SEEKING CLARITY ON CENTRAL MA’s FUTURE HOME LOAN INTEREST RATES

Here’s a piece of incoming information that crossed my screen, an item that related to the

Interest Rates cloud word with a blue sky
“© gustavofrazao/Adobe Stock”

possible direction in which Central MA home loan interest rates might be heading.

The first came from a big national listing aggregator. It seems that once this outfit gets the idea that you are interested in homes, they conclude that it’s your wish to establish an ongoing relationship. They then display all the energy and persistence a large corporation can muster to share their thoughts about this and that. They will continue to email you with regularity until you call, “halt”.

Along with other communications, they sometimes send attention-grabbing questions to everybody on their list, then share the answers from the “community” (that is, everyone who hasn’t begged off yet). Here’s an example question: “Is it better to buy a house right now or wait until 2017?” Since Worcester County’s current home loan interest rates are one of the prime reasons today’s market is so affordable, the posted responses would surely be relevant.

Some were confused (“When interest rates rise, this puts pressure on affordability, which then slows rising house prices…then is the best time to buy”). This commenter apparently hadn’t taken into account the fact that higher home loan interest rates mean higher mortgage payments; definitely not a more attractive time to buy.

A crank in Upstate New York complained that houses around those parts were too spooky and expensive (“housing and all these old, some hunted houses costs easily over 500K”).

Other answers were more philosophical (“it is ALWAYS a personal matter whenever a large purchase is contemplated”). Some claimed dubious expertise (“BUY NOW>>>NEXT YEAR THE PRICE WILL BE GOING EVEN HIRE”). Others were observant (“You should go to grammar school and get some spelling lessons. Seriously”).

mortgage interest rates
“© eteimaging/Adobe Stock

All in all, most did subscribe to the majority view that low home loan interest rates make the current environment genuinely inviting. One writer was defiantly emphatic (“Buy now; waiting costs you more for interest rate and purchase price”).

Answers like that (there were lots of them) made the second source of home loan interest rate news all the more relevant. It came from a source that should supply the most reliable clues to the future direction of rates: the financial press. Unfortunately, after reading many different takes on the breaking news, clearness was in even shorter supply.

Anyway, continued low home loan interest rates could mean smooth sailing for the Central MA’s residential market. And another good reason to give me a call. Come to think of it, if the opposite happens, it’s also a good reason!…..Realty Ace, LLC

fair housing logo

WHY SHOULD CENTRAL MA BUYERS AND SELLERS CARE ABOUT BREXIT?

Homeowners who keep an eye on Worcester County mortgage rates had a remarkably

Interest Rates cloud word with a blue sky
“© gustavofrazao/Adobe Stock”

clear view of what the future is likely to bring. “Brexit” had all but sealed the deal.

Part of the reason for the resurgence in the local real estate market has been the phenomenon of Central MA’s historically low mortgage interest rates. Following 2015’s first rate hike in nine years (and the promise that two or three more were in store for 2016), across the nation, financial commentators foresaw the expected gradual rise in mortgage interest rates to act as a moderating influence on home sales activity. In other words, a market that would slowly grow a bit tighter.

As recently as last April, that had been the common wisdom. That changed. Those who factor mortgage interest rates into their own decision about buying and selling a south central property were doubtless pleased when, recently, some bad news about employment rates triggered good news about the all-but-certain Federal Reserve interest rate hike: it was going to be delayed.

For anyone whose vacations allowed them to remain blissfully unaware of world affairs, “Brexit” was the name given to an election Great Britain held to determine whether or not to remain in the European Union. When the votes came in, the decision was to leave. Exit. This was so completely unexpected that the bottom dropped out of world stock exchanges. Convinced that Brexit would fail, traders had bolstered markets in the days leading up to the vote. Japan’s stock market tumbled 7.9%. Theirs was the most dramatic, but here in the U.S., the Dow fell 3.4%. The British pound dropped; the dollar rose.

The reason Central MA mortgage interest rates could be affected by a distant overseas political event is due to the currency ramifications. When the dollar is seen as more stable

than others, it rises in value. That causes U.S. products sold overseas to become more expensive, producing a drag on the economy. Since growth might falter if the Fed were to add the additional burden of higher interest rates, it seems all but certain that mortgage interest rates will remain where they are for longer than had been assumed. Possibly, for far longer.

The Wall Street Journal pointed out that “central banks will bolster growth by easing policies and, in the case of the Federal Reserve, delaying potential rate increases.” Forbes

close up of businessman hand holding scissors
“© Syda Productions/Adobe Stock”

headlined “Brexit Makes That Federal Reserve Rate Rise Recede into The Future;” they predicted a future of “near zero interest rates…far longer than expected.” London’s Financial Times went even further, suggesting “the possibility of the Fed reversing last December’s quarter-point rise.” The Washington Post noted that U.S. mortgage interest rates “already hit rock bottom this year…nearly a three-year low.” They quoted one analyst’s post-Brexit observation: “If you’re a borrower, don’t wait to lock your rate as this opportunity may not last long.”

The Brexit phenomenon is certainly not reason enough for anyone to buy or sell a home but when the decision is already in the works, current mortgage interest rates can’t help but make the prospects more attractive. Call me if you are interested in further investigating just how rewarding today’s market can be! I can help connect you with a top-rated lender…..Realty Ace, LLC

fair housing logo

THEY SAY A PICTURE IS WORTH A THOUSAND WORDS

Well, here are a three graphics that depict current market conditions and I won’t need housing supplythree thousand words to describe them. If you’re planning to sell your home, the time is now! The supply of homes currently for sale is less than the the number of buyers who want to purchase a home right now. This makes your chances for a successful sale much greater, simply because of the lack of market competition. If that doesn’tbuyer traffic motivate you as a seller take a look at the buyer traffic figure and look at Massachusetts. WHAT, MORE GOOD NEWS FOR SELLERS! That’s right, buyers have access to great mortgage terms and rates giving more of them the opportunity to purchase a home of their own.

fannie may requirementsP.S. That’s also good news for buyers.

If you want to sell but you’re not sure what direction you should take, whatever you do don’t use a Tates compass, because “He who has a Tates is lost!” (smile).

Feel free to give me a call. …..Realty Ace, LLC

fair housing logo

 

FREE FICOs AND THE SEARCH FOR AN IDEAL CREDIT SCORE

Something is being offered that is actually for free. No, really.

It is truly the case that lately some banks and credit card companies have been including a

fico size
“© Michael Brown/Adobe Stock”

new benefit for their Worcester County clients: free access to their current FICO credit score.

This isn’t the same thing as the ads we’ve been deluged with for years, the ones for “free” credit reports. Most of those wound up not really being completely free, at least not if you value your privacy (as in your email and other personal information). Most of them were bent on pitching you on surprisingly pricey subscription credit monitoring services. For anyone who placed value on the time it took to tell them “no” a half-dozen ways, these weren’t really “free.”

But if you are a lucky Central MA client of one of the outfits now providing continuous access to your FICO credit score, it IS interesting to click on it now and again. The score goes down and (we hope) up as various information flows into the FICO computers.

“FICO” is shorthand for the Fair Isaac Corporation, which is by far the dominant credit rating creator. But don’t be fooled: not all FICO credit scores are the same because there are three different companies (Equifax, TransUnion and Experian) who collect the data. They pay FICO to furnish their branded versions of the scores. Each one has FICO assign different weights to different parts of your history and the result is to create three different FICO scores.

That’s why when you read a headline like Tulia’s “Magic Number: The Ideal Credit Score For Securing A Mortgage,” you’re right to be a bit skeptical, since an “ideal” credit score for Equifax and TransUnion and Experian would be unlikely to be the same. Nonetheless, the number given as “ideal” was probably pretty much about the best rule of thumb number you could realistically come up with: 740.

If 740 or higher is the ideal FICO number (considered to be in the ‘perfect’ range for mortgages), another kind of correct number for mortgage applicants was 660, which they

Mortgage Documents
“© Itan1409/Adobe Stock”

thought was a credit score that would “land a better rate and avoid jumping through additional hoops” than would 620, the basic requirement “for many lenders” looking to originate a conventional home loan.

The “most lenders” qualification, along with the differences in the credit scores offered by the different companies, means that there is a lot of wiggle room that can affect not just whether or not an applicant is successful in being offered a loan for their new home, but what the terms of the mortgage will be. Given all that, it’s really impossible to take any one credit score number and say definitely what that will mean to your loan originator.

Who doesn’t appreciate being given free access to their FICO score even if you aren’t quite certain what the rises and falls are going to mean? The only time you actually get a real-world answer to that is when you are ready to buy a home and submit your application. Remember there’s more to getting a mortgage than just your credit score. That said, you can access your credit score for free once a year at AnnualCredit.com.  Call me when I can help!…..Realty Ace, LLC

fair housing logo