Author: Evan

My blog is a tool for me to provide updates on what is happening in the financial markets that will impact mortgage rates, update professional partners on what is happening in the mortgage industry, and write about general financially related topics.

How much are buyer’s closing costs?

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

When preparing to purchase a home a buyer needs to not only prepare for the down payment but also the settlement charges.

Total Settlement Charges…

Settlement charges will vary for each buyer so it is difficult to forecast exactly how much a specific person should budget without a complete pre-approval application.  That said, please watch this short video which explains how much a homebuyer should plan for based on a median priced home in Portland, OR.

As the video states, on average we are accustomed to seeing homebuyers in Portland, OR pay about $10,000 in total settlement charges for a median priced home.

….includes non-recurring closing costs…

Included in that figure are the one-time non-recurring closing costs, such as the lender’s administration fee(s), appraisal, credit report, title & escrow company fees, and county recording.  On average these costs total between $4,000-$5,000 depending on multiple factors including the purchase price, loan amount, down payment, loan program, property type, credit score and others.

…as well as pro-rated and prepaid interest, taxes, and insurance…

In addition, the ~$10,000 total includes pro-rated and prepaid mortgage interest, property taxes, and homeowners insurance.  This set of settlement charges will typically total ~$5,000-$6,000 but can vary greatly depending on whether or not the loan will have impounds for taxes and insurance, the amount of property taxes, the closing date, and whether the property has HOA dues.

…be careful in comparing

Unfortunately, Federal regulations do not guarantee that consumers receive a comprehensive and accurate disclosure of upfront settlement charges from lenders at the beginning of a loan application.  The result is that some consumers think they are getting the best deal on their home loan closing costs, but when they show up to closing they are faced with the unwelcome surprise of higher upfront charges than they expected.

There are a myriad of factors which can influence a homebuyers closing costs.  If you would like to avoid an unwelcome surprise then choose to work with a lender that is ethical and who will take the time to deliver an accurate and reliable disclosure of your settlement charges.

If you are looking for a home loan lender we would love to be a resource.  Please contact us today.

How long until an average home in Portland is worth $1.0 million?

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Happy birthday Fats Domino who was born on this day in 1928.  This little-known musician is considered a pioneer of rock and roll music and started playing bars in New Orleans at the age of 10.

Domino’s single “Fat Man” was the first rock and roll record to sell more than 1,000,000 copies in the US.

Home prices in Portland

Speaking of one million, how long will it take for an average home in Portland to be worth $1,000,000?

According to today’s Case-Shiller Home Price index report home prices increased by 3.9% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 3.9% it will take 23 years for the home to be worth $1,000,000 (2042).

According to the FHFA Home Price Index report, which only tracks home prices for homes with conforming (non-jumbo) mortgages, home prices increased by 4.92% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 4.92% it will only take 18 years for the home to be worth $1,000,000 (2037).

Why is there a discrepancy between the two reports?  The discrepancy is likely related to the fact that higher priced homes, which are generally bought with jumbo mortgages, are not appreciating as much as median and lower priced homes which are secured by conforming loans.

The Federal Reserve

Fed Chairman Jerome Powell is scheduled to testify on Capitol Hill tomorrow.  The interest rate markets will be listening for clues on how monetary policy will evolve during 2019.  Last week, the Fed commented that they may slow rate hikes.

Outlook

From a technical perspective interest rates have been trading in a sideways pattern.  If rates continue without much volatility then we could set ourselves up for a “breakout” which is when interest rates move sharply lower or higher (we never know in advance).

 Current Outlook: cautiously floating

Benefit 3 – Avoid contractual problems by getting pre-approved by a reputable lender

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Did you know the standard Residential Real Estate Agreement commonly used in Oregon allows the seller to prevent you from switching lenders or loan programs?

In this short video I explain the third benefit of being pre-approved for a home loan prior to starting your search:

Consumers should take the time to compare lenders prior to starting their home search because once they are in an accepted offer they need the sellers written consent to switch lenders.

If you would like to get pre-approved then please contact me today to get the process started!

Benefit 2 – Avoid surprises by getting pre-approved before you start your home search

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Are thinking of buying a home and wondering when you should get pre-approved?  Unless you are open to the potential for an unwanted surprise, I recommend you get pre-approved early on.

In this short video I explain the second benefit of being pre-approved for a home loan prior to starting your search:

By taking the time to get a mortgage pre-approval ahead of time a competent lender will be able to properly set your expectations for monthly payments, closing costs, and down payments.  This way, you can direct your home search at a level that is financially sustainable for you.

If you would like to get pre-approved please contact me today to get the process started!

Threat of government shutdown helps mortgage rates remain low

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Are you having withdrawals from the ‘round the clock media coverage of the federal government shutdown?  Don’t worry, without a fresh funding bill the government will shut down this Friday at midnight.

Or will it?

Agreement in Principle

According to multiple reports republicans and democrats have reached an agreement to fund the government past this Friday.  Assuming the bill is passed and a shutdown is avoided I would expect the stock market to rally (it is up 200 points this morning) and interest rates to increase modestly.

Mortgage Rates

In the meantime, home loan rates remain at 9-month lows and there is plenty of uncertainty to help keep them low.  The US and China continue seemingly endless trade talks.  If and when there is a trade deal it could spark a stock market rally and hurt mortgage rates.

As I wrote about last week uncertainty about Brexit is also helping US mortgage rates remain low.

On tap this week

Tomorrow the Labor Department will release the latest Consumer Price Index (CPI).  Inflation is the primary driver of mortgage rates because it reduces the purchasing power of dollars repaid to a lender in the future.  Higher inflation results in higher home loan rates and vice versa.

I’ll also be watching the Producer Price Index which is released on Thursday and Consumer Sentiment on Friday.

Outlook

Mortgage rates remain in a long-term downward trend which I highlighted in last week’s update (see HERE).  I will maintain a floating position but am concerned that rates may reverse higher if a government funding deal is reached.

Current Outlook: cautiously floating

Benefit 1 – Getting pre-approved for a mortgage

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Are you thinking of buying a home and wondering if you should get pre-approved?  The answer is “YES!” especially in Portland, Oregon where desirable homes are still very competitive.

In this short video I explain one benefit of being pre-approved for a home loan prior to starting your search:

By taking the time to get a mortgage pre-approval, a home seller will take your offer more seriously than without one.

If you would like to get pre-approved then please contact me today to get the process started!

Mortgage rates remain at 9 month lows

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Later tonight President Trump will deliver his State of the Union address to a joint session of Congress.  Generally the US president will use the address to communicate the state of the national budget, economy, and layout priorities for the coming year.

In other words, it’s a great night to binge watch “Friends from College” season 2.

Mortgage Rates

Interest rates remain at the best levels since April of last year.  Will they reverse course and move higher?  Or might they go even lower?

Technical Signals

The economic calendar is relatively light this week so I expect interest rates to react to technical trading patterns.

Currently, the yield on the US 10-year treasury note is trading up against its 3-month trailing trend line.  I will be watching to see if the yield can bounce lower off this level.  If so I expect home loan rates to improve.

If not, watch out as rates will likely increase by .125%-.25% in the coming week.

Home Prices

Core Logic released its monthly Home Price Index report earlier today.  It showed that on average home prices across the US increased by +4.6% from last year.  This confirms trends seen in similar housing data.

Home prices continue to increase but at a pace that is declining.  This is much like a car that is slowing.  Home prices continue to move ahead but at a slower speed than they have previously.  Home prices are not reversing and going backwards despite the media’s spin.

Outlook

I expect mortgage rates to react based on the aforementioned technical trading patterns.  What may make it difficult for mortgage rates to improve this week is that the US Treasury is scheduled to auction ~$84 billion in fresh bond supply.  Last year at this time the US government only had to auction ~$66 billion to funds its budget.

Read THIS LINK to learn how this can adversely impact home loan rates.

Current Outlook: cautiously floating

Uncertainty keeps mortgage rates at low levels

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Think “fake news” is a new phenomenon?

Back in 1935 an organization called the Clark Foundation based in Cooperstown, NY publicized a false story claiming that US Civil War hero Abner Doubleday invented the game of baseball in that town 100 years earlier.

Despite the story being inaccurate it helped the organization raise money to build the baseball hall of fame which inducted its first members on this day in 1936.

Every year around this time baseball fans eagerly await the election results to see which former players will be inducted in that year’s class.

Brexit uncertainty

The financial markets are eagerly awaiting a vote in the British Parliament today which will set the stage for Brexit which is currently scheduled to take place on March 29th.

Britain still does not have an approved trade agreement with the European Union and if Brexit takes place in the absence of one it is likely Britain will fall into recession.

Many analysts are predicting Brexit will get delayed so an agreement can be reached but there is still much uncertainty.

…more uncertainty

Political uncertainty is not contained to Britain.  Here in the US we recently reopened the Federal government after the longest shutdown in history.  The threat of another shutdown looms three weeks away and it is not a clear that a longer funding bill will get passed in time.

Furthermore, US and Chinese trade negotiators continue to meet periodically but by all accounts are still far from a comprehensive trade deal.

Political and economic uncertainty helps US mortgage rates remain low.  Should these issues get resolved I would expect mortgage rates to move higher by .25%-.50%.

Home prices still rising

The Case-Shiller Home Price index report was issued earlier today and showed that home prices nationwide increased by 5.2% from a year earlier.  Here in Portland home prices only increased by 4.4% from last year.  Many in the media are painting a doomsday scenario.

However, for a customer who puts 5% down on a $400,000 home ($20,000) and sees their home value increase by 4% in the first year (+$16,000) that is better than they could expect from the stock market.

Outlook

Still to come this week is the Fed monetary policy decision (no rate hike expected) and the all-important jobs report due out on Friday.  For now we can continue to float but I am concerned rates may have hit a bottom at current levels.

 Current Outlook: floating

Credit Myth #7- Qualifying for a home loan without a credit score

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

After spending over 16 years in the mortgage lending industry I have identified seven myths that consumers commonly hold regarding their credit.  In this series of videos I am going to breakdown each myth and help you better understand how your credit scores are determined so that you can achieve a better outcome for your next loan application.

The seventh myth is that an applicant without a credit score cannot qualify for a mortgage.  Please watch this short video to learn the truth:

It is possible for people without a credit score to obtain a home loan.  They have to be able to demonstrate that they have made on-time payments for other recurring payments such as rent, utilities, insurance or other similar bills.  This is known as a “non-traditional credit reference”.  This approach may not be used for an application with a credit score that is too low to qualify.

If you would like to learn if this loan program would work for you please contact me today!

A short outlook for housing in 2019

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Have you made it a goal to buy a home in 2019?  If so then knowing when to buy can offer real savings.  In this short video I explain why I think home buyers that take action at the beginning of the year will likely be better off than those who wait.

As explained in the video, many experts are predicting that home prices and interest rates will rise throughout the year.  Given that mortgage rates are currently at multi-month lows, I am encouraging those who want to buy a home to look sooner rather than later.

If you would like a no obligation review of your options please contact me today to get started.  Thanks!