David Wickert is joined by Paul Miller to give you the latest in mortgage and realty news.
This week on the Accunet Radio Show:
David Wickert and special guest Paul Miller shed insight on what the trade war means for mortgage rates, how cutting your kids a deal on a home might hurt them, and what your lender needs to know before closing.
This week’s highlights
- Accunet has the ability to go back and renegotiate your interest rate even after its locked in — meaning applying for a refinance today is a win-win.
- This week, the Federal Reserve Chairman Jerome Powell announced another rate cut in the future.
- Getting a divorce affects your mortgage differently depending on the phase of divorce you’re in: Before, during, or after.
Mortgage industry update: Week of Aug. 18-24, 2019
This was a busy week for financial news that boiled down to three events:
- China announced intentions to raise tariffs on $75B of US goods.
- President Trump has previously outlined $200B in tariffs on Chinese goods and has threatened tariffs of up to $300B.
- The Federal Reserve commented on rate cuts and the world economy.
- At the Federal Reserve conference in Wyoming, Chairman Jerome Powell announced a rate cut sometime in the future and recognized the trade war as a source of economic uncertainty. As of Sunday, there’s a 95% chance of a 0.25% cut in the future — we just don’t know when.
- President Trump released comments about both the Chinese tariffs and Chairman Powell’s comments.
Needless to say, these three things had a pretty huge impact on the financial world. The Dow Jones shed roughly 500 points, and the US Treasury, which acts as the bellwether of economic health, dropped down to 1.54%.
So, how does this affect me?
How do these headlines affect Wisconsin homeowners and realty professionals? Well, it’s still too soon to say. Economic uncertainty doesn’t make anyone feel good, but none of this should impact your day-to-day life anytime soon.
Where do mortgage rates go from here?
The financial markets think the Fed is going to do another rate cut (check today’s rates here). What people don’t realize is that that cut is already baked into the rate cake. While we don’t know when the cut is going to happen, we do know it’s a great time to be refinancing. Accunet Mortgage has the ability to go in and renegotiate your interest rate even after it’s locked in — meaning if we snag a 3.75% rate for you today, and in a week, rates drop, we have the power to go back and take advantage of the new rate. Any way you look at it, it’s a win-win.
Selling a home to your child: Cheaper isn’t better.
Every now and then, we’ll have a customer who either wants to sell their home to their children or who wants to buy a home from their parents. Most families tend to think, “Hey, since I’m selling to family, I’ll cut them a deal. I’ll set the price just above whatever is owed on the house.” Good idea, right? Well, not exactly.
Mortgage lenders are all about measuring risk, and we measure that risk based on the information we’re provided. Offering a mortgage on a home that has a 25% equity buffer is much safer than a mortgage with only a 5% equity buffer between what you borrow, and what the house is worth. And guess what? That equity position plays directly into your interest rate and monthly payment.
By setting the purchase price lower than the property’s worth (and accordingly, having less equity in the home), your monthly mortgage payment could go up higher than it would be if the home were accurately priced. Correspondingly, any home with less than 20% equity necessitates PMI (private mortgage insurance), increasing your payment even more.
So, before you buy a home, don’t let the sellers cut you a deal below market value. On a month-to-month basis, your bank statement will thank you.
How do federal tax liens affect a mortgage?
A federal tax lien notifies the public that you owe tax money to either the state or the federal government. Just like any other kind of debt, this affects your mortgage. Buy why?
Any time you have a federal (or state) tax lien, that debt goes in front of your mortgage. So, when you eventually sell your home, those liens are going to get paid off before your lender gets their money back. Needless to say, lenders don’t like this too much.
That’s not to say you can’t get a mortgage — Accunet can still help folks that have debts to the IRS, as long as those debts are being paid back. Ultimately, it’s counted similarly to a car loan or student loan; it’s a monthly payment we have to make sure your income can sustain.
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