Tag Archives: Mortgage

S P Case-Shiller Home Price Index: May Home Prices Rise

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S&P Case-Shiller Home Price Index: May Home Prices RiseMay home prices rose in all 20 cities tracked by the S&P Case-Shiller 20 City Home Price Index. This was the second consecutive month in which all cities posted gains.

On average, national home prices rose by 1.10 percent in May as compared to April’s reading. Year-over-year, home prices rose, but at a slower rate of 9.39 percent in May as compared to 10.80 percent year-over-year for April.

Nevada, Florida and California Cities Post Highest Gains 

Cities posting the highest year-over-year price gains in May included Las Vegas, Nevada at 16.90 percent, San Francisco, California at 15.40 percent, Miami, Florida at 13.20 percent. San Diego and Los Angeles, California reported home price growth rates at 12.40 and 12.29 percent respectively.

According to the 20-City Index, home prices are 18 percent below their peak reached in mid-2006, but are 27 percent higher as compared to March 2012 lows.

Pending Home Sales Decline in June

More evidence of sluggish home sales was reported for June. The National Association of REALTORS® reported that pending home sales dropped by 1.10 percent in June. This was a surprise as compared to May’s month-to-month gain of 6.00 percent for pending sales.

Several factors were cited as contributing to slower home sales; higher home prices, stagnant wage growth, higher mortgage rates and stringent loan requirements were seen as obstacles for home buyers. Pending home sales are an indicator of future closings and mortgage activity. Approximately 80 percent of purchase contracts signed sales completed within 60 days.

FHFA House Price Index: Home Price Growth Slips in May

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that home prices grew by 0.40 percent in May to a seasonally-adjusted year-over-year rate of 5.50 percent as compared to April’s year-over-year reading of 5.90 percent. FHFA’s House Price Index is based on sales of homes connected with Fannie Mae and Freddie Mac mortgages. 

On a positive note, the reading for the Consumer Confidence Index jumped from 85.20 in June to 90.90 in July. Expanding consumer confidence suggests that more families may decide to transition from renting to owning their homes, and that homeowners may feel confident enough to move up to larger homes.

 

Is Now the Time to Consider a 15-Year Mortgage? Five Reasons to Give the 15Y Another Look

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Is Now the Time to Consider a 15-Year Mortgage? Five Reasons to Give the 15Y Another LookA 15-year fixed mortgage is, as its name suggests, a mortgage that’s paid off after 15 years. Since it amortizes fully, after that amount of time you won’t have to pay anything else. This type of mortgage has a lot of benefits, and below we’ll share just a few of them.

1) No Need For Payments After Retirement

Here it highly depends on when in life you choose to take on the mortgage. However, most people decide to take on a mortgage at around 30 years of age.

If this is the case for you, then it means you’ll be 45 years old when your mortgage will be fully paid. There will be no need to worry about having to use Social Security or pension checks to pay it off.

Another consideration is the fact that the older you are, the more your health costs will go up. Having costs like that pile up while having to make mortgage payments can be a huge problem. For that reason, not having to pay off your mortgage after retirement is a tremendous bonus.

2) Your Home Will Be Yours Sooner

You might think your house is yours the minute you step into it. However, in reality, it’s only yours after you have fully paid your mortgage off. Until then, it can be repossessed if you fail to make payments.

With a 15-year mortgage, your home will become yours in the blink of an eye. Then, you’ll have plenty of time to enjoy other things in life, knowing you already own your home.

3) You’ll Pay Less Interest

If you were to pick, say, a 30-year mortgage, there will be twice as many years in which interest will add up. This will more than double the amount you end up having to pay, as mortgage interest compounds over time.

As such, getting a 15-year mortgage will not only reduce the time you’ll pay it off; it will also reduce the amount you pay back. Saving both time and money is an amazing deal.

4) Get Lower Rates

On most 15-year mortgages, the amount you have to pay in terms of rates is usually lower than for 30-year ones. As such, you’ll be saving money in two ways. First, you’ll save by reducing the time, then, by reducing the actual rate.

5) Learn To Push Yourself

Some people fear getting a 15-year mortgage. The reason is that they think the payments will be too expensive. They think that getting a 30-year mortgage is likely a better idea.

If you can’t afford to make the payments of a 15-year mortgage, you might want to reconsider. However, if you can afford it, but you’re afraid, don’t be. Pushing yourself to achieve something you truly want is a good thing. You’ll become a stronger person, and you’ll have more reason to be proud of your achievement.

A 15-year mortgage has many benefits. The main one is simply that you’ll be able to pay it faster, which means that you won’t worry about it for long. This, in addition to the fact that you’ll be paying less are very convincing factors.

If you’d like to learn more about 15-year mortgage plans, contact your mortgage professional for more information.

What’s Ahead For Mortgage Rates This Week – July 7, 2014

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What's Ahead For Mortgage Rates This Week July 7 2014

Last week’s economic news was mixed, but economic reports for Non-Farm Payrolls and the National Unemployment rate suggest a strengthening labor sector. Pending Home Sales surpassed expectations in May and conversely, construction spending was lower than expected. Here are the details.

Pending Home Sales Reach Highest Level in Eight Months

The National Association of REALTORS® reported that pending home sales in May rose by 6.10 percent over April’s reading. May’s reading was 5.20 percent lower than for May 2013. The index reading for May reached 103.9 as compared to April’s index reading of 97.9. Results for all regions were positive for May:

– Northeast: 8.80%

– West 7.60%

– Midwest 6.30%

– South 4.40%

An index reading of 100 for pending home sales is equal to average contract activity in 2001; pending home sales are a gauge of upcoming closings and mortgage activity.

CoreLogic Home Price Index Reflects Slower Price Gains

National home prices rose by 1.40 percent in May and 10 states posted new month-to-month highs, while year-over-year reading slipped from 10.00 percent in April to 8.80 percent in May. Home prices remain about 13.50 percent lower than their 2006 peak.

The overall rate of construction spending slowed in May to an increase of 0.10 percent from April’s reading of 0.80 percent and against expectations of 0.70 percent. Residential construction spending dropped by 1.50 percent in May.

Freddie Mac’s weekly survey of average mortgage rates brought good news as the rate for a 30-year fixed rate mortgage dropped by two basis points to 4.12 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.22 percent, as was the average rate for a 5/1 adjustable rate mortgage at 2.98 percent. Discount points were unchanged at 0.50 percent for a 30-year fixed rate mortgage and 15-year fixed rate mortgages. Discount rates rose from 0.30 to 0.40 percent for 5/1 adjustable rate mortgages.

Jobs Up, Unemployment Rate Lower

ADP payrolls, which measures private-sector job growth, reported 281,000 new jobs in June as compared to a reading of 179,000 new private-sector jobs in May. The Bureau of Labor Statistics’ Non-Farm Payrolls report for June surpassed expectations of 215,000 jobs added with an increase of 288,000 jobs against May’s reading of 224,000 jobs added.

The national unemployment rate fell to 6.10 percent against predictions of 6.30 percent and May’s reading of 6.30 percent. 

No news was released on Friday, which was a national holiday.

What’s Ahead

This week’s scheduled economic is lean with no events set for Monday. Job Openings, the minutes from the most recent FOMC meeting, along with regularly scheduled weekly reports on mortgage rates and new jobless claims round out the week’s economic news.

What’s Ahead For Mortgage Rates This Week – June 30, 2014

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What's Ahead For Mortgage Rates This Week June 30 2014Last week brought several economic and housing sector reports including Existing Home Sales, Case-Shiller and FHFA home prices for April, as well as New Home Sales. Freddie Mac’s weekly mortgage rates survey and the weekly report on new jobless claims were released on Thursday, and Consumer Sentiment for June rounded out the week on Friday.

Existing Home Sales Stronger than Expected! 

Good news came from the National Association of REALTORS® Existing Home Sales report for May, which reported 4.89 million previously owned homes sold on a seasonally-adjusted annual basis. Analysts had projected a seasonally-adjusted annual figure of 4.75 million existing homes sold based on April’s reading of 4.65 million existing homes sold; April’s reading was later adjusted to 4.66 million. May’s reading represented a monthly increase of 4.90 percent over April’s reading and was the second consecutive monthly increase in previously owned home sales.

The median sales price for existing homes sold in May was $213,400, which represented a 5.10 percent increase year-over-year.

May’s reading for existing home sales was the highest in seven months, and mortgage rates trended down during May, but strict lending standards were cited as a significant obstacle to first-time homebuyers.

Federal Reserve Chair Janet Yellen recently said in a press conference that mortgage lenders “need more clarity” as to their potential liability for failed mortgages. Mortgage lenders and loan servicing companies can be required to repurchase defaulted loans or to reimburse Fannie Mae and Freddie Mac for losses associated with mortgage defaults and foreclosures.

Case-Shiller, FHFA Report Slower Pace for Home Price Growth

The S&P Case-Shiller Home Price Index and FHFA’s House Price Index for April documented slowing rates of home price growth. Case-Shiller reported a 10.80 percent year-over-year growth in home prices for April, and FHFA reported a year-over-year gain of 5.90 percent rate of appreciation for home sales associated with mortgages owned by Fannie Mae and Freddie Mac.

Analysts noted that home price growth is leveling out after last year’s steep appreciation in home prices. While homeowners may disagree, economists say that a slower rate of home price growth can actually bode well for housing markets. More buyers can afford a home, which adds stability to housing markets. First-time buyers provide a foundation for home sales; if they cannot buy homes, then homeowners can’t sell existing homes and buy new homes. A slower but consistent rate of home price growth allows homeowners to build home equity, but won’t likely lead to housing “bubble.”

New Home Sales Blast Past Expectations, Mortgage Rates Fall

The U.S. Department of Commerce reported that new home sales for May reached a six-year high with a reading of 504,000 new homes sold on an annual basis. April’s reading exceeded expectations of 440,000 new homes sold as well as April’s adjusted reading of 425,000 new homes sold. The month-to-month increase in new home sales from April to May was the largest monthly increase in home sales in 22 years.

Although analysts caution that month-to-month seasonally-adjusted sales reports are volatile, this uptick in new home sales may help bolster builder confidence in housing markets. May prices for new homes also rose with the median home price at $282,000. This reading represents a year-over-year increase of 6.0 percent for new home prices.

The Northeast led regional results for new home sales with its reading of 54.50 percent; The West reported an increase of 34.00 percent. New home prices in the Southeast rose at an annual rate of 14.20 percent, and the Midwest region reported a 1.40 percent increase in new home prices. While analysts characterized the Northeast region’s May reading as exaggerated, overall results for new home prices indicate a comeback for new home prices.

Freddie Mac put some icing on the good news cake with its weekly mortgage rates report. Average rates for a 30-year fixed rate mortgage dropped to 4.14 percent with discount points lowered to 0.50 percent. The average rate for a 15-year fixed rate mortgage fell by eight basis points to 3.22 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.98 percent with discount points lower at 0.40 percent.

Thursday’s Weekly Jobless Claims Report reading fell by 2000 new claims to a seasonally adjusted reading of 312,000 new claims filed. Analysts had expected a reading of 310,000 new jobless claims. 214,000 per month have been added to the economy from January to May 2014.

Positive economic developments were not lost on consumers. The Consumer Sentiment Index for June posted a reading of 82.5 against an expected reading of 81.9 and May’s reading of 81.2.

This Week’s News

Scheduled economic news includes Pending Home Sales, Construction Spending, the ADP Employment report, and the Non-farm Payrolls Report. The National Unemployment Rate report along with Freddie Mac’s PMMS and Weekly Jobless Claims round out the week. No news is scheduled for Friday’s Independence Day holiday.

Case-Shiller: Home Price Growth Slows in April

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Case Shiller Home Price Growth Slows in AprilThe S&P Case-Shiller Index for April shows that while home prices continue to grow, they are doing so at a slower pace as compared to April 2013. The Case-Shiller 20 city index reports that home prices expanded at a year-over-year annual rate of 10.80 percent as compared to 12.40 percent in April 2013.

Month-to-month data showed that home prices rose for the second consecutive month. The seasonally- adjusted month-to-month growth rate for the 20 city home price index was 0.20 percent against March’s month-to-month home price growth rate of 1.20 percent.

Slower Home Price Growth: A Silver Lining?

According to the Case-Shiller 20-City Home Price Index 19 of 20 cities posted slower growth rates for home prices in April. Analysts say that this may not be all bad news as rapidly rising home prices, a shortage of available homes and stringent mortgage credit requirements have caused would-be buyers to be sidelined. Inventories of available homes are increasing which should help more buyers enter the market.

David M. Blitzer, chair of the S & P Dow Jones Indices Committee said that last year, some sun belt cities posted annual home price growth rates near 30 percent, but this year, the maximum annual home price growth rates are lower than 20 percent for all cities on a seasonally adjusted annual basis.

Month-to-month price growth was described as seasonally strong. Five cities posted month-to-month price gains of two percent or more.

Seven of the 20 cities included in the 20-city index posted slower rates of home price growth in April than for March: Cleveland, Ohio, Las Vegas, Nevada, Los Angeles California, Miami, Florida, Phoenix, Arizona and San Diego, California were included in this group. Boston, Massachusetts posted a 2.70 percent gain in home prices between March and April; this was the city’s largest month-to-month gain since the inception of the 20-City Index.

Lower mortgage rates, more homes on the market, and a recent statement by the Federal Reserve that it did not expect to raise its target federal funds rate until mid-2015 are seen as factors that are helping to stabilize housing markets.

FHFA Reports Home Price Gain Rate Unchanged in April

The Federal Housing Finance Agency (FHFA) that oversees Fannie Mae and Freddie Mac reported that home prices connected with mortgages owned or backed by Fannie Mae and Freddie Mac rose by 0.70 percent, which was the same pace in month-to-month home price growth as for March. Year-over-year, home prices rose by 5.90 percent.

On a seasonally-adjusted month-to-month basis, home prices ranged from -1.3 percent in the New England division to +0.60 percent in the East South Central division. Year-over-year, home prices in the nine census divisions increased at rates between 1.70 percent for the Mid-Atlantic division to 10.70 percent for the Pacific division.

The peak home-buying season during spring and summer months and labor market performance will likely be strong influences on home price growth in the coming months.

The FHA Hawk Program for New Homebuyers is Coming: Here’s How It Affects Your Mortgage Insurance Premiums

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The FHA Hawk Program for New Homebuyers is Coming: Here's How It Affects Your Mortgage Insurance PremiumsThe FHA offers many new programs and incentives for new homebuyers to take advantage of so that they can be part of the effort to ease the credit crisis. If you are in the process of shopping for a mortgage prior to shopping for your new home, it can benefit you to learn about programs that you may qualify for that are being created by the Federal Housing Administration and piloted.

One such plan, which is has been approved as a four-year pilot program, is referred to as the FHA HAWK Program. Read on to learn how this program works and how it can affect mortgage insurance premiums.

What Is The HAWK Pilot Program?

The FHA HAWK program, which stands for Homeowners Armed With Knowledge, is designed to help first-time homebuyers make educated decisions when borrowing and buying a home. Individuals who are eligible to participate must qualify and meet the definition of first-time home buyer.

They will also be required to complete a housing counseling and education program that is available through HUD where they will learn financial information that can help them make smart home buying decisions.

Some of the topics covered in the educational program include: how to better manage finances, mortgage options, how to evaluate affordability, understanding your rights and the responsibilities that come with homeownership. Upon completion of the program, the applicant can submit their application for an FHA-insured mortgage and receive specific FHA mortgage insurance pricing incentives that will lower premiums.

What Type of Mortgage Insurance Incentive Will You Receive?

Once you participate in the program, the Federal Housing Administration will give all of the borrowers who qualify for the incentive a mortgage insurance premiums incentive by applying a 50 basis point reduction in the upfront premiums and a 10 point reduction in the annual premium starting at the time the loan originated.

As long as the borrower stays in good standing with their lender, they will receive these incentives and fee reductions for the life of the loan. This brings the upfront premiums down from 1.75 percent to a more manageable 1.25%. Add in the fact that you are saving on annual premiums that range between.45 and 1.55 percent, and you can see how beneficial this program can be over the period of 30 years. Finance experts predict that the average buyer will see a savings of $325 per year, which is a savings of $9800 over a 30 year loan term.

The FHA is piloting this new HAWK program in an effort to reduce delinquency of borrowers who borrow from FHA-insured lenders and to also reduce the costs of loan processing. By offering first-time homebuyers a discount to learn about the market, the FHA is trying to battle the ongoing credit crisis and in the same time service more educated buyers. If you would like to learn more about how you can reduce the mortgage insurance premiums that you pay initially and throughout the life of your loan, contact your trusted mortgage agent and discuss your options when it comes to the HAWK program.

What’s Ahead For Mortgage Rates This Week – June 23, 2014

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What’s Ahead For Mortgage Rates This Week June 23 2014Last week’s scheduled economic news included the National Association of Home Builders /Wells Fargo Housing Market Index, Housing Starts and Building Permits. The Fed’s Federal Open Market Committee (FOMC) issued its usual statement at the conclusion of its meeting, and Fed Chair Janet Yellen also gave a press conference.

Home Builder Confidence Improves, But Housing Starts Slow

NAHB released its Housing Market Index report, which reached its highest reading in five months. The index moved up from 45 to 49; a reading of 50 indicates that more builders are confident about housing market conditions than those who are not. David Crowe, NAHB chief economist, said that builder confidence is in line with consumer confidence; he noted that consumers are waiting for a stronger economic recovery before buying homes and that builders didn’t want to build more homes than markets would bear.

According to the latest figures from the Department of Commerce, May housing starts fell to 1.00 million from April’s reading of 1.07 million on a seasonally adjusted annual basis, and missed the consensus reading of 1.02 million. Building permits issued in May fell by 6.40 percent to 991,000 permits issued for single and multi-family construction. In recent months, permits for single family homes have fallen, while permits for multi-family units are increasing. This concerns economists as single-family homes generate sales of retail goods including furniture and home improvement supplies, while multi-family housing is often occupied by renters and yields fewer home related purchases.

Warmer weather was expected to add to the pace of housing starts, but this did not occur during May.

Fed Reduces Asset Purchases, Mortgage Rates 

FOMC members reduced the Fed’s monthly asset purchases by $10 billion, for a monthly volume of $35 billion in Treasury securities and MBS. The meeting minutes noted FOMC concerns that inflation has not yet reached the committee’s benchmark of 2.00 percent inflation as a benchmark of economic recovery.

The minutes reflected FOMC’s position that it will maintain the target federal funds rate at between 0.00 and 0.25 percent for a considerable period after the asset purchases under the current quantitative easing program have ended. While analysts previously associated “considerable period” with a time frame of six months, Fed Chair Yellen stated during her press conference that there was no formula for determining the Fed’s actions; she emphasized that the Fed and FOMC would monitor a wide range of economic indicators, economic reports and developments in support of any decisions to change current monetary policy. 

In response to a question about tight credit, Chair Yellen cited banks’ reluctance to lend to all but those with “pristine” credit scores as a factor contributing to slower recovery in the housing sector.

Mortgage Rates, Jobless Claims

Freddie Mac reported lower mortgage rates on Thursday. The reading for a 30-year fixed rate mortgage was 4.17 percent, a decline of three basis points. Discount points were also lower at 0.50 percent. The average rate for a 15-year fixed rate mortgage was lower by one basis point at 3.30 percent; discount points were unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell to 3.00 percent from last week’s reading of 3.05 percent. Discount points were unchanged at 0.40 percent.

New jobless claims were higher than expected at 312,000; analysts had predicted a reading of 310,000 against the prior week’s reading of 318,000 new jobless claims.

No economic reports were released Friday.

What’s Ahead

This week’s economic calendar includes several housing-related reports. Existing home sales, the Case-Shiller Housing Market Index and New Home Sales will be released along with multiple consumer-related reports and weekly updates for mortgage rates and new jobless claims.

What To Do When Your Real Estate Loan Is Declined

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What To Do When Your Real Estate Loan Is Declined There are many reasons why a mortgage loan could be declined. It doesn’t have to be the end of your real estate dreams. Here are a few things to consider if you’ve been turned down for a mortgage.

Loan-To-Value Ratio

The loan-to-value ratio (LTV) is the percentage of the appraised value of the property that you are trying to finance. For example, if you are trying to finance a home that costs $100,000, and want to borrow $75,000, your LTV is seventy-five percent.

Lenders don’t like a high LTV. The higher the ratio, the harder it is to qualify for a mortgage. To reduce the percentage, you can save up a bigger down payment. Some lenders may approve the loan if you buy mortgage insurance, which protects the lender in the case of default, but makes your mortgage payment higher.

Credit To Debt Ratio

Lenders will be less likely to approve your mortgage loan if you have a high credit-to-debt ratio. The ratio is figured by dividing the amount of credit available to you, on a credit card or auto loan, and dividing it by how much you are currently using.

High debt loads will scare away most lenders. Try to keep your debt to under fifty percent of what is available to you. Lenders will appreciate it, and you will be more likely to be approved for a mortgage.

No Credit Or Bad Credit

Few things can derail your mortgage loan approval like credit issues. Having no credit record can be as bad for your approval chances as bad credit. With no record of timely loan payments from anywhere, a lender is unable to determine your likelihood to repay the mortgage. Some lenders will consider other records of payment, like utility bills and rent reports from your landlord.

If you have frequent late charges or collections, you’ll need to work on getting those paid on time, every time. There aren’t many lenders who will approve someone with bad credit, especially in today’s market.

Talk to your loan officer to determine which problem applies to you, and learn the steps to fix it. Then, you can finance the home or condo of your dreams.

If you’re ready to buy a home or condo, I can help. Together, we’ll determine how much you can afford, and I’ll negotiate to get the best price and terms for you. Get in touch with me so I can help you. 

What’s Ahead For Mortgage Rates This Week – June 16, 2014

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What’s Ahead For Mortgage Rates This Week June 16 2014Last week’s economic news was quiet in the housing sector, but retail sales and employment-related reports provided indications of less consumer spending and reduced consumer confidence.

On Monday, James Bullard, St. Louis Fed President, commented that inflation appears to be rising. Although not a voting member of the Fed’s Open Market Committee (FOMC), inflation has been a topic of concern to the FOMC in recent years. Mr. Bullard had previously noted that inflation was stable.

His remarks set the stage for this week’s FOMC meeting and press conference by Fed Chair Janet Yellen. Analysts expect the Fed to continue tapering its asset purchases as it winds down its quantitative easing program.

Labor related reports were mixed last week. Job openings in April rose to 4.46 million in April; this was the highest reading since September 2007 and exceeded the March reading of 4.17 million job openings in March.

More good news came from the U.S. Labor Department, which 4.71 million hires in April. This was the highest rate of hiring since June 2008 and represented a year-over-year increase of 6.00 percent. At the start of the recession at the end of 2007, about 5 million job openings were reported.

Mortgage Rates, New Jobless Claims Rise

Weekly jobless claims were reported at 317,000 as compared to expectations of 310,000 new jobless claims and the prior week’s reading of 312,000 new jobless claims. The four-week rolling average of new jobless claims rose by 4,750 new claims for a total of 315,250 new jobless claims. The four-week gauge of jobless claims evens out weekly volatility and is viewed by analysts as a better indicator of labor market trends.

Mortgage rates were higher according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose by six basis points to 4.20 percent; discount points rose from 0.50 to 0.60 percent.

The average rate for a 15-year mortgage rose by eight basis points to 3.32 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage rose from last week’s reading of 2.93 percent to 3.05 percent. Discount points were unchanged at 0.40 percent.

The Fed’s quantitative easing program was implemented to control long-term interest rates, including mortgage rates. Gradual tapering of this program is allowing mortgage rates to rise. Other influences include investor concerns over recent decisions made by the European Central Bank.

Consumer sentiment slipped slightly for June according to the University of Michigan Consumer Sentiment Index. June’s reading was 81.20 as compared to an expected reading of 82.80 and May’s reading of 81.50.

What’s Ahead

Next week’s scheduled economic news includes the NAHB Housing Market Index for June and Housing Starts for May. These readings are important indicators for housing supplies, as a lack of builder confidence can translate to fewer housing starts. Housing markets were impacted by high demand for homes against low inventories of available homes during 2013 and into 2014.

Also noteworthy is the FOMC post-meeting statement and Fed Chair Janet Yellen’s press conference. The FOMC sets the Federal Reserve’s monetary policy and is expected to announce further tapering of the Fed’s quantitative easing program. It will be interesting to learn the Fed’s perspective on inflation, which has been stuck below the Fed’s target level of two percent.

Friday’s release of Leading Economic Indicators for May round out this week’s economic reports.

Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

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Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

Understanding your credit score and how it impacts your home ownership prospects your credit score is an important part of your financial profile. It has a direct impact on your ability to take out loans.

The score itself is a numerical reflection of your credit history. It gives lenders a way to discern your reliability before approving a loan like a mortgage for instance.

Though this is the basic function of a credit score, it can also have a far-reaching influence over other aspects of home ownership.

Mortgage Loan Approval: Will Your Score Make the Cut?

First and foremost, the status of your credit score is a deciding factor in whether or not you are approved for a loan.

Even if you put down a large down payment on your home, a low credit score can still cause the loan to be rejected. For this reason, it’s best to wait until you’ve built up a good credit score before looking to purchase a house.

Mortgage Interest Rates: The Lower The Score The Higher The Rate

High interest rates are another reason to hold off on purchasing a home until you’ve obtained a very good credit score. While applying for a loan with the minimum credit score required might get the loan approved, it also means having to pay higher interest rates.

Shooting for a credit score above the bare minimum before applying for a mortgage will increase the likelihood of receiving a much lower interest rate. A higher credit score demonstrates a credit history of timely payments and the ability to successfully pay off debts, which are key factors in mortgage approvals.

Homeowner’s Insurance Approval And Premium Rates

An insurance broker running a credit check might seem a little out of the ordinary, but in actuality when is comes to home insurance, companies frequently run credit checks on prospective clients. When an insurance company inquires about your credit history, all they receive is your credit score and nothing more.

The nitty-gritty details of your credit history remain private. So, why are insurance companies running credit checks in the first place? Credit scores are an integral part of the scoring system they use to determine premium rates for each client.

Though your credit score might seem irrelevant in determining how likely you are to file an insurance claim, the industry argues that there is a documented connection between those who are more likely to file insurance claims and the lowly state of their credit scores. This trend has led insurance providers to offer higher insurance premiums to those with lower credit scores.

In some cases companies may refuse to insure a client based on a poor credit rating. Credit scores have a profound influence over financial transactions. You ability to make a large purchase like a new home can be severely hindered by a poor credit score.

If you have a low credit score, consider taking some time to repair your credit history before applying for large loans. Correct any lingering errors on your credit report and get into the habit of making consistent, timely bill payments.

Addressing these issues could dramatically improve your credit score in a year’s time, putting you in a much better position to tackle home ownership.