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Real Estate - Mortgage

Should you buy or rent after selling your home?

In this article: Your home is on the market, and you can probably count on moving soon. Should you buy or rent after selling your home? Should you buy or rent after selling your home? How costs affect whether you buy or rent after selling If you’re planning to live in the home you buy for a decade or more, these costs remain painful. Might home price inflation be so rapid as to make the cost of moving affordable? That brings us to the next point … Know the markets When deciding whether to buy or rent after selling, you need to get a feel for two markets in the place you want to move. What’s a realistic estimate for the money you stand to make in home price appreciation while you live there? What will it cost you to rent each month? Especially if you’re careful about when you pick your start and end points, it’s easy to prove that, on average, stock markets give better returns than property ownership. The decision to buy or rent after selling does depend — on many factors.

Here’s how a 5% mortgage rate would roil the US housing market

Mortgage rates are now at their highest level in four years and poised to move even higher. The timing couldn't be worse, as the usually busy spring housing market kicked into gear early this year amid higher home prices and strong competition for a record low supply of homes for sale. Mortgage rates have not been at 5 percent since 2011. Just 6 percent said they would drop their plans to buy altogether. About one-fifth of consumers said 5 percent rates would cause them to move with more urgency to purchase a home, fearing rates would rise even further. Another fifth said they would consider more affordable areas or just buy a smaller home. Specifically, the deduction on property taxes is now limited to $10,000. Some have claimed that higher rates and the new tax law will put downward pressure on home prices, alleviating some of the current sticker shock, but other factors are fighting that assertion. "There are still many more buyers than the current housing supply can support, with no major relief in sight." Higher mortgage rates may mean some borrowers on the margins will not qualify for the size of the loan they need or want.

GE warns its subprime mortgage unit could file for bankruptcy

But the business still faces legal trouble, including lawsuits from investors and an investigation by the Justice Department. GE warned in a filing on Tuesday evening that WMC could file for bankruptcy if it loses one of those lawsuits. Federal bank regulators ranked WMC as one of the worst subprime mortgage lenders in major metro areas, with more than 10,000 foreclosures between 2005 and 2007. The investors who are suing claim that WMC misrepresented the quality of the mortgages it sold. GE said WMC may file for bankruptcy if it is found liable. The TMI case is one of four pending lawsuits against WMC. Even if WMC files for bankruptcy, GE may still be on the hook for the mortgage unit's problems. The WMC bankruptcy warning and the series of lawsuits suggest that GE's losses on the mortgage business could continue to rise. Indeed, GE said in the filing on Tuesday that WMC estimates possible losses of up to $500 million above its reserves. For instance, it's not clear how much a settlement with the Justice Department would cost GE.

No-Money-Down Mortgages Are Making a Comeback

Unlike the days of the real estate bubble of more than a decade ago, they require strong credit scores, mortgage brokers say. Flagstar offers its zero-down mortgages in low- and moderate-income areas of the state. The bank offers as a "gift" the 3% down payment plus up to $3,500 in closing costs in "challenged" areas like Detroit, where total assistance can go up to $7,500, according to a spokeswoman for the bank. Still, some lenders, including Quicken Loans, have pulled back from mortgages with little or no down payments in the wake of a decision last year by Freddie Mac, a giant, federal home loan financing authority, to tighten up the rules. Given that Freddie Mac buys billions in mortgages each month from banks and mortgage companies, the new rules, which make it more difficult for buyers to avoid putting any money down, has had a big impact. Bill Banfield, the executive vice president of capital markets for Quicken Loans, doesn't think the decision was based on any issues with the loans, with his own company's low-down-payment mortgages having performed well. And these mortgages are not just popular among low- and moderate-income buyers. With a conventional loan, every 5% more you put down will typically lower both the interest rate and the amount of mortgage insurance, required on all loans in which the down payment is under 20%, according to Quicken's Banfield. When the next real estate downturn comes, this may increase the chances that you end up with a dreaded upside-down mortgage, owing more on your home than it is worth. That said, if you are faced with not being able to buy now or buying now and being able to build up equity over the long term, a no or low down payment mortgage may still be worth it in the end, MHA's Schmiedl says.

4 Ways You can Boost Your Credit Before Applying for a Mortgage

One of the most important things that a person will need to do before going in to get a mortgage is to make sure their credit is as high as it can be. Focus on Your Credit Cards The first thing to focus on when trying to boost your credit is paying off any credit cards that you have outstanding. Before you even make a decision on getting a particular card, you will have to do some research. Looking at various credit card reviews is essential during this decision making process. Once you have this information, you should have no problem making the right decision regarding which card to get. Know What is on Your Credit Report The next thing that you will need to do when trying to get your credit where it needs to be is pull the credit report you have. While you may have to pay a small fee for these services, it will be well worth it in the long run. This may be a bit inconvenient for you, but it will be worth it when you are able to get the home loan that you need in a hurry. Address any Errors on Your Credit Report Since the information entered on your credit report is done by other humans, there is always a chance of mistakes being made. The time that you spend finding and addressing these mistakes will pay off when your credit score rises.

The housing market is cooling off — and uncertainty isn’t helping

The housing market has been losing momentum, with inventories rising to 2011 highs. Wage growth could help bridge the disconnect. From rising prices to the new tax law, economists say there are a number of conditions contributing to a slowdown in the US housing market. "Usually, consumers are used to seeing the housing market perform in tandem with the economy," said Jonathan Miller, an appraiser and market analyst. "But what's been especially confusing over the last year and a half or so is that they seem to be disconnected." Together with rising rates, an increasing number of Americans have been priced out of the market. That could be especially discouraging for Americans living in states with high taxes and expensive housing markets, like New York and California. "This isn't too surprising given the growing gap between what homebuyers can afford and where home prices stand today," BAML said. "What's clear in the responses is that consumers believe the housing market has favored the seller this year." "If you look at wage growth with inflation factored in and then at housing prices, there's a big disconnect."

FinTech is fundamentally changing mortgage lending right now

The digitalization of mortgage lending is not a gimmick to attract millennials but a fundamental shift in the way mortgage lending is done. If you don’t have plans in the works for a fully automated mortgage production process, you should. And if you already do have such plans in the works, you should speed up your timetable for deployment. That is my takeaway from this fascinating bit of researchreleased in February by the Federal Reserve Bank of New York. It’s actually worth reading on your own. The researchers examined the impact of FinTech lenders. The research looked at some of the most fundamental questions involving FinTech mortgage Lending and concluded that beginning-to-end automation of the mortgage process has so far proven to be not only faster but beneficial to consumers across socioeconomic groups. The efficiencies speak for themselves. According to the researchers, FinTech lenders process loans 7.9 days faster than non-FinTech lenders. continue reading »

The top spots for Generation Z home buyers

Selecting suburbia It looks like the suburbs are getting a serious dose of growth in the coming years. According to a new analysis, a whopping 60 percent of Generation Z prefer suburban living — and 83 percent of that cohort plans to buy a home in the next five years. Verify your new rate (Sep 13th, 2018) Gen Z won’t go rural According to a new study by PropertyShark, Generation Z home buyers are going to gravitate to the suburbs, with more than half preferring the suburban lifestyle. Another 30 percent say they prefer city life, while only a small fraction plan to go rural. The study showed Generation X prefers rural living over all other options. San Francisco, Atlanta, Washington D.C., Miami, San Diego, Seattle and Tampa, Florida, also made the list. For one, they name student loan debt, down payments and job insecurity as their biggest barriers to buying in. That’s nearly as much as Millennials (87 percent). One in five Gen Zers has nothing in savings, while 40 percent have under $10,000. Show Me Today's Rates (Sep 13th, 2018)

5 types of mortgage loans for homebuyers

5 types of mortgage loans: A conventional mortgage is a home loan that’s not insured by the federal government. Generally, lenders require you to pay private mortgage insurance on many conventional loans when you put down less than 20 percent of the home’s purchase price. Jumbo loans are more common in higher-cost areas and generally require more in-depth documentation to qualify. FHA loans: Backed by the FHA, these loans help make homeownership possible for borrowers who don’t have a large down payment saved up and don’t have pristine credit. You must purchase a home in a USDA-eligible area and meet certain income limits to qualify. Pros of government-insured loans They help you finance a home when you don’t qualify for a conventional loan. You’ll have higher overall borrowing costs. Fixed-rate mortgages keep the same interest rate over the life of your loan, which means your monthly mortgage payment always stay the same. Cons of fixed-rate mortgages You’ll generally pay more interest with a longer-term, fixed-rate loan. If you don’t plan to stay in your home beyond a few years, an ARM could save you big on interest payments.

What it takes to get (and keep) a mortgage

Make a pre-qualification checklist The first step toward purchasing a home is getting pre-qualified for a mortgage loan. Following are items your lender will ask for during this process: • Most recent two years of W-2s for anyone whose name will be on the loan • Two years of tax returns • Statement of assets, such as 401k accounts, mutual funds, investments and, most importantly, the accounts the funds your down payment is coming from • The lender’s application filled out as completely as possible • Homeowners insurance information After gathering these items and reviewing your financial history, your lender will tell you the loan amount. Loan Application Dos and Don’ts Once you find the home of your dreams, it’s time to apply for the actual loan. During the application process, your lender will verify all information, including the steps leading up to closing. • Making Large Purchases: Don’t make any large purchases until you close on your loan. This includes furniture for your house, a new car or anything else that will significantly change the debt you have. This means you should avoid applying for a new credit card or any activity where your credit will be pulled. Your credit score is an important part of your loan process; therefore, you should avoid activities that could change it. You don’t want this process to delay closing on your new home. They can help you avoid making decisions that could negatively affect the outcome of your mortgage loan.

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