The Accunet Mortgage Show (6-6-2021) Episode

This Week’s Highlights:

• Jobs Report: Not as Strong as Expected, But Not Bad News
• Home Appreciation and PMI
• When Can Monthly PMI Be Completely Dropped?

Download a transcript of this week’s episode here.

Jobs Report: Not as Strong as Expected, But Not Bad News

The Bureau of Labor Statistics was bracing for a very strong month of job creation in May. This report comes out once a month and tells us how many new jobs the economy created, and offers a percentage of people who are actively looking for work, but can’t find it. This gives readers a detailed indication of the economic health of the country. Furthermore, as the unemployment rate goes down and fewer people are looking for work, that can put upward pressure on wages. If it costs more to provide a service because of labor costs, that’s going to drive up cost and inflation; the enemy of interest rates. 

The market was expecting about 750,000 to 900,000 new jobs, which would have been a colossal increase. Instead we saw  559,000 people who got jobs. While this is still an excellent number, it’s a far throw from the nearly one million that was originally forecasted. On top of that, the unemployment rate fell to 5.8%. Historically, economists would consider unemployment rates close to 5% to be full employment. And when comparing these numbers to last year, the news looks even better. According to the report data, the current number of people who are officially unemployed in America, is 9.3 million, a drastic decrease from the 21 million people out of work at the height of the 2020 lockdown. That said, the report did not account for the 6.6 million people who have not looked for a job in the last four weeks or could not have taken a job for personal or medical reasons. 

So while the unemployment statistics are realistically closer to 9.5%, small business owners are having trouble finding people to fill jobs, especially in the service industry and assisted living places. As it stands, there are 151.6 million Americans who are working, or what we call the non-institutional civilian population. There are 100 million people in that adult population who are not working, either due to retirement or simply choosing not to work. That means just under 62% of the population are working, which is pretty good from where the numbers have been in the recent past.

Home Appreciation and PMI

Many homeowners looking to decrease their monthly payments are unaware that every 5% in equity changes the cost of private mortgage insurance. With that in mind, we looked to FHFA data to compare the value of a home in various metropolitan areas in Wisconsin during this first quarter of 2021 versus just a year earlier. La Crosse, Green Bay and Madison gained only 5.5% appreciation, but that’s still enough to move you one notch down with private mortgage insurance costs. The Duluth and Superior area, Sheboygan, and Oshkosh fell into the 6% price appreciation range. That’s a $15,000 increase on a $250,000 house. Fond du Lac, Wausau and Appleton appeared in the 6.5% appreciation category, so a $250,000 house that you bought early in 2020 is now worth $266,250. Eau Claire and Janesville appeared in the 7% range, and Racine in the 7.5% range. 

The top two increases were for  Kenosha, Lake County and the metropolitan area, which was up 10%. A $250,000 home in this area is now worth about $275,000, just one year later. The biggest and fastest appreciating market in Wisconsin is the Southeastern Wisconsin market, or Milwaukee, Waukesha and West Allis. This area is up a staggering 13%, which means a $250,000 home has gained $32,500 in value, making it worth $285,500.

With the price appreciation we’re currently seeing, Accunet Mortgage and Realty could make a homeowner a 2.99%, 30 year fixed rate, and they would have at least 10% equity now, saving them $1,000 a year in monthly mortgage payments every year, for the rest of the time left on the loan. All the homeowner would have to pay is about $800 in loan costs, in the event that an appraisal is needed. That said, when we put a regular refinance through the Fannie Mae or Freddie Mac automated underwriting system, appraisal waivers are issued about 48% of the time, meaning no new appraisal is needed.

See if you qualify for a lower rate and potentially drop your PMI today! Refinance with Accunet Mortgage—click here to get started.

When Can Monthly PMI Be Completely Dropped?

We recently got an interesting question asking when the monthly PMI payment can be dropped. The answer to that question is twofold .

If you do a refinance and are taking out a completely new loan to pay off an old loan that has PMI on it, there is no time limit or waiting period because our computer system will essentially reset the facts and issue a new appraisal or home value. On the other hand, when a mortgage has PMI on it and you’re not going to refinance the Home Equity Preservation Act comes into play. This is a federal law that applies to primary residences where the PMI must be removed after the loan balance gets down to 78% of the original property value. 

Another important thing to note is that a homeowner can petition without refinancing to have the mortgage insurance removed. This can be done anytime the homeowner has reached 20% equity. This gives homeowners several small ways to either decrease or eliminate their PMI payments altogether.