The Truth About Biweekly Mortgage Payment Plans

May 24th, 2018

Steve Hollander – Hollander Real Estate
Trulia’s Blog

You don’t need a third party to help you pay off your mortgage early.

Traditionally, your mortgage payment is a monthly cost. You submit your payment once a month to the mortgage company, and your money is applied to principal, interest, and escrow. But many mortgage lenders also offer biweekly mortgage payment plans that allow you to pay in installments every two weeks instead of every month. Biweekly payment plans sound simple and straightforward: You pay biweekly instead of monthly and reduce the balance on your loan faster. In theory, by using one of these plans, you pay less interest over time, build equity quickly, and pay off your mortgage faster.

So if you live in a pricey market like California and want to pay down the mortgage on your Middleton, CA, real estate faster, a biweekly payment plan may sound like an appealing option. But before you sign up for one, it’s important to understand the pitfalls — and consider whether putting this concept to work on your own makes more sense.

Should I sign up for a lender-sponsored biweekly mortgage payment plan?

Unfortunately, these mortgage payment plans don’t always work as well as they claim. What actually happens is that you send in your biweekly payment to the company servicing the loan, and then they hold your payment until the second one arrives. Only after the company has the full monthly payment amount do they apply the money to your mortgage — which means as far as the mortgage company is concerned, you’re still making one payment per month.

In effect, this saves you nothing in interest because your funds are still only being applied as if you were making monthly payments. Worse still, some biweekly mortgage payment plans can actually ending up costing you more money, because the companies that offer these plans often charge additional fees to handle and deliver the payments for you.

If they don’t help pay off a mortgage early, why do these payment plans exist?

Considering the potential costs for the borrower, it may seem silly for lenders to even offer this plan. What’s the point if using the payment plan is no different than if you paid on the regular monthly schedule? Consider this: Most lenders who originate loans don’t actually service those loans. A third party handles the payment and the processing. But that doesn’t mean you can’t make a plan to pay down your mortgage loan ahead of schedule. You just don’t need to set it up through a lender-originated plan.

How can I pay off my mortgage early on my own?

There’s nothing wrong with the idea of paying extra on your mortgage and accelerating the rate at which you pay off the loan. You can make extra payments at any time, and you can do so in a variety of ways. Consider adding a little more to each monthly payment you make to help pay off the mortgage early. If you know you have an extra $100 in your budget each month, tack that on to your payment. For example, on a $100,000 loan (assume a 30-year fixed mortgage and 4% interest), paying an extra $100 a month can cut approximately 8.5 years off the life of the loan — and save $22,463.76 in interest. That’s some serious cash.

Another option? Create your own biweekly payment plan. By skipping the third-party processing (and the fee they add on for doing so), you’ll end up making an extra payment each year that you wouldn’t make if you paid monthly. You can also continue to pay monthly but make one extra mortgage payment at some point during the year to get the same result. Anytime you have extra money on hand — from a tax return, bonus from work, or gift — you can apply these funds to your mortgage too.

Just be sure that any extra payments you make are applied to the principal of your loan, not just the interest. This ensures you’ll actually receive the full financial benefit of paying extra toward your mortgage and be on track to pay off the loan early. You’ll also want to ensure that the terms of your mortgage will not leave you with a prepayment penalty should you pay extra or early.

Read more:

The Market Preview

May 23rd, 2017

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

Coming Soon: The 5% Rate Quote
Most market pundits expected this to happen four years ago, if not earlier.

They expected interest rates to rise, and rise meaningfully with sustained momentum.

Interest rates failed to follow the script. They’ve made up for their ad lib in 2018. Interest rates have trended in one direction – up. They continue to trend up as we write.

In the past week, the 10-year U.S. Treasury note yield has risen 12 basis points. The latest increase means the yield has risen 60 basis points year to date.

As the yield on the 10-year note goes, so go the rate quotes on long-term mortgages. The standard-bearer – the prime 30-year conventional mortgage – has kept pace with the 10-year note. Rates have risen 60 basis points since the beginning of the year. Rates are at a seven-year high. The range based on the national average has risen to 4.75%-to-4.875%.

It appears unlikely that mortgage rates have finished their ascent.

Oil prices have risen relentlessly since the beginning of the year. A barrel of West Texas Intermediate Crude goes for $71 on the spot market. It’s at a three-high. A barrel of WTIC cost less than $30 a barrel only two years ago.

Not surprisingly, transportation costs are on the rise. A recent Wall Street Journal dispatch noted that senior executives at many major U.S. companies report higher transportation costs. The WSJ cited Coca-Cola, Procter & Gamble, Nestle, and Hasboro. These companies are reporting transportation-cost increases in percentages measured in the high-single digits to high-teens.

These companies will push as much of their increased costs as they can onto consumers with higher prices. So, inflation is what we’re really talking about. Consumer-price inflation is a key variable in setting interest rates, particularly on the long-end of the curve. Consumer-price inflation is on the rise.

The April Consumer Price index posted a 2.5% year-over-year increase – its hottest reading since February 2017. The New York Federal Reserve’s Underlying Inflation Gauge (which aims to capture “sustained moves in inflation from information contained in a broad set of price, real activity, and financial data”) was more telling. It rose 3.2% year-over-year in April. That’s the highest reading since July 2006.

The Federal Reserve has wanted more consumer-price inflation for the past seven years. It’s finally getting what it wants. Consumer-price inflation has accelerated this year. That said, Federal Reserve officials are sanguine on the matter.

Federal Reserve Bank of Dallas president Robert Kaplan Kaplan forecast in a recent speech: “In the medium term, I think inflationary forces are still going to be more muted . . . Most of the forces in the world are deflationary.”

For anyone who fills up the gas tank and shops at the grocery store, the deflationary forces are difficult to decipher. Just by eyeballing the joint, we see consumer prices rising.

We mentioned last week that JPMorgan Chase CEO Jamie Dimon forecasts a 4% yield on the 10-year U.S. Treasury note. That yield still has some distance to cover before it hits 4%, but it’s progressing in that direction.

Therefore, don’t be surprised to see rate quotes on the prime 30-year conventional mortgage hit 5% in the near future. Then don’t be surprised to see rate quotes progress higher from there.

Holding Steady for Now
The Home Builder Sentiment Index held at 70 in May. It has held near 70 for 2018. Home builders remain optimistic, though they’re less optimistic compared to a year ago.

Business, fortunately, is still good. Housing starts in April were at a seasonally adjusted annual rate of 1.287 million. This is 3.7% below the revised March estimate of 1.336 million, but it is 10.5% above the start rate compared to a year ago.

As for mortgage activity, business has slowed in recent weeks. No surprise that refinances trend down, but so, too, have purchases. Purchase applications were down 2% in the latest reported week. Activity is still up 4% compared to last year.

We know that some market watchers are concerned that rising interest rates spell the end of the good days for housing. We’re not one of them. Let’s keep in mind that the economy is strong, businesses are reporting record profits, employment is at a multi-year high. These are sufficient positives to suggest that more good days are forthcoming.

Jackie Doran
Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

How To Pay Off Your Mortgage Faster

May 22nd, 2018

Steve Hollander – Hollander Real Estate
Trulia Guides

Your loan term might be fixed, but it doesn’t have to dictate when you’ll be mortgage-free. Find out how to speed up the process.

A lot can happen in 30 years. Kids become adults, jobs change, and life goals are accomplished and reset. Change during such a lengthy period is inevitable. But if you’re a homeowner, there’s one thing that won’t change: Your obligation to make a monthly mortgage payment.

The good news? A loan term doesn’t have to dictate when you free yourself from this financial commitment. There are a few tried-and-true ways to cut the ties early while lowering the total amount paid in the process. Follow these recommendations, including the No. 1 tip to pay off your mortgage faster on your home, whether it’s in Seattle, WA, or Boston, MA.

How To Pay Off Your Mortgage Faster

1. Refinance into a 15-year mortgage

Cutting your loan term in half is a big financial step, but the benefits are substantial. Not only will you shorten the payoff time, but you’ll also be rewarded with a lower rate and pay significantly less in interest over the life of the loan.
The key here is determining whether you can shoulder a larger monthly cost that comes with a 15-year mortgage. If you’re not completely confident in your ability to commit to a higher monthly payment, challenge yourself to make payments you would be making if you had locked into a 15-year mortgage. Then, if financial circumstances change, you still have the flexibility to return to a lower monthly payment.

2. Refinance into a lower rate but keep payments the same

The benefits of refinancing your loan but sticking to the same payments are twofold: You will pay less in interest over the life of the loan and create a shorter path to mortgage freedom. Plus, it’s not as drastic as jumping from a 30-year mortgage to a 15-year mortgage. However, it’s important to do a bit of research on how to refinance.

Closing costs for refinancing are generally lower than if you were to purchase a new home, but they’re still an added expense. Your new interest rate should be low enough to negate the cost of refinancing, or you should be planning on staying put long enough to reap the benefits of a smaller rate. (Use the Trulia refinance calculator to see if this is a good choice for you.)

3. Get rid of private mortgage insurance (PMI)

If you financed more than 80% of your conventional mortgage, chances are, you are paying private mortgage insurance to protect the lender in case of default. Redirecting this amount — usually 0.05%–1% of the loan amount annually — to the principal on your mortgage can have a big impact over time.
You can request to get rid of PMI once you reach an 80% loan-to-value ratio, but the lender is required to remove it after you’ve reached a 78% loan-to-value ratio. You can speed up the process by increasing your equity through home upgrades, or, if the home has already increased in value for other reasons, you can opt to refinance. Some lenders may even allow you to get an appraisal to show the new value and your increased equity — without paying for a refinance.

4. Put those windfalls to work

Maybe your monthly budget doesn’t have wiggle room and paying the costs to refinance isn’t in the cards. There’s another option.

Tax returns, bonus checks, and inheritance payments present the opportunity to pay off a chunk of your mortgage without feeling the pain in your monthly budget. This could mean thousands of additional dollars chipping away at this massive financial responsibility each year. Sometimes your money could be better spent elsewhere — like paying off high-interest debt — but if wiping out your mortgage early is a priority, this is a great place to start.

5. Make extra or higher principal payments

Additional small principal payments add up over time!. On a $150,000 loan for 30 years at 3.75%, with no additional payments, more than $100,000 will be paid in interest over the course of the loan. By adding just $100 per month in principal payments, the total interest paid is reduced by nearly $25,000 and the loan will be paid off more than six years sooner!”

Another way to do this is by making biweekly mortgage payments. Instead of making 12 monthly payments, this equals out to 26 half-payments — or 13 full payments — per year. But beware, explains Harper, not all loan servicers make it easy to apply these extra payments to the principal. Make sure to speak to yours and ensure they aren’t simply holding on to the extra money and applying it toward the interest.

The bottom line: Choose what works for you

Choose the option that fits best with your current financial situation and any possible changes you foresee. If you have a steady income that will last in the long term, will last in the long term, a shorter refinanced term might make sense. If your income is a bit less consistent, you may want the flexibility of making additional payments when you can.

Read more:

The Markets In A Minute

May 21st, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

The Economy

Retail sales rose 0.3% in April, matching expectations. Consumer spending is also picking up, but higher gas prices are cutting into discretionary spending.

The increase in sales and spending is driving investors’ concerns about increasing inflation. These concerns have helped push mortgage rates higher.

Although jobless claims were slightly higher last week at 220,000, the number of people on unemployment rolls fell to the lowest level since 1973.

Housing News

Home builder confidence rose in May, according to the NAHB. Low unemployment and strong demand have builders looking favorably on the market.

However, housing starts were down slightly in April from March. Lumber costs and difficulty hiring as many workers as needed are contributing factors.

Rising rates don’t seem to be affecting demand for housing. Although mortgage applications fell slightly last week, the decline was mostly for refi applications.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.

Jackie Doran

Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

Is It Better to Get a Brand New House?

May 18th, 2018

Steve Hollander – Hollander Real Estate
Trulia Guides

Not sure what type of home is right for you? Here are some key benefits to buying a brand new home.

If you’re shopping for a home, choosing between new construction and pre-owned homes can be an overwhelming decision. For many prospective buyers, new construction is an opportunity to see their dream home come to life while possibly saving money on the costs involved with buying an existing home.=

Existing or older homes have the advantage of architectural charm and sizable lots, and are generally located in more established neighborhoods. However, older homes, and especially ones that were not meticulously maintained, might need a little TLC at move-in time, but can be slightly less expensive than a newly built home.

Depending on what’s important to you, new construction homes might have the advantages that outweigh the pluses of their older, more established counterparts.

Benefits of Buying a Newly Built Home

1. Modern floor plans designed for the way we live today.
One of the biggest advantages of buying a new construction home is that they are designed and built for today’s lifestyle. They come with flowing open floor plans and features that meet modern-day demands, including open, eat-in kitchens, walk-in closets, large master baths, more access to outdoor entertaining areas, and even additional storage. Many older existing homes built between the 1920s and the 1990s often lack one or more of those features as part of their original home design.

2. More customization and more choices.
Today, more than ever, home builders are offering buyers the ability to customize their homes with a vast number of options. Lighting, flooring, cabinetry, countertops, wall coverings, paint colors, and even landscaping can often be selected from a wide variety of choices. Some of the choices are considered upgrades and will add to your base price, but now builders are adding options that are still considered part of the original price package. You’ll be moving into a home that’s customized for your needs.

3. New homes are energy efficient.
Utilizing new construction materials, just-built homes are usually more energy efficient — and that means potentially lower utility bills. Not only are these newly built homes rated higher for insulation, but many new homes also are incorporating renewable sources of clean energy like solar. All of this new home tech could save you thousands over the course of the years you live in the home.

4. New homes are smarter, too.
New construction homes are often equipped with the latest technology built right in. Think cable, alarm systems, speaker systems, high-speed wired Internet, digital thermostats and detectors — when they’re just the flip of a switch or a voice-command away, you save lots of time and money, not to mention holes in the walls.

5. Fewer maintenance and repair bills.
With new construction or pre-construction purchases, the work is already done for you. You don’t have to do a darn thing. You don’t have to lift a finger (or a hammer). A big financial benefit to a new home is that you won’t have much maintenance to do for quite a while. With modern, new appliances, plumbing, heating, and air, you should be able to live repair-free for a few years.

6. You’ll save money in repairs.
When you buy new from a reputable and established builder, you are able to include your selected upgrades in the original purchase price and mortgage amount, financing them. When you purchase an older home, you will have to secure a mortgage, buy the home, and then begin renovations on a separate line of funds. That means the money for renovations will have to come directly out of your pocket.

This can be especially tough for homebuyers who are low on cash after plunking down a big down payment. New construction, however, allows you to make your choices of upgrades and additions and have those costs incorporated into the overall purchase price of the home. That way, you are able to finance these upgrades rather than pay for them in full, out-of-pocket.

7. New trumps retrofit.
New homes are built with the latest building plans, designs, and materials. Their systems (electrical, plumbing, sewage lines, central heating, and air) already meet today’s codes and standards. It is always much more efficient and practical to have these systems built into a new home, rather than have to upgrade and retrofit existing older systems, which can sometimes mean ripping into the walls, floors, and ceilings to gain access to the key home systems.

8. You’ll have free weekends.
When you buy new, you get more time relaxing at home. You won’t be spending all your weekends at home renovation stores as you try to tackle that “honey-do” list of home improvements each week. Buying a new construction home allows you to enjoy your weekends at home almost as soon as you are unpacked.

Read More:

Hurricane Deductibles

May 16th, 2018

Steve Hollander – Hollander Real Estate
Traci Sihle – Sihle Insurance

Most homeowners policies have an “all other peril” (AOP) deductible for losses caused by perils such as fire, lightening, and theft and a separate deductible for hurricane losses. The hurricane deductible is mandated by Florida statutes.

The hurricane deductible is expressed as a percentage, typically 2-5%, but higher percentages are availableIt is a percentage of the coverage amount, not a percentage of the loss. For an example, a structure insured for $200,000 with a two percent deductible would have a deductible of $4,000 for damage caused by a hurricane. However, it can be as low as $500 or $1000 depending on the Insurance Company and/or your dwelling coverage amount. 

The hurricane deductible applies only for a hurricane as defined in the statutes. According to Florida Statute 627.4025, a hurricane means a storm system that has been declared a “hurricane” by the National Hurricane Center or the National Weather Service. Note that a named tropical storm does not trigger the hurricane deductible.

According to the statutes, the duration of a hurricane in which the hurricane deductible would apply includes the time period:

  •  Beginning at the time a hurricane watch or warning is issued for any part of Florida by the National Hurricane Center.
  • Continuing for the time period during which the hurricane conditions exist anywhere in Florida; and
  • Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of

The deductible applies on a calendar year basis.  Using the earlier example of the $4,000 hurricane deductible, that $4,000 applies for all losses during the calendar year for losses due to hurricanes. For example, in 2004 some areas of Florida were hit by three major hurricanes in about 40 days. This calendar year deductible applies only if the customer was insured by the same company during all hurricanes. Assume that a hurricane causes $40,000 in damage; the claim is paid less the $4,000 deductible. If there is a second hurricane during the calendar year, the $4,000 hurricane deductible does not apply; instead the AOP (all other perils) deductible applies.

In a different example, suppose that the first hurricane causes damage of only $3,000. Due to the $4,000 deductible, nothing is paid by the carrier and you pay $3,000 of the deductible. If a second hurricane were to cause $35,000 in damage the claim is paid less a $1,000 deductible ($4,000 hurricane deductible less the $3,000 that applied for the first hurricane, leaving $1,000 deductible). If a third hurricane were to cause damage in the same calendar year, the AOP deductible would apply. Many, if not most, insurance policies require that the customer report all hurricane losses, even those that are clearly below the deductible.

Policies are different; it’s key to read the specific policy in question to see how deductibles are structured.
Hurricane deductibles on policies typically can only be changed at the renewal date of the policy.

Traci Sihle
Sihle Insurance Group
1021 Douglas Avenue
Altamonte Springs, FL 32714
www.sihle.com

 

The Market Preview

May 15th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

Is Four in Store?
The yield on the 10-year U.S. Treasury note hovers just above 3% as we write.

It hasn’t hovered this high since December 2013. Rate quotes on a prime 30-year fixed-rate conventional mortgage hover between 4.625% and 4.75%. They haven’t hovered this high in four years.

Jamie Dimon, chairman and CEO of JPMorgan Chase, believes that we’re not done yet. He sees a 4% yield on the 10-year note. Dimon didn’t say when the 4% yield will materialize. We assume (usually not a good thing to do) he means within the next year to 18 months.

Interestingly enough, the 3% yield on the 10-year note that prevailed in 2013 didn’t ratchet up to 4%. It ratcheted down to 2%. In late January 2015, the yield even briefly dropped to 1.7%. A well-timed call to a mortgage lender could have elicited a 3.625% rate quote on a prime 30-year fixed-rate mortgage.

No two epochs are alike, of course. Consumer-price inflation was dormant back then. It would remain dormant over the subsequent four years. The Federal Reserve also had the range on the federal funds rate set at 0%-to-0.25%. The effective rate was only 10 basis points.

Today, consumer-price inflation has emerged. It runs slightly above the Fed’s 2% annualized goal. The range on the fed funds rate has risen, through a series of 25-basis-point increases, to 1.5%-to-1.75%. The effective rate is 1.7%. The range will likely be increased another 25 basis points next month. It will likely be increased another 25 basis points after that.

Given the market dynamics today, Dimon is likely more right than wrong. A 3% yield giving way to a sub-2% yield on the 10-year U.S. Treasury note is highly unlikely. That being the case, a return to sub-4% rate quotes on a 30-year conventional mortgage is equally unlikely.

The good news is a growing economy can handle it. Like Dimon, we believe the economy, including housing, can absorb rising interest rates. A 4% yield on the 10-year note is nothing to worry about, with one caveat. The yield curve must remain normal. It’s normal when each successive yield on U.S. Treasury securities is higher than the previous yield.

If we see yields on short-term Treasury securities rise above yields on long-term Treasury securities, we might worry. At the least, we’ll contemplate the possibilities. When the yield curve inverts, short-term yields rise above long-term yields, a recession usually appears within the next 24 months.

The yield on the 10-year note is 44 basis points higher than the yield on the two-year note. The spread was 54 basis points at the start of the year. It was 100 basis points a year ago. We’re not worried, but we would like to see a little more distance separate the two securities.

Hooray for Falling Prices!
Recent data from Trulia show that home prices really don’t rise all the time.

Indeed, the data show that the median price of a home listing in six of the 100 largest markets remains unchanged or has dropped year over year. The median list price is up less than a percentage point in four other markets.

San Antonio reported the largest decline in the median list price, with a 5.4% decline. Denver, one of the hottest markets post-bubble burst, has seen only a 0.9% increase in the median list price.

The median number is a dividing number: half the listings are above and half are below the median price. It doesn’t mean every listed home in San Antonio has dropped 5.4% or that every listed home in Denver has risen 0.9%.

Trulia correctly notes that the drop in the median list price can be the result of a healthy event, such as more home builders building lower-priced homes. The normalization of a market would be another healthy event. For instance, the median list price for a home in Honolulu is down 1.4% year over year, but it is up 18% over the past two years.

Many market watchers reflexively believe that higher is better: Rising prices are a sign of a healthy market. That’s not always the case, particularly when prices relentlessly rise above historical norms. When that occurs, demand is eventually exhausted. A market correct, frequently unpleasant, will follow exhausted demand.

Jackie Doran
Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

The Markets In A Minute

May 14th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

The Economy

The consumer price index, which measures inflation, was slightly lower than expected in April. Lack of inflationary pressure helps keep rates lower.

The producer price index was also a bit lower than April’s forecast, another sign of lower inflation pressure. Prices rose 0.1% instead of the expected 0.3%.

Oil prices continue to rise, hitting the highest levels since 2014. Increasing oil prices could push rates higher.

Housing News

In response to new tax code limits on property tax deductibility, NJ has enacted legislation to let homeowners declare property taxes as charitable donations.

Could more inventory start hitting the market? In a recent FannieMae survey, 45% of respondents said it’s a good time to sell, a new survey high.

Amazon’s Alexa system is gaining ground in powering smart homes. New home builder Lennar announced plans to include the technology in all new homes.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.

Jackie Doran

Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

The Market Preview

May 11th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

More of the Same for Mortgage Rates
The latest meeting of Federal Reserve officials came and went on Wednesday.

The meeting came and went as anticipated. Fed officials held the range on the federal funds rate – an influential overnight lending rate – at 1.5%-to-1.75%.

Credit-market participants reacted with the expected yawn. Yields on U.S. Treasury securities (and other quality debt instruments) barely budged.

No one should be surprised the market response was universal indifference. That which is anticipated rarely elicits action. Everyone anticipated the Fed to maintain the range on the fed funds rate. The Fed followed the script.

Everyone also anticipates the Fed to lift the range on the fed funds rate when officials convene again in June. Everyone expects the range to rise to 1.75%-to-2%. So when the Fed lifts the range next month, expect the market response to be similarly muted.

Words can speak louder than actions, though. The event itself, the holding or raising of the fed funds rate, will elicit indifference. The press conference following the event can move markets. A Fed official, being human, can say something that was off script and unanticipated.

No such luck this time. Fed officials held to form. Here again, everything was anticipated.

Fed chairman Jerome Powell was broadly optimistic about the U.S. economy, but he noted a few risks. (There are always a few risks.) The trade dispute China was highest among the risks. Powell mentioned that consumer-price inflation was finally running at the Fed’s designated 2% annualized rate. Wage-price inflation was a concern given low employment. Employers might need to funnel more dollars into wages to entice scarce employees. More wage-price inflation can lead to more consumer-price inflation.

As for us, it was business as usual. Quotes on mortgage rates were equally muted compared to yields on most debt instruments. Quotes on prime 30-year fixed-rate conventional mortgages continue to hold the 4.625%-to-4.75% range established last month.

Given that U.S. GDP growth was underwhelming in the first quarter, mortgage quotes should hold the range for at least the near future.

A pre-summer lull appears to have descended upon us. With what we know and with what credit-market participants anticipate, mortgage-rate volatility should remain dormant. Borrowers might be able to pick up a few basis points on a short-term float. But is the reward worth the risk? We can’t say. It’s a coin flip.

We mentioned last week why it’s worthwhile to monitor the yield curve, which has flattened over the past month. The spread between the two-year note and the 10-year note has narrowed to 50 basis points. The spread between the 10-year note and 30-year bond has narrowed to 20 basis points.

A flattening yield curve is no big deal; an inverting yield curve is. If short-term yields rise above long-term yields, take note. Inverted yield curves have preceded nine of the past 10 recessions.

Still Stuck in Purgatory
The NAR’s Pending Home Sales Index showed only marginal improvement in March. The latest reading suggests that we shouldn’t see much change in existing-home sales over the next month or two. No surprise here: low inventory driving relentless price appreciation continues to constrain sales growth in many markets.

Home inventory is unlikely to receive a boost from new construction. Bureau of Economic Analysis data show single-family-home investment running at $280 billion on an annualized rate. The number sounds big in isolation. Relatively speaking, it’s not so big. It’s roughly 1.4% of GDP, at the low end of historical percentages.

Single-family-investment is low. It’s low enough to be below the bottom of previous recessions as a percent of GDP. Home builders have had troubled getting into gear. They have been plagued with accelerating land, labor, material, and regulatory costs. That’s unlikely to change any time soon.

Many market watchers are concerned rising interest rates, including rising mortgage rates, will eventually trip up housing. We’re not one of them. The consumer market is healthy enough to absorb higher mortgage rates. The issue is more fundamental: More inventory for sale and more housing supply, in general, are needed. Until that occurs, little will change on the sales front for the foreseeable future.

Jackie Doran
Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

What a Home Inspection Could Miss

May 9th, 2018

Steve Hollander – Hollander Real Estate
Trulia Guides

A standard home inspection is status quo in the home-buying and selling process, but is it giving you the complete picture of a home’s health?

An inspection is standard operating procedure when it comes to buying and selling a home. And while a home inspector’s final report provides valuable information, does it give you an accurate picture of a home’s well-being? Maybe. But there are some potential gaps in a typical home inspection, and some of them could prove costly if existing issues are overlooked.

Whether you’re buying or selling, double-checking for potential problems known to slip through the cracks in a typical home inspection could save you money in closing. Read on to find out how to get the additional information for special inspections that you’ll need to help spot issues before you close (which could protect you from costly repairs and replacements).

8 Problems That a Typical Home Inspection Could Miss

Roof woes
Since home inspectors are not legally required to perform a physical inspection of the roof, their limited visual inspection could leave out substantial issues. Not surprisingly, according to the National Roof Certification and Inspection Association (NRCIA), roof problems are responsible for 39% of homeowners insurance claims.

If you read your home inspection report carefully, you might spot a disclaimer about the status of the roof and a recommendation for an additional inspection (which should be completed by a certified roof inspector). Inspectors who are licensed with the NRCIA may also issue a roof certification guaranteeing the life and quality of the roof. While this service may cost a few hundred dollars, requesting that the seller address any issues with the roof before closing could make it well worth the cost.

HVAC problems
Problems with a home’s heating, ventilation, and air conditioning system (HVAC) can also be easily overlooked during a home inspection. While an inspector should confirm the unit is functional at the time of inspection, they will make no guarantee that it will keep working once you purchase the home. An HVAC specialist, however, will not only give a status of the unit but also will certify the findings of their inspection. If the HVAC unit of the home you’re considering is old or the sellers can’t tell you when it was last serviced, an inspection or presale tuneup could pay off (and give you peace of mind).

Water damage
External water damage is pretty easy to spot with a visual inspection; it’s the damage hidden within a home’s walls that can be difficult to detect. Unless your inspector is using an infrared (IR) camera to locate and document any moisture intrusion, you may not know your dream home is waterlogged — and certified home inspectors aren’t required to use them.

For a more thorough inspection, seek out a home inspector who knows how to wield an Infrared (IR) camera. If they spot hidden problems, they can potentially save you thousands. That was the case for Brandon Fenton, who ran into a water damage issue when viewing a home. “My wife and I were excited about the house, but there was what appeared to be an old water stain on the ceiling of the upstairs bedroom,” he says. “The damage looked old, but the inspector’s IR camera picked up a huge water spot, which had led to a substantial mold issue.” Luckily for the Fentons, their agent had insisted on using an inspector with an IR camera. Otherwise, the couple would’ve been the proud new owners of a moldy home — an issue that can cause health complications and also be expensive to remediate.

Flooring trouble
Inspectors check for obvious signs of wear and tear and any potential issues in plain sight. But what about flooring problems that are covered up with carpet, tile, or laminate? If floors and subfloors are warped or spongy, the home may have a moisture problem — and a costly one at that.

“The homes we purchase are typically in rough shape, but core issues such as a molded-out subfloor can make all the difference between a healthy profit and breaking even,” says James Dainard, co-founder of Heaton Dainard Real Estate in Seattle, WA, which represents buyers interested in acquiring investment properties. But how do you know if you should be concerned? Use your feet to detect an issue; soft spots where the wood is weak will give way as you walk across the floor. But you can also use your sense of smell: A weak subfloor will have a moldy, musty smell — a clear indication of wood rot. If you spot the signs of a potential problem — or just want to be sure — you can find local experts through the National Institute of Certified Floorcovering Inspectors.

Appliance performance
While a home inspector can verify that appliances are in good working order, they won’t be able to guarantee how long they will last. Understand the health of your big-ticket appliances by asking the owner for warranty manuals, original purchase receipts, and maintenance records. These items won’t provide a guarantee of performance, but they will give you the context you need to help make an informed decision.

Disturbed asbestos
Sellers are required to disclose any known presence of asbestos. However, the presence of asbestos-based building materials in a home isn’t necessarily a reason to call off your purchase: Asbestos is not dangerous unless the material is damaged and fibers are released and inhaled. However, while intact asbestos fibers are often obvious, it can be more difficult to know if there are disturbed asbestos fibers hiding underneath insulation or even under floorboards.

If you’re considering a home built before 1980, it’s worth asking your home inspector if they have frequently worked with asbestos and can make a reasonable judgment about whether disturbed asbestos fibers are present based on a visual inspection. If the presence of disturbed fibers is confirmed, you should seek a remediation quote from a qualified contractor — or make sure the sellers have the problem fixed before you close.

Noxious gases
Found in homes in all 50 states, radon is a naturally occurring radioactive gas you cannot see, smell, or taste — and it causes cancer. The U.S. Environmental Protection Agency (EPA) recommends all homes be tested for the presence of radon. Before your home inspection, ask the seller if they have already tested for radon. Sellers often test their homes before placing them up for sale, so recent test results may be available during the closing process. If not, radon tests are reasonably priced, around $40, and the test results can be processed in a matter of days. Some states offer free test kits: find your state’s radon contact on this radon map by the EPA.

Drainage issues
Signs of drainage issues come in all shapes and sizes, from water that gushes from ill-fitting or clogged gutters to an ominous-looking flood line along a basement wall. With a little luck, cleaning the gutters will fix the problem. In the worst case, a drainage issue could be related to foundation problems.

If there’s evidence of foundation cracks caused by faulty drainage, Houston, you have a problem. Your inspector will most likely advise you to call in a structural engineer, and with good reason. A compromised foundation is not only pricey; it can also affect a lender’s willingness to approve a mortgage.

To ward off costly drainage repairs postpurchase, sewer scope inspections have become increasingly popular. Given that most sewer systems are complicated and spendy to repair or replace, savvy buyers often have the inspection for peace of mind. A qualified technician will use a scope to determine the condition of the property’s sewer line and whether the system is functioning as designed.

What should you do after a home inspection? 

With so many potential missed items in a standard home inspection, it’s your responsibility to take further steps. Whether you hire a roof inspector or an HVAC technician to help round out the picture of your potential new home, the additional investigation could end up saving you thousands in repair and replacement costs. Once you have finished with the inspection process and purchased your home, your homeowner policy coverage will kick in. Given the existing gaps in the inspection process, the policy will provide the final piece of assurance to help you sleep through the night.

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