or pre-approve we can help you with both – apply on our website or call us to get started.

Huge Reversal For Mortgage Rates. No Promises of Sustainability

Thursday- September 29, 2022

If you’re just getting caught up, mortgage rates broke above 7% on Wednesday for the first time since 2002. 

Yesterday was an entirely different day.  In fact, rates dropped not only back below Wednesday’s levels, but all the way back to the end of last week (Thursday afternoon-ish, depending on the lender).  This wasn’t necessarily the case Wednesday morning, but almost every lender adjusted their rate offerings in the middle of the day–in many cases multiple times.

Mortgage rates are based on bonds.  When bonds rally enough, mortgage lenders issue these “mid-day reprices.”  

Why were bonds so happy?  Happy isn’t the right word for it.  “Relieved” would be more appropriate.  A fiscal policy announcement in the UK is at the heart of all of the drama over the past few days, and while that has not been retracted or changed, a MONETARY policy decision in the UK helped to sooth financial markets early this morning.  

In short, the British government said things that spooked investors in a major way.  Then the British central bank announced an emergency bond buying operation to un-spook them.  British 10yr yields fell more than half a point in 40 minutes.  US bonds followed gingerly by comparison, just as they followed on the way up (US bond market movement has been less than half as abrupt as that of the UK).

All of the gains in the bond market translated fairly well to mortgage-backed bonds, with the average lender ultimately able to get back down well into the 6’s.  For those wondering if all of the “bad stuff” is done, there’s no way to know. What we do know is that nothing about today’s Bank of England announcement guarantees a sustainable reversal in and of itself.

There’s still reason to be cautious about what lies ahead for rates.  It will take additional motivation and especially downbeat economic data (including tamer inflation) for rates to be reliably moving lower in the bigger picture.  That said, any time a major central bank dumps a bunch of cash into the bond market unexpectedly, good things tend to happen for rates.  So, if other central banks do the same at some point in the near future, then we wouldn’t need to wait for downbeat data. 

Jack Leachman

Anchor Mortgage LLC

(w) 828-251-9190   (c) 828-242-6276

NMLS #70356  Company NMLS:192247

Heartbreaking Day Leaves Mortgage Rates Much Higher Than 6.29%

Mortgage Rates

September 23, 2022

 

 

At the close of business Wednesday, there was hope.  Well, to be fair, there's still hope, but it's much less immediate, and it certainly isn't the first thing that comes to mind today.  

Wednesday's hope stemmed from a combination of factors.  Rates had risen at a break-neck pace since the beginning of August, accelerating to the most troubling pace in the week following the most recent Consumer Price Index (CPI) release–a key inflation report that guides decisions of the Fed.  

CPI had extra oomph due to the proximity of the next Fed meeting (the one we just lived through Wednesday).  Market participants expected the Fed to signal an even firmer commitment to its rate hike outlook as a result.  Not only did that happen, but in the Fed's forecast summary, there was a strong shift in expectations for even higher rates in the coming months and years.

Granted, the members of the Fed can't begin to guarantee or even reasonably predict that rates will be as high in 2023-2025 as yesterday's forecasts suggested, but if they had to guess at those levels based on what they know today, those are their guesses.  

How high do they see rates?  That doesn't matter.  I could tell you that almost a third of the Fed sees the Fed Funds Rate at 5.0% by the end of 2023, but that's the Fed Funds Rate—not mortgage rates.  The two are both similar and different.

Perhaps more significant was the fact that this represented about a 1.0% increase in the Fed's rate hike outlook from the last scheduled release of forecasts in June.  For those who need convincing, we can pause there for a moment to appreciate that, in addition to the 1.0% increase in the forecast ceiling, the Fed Funds Rate itself is now 1.5% higher than it was on June 14th, and despite all that, today's mortgage rates are nowhere new 1.5% higher.  And Wednesday’s mortgage rates were much closer to June's levels.

And that's the source of the hope.  Or at least it was, as of Wednesday afternoon.  In other words, the market made it through what seemed to be bad news for rates from the Fed with rates moving a bit lower!  The more optimistic hope was that such a ground-holding event could serve as a turning point after rushing up to the highest levels in 14 years.  

But everything changed yesterday.  The bond market had massive second thoughts about Wednesday's resilience.  The underlying reasons for this remain a matter of debate among market participants.  There are a laundry list of seemingly convenient excuses, but none of them hold water sufficient to explain yesterday's carnage.  It's not that I am the one person who knows everything about why the market moved in a certain way today.  I'm simply saying that if some event, piece of data, or other discrete root cause was responsible for yesterday, it was very far from obvious.    

Once we're at the point of such humble admissions, further analysis of the market's motivation tends to get into the weeds with heavy reliance on the balance and nature of trading positions leading up to and away from Fed Day. Suffice it to say, the move was unexpected at the close of business Wednesday, and it was large and aggressive in a way rarely seen in the absence of the tidy scapegoats alluded to above.  

Such moves in the bond market mean equally troubling news for mortgage rates.  There's no perfect way to relay the current position of the top tier 30yr fixed rate because it varies greatly depending on the lender's pricing structure and the borrower's pricing preferences.  The big issue is the presence of upfront costs.  They're unavoidable in many cases.  In others, lenders use them to offer clients a way to "buy down" to a lower rate.  

To be sure, while "points" or "buydowns" aren't good or bad, they are an interest expense in the same way the interest portion of your mortgage payment is.  You're just paying it upfront instead of over time. 

All that to say that the rates appearing in many news headlines are hopelessly low.  Freddie Mac's weekly rate survey just came out at 6.29% today.  Not only does that require almost a full "point" of upfront cost, it's also very stale data at this point.  If we could magically remove the mortgage market's ability to rely on points as a part of the rate quote equation, and if we could magically track day to day rate changes including late-day "reprices" from panicked lenders, we would be left with a top tier 30yr fixed mortgage rate that's at least 6.625%.  

 

Jack Leachman NMLS: 70356 

jack@anchormortgagellc.com | www.anchormortgagellcc.com/jack

 

Mortgage Rates Now at 20-Year Highs

Mortgage Rates Now at 20 Year Highs

September 27, 2022 

 

The most recent historical high-water market for mortgage rates was "14 years."  It was broken so many times in September that it almost become boring last Tuesday.  Now, less than a week later, 14-year highs would be more exciting than boring.  As of mid-day yesterday, we're officially at 20 year highs.

What's remarkable is that in less than a year, the payment on a new $400k mortgage is up at least $1000/month.  Many lenders are now quoting top tier 30yr fixed rates over 7%.  

Why have rates spiked so quickly?  One might assume is has something to do with last week's Fed rate hike.  After all, the Fed hiked rates and then mortgage rates went higher, but that's actually not the issue at the moment. 

The issue stems from strange goings-on in the realm of fiscal policy in The UK.  Yes, that's an odd thing to consider when it comes to mortgage rates in the US, but it's important to understand just how huge the market reaction to recent events in The UK has been.  Without going into tedious detail, the best way to convey the drama is by noting that British 10yr yields have risen more than 1.00% in 4 business days. 

Contrast that to US 10yr yields which have only jumped by about a third of that.  Also consider that "a third" is a smaller than normal correlation for these two markets.

In other words, the market movement overseas is so big that, even with a far diminished echo, it's been enough for another major jump in rates.  

Don't expect any emergency help from the Fed either.  Multiple Fed speakers were out yesterday reiterating that they're still waiting for evidence that inflation has turned a corner and for evidence that their policies are producing a certain amount of economic pain.  Pain is normally bad, but in this case, the Fed views it as evidence of traction in the fight against inflation.  In any event, at best, it will take weeks and probably months for economic data to open the door for a softer stance from the Fed.  

Bottom line: 7% or close to it is the new 30yr fixed rate reality for now.

FHA Or Conventional Mortgage?

Today we are going to discuss two common mortgage loan products, and the pros and cons of both: FHA versus Conventional Loans.
Many people are familiar with the 20% down, good credit 30 year fixed conventional loan scenario. FHA loans are designed for people who have difficulty qualifying for a conventional loan to buy a house.
FHA Loans offer down payments as low as 3.5% and are more lenient on credit scores and past financial issues. Borrowers can qualify for FHA loans with as low as 580 credit scores.
One of the downsides of FHA loans are mortgage insurance requirements, if you put down less than 10% you will be required to pay monthly insurance for the duration of the loan, as well paying Upfront Mortgage Insurance Premium.
The best choice for you? Give us a call or apply online and we will analysis what programs suits your needs 😊