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What’s Ahead For Mortgage Rates This Week – November 4th, 2024

November 4, 2024 by Angel Leon

This week, the Federal Reserve’s preferred inflation data was released, and the results met expectations. This, along with recent GDP estimates, employment reports, and personal income/spending figures, paints a stable economic picture. It suggests that we may be on track for the Federal Reserve’s next round of rate cuts. The Federal Reserve has consistently stated its 2% inflation target and current figures show inflation at 2.1%. This indicates that a ‘soft landing’ for the economy could be within reach.

PCI Index

Prices in the U.S. rose modestly in September, but not enough to suggest inflation is rekindling or to prevent the Federal Reserve from cutting interest rates. The Fed’s preferred PCE index moved up 0.2% last month, the government said Thursday. That matched the forecast of economists polled by The Wall Street Journal.

The increase in inflation in the past 12 months slowed to 2.1% from 2.3%, leaving it just a hair above the Fed’s 2% target.

Consumer Spending

Consumer spending and incomes both rose in September, signaling continued strength in the primary driver of the U.S. economy. Household spending increased by a solid 0.5% for the month, surpassing the 0.4% rise economists had anticipated in a Wall Street Journal poll. Incomes also grew by 0.3% in September. Overall, consumer spending surged by 3.7% in the third quarter, marking the largest increase in a year and a half.

GDP (Estimates)

The U.S. grew at a brisk 2.8% annual pace in the third quarter, powered by another sharp increase in consumer spending that appears primed to extend a four-year-old economic expansion into next year.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw an increase of 0.28% with the current rate at 5.99%
30-Yr FRM rates saw an increase of 0.18% with the current rate at 6.72%

MND Rate Index

30-Yr FHA rates saw a 0.26% increase for this week. Current rates at 6.62%
30-Yr VA rates saw a 0.26% increase for this week. Current rates at 6.64%

Jobless Claims

Initial Claims were reported to be 216,000 compared to the expected claims of 228,000. The prior week landed at 227,000.

What’s Ahead

Next week, the Federal Reserve is set to announce another rate decision, followed by several other important reports. These include final manufacturing figures from S&P Global PMI data, the University of Michigan Consumer Sentiment report, and Consumer Credit reports.

Can You Refinance a Reverse Mortgage Loan?

November 1, 2024 by Angel Leon

If you have a reverse mortgage loan, you might be curious about your options for refinancing. The good news is that yes, you can refinance a reverse mortgage, and doing so may offer several benefits depending on your unique financial situation. We will provide a detailed overview of refinancing a reverse mortgage, including reasons to consider it, eligibility requirements, costs, and important considerations.

1. Why Refinance a Reverse Mortgage?

Homeowners often choose to refinance their reverse mortgage loans for various reasons, primarily centered around financial flexibility and accessing more equity. Here are some common motivations:

Accessing More Equity: If the value of your home has significantly increased since you took out your reverse mortgage, refinancing can allow you to tap into that additional equity. This can be particularly beneficial if you need funds for home improvements, healthcare costs, or other financial needs.
Lowering Your Interest Rate: Market conditions fluctuate, and if interest rates have decreased since you initially secured your reverse mortgage, refinancing could help you secure a lower rate. This can lead to substantial savings over the life of the loan, making your financial situation more manageable.
Adding a Spouse: If you’ve gotten married or have a partner living in the home, refinancing can allow you to add them to the reverse mortgage. This ensures they will have continued access to the home and its equity, providing peace of mind for both parties.
Changing Loan Terms: Refinancing might also offer you the opportunity to adjust your loan terms, such as moving from a variable interest rate to a fixed rate, which can provide more predictable monthly expenses.

2. Eligibility Requirements

Refinancing a reverse mortgage isn’t as simple as it may seem; there are specific eligibility criteria you need to meet:

Equity Requirements: Most lenders will require you to have at least 50% equity in your home. This is important because the lender wants assurance that there is sufficient value in the property to cover the loan.
Age Requirement: To qualify for a reverse mortgage, borrowers must typically be at least 62 years old. This age requirement holds true for refinancing as well, as it’s designed to protect senior homeowners.
Financial Assessment: Lenders will assess your financial status, including your credit score, income, and other financial obligations. They want to ensure you can maintain the costs associated with the new loan.
Tangible Benefit: The new loan must provide a “tangible benefit,” which means it should either lower your monthly costs, increase your loan amount, or provide other significant financial advantages.

3. Costs and Considerations

While refinancing a reverse mortgage can be advantageous, it’s essential to consider the associated costs:

Closing Costs: Just like with any mortgage, refinancing involves closing costs, which can include lender fees, title insurance, and attorney fees. These costs can accumulate quickly, so it’s crucial to factor them into your decision.
Appraisal Fees: You may also incur costs for a new appraisal, which is necessary to determine the current value of your home. This step is vital for refinancing, as it establishes how much equity you have.
Loan Origination Fees: Some lenders charge origination fees for processing the new loan. It’s wise to shop around for the best rates and terms to minimize these fees.
Consideration of Long-Term Goals: Before moving forward, it’s vital to weigh these costs against the potential benefits. Are you planning to stay in the home long enough to recoup the costs through savings? Consulting with a financial advisor or mortgage professional can provide personalized insights tailored to your specific situation.

Refinancing a reverse mortgage can be a smart financial move, especially if it aligns with your long-term financial goals. However, understanding the process, eligibility requirements and associated costs is crucial for making an informed decision. Whether you’re looking to access more equity, lower your interest rate, or include a spouse, being proactive and well-informed will help you navigate this opportunity effectively.

Do Not Get Spooked by Your Underwater Mortgage – How Refinancing Can Help You Escape

October 31, 2024 by Angel Leon

It’s Halloween season, and while it’s fun to enjoy spooky decorations and scary movies, there’s nothing fun about feeling haunted by your mortgage—especially if you owe more on your home than it’s currently worth. If you’re feeling trapped in an underwater mortgage, don’t let it send chills down your spine! Refinancing your mortgage can be the solution to break free, no matter how far underwater you are.

What Is an Underwater Mortgage?

An underwater mortgage occurs when the balance you owe on your home loan is higher than your home’s current market value. This can happen for a variety of reasons, including market fluctuations, neighborhood decline, or unforeseen economic conditions. While being underwater can feel like you’re stuck in a haunted house, it’s important to remember that you have options, and refinancing might be the best way to make your mortgage situation more manageable.

Government Programs for Underwater Homeowners

One of the most effective ways to refinance when you’re underwater is through special government-backed programs designed for homeowners who owe more than their home’s value. The Federal Housing Administration (FHA) offers the FHA Streamline Refinance, a program that makes it easier for underwater homeowners to refinance without needing to meet home equity requirements. Similarly, the VA Interest Rate Reduction Refinance Loan (IRRRL) provides an option for veterans and service members to refinance their VA loans into lower interest rates or more favorable terms, even if they owe more than their home is worth. These programs are like finding a flashlight in the middle of a dark maze—helping you see a way out when you might feel lost.

Conventional Refinancing Options

But what if you don’t qualify for a government-backed refinance? Don’t let that give you nightmares! There are still conventional refinancing options available for underwater homeowners. Many lenders offer refinancing solutions that can help you secure a better interest rate or switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan. Switching to a fixed-rate loan can give you the security of stable monthly payments, so you’re no longer spooked by the unpredictability of fluctuating rates. Even when home values are down, these options allow you to take control of your financial future and breathe easier, knowing that your payments are more manageable.

Shortening Your Loan Term

Refinancing also offers the opportunity to shorten your loan term. If you currently have a 30-year mortgage, for example, you could refinance into a 15- or 20-year loan. While your monthly payments may be higher with a shorter-term mortgage, you’ll be able to pay off your loan faster. This can be especially helpful if you’re looking to rebuild equity more quickly. When home values eventually rise again, you’ll be in a stronger financial position, and the mortgage that once felt like a curse will no longer weigh you down.

Don’t Let Your Mortgage Haunt You

Refinancing might sound intimidating, but it doesn’t have to be. With the right lender or program, you can escape the clutches of your underwater mortgage and gain financial peace of mind. Don’t let the fear of being underwater keep you from exploring your options. By refinancing, you can lock in a lower rate, secure more favorable terms, and potentially shorten your loan’s lifespan—all of which will help you regain control of your finances.

Remember, Halloween is the season for ghosts and ghouls, not for being haunted by your mortgage. With refinancing options available, you don’t have to live in fear of your underwater mortgage forever. Instead, you can transform a seemingly spooky financial situation into an opportunity to improve your future.

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