February, 2015 | Arizona Mortgage

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Archive for February, 2015

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Freelancing in 2015? Three Tips for How to Secure a Mortgage if You’re a Self-Employed Entrepreneur

Freelancing in 2015? Three Tips for How to Secure a Mortgage if You're a Self-employed Entrepreneur If you are self-employed, either as a freelancer or as the owner of your own business, your income can fluctuate greatly from year to year. That can make it difficult to get approved for a mortgage, although there are some things you can do to improve your chances. Here are three tips for securing a mortgage if you are self-employed.

Make Sure Your Credit Score Is In Good Shape

While your ability to pay back a mortgage is the most important factor in approval, your credit score is a close second, and that goes for every borrower, not just those who are self-employed. If you have a credit score in the high range — something above 750 or 760 — it will help you get approved for a mortgage. To boost your score, make sure you pay all bills on time, pay down your debt levels and don’t make any new big purchases or apply for new credit soon before you apply for a mortgage.

Have a Large Down Payment

The more money a bank lends you to buy a house, the more risk it is taking in that the money won’t be paid back. If you are self-employed and considered a higher risk to begin with, one way you can alleviate some of that risk is to be able to put down a large amount of money. Putting down 20 percent is standard for a conventional loan, and you should be willing to contribute at least that much. Putting down at least 20 percent also will save you money in the long run, because you won’t have to pay for mortgage insurance and you will pay less in finance charges over the life of the loan.

Have Significant Assets

One way to put a lender at ease about your ability to pay for a mortgage is to have significant reserves in the form of assets. If you have large amounts of money in regular savings, brokerage and retirement accounts, it offers a reserve for you to tap should your income take a dive. Other forms of property, such as personal and business property that’s paid off and has value, also help.

If you are self-employed and are thinking about buying a home, contact a mortgage professional to discuss your situation and to see if you will be able to qualify for a home loan.

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What’s Ahead For Mortgage Rates This Week – Feburary 9, 2015

Whats Ahead For Mortgage Rates This Week Feburary 9 2015 Last week’s economic news included construction spending, which fell shy of expectations but exceeded the prior month’s spending, and several consumer and labor-related reports. The details:

Mortgages More Accessible: Fed Survey

A Federal Reserve survey of senior loan officers at 73 U.S. banks and 23 branches of foreign banks indicated that mortgages may be more accessible. While banks eased credit standards for mortgages eligible for purchase by Fannie Mae and Freddie Mac, consumer demand for mortgages fell over the last three months. This seems puzzling given lower mortgage rates, but mortgage lending rules remain tough for borrowers with less than pristine credit.

Mortgage rates dropped last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage was 3.59 percent with discount points higher at 0.70 percent. The average rate for a 15-year fixed rate mortgage was seven basis points lower at 2.92 percent with discount points higher at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage was four basis points lower at 2.82 percent with discount points unchanged at 0.40 percent.

Lower mortgage rates are great news for home buyers and homeowners seeking to refinance, but only if mortgage loans are available.

Construction Spending Higher, Consumer Spending Drops, Inflation Stalls

According to the Department of Commerce, Construction Spending rose by 0.40 percent in December against November’s reading of -0.20 percent and expectations of 0.70 percent growth. December’s reading represented $981.2 billion in construction spending on a seasonally-adjusted annual basis. Residential construction rose by 0.30 percent.

Consumer spending fell by -0.30 percent and was consistent with analysts’ expectations. This was the highest month-to-month drop in consumer spending since September 2009. Consumers spent less on vehicles and fuel. Lower fuel prices were seen as the driving force behind less consumer spending. Core personal expenditures did not increase in December. Core inflation, which excludes volatile food and energy sectors, was well below the Fed’s target annual inflation rate of 2.00 percent with a reading of 1.30 percent year-over-year.

Labor Reports: Mixed Signals

Weekly jobless claims rose to 278,000 against the prior week’s reading of 267,000 new jobless claims, but claims were lower than the expected reading of 290,000 new jobless claims. Nonfarm payrolls for January were higher in January at 257,000 jobs added. Analysts expected only 230,000 new jobs added in January based on December’s reading of 267,000 jobs added.

ADP Payrolls reported 213,000 private sector jobs added in January against December’s reading of 253,000 private sector jobs added. January’s lower reading is likely based on seasonal hiring during the holiday season. National Unemployment rose from December’s reading of 5.60 percent to 5.70 percent. In recent months national unemployment rates have fallen below the Fed’s target reading of 6.50 percent.

What’s Ahead

This week’s scheduled economic reports include data on retail sales, job openings, labor market conditions and weekly reports on new jobless claims and Freddie Mac’s survey of mortgage rates.

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Are You Ready to Make the Leap into Home Ownership? Here’s How You Can Tell

Are You Ready to Make the Leap into Home Ownership? Here's How You Can Tell Are you ready to make that leap from living at home or renting to owning a home of your own? While everyone moves at their own pace, here are some signs that you can use to determine if it is time to own your own home. Let’s take a look at some of the reasons you can use to justify your decision.

Are You Sticking Around?

If you plan on moving soon for a job or think that you won’t be in town much longer, it may be better to rent. However, if you are thinking about living in the same town or within the same county for years to come, it is time to put down roots.

The stability that comes with home ownership may make you more prepared for a marriage and/or a family if that is something that you want. This stability may make you more attractive if you are single and searching for a long-term relationship.

Do You Have a Steady Job?

Those who have a steady job and know that they have a stable salary may want to make the move to home ownership. As long as there aren’t any other major debts eating into your income, you can probably handle a mortgage and other costs associated with home ownership.

The equity that you build in your home can help you build wealth for the future if and when you want to retire. Your home may also make a great rental property in the future, which can help you diversify your portfolio and keep you solvent for years to come.

You Are Spending More Time Watching Television Shows Related to Home Ownership

You may have caught yourself recently watching shows revolving around people or couples who are looking for homes. You may also be watching programs dedicated to giving tips as to how you can upgrade your home. If you watch these shows frequently, it may be a sign that you are ready to move out on your own and take on the exciting challenge of being a homeowner.

Are you ready to be a homeowner in the near future? Only you can say for sure if it is time to make that leap. However, those who are looking for a long-term housing solution may be ready to make that move. For more information, it may be worthwhile to talk to a mortgage professional to see what you can afford to do.

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Buying a New Home? Follow These Three Tips to Ensure a Stress-Free Transaction

Buying or Selling Your Home? Follow These Three Tips to Ensure a Stress-free Real Estate Transaction Buying real estate and or taking out a home loan is a significant milestone in life. Frequently, it means that a new phase is starting, whether it’s a new job, a new relationship, or moving to a new area. However, when the most basic steps are missed, this transition can be fraught with stress and disaster. To ensure a smooth transaction, home buyers should be sure to mind the following tips.

#1: Always Be Honest

Honesty and clear communication need to be a two-way street. Home buyers expect their mortgage professional to be honest with them, and likewise it is always necessary for a home buyer to be honest with their mortgage professional.

Hiding details or covering up potential problems by either party will only cause more issues when everything comes to light. When important information is withheld, it’s possible for delays to occur, costs to rise, or even for the deal to fall through.

It’s much better to disclose all necessary information upfront so the situation can be handled appropriately. An expert mortgage professional will be able to guide home buyers through any problems and issues to a workable solution.

#2: Hire A Professional Team

Buying real estate and taking out a mortgage is not an easy process, so it’s never a good idea to try to proceed without a professional who can be trusted.

Far too often, people let friends or family members represent them in real estate transactions. In these cases, it’s likely for feelings to be hurt, relationships to be damaged, and trust to be compromised.

Rather, it’s recommended for home buyers to use a real estate agent and mortgage professional they do not have a close personal relationship with. That way, they can stand confident that their agent or mortgage professional is looking out for their best interests, and nothing else.

#3: Understand The Market

Far too often, home buyers fail to understand the market and their finincial situation.

Failing to identify this crucial information will waste time for buyer and mortgage professional. However, this is where a real estate agent or mortgage professional comes in: he or she will know the market inside out and be able to offer valuable counsel for all financial situations.

Home buyers should call their mortgage professional if at any time they have questions about taking out a mortgage; this professional is the key to a smooth real estate purchase.

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Tax Time is Upon Us: Learn About Tax Deductions and How to Write off Your Home Mortgage Interest

Tax Time is Upon Us: Learn About Tax Deductions and How to Write off Your Home Mortgage Interest Much to the chagrin of taxpayers all over the country, the tax-filing season begins in January and runs through April 15 of each year.

As the current tax season approaches, it presents an opportunity to help tax-payers clarify their responsibilities and remind them of certain important tax deductions that may be available.

Filing Responsibilities

Every person in the United States is required to file their tax returns by April 15 so long as they have some form of qualifying income. Based on filing status, income and available deductions, tax-payers must file a 1040EZ, 1040A or 1040 (long-form for itemized deductions).

Qualifying income is generally defined as, but not limited to wages, commissions, miscellaneous income (rental, interest), investment income and alimony. These forms of income are reported on a periodic basis to the IRS and State governments by employers, banks, contract employers and/or other responsible parties.

The most common tax receipts that must be sent to tax-payers by January 31 are W-2s and 1099-Misc forms.

Calculating Taxes

While the IRS requires individuals to report all forms of income, they also allow certain living costs to be used as deductions to offset income in order to arrive at a “taxable income” number on which tax liabilities are calculated.

If a tax-payer’s deductions fail to exceed the combined statutory standard deduction (2014: $6,200 if filing single, $12,400 if filing as married couple, $9,100 if filing Head of Household) and personal exemption of $3,950 per dependent, they will want to file the 1040EZ or 1040A. If itemized deductions exceed this number, the 1040 becomes preferable.

Mortgage Interest Deduction

For a majority of tax-payers, the largest tax deduction available is usually mortgage interest paid on secured debt where the primary residence and in some cases second homes or rental property serve as collateral. In most of these cases, all interest paid during the year is deductible.

If the mortgages are large enough, the total interest paid will typically push the tax-payer into position to itemize deductions. It is important for tax-payers to read the rules related to mortgage interest deductions as they tend to be somewhat complicated.

Other Important Deductions to Consider

Once a tax-payer qualifies to itemize deductions, many other living expenses become deductible. Other prominent deductions include property taxes, charitable contributions, childcare costs, qualified moving expenses, certain work related expenses and certain medical expenses.

Prior to using any deduction, it is incumbent on the tax-payer to review deduction guidelines in order to determine applicability.

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Do You Need Mortgage Insurance Even if It’s Not Required by Your Lender? Let’s Take a Look

Do You Need Mortgage Insurance Even if It's Not Required by Your Lender? Let's Take a Look Finding a proper mortgage loan and understanding the processing procedures behind the loan is the basis of good research. The down payment on a mortgage loan is typically significant when dealing with mortgage insurance.

Most loan applications with less than 20% down payment are required to include mortgage insurance with the loan. However, mortgage insurance may still be required even if it’s not typically required by your lender.

Underwriting Requirements

Most home mortgage applications undergo a strict set of standards for approval. These standards are known as underwriting and make up the bulk of time spent on a mortgage application. Unique situations in employment or credit history may require an additional down payment percentage to avoid PMI or private mortgage insurance.

Most underwriting requirements require adequate information on the borrower’s credit and employment history for complete application. Self-employed individuals or those with alternative forms of credit may need a few additional hoops to jump through when dealing with mortgage insurance requirements.

Lender-paid Mortgage Insurance

Lender-paid mortgage insurance is a popular option with potential homeowners that seek to avoid the cost of a PMI or FHA-backed insurance on a home loan. Most lenders incorporate payment of private mortgage insurance in exchange for a slightly higher interest rate.

This is one example of the points system on a mortgage application that eliminates the cost of PMI. The increase in interest rate may or may not warrant the need for a lender-paid mortgage insurance arrangement.

What’s Involved With Risk Assessment?

Strict lending requirements and banking policy now limit the number of mortgages with zero down payment options. Conventional mortgages and FHA both require private mortgage insurance if it is less than 20% down payment. However, FHA loans can be more flexible with the initial down payment requirements with adequate credit. FHA mortgage costs are now for the life of the loan. Lenders will look at mortgage insurance as risk protection.

The risk protection process may or may not require mortgage insurance in your home loan. For example, VA and USDA loans do not usually require mortgage insurance if the borrower’s credit and employment history are adequate.

Conventional loans have a reduction in risk once there is at least 20% equity in the home compared to the principal of the mortgage. Don’t hesitate to contact your trusted mortgage professional about potentially dropping mortgage insurance in the future to reduce overall loan costs.

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What’s Ahead For Mortgage Rates This Week – Feburary 2, 2015

Whats Ahead For Mortgage Rates This Week Feburary 2 2015 Last week’s economic reports included Case-Shiller 10 and 20-City Home Price Index reports for November along with new and pending home sales for December. Freddie Mac reported on average mortgage rates and new jobless claims dipped unexpectedly. The details:

Case-Shiller: Home Price Growth Slower in November

Case-Shiller’s 20-City Home Price Index for November indicated that home prices continue to slow across the nation. Seasonally-adjusted annual home price growth slowed to 4.30 percent from October’s reading of 4.50 percent. Slowing momentum in year-over-year home price growth placed downward pressure on month-to-month readings. Several cities, including Atlanta, Georgia, Boston Massachusetts and Cleveland Ohio reported lower home prices in November as compared to October. Chicago, Illinois surprised analysts with a -1.10 percent drop in home price growth for November. Although mortgage rates have fallen in recent weeks, analysts cited tough mortgage approval standards, lower demand for homes and growing inventories of available homes as factors contributing to sluggish housing markets.

New and Pending Home Sales: Mixed Readings

New home sales jumped to a seasonally-adjusted annual reading of 481,000 sales in December against expectations of 455,000 sales and November’s revised reading of 431,000 new homes sold. The original reading for November was 438,000 new homes sold. New home sales were 8.80 percent higher in December year-over-year. The median price of new homes was $298,100 in December, which was an increase of 8.20 percent year-over-year.

Pending home sales reflected sluggish market conditions in December with pending sales lower by -3.70 percent as compared to November’s reading of +0.60 percent. This lull will likely impact completed sales as pending sales generally forecast completed sales within the next 60 days. The National Association of Realtors® said that home prices rose in some areas as supplies dwindled. Fewer homeowners list homes for sale during the fall and winter months than during spring and summer. Analysts also said that home sales trends rely on the willingness of homeowners to list their homes and move up. Although the economy continues to grow, homeowners can impact supplies of available homes if they wait to move up to larger homes.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 3.66 percent; the average rate for 15-year mortgages rose by five basis points to 2.98 percent, and the average rate for a 5/1 adjustable rate mortgage was 2.86 percent. Discount points fell to 0.60 percent for 30-year mortgages and 0.50 percent for 15-year mortgages. Discount points were unchanged at0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 265,000; this was lower than the expected reading of 296,000 new jobless claims and the prior week’s reading of 308,000 new jobless claims. Analysts said that the short work week likely contributed to the drop in weekly jobless claims, which was the largest drop in new jobless claims since November 2012. As labor markets improve, more consumers can afford to buy homes. January’s Consumer Confidence Index rose more than expected in January with a reading of 102.9 against expectations of 96.90 and December’s reading of 93.10.

What’s Ahead

This week’s scheduled reports include Construction Spending, Personal Income, Core Inflation, and several employment reports including ADP Payrolls, Non-Farm Payrolls and the national unemployment rate. Freddie Mac’s mortgage rates report and new unemployment claims will be released on Thursday as usual.

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Archive for February, 2015

Freelancing in 2015? Three Tips for How to Secure a Mortgage if You’re a Self-Employed Entrepreneur

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What’s Ahead For Mortgage Rates This Week – Feburary 9, 2015

Related Articles:

Are You Ready to Make the Leap into Home Ownership? Here’s How You Can Tell

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Buying a New Home? Follow These Three Tips to Ensure a Stress-Free Transaction

Related Articles:

Tax Time is Upon Us: Learn About Tax Deductions and How to Write off Your Home Mortgage Interest

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Do You Need Mortgage Insurance Even if It’s Not Required by Your Lender? Let’s Take a Look

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What’s Ahead For Mortgage Rates This Week – Feburary 2, 2015

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