Have Rates Hit Their Lows?

Volume 14 Issue 5 May 2019

M

uch has been made of

the fact that

interest

rates are

lower this year than

those "high paid" market

analysts predicted. These

lower rates have contrib-

uted to a rebound in the

stock market during the

first third of the year. Lower

rates have also contributed to a rebound

in the housing markets. We have also

witnessed higher oil and gas prices this

year as well.

This has led some to speculate that the

economy might be self-correcting.

What do we mean by that? The same

prognosticators who said rates

would rise were also predict-

ing an economic slowdown

this year. And the most

recent overall measures of

the economy have shown

that the economy indeed is

slowing down.

But we have also speculated that

the boost which comes from lower in-

terest rates could also cause the econo-

my to rebound a bit, or at least not slow

down as much as predicted.

If this hypothetical comes to fruition,

it is quite

In This Issue P2 Springtime Home Bargains || P2 Time to Pop the Second Big Question

P3 Have Rates Hit Their Lows? || P4 Staying and Renovating

Selected Interest Rates

April 25, 2019

30 Year Mortgages——–4.20%

2018 High (Nov 15 %

2018 Low (Jan 4)———–—3.95%

15 Year Mortgages——-3.64%

5/1 Hybrid ARMs——–—–3.77%

10 Year Treasuries—–—–2.53%

Sources—Fed Reserve, Freddie Mac

Note: Average rates do not include fees and points. Information is provided for indicating trends only and should not be used for comparison purposes.

Continued on Page 3

THIS NEWSLETTER IS BROUGHT TO YOU BY:

Did You Know…

Data from RentCafé shows that the number of seniors renting has taken off, seeing stunning growth in a 10-year period. RentCafé’s data shows that renters aged 60 and over grew by 43% over 10 years, from 6.55 million in 2007 to 9.37 million in 2017, outpacing their younger counterparts in growth. The median age for renters is still younger than their owner counterparts, but that’s to be expected. Renter householders tend to be younger, with a median age of 42 in 2017, compared to owners that had a median age of 56. But the median age of renters has been closing the gap over the last decade.

Source: HousingWire

Time to Pop the...

Page Two

“…there are a multitude of factors

to consider...”

B

uying a home is likely

to get more affordable

this spring as declining

prices and interest rates

give 6.0 percent more purchasing

power while keeping monthly

payments the same, or a decrease

of $62 per month in principal and

interest on the average home,

according to Black Knight's recent

Mortgage Monitor Report.

The report indicated that annual

home price growth has slowed for

10 consecutive months falling from

6.8 percent year-over-year in Feb-

ruary 2018 to 4.6 percent at the end

of the year. The report indicated

that declining rates are also boost-

ing refinancing of loans -- with

3.27 million homeowners likely to

qualify for a refinance and reduce

their current interest rate.

"While this is welcome news for

consumers heading into the spring

home buying season, it remains to

be seen whether recent rate

declines and easing affordability

will be enough to halt the decelera-

tion in home price growth," said

Ben Graboske, President of Black

Knight's Data and Analytics

Division...

Source: MReport

Springtime Home Bargains

W

e all know about pop-ping the big question. If you are planning

your wedding, it means that you have moved past that stage. There are a multitude of details to consider when planning a wedding and setting up a new life. And there is nothing more important than the second big question:

Should we purchase or rent our first home? The truth is that many who are getting married are already home-owners and thus there are variations to this question. In this article, we will start with the most basic of questions – renting vs. owning — and then move to additional housing questions that newlyweds face.

Purchasing or renting? There is no doubt that most couples aspire to own a home in the long run. Home owner-ship is considered the American Dream because it brings so many advantages to the table. Here are just some of the economic and social advantages of owning:

*Economic Advantages. Owning has always been the number one way to build wealth in America. The Federal Reserve Board has estimated that home owners have over ten times

the average net worth of renters. Why? For one, all of your

rent payment goes into the pocket of your landlord, while part of your mortgage payment goes to pay off what you owe, which enables you to build equity every month. A home also will typically go up in value over time and provide a tax deduc-

tion and inflation protection, while rent does not provide ownership of any asset nor any tax deduction.

*Social Advantages. Owning provides security for your family, as you don’t have a landlord who can tell you to move and the stability means that you are part of a community which provides lasting relationships. Neigh-borhoods of owners tend to be safer and provide better lifestyles to raise a family. Plus, you have the freedom of choice with regards to improving your property and this can mean anything from a swing set in the backyard to painting a nursery for your first child.

Seeing the advantages, does this mean that everyone should go out and purchase a home right after the wed-ding or even beforehand? While many do make this decision, it does not mean that home ownership is right for everyone. Here are a few more questions you must ask yourself before

Page Three

...Second Big Question

©2019, All rights reserved

The Hershman Group www.originationpro.com

1-800/581-5678

Have Rates Hit Their Lows?

Continued from Page 1

possible that interest rates have

already reached their low for the

year. We have already seen a small

rise in rates. Might interest rates

start rising from here?

We don't know, but the jobs report

coming early this month might

give us a major hint. A stronger

than expected showing would

strengthen the theory that rates are

contributing to an economic re-

bound and we could see rates start

rising from here. A moderate or

weak report could keep rates at

their present welcome lows. Stay

tuned as the report will be released

shortly...

“…The jobs report

coming early this month

might give us a major hint…”

you can determine if purchasing a home should be a first step in your new life:

*Are you staying local? If you think you might be moving out of town in the near future, then homeownership probably does not make sense because owning is a long-term proposition. *How are your finances? Are you starting married life with a lot of debt and a low credit score? It will make much more sense for you to pare down your debt first before you move to purchase a home. *Do you have savings? Savings is not only important for a down pay-ment. Cash reserves are very important for emergencies as well. Down pay-ment requirements can vary signifi-cantly. For example, if one of you is active military or a veteran, you likely can take advantage of the VA’s no down payment mortgage op-tion. There are many other options which exist to lower the down payment required and working with a lender before you start house hunting makes all the sense in the world in this regard.

Speaking of the down payment, it is not unusual for some who are getting married to cut back the cost of their weddings and/or honeymoons and use more of their cash gifts to help them move closer to being able to purchase a home.

What if one of us (or both) already own a home? Especially with many couples getting married later in life, it is more likely for one or both of the newlyweds to own a home. In this case, the renting question typically gets thrown out the window and other questions might arise. For example, if

*The newlyweds could move into one home and sell the other. Which house is kept might be determined by loca-tion, lifestyle and finances, such as how much equity is in the home.

*The newlyweds could move into one home and rent out the other. This action might be an option if the home you chose not to live in has no equity. As the renter pays your mort-gage over time, you will be gaining equity in the long-run.

*The newlyweds could sell both homes and trade up for a larger home. If children are expected in the near future, purchasing a larger home may be the right choice.

Again, there are a multitude of factors to consider with regard to all of these choices. This is why it makes sense, not only for newlyweds to have a wedding advisor, but also a financial advisor, real estate expert and mort-gage advisor on their team...

Homeownership Rate

Staying and Renovating

Address Correction Requested

In This Issue:

Have Rates Hit Their Lows?

P

eople are staying in their homes longer and making repairs or renova-

tions, according to a recent survey. The sixth annual LightStream

Home Improvement Survey conducted by The Harris Poll found that

73% of owners are planning home improvements in 2019, a rise of

26% from last year. They are also planning to spend more - $9,000 on average

– a record high for the survey, while the share planning to spend $25,000 or

more rose by 83% year-over-year.

"The majority of homeowners are planning on staying in their homes for at

least 10 years—or never move," said Todd Nelson, senior vice president of

strategic partnerships at LightStream. "We found that most consumers are fo-

cusing their home improvement projects to reflect their personal lifestyle, com-

fort and interests." The reason for renovations is less about adding value than it

is about creating a perfect space. Personalization is the top motivator for 27%

of respondents while just 14% are driven by increasing value. Improving their

home ahead of sale was the priority for just 7% while 4% were preparing for a

major life event such as having a baby...

Source: LightStream