Brian and David Wickert guide you through the recent drop in mortgage rates, and give you the advice you need to get the home of your dreams.
This week on the Accunet Radio Show:
David and Brian Wickert discuss the latest drop in mortgage rates, give you a quick look at the SE Wisconsin housing market, and share a client story to illustrate the effectiveness of our Rock Solid Pre-Approval.
This week’s highlights
- This week saw a drop in mortgage rates, with Freddie Mac listing 3.6% on a 30-year fixed-rate mortgage.
- When buying a home leading up to retirement, paying off your mortgage as quickly as possible isn’t always the best option. Instead, consider putting the excess money into your retirement account.
- In July, home sales were up 1.5% in the 5-county metro Milwaukee area.
Last week’s rate drop — What’s the deal?
On August 8, Freddie Mac reported a significant rate drop in their weekly survey, showing a 3.6% rate on a 30-year fixed-rate loan. What most news sources won’t tell you is that this rate only applies to those willing to spend ⅙ of a point — Which, on a standard $200,000 loan, is a whopping $1,200!
Freddie Mac’s survey used information collected on that Tuesday, when the U.S. was experiencing stock market shifts. By the end of the week, the panic ended, which caused some upward pressure on rates.
Why are mortgage rates down?
Mortgage rates change based on multiple factors, from the economy to global politics. We hypothesize this drop was directly related to two events:
- The Trump administration has instituted a 10% tariff on $300B worth of Chinese goods to go into effect on September 1, 2019.
- The Trump administration has threatened additional tariffs in the spring.
Housing market snapshot: SE Wisconsin
This week, Brian pulled some data from the Wisconsin Realtors Association to give you a quick look at the market in the top 10 most populous cities in Wisconsin — and how their home sales compare to each other.
|County||Population||Home Sales YTD (through June)|
|Milwaukee County||948,000||Down 4.5%|
|Dane County||542,000||Down 3.7%|
|Waukesha County||403,000||Up 1.4%|
|Brown County||264,000||Down 4.5%|
|Racine County||196,500||No change|
|Outagamie County||187,000||Up 1.4%|
|Winnebago County||171,000||Down 15%|
|Kenosha County||169,000||Down 2%|
|Rock County||163,000||No change|
|Washinton County||135,000||Down 7%|
Buying a home with no credit score
In the real estate industry, credit score is (practically) everything. On our end, credit scores are a statistical measurement of whether we can trust a borrower to pay back a loan. The higher the score, the more likely we are to lend. So what happens if you’ve never borrowed money, and don’t have a credit score?
In cases like these, we need documentation of other time-sensitive bills, like phone bills. While these payments not be reported to credit bureaus, they do prove a borrower can be trusted to pay on-time, in-full. To qualify for a loan using non-traditional credit, the borrower can’t have more than one late payment exceeding 30 days.
Getting a mortgage without a credit score isn’t easy; Accunet can help. Contact us today for more information on getting a mortgage with a non-traditional credit score.
Client story: How paying off your mortgage quickly isn’t always the right decision
In 2018, Accunet helped a 62-year-old client consolidate her mortgage and second mortgage on a 20-year fixed-rate loan with a 4.875% interest rate. We were able to lower their rate from 4.875% to 4.25%, and the client was interested in shifting to a short-term loan to pay off their mortgage as quickly as possible.
When rates dropped on Tuesday, Brian presented the client with a few options:
- 3.625% on a 20-year fixed-rate loan
- Payment lowered by $88/month
- 3.75% on a 20-year fixed-rate loan
- Payment lowered by $70
- 3.875% on a 30-year fixed-rate loan
- Payment lowered by $346
Our thought process: The client is getting close to retirement. Rather than shortening their loan and increasing their monthly payment, they could put that extra money in a retirement fund, and pay a 30-year fixed loan as if it were a 15-year fixed. That way, they maintain payment flexibility while bolstering their retirement.
When you’re retired, the equity in your home – unless you have it fully paid-off – does you absolutely no good.