Weekly Update November 7

As a follow up from last week, our projections of rate increases largely due to strong employment numbers had come to fruition.  Friday the 2nd came with a surge in mortgage rates and they have hovered around that area since then.  Initial jobless claims are near 50 year lows!  Basically, employment numbers cant get much better but they might stay this good for the near future.

 The Fed is also meeting and will release their monetary policy statement Thursday afternoon.  Although we are not expecting a rate hike, we are very interested in what they have to say about wages, inflation, and the pace of rate hikes moving forward.  Mortgage bonds are higher ahead of the Fed announcement, but we are expecting a flat, but volatile week barring any Fed surprises.  We will report more on the Fed meeting next week.  Take great care of your clients!  Make sure you are working with a mortgage professional who understands the markets!

Weekly Update Oct 31

We will keep this short and begin again with a familiar statement.  Rates remain relatively flat week over week with high volatility.  Instead of digging into all causes for this volatility, we will try to stay focused.  The big news this week revolves around employment numbers yet again.  As you may recall, mortgage rates started its most recent trend upward back in early September after strong hourly earnings number were reported.  Rates turned up again in October when the ADP released its strong employment numbers.  Although the increase in rates were followed by pull backs, it creates a high amount of volatility.  And more jobs and earnings reports will be released this Thursday and Friday.  We believe these reports will either push rates higher or they will remain flat.  It is highly unlikely these reports will cause rates to drop.  If you have any clients who have not locked in their rates, be cautions!  Under worse case scenarios, your clients could be out big dollars or NOT be able to qualify for the same home they could have weeks or months ago.  As always, make sure you are working with a mortgage professional who understands the markets!

Granny Flats are Making a Comeback

Accessory dwelling units -- often called granny flats, mother-in-law suites, garage apartments and even tiny houses -- are one of the most talked about trends in real estate. These extra living spaces don't just make a great place for loved ones to stay; they can also offer another income stream.

Should you buy in to the trend and add one to your existing property? Should your new home wish list include an accessory dwelling unit (ADU)? Here are a few of the perks you stand to gain with one:

Extra Space: First and foremost, granny flats mean more space for guests and family while still offering the privacy and amenities of a home. Have friends over, invite your family to stay and help with the new baby, provide elderly parents with a low-maintenance living situation or give your partner a home office.

Added Income Potential: Many homeowners use their ADUs as short-term or permanent rental units. A long-term tenant could provide consistent monthly income, which might help make your mortgage payment a little more affordable. If you're planning to build one, make sure it's allowed by your HOA.
Possible Increase in Home Value: A second living area on the same property could increase your property value, especially if you've had steady tenants. Just be sure to keep the unit well-maintained. 

While the upsides are plentiful, ADUs are only beneficial if they're legal. Most cities have detailed rules and regulations regarding building and renting these units. 

Have questions about adding an ADU to your property? Or have your eye on a property that already has one? Please get in touch.

Weekly Update October 25, 2018

More of the same!  Rates ended the week from Wednesday to Wednesday exactly where it started, but the volatility was actually greater than last week!  But there is some hope in sight.  The S&P 500 is almost 10% off of is all time high set in September which could spook investors and cause them to seek the safety of mortgage bonds.  Mortgage bond prices, and in turn mortgage interest rates, are a product of supply and demand.  When investors are in a “risk off” position, they will purchase safer investments, such as mortgage bonds.  As more investors seek to purchase mortgage bonds, the bond prices are pushed higher due to simple supply and demand.  So as those bond prices increase, the yield from those bonds actually decrease. 

For a simple example, an investor might be willing to purchases a mortgage bond that pays 5% for $100.  In this case, the investor will earn $5/ year.  However, if other investors want the security of holding mortgage bonds, they might be willing to pay $110 to purchase the 5% bond from the original investor.  Although the 2nd investor will still received the same $5/ year, they payed $110 to get it.  Now the yield for the second investor is actually about 4.5% (5%/ $110), less than the original investor’s yield of 5%.

So how does this apply to your new mortgage?  Well, an educated investor should be indifferent in purchasing a 5% bond for $110 or a new 4.5% bond for $100.  That means we can now lock in new loans at 4.5% instead of 5% and the borrower saves money while the investor earns less.

 This can be confusing and unintuitive so make sure you are working with a mortgage professional who understands the markets!  As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Weekly Update October 17, 2018

Rates, rates, rates!  Another volatile week in the mortgage markets and every day seems to be a new surprise!  However, if we sift through the noise, it becomes clear that the Fed is making it quite clear that “normalizing” rates will be advantageous in the long run.  Significant market shifts might indicate otherwise, but the reality is that the market is doing well enough (in whole) to justify less accommodative monetary policy.  So look past the massive swings in both the bond and stock markets and focus on what is actually going on.  Week over week, rates are generally flat or slightly down.  However, throughout the week we saw drastic improvements followed by a day of giving it all back.  Net effect… flat.  Week over week flat markets do NOT tell the whole story so please make sure you are working with a mortgage professional who knows the market.  It can make the difference between your clients buying their dream home and it remaining just a dream.

The Fed Meeting Minutes reiterated what we already knew.  The days of accommodative monetary policies seem to be behind us and the focus seems to be focused on keeping the market in check.  So rates are not as low as they once were.  Is that bad?  Probably not.  Rates are still incredibly low from a historical standpoint and the housing market in the Front Range might benefit from some “normalcy.”  10-25% Year over Year value increases is simply not sustainable and could potentially harm our local housing markets.  We promote long term, sustainable growth for the benefit of both buyers and sellers.  Mountain State Financial Group is a strong supporter of healthy housing markets which sometimes feels uncomfortable.  However, we are also exceptionally strong supporters of our local real estate professionals to assure we all grow together the right way.

That being said, we are supporting locking rates in the near term as volatility can often mean the difference between qualifying and not qualifying.  As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Weekly Update October 10 2018

Another week of rising interest rates as more positive economic news comes in.  However, both the stock and bond markets seem to be overly sensitive to any news which is causing greater volatility.  Most recently, the Producer Price Index rose more than expected which hit bonds and raised mortgage rates.  In addition, the NY Fed President reiterated the Fed’s plan for gradual but steady increases to interest rates.  Luckily, we might be seeing near term flattening of mortgage rates as the technical analysis indicates more stability in rates near term.  Its always a moving target so make sure you are working with a mortgage professional who understands the markets!

As we have been mentioning for some time now, many of the players in the mortgage industry continue to cut jobs.  In fact, these job cuts are picking up steam.  Not only are Wells Fargo, USAA, JP Morgan Chase, and many other lending giants cutting staff, but also some of the smaller, local companies are doing the same.  Mountain State Financial Group does not subscribe to this practice as this would hinder the exceptional services that clients have grown to expect.

Many of these job cuts are not without merit.  As interest rates rise, clients are not able to afford the same homes they could have during lower interest rates which is dragging on home sales.  If you have any clients who were pre-approved for a certain price point, you may want them to reach back out to their pre-approving mortgage professional to make sure you are not showing houses your clients can no longer afford!

As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Weekly Update October 4

Rates went higher.  Much higher!  October 3rd was the greatest single date rate increase since the 2016 presidential election.  Rates are about 1/8th of a percent higher than a week ago.  Why the sudden increase?  Well, economic news keeps coming in better than expected.  Last month, we saw hourly earnings increase above projections, which started a sell off in mortgage bonds.  Then yesterday the ADP National Employment Report was well better than expected.  Adding more jobs AND an increase in hourly earnings is a double whammy for bonds and mortgage rates.

In addition to employment news, the Dow hit another record high yesterday.  In short, the US economy is booming, the market is in a “risk-on” position, and bonds across the board are taking the hit.  This certainly would indicate that there will be more rate hikes to come and barring any surprising economic indicator downturns or more “trade-wars”, mortgage rates will be on the rise as well. 

Watching the technical, the outcome remains the same.  Bond yields have broken above recent highs and trending upward.  Unfortunately, the trend is NOT our friend as this may indicate that the lowest rates of this economic cycle may already be behind us and we can expect to see rates continue to rise. 

Now is good time to differentiate yourself from the rest!  Reach out to your existing clients with their best interest in mind and talk to them about the net benefit/ harm of consolidating their debt with a refinance.  Make sure you are working with a mortgage professional who is able to determine the best fit for your clients and not just a salesperson.

As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Prepping for Your Mortgage Application

The mortgage application process can feel stressful and drawn-out, but it doesn't have to. In fact, if you take some time to prepare by collecting your paperwork and learning about the process, applying for a home loan can be fairly straightforward. 

Here's what you can do to streamline the process:

  • Get your credit in order. Going in with a great credit score helps. If need be, work on your credit before buying a home -- pay down debts and check your credit report for any errors. Any little change can help.

  • Have your paperwork ready.You'll need to provide lots of financial documentation, and that can take awhile to get organized. But you can start before you apply: Collect your recent pay stubs, tax returns, W-2s and bank account statements. If you have any retirement accounts, stocks or bonds, you'll also need records of those.

  • Learn about mortgage products.Look into the different loan options out there. Do you understand the difference between fixed-rate and adjustable-rate loans? What sort of term are you interested in? How much will you need for a down payment with each type? Have questions ready to discuss in person. 

  • Apply for preapproval or prequalification. Getting prequalified or preapproved can help set the foundation for a quick and easy application. It can also help you determine your price range when searching for a home. As a bonus, a preapproval letter can give you a leg up over other buyers. 

Your actual mortgage application might only take a few hours, but you'll likely need to provide updated documentation later in the process. Have questions? Get in touch today.

Weekly Update September 27

First, we are offering a 1% down conventional mortgage for your borrowers!!!  They also receive a 2% gift, giving them a 3% equity position!  We have been able to put great people into home who otherwise wouldn’t qualify.  Another great reason to reach out to those prospects with little money to put down without have to go through CHFA!  Program details are attached.

Top story is that the Fed raised rates by a quarter percent, in line with expectations.  As I always like to remind people, this isn’t the rate that directly drives mortgage rates.  However, many other loans, such as HELOCs and credit cards are tied directly to the Fed Funds rate so you can expect to be paying more in interest on any balance you may have.


However, although the Fed Funds rate went up, mortgage rates are actually down slightly over the last week.  Now is good time to differentiate yourself from the rest!  Reach out to your existing clients with their best interest in mind and talk to them about the net benefit/ harm of consolidating their debt with a refinance.  This can actually mean refinancing into a higher rate in certain situations.  Many mortgage lenders are merely salespeople so make sure you are working with someone who is able to determine if there is a benefit of doing so.  Mountain State Financial Group can assist with this process and help your clients make an informed decision.

 As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Home Updates That Won't Cost a Fortune

Are you considering buying a new home but have a small decorating budget? Luckily, with a little creativity, updates don't have to be expensive. Whether you're giving a fixer-upper a fresh look or wanting to personalize your property, these resourceful tips can help: 


  • Reface old appliances. Dated appliances are a drag, but if they still work well, don't stress about replacing them. Instead, use appliance paint or adhesives for an instant update. 

  • Opt for unique, inexpensive art. Shop thrift stores and flea markets for affordable, one-of-a-kind finds. Etsy, college art shows and craft fairs can be great places to find unique pieces. 

  • Repurpose and reuse. Have vinyl records you don't listen to anymore or extra fabric left over from a craft project? Turn these items into wall art. See if there's a way to reimagine old items around your home that can be given new life.

  • Add some greenery. Plants add color and dimension to any room. If you're short on space, opt for small succulents or bonsai trees. For more open areas, consider a large snake plant or fern.

  • Swap rooms. Sometimes, swapping furniture and decor between rooms can be enough change to keep things interesting. Switch out bed frames, tables, chairs and linens, and see what new arrangements you can create with what you already have.

A beautiful, welcoming home doesn't have to cost a lot of money. If you're ready to start decorating a new home or considering a refinance to fund a bigger project, don't hesitate to get in touch.

Weekly Update Sept 19

Another tough week as mortgage rates continue to rise.  This has been in part due to bond yields increasing globally, which had been acting to keep US yields lower.  In addition, US stock markets are rallying to levels not seen in many months which is also weighing on bonds.

 The Fed is meeting next week as well and it is widely believed that they will be raising the Fed rate by .25%.  It will be interesting to hear what the Fed has to say, but there is very little expectation that it will be good news for mortgage rates.  Both the fundamentals and technical analysis are indicating that the trend of raising interest rates will continue, but we may be due for some pull backs soon.  As always, make sure you are working with a mortgage lender who knows the mortgage market. 

New mortgage applications fell again in August as well as in Q2, which may not be a surprise, but what might be is that the total mortgage balances across the country are now nearing the record highs seen in 2008.  Rising interest rates will likely continue to stifle new applications and may help level the housing market from a sellers market to something more neutral.  We will keep you posted. 

As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!

Your Refinancing Questions Answered

Are you curious about refinancing and why homeowners go this route? More importantly, is it a good option for you? Depending on your goals, a refi could result in smaller payments, a shorter loan term or even cash to put toward college tuition or home improvements.

These are just a few of the benefits a refinance can offer, but the timing has to be right. Want to learn more? Here are four things to know about refinancing:   

1. What is a refinance? Essentially, a refi replaces your old mortgage and allows you to change your loan term, rates and other details.

2. Would it benefit you? Refinancing might be a good choice if: 

  • You have an adjustable rate loan and your interest rate is about to change.

  • Current market interest rates are lower than the rate on your current loan.

  • Your credit score has greatly improved since you took out your mortgage.

  • You want to shorten the length of your loan or lower your monthly payment.

  • You need a source of funds.

3. When should you refinance? It depends on a variety of factors -- things like how much you've paid off on your loan, what your rate is compared to the current market rate, the type of loan you have and your financial goals.

4. What options are out there?Some common refinances include: 

  • Rate and term refis, which aim to change your interest rate, loan termor both.

  • Cash-out refis, which give you cash based on your home equity.

Not sure if a refi is right for you? Or want to learn more about how they work? Get in touch so we can talk about your financial goals and options.

Weekly Update Sept 5

For yet another week, rates remain flat between support and resistance.  As you can tell from the week to week rate comparisons, this summer has been almost completely flat, but has also been volatile from day to day.  We haven’t changed our stance that we recommend locking in the near term and floating longer, but that could change quickly.  As always, make sure you are working with a mortgage lender who knows the mortgage markets.  Otherwise you could lock your rate high based solely on volatility.

The Federal Reserve reiterated last week that they will likely raise rates at a gradual pace as long as the economy remains strong.  We believe it is almost certain that they will raise the Fed Funds Rate by .25% at their next meeting toward the end of September.  Although the Fed doesn’t directly manage mortgage rates, the decisions they make affect the whole of the economy, including mortgage rates.

Home prices have also been more stable and this sellers’ market may be softening.  Potential buyers may want to revisit purchasing this fall in anticipation of sellers receiving fewer offers.  This combined with relatively flat, yet somewhat volatile rates could be the opportunity buyers have been waiting for.  We are anticipating a busier fall and will continue to keep you posted.

Weekly Update Aug 30

Mortgage rates ticked up very slightly other than Jumbo rates which were flat since last week.  Mortgage bonds are still trading flat and within support and resistance.  In the near term, we are suggesting to lock but that recommendation can change in a moment.  MAKE SURE YOU ARE WORKING WITH A MORTGAGE LENDER WHO KNOWS THE MORTGAGE MARKET.

New mortgage applications are down slightly again this week.  Again, it is actually purchase applications that slipped while refinance applications were unchanged.  Borrowers seem to have a new sense of urgency to consolidate debt and take advantage of lower rates.  However, that doesn’t stop the big guys from letting people go.  Wells Fargo is letting go of another 600+ mortgage employees as mortgage applications fall.  As always, Mountain State Financial Group does NOT subscribe to this model as we place service and satisfaction above all else.  This doesn’t happen when employees are fearful of keeping their jobs.

Weekly Update Aug 22

Interest rates remain flat to slightly down from last week, but still above support levels.  Not much to report yet, but the trend has been our friend, even if only slightly.

New mortgage applications are down for another week.  Interesting, refinance applications actually remained the same while purchase applications lagged.  As rates remain flat and in the gap between support and resistance, those on the fence of refinancing are starting to finally move forward.  As we mentioned last week, part of a sound refinance decision depends on all debt and interest rates, not just the mortgage rate.  Our team will happily run numbers to see in refinancing, possibly into a higher rate, is a sound financial decision.

As new applications continue to decline, the latest lender to announce lay-offs is Ditech who has announced they will be closing one of their call centers with over 400 employees in November 2019.  We expect these reductions to staff to continue while some small shops will actually exit the market.  It is our fear that these types of lay-offs will lower client satisfaction across the industry.  Mountain State Financial Group does not subscribe to this business model and are continuing to bring on new talent.

Nationally, sales prices are still on the rise, but they are rising more slowly in most of the country.  In addition, there are fewer homes selling for over asking price and more homes selling at a discount.  Although it is very premature to assume that we are transitioning away from a sellers’ market, it is thought that millennials are a big part of this as they simply don’t see the value of purchasing homes at these higher prices.  We don’t predict any kind of bubble in the metro area at this time, but we will be watching millennial purchase activity closely.

Weekly Update Aug 15

Rate fell slightly across the board for all mortgage types.  I am beginning to sound like a broken record, but mortgage bonds continue to trade between support and resistance levels yet again.  Although the mortgage market has been largely flat with some  relatively small changes over the last several weeks, we are still generally advising clients against floating rates beyond 30 days and are watching continuously for indicators to lock sooner or float longer.

Fundamentally, the US economy continues doing well, despite tariffs and other world events.  However, this doesn’t help everyone.  Home affordability continues to drop and is now close to Great Recession levels, keeping many buyers out of the house market as they are unable to afford these high prices.  If interest rates rise, this could compound the issue.  The next Fed meeting in late September will be interesting and we well keep you posted as this event draws closer.

We have also been visiting with many clients about mortgage rates, refinancing, and the total picture.  In short, depending on the other assets, debts, interest rates, and payments, many homeowners could still benefit from a refinance even if into a higher rate.  This isn’t always easy to understand for clients, but a good mortgage advisor should be able to run a blended rate comparison to see if a refinance makes sense.  Most importantly, clients still need to understand solutions presented to them so we place great weight on education.

Steps to Boosting Your Credit Score

Your credit score plays a big role in the homebuying process. It can influence what interest rates you're eligible for, as well as what options you have for loans in general. 

If your current score isn't as high as you'd like, don't lose hope. You can boost your score and improve your chances of qualifying for a mortgage or a better rate. Here are a few ideas that can help:

  • Check your credit report. Credit reporting agencies collect data from a variety of sources, and this info may contain errors. Plus, there's always the possibility of identity theft. Request a copy of your annual credit report from one (or all) of the three main agencies -- Experian, Equifax and TransUnion -- and make sure everything is correct. If you see something that looks off, report the issue to get it resolved.
  • Settle any debts in collections.Having an account in collections hurts your credit score. Pay these off as soon as possible, or work with the creditor to set up a payment plan.  
  • Work toward paying off other debts. Start paying down your debts as much as you can, focusing on high-interest ones first. Your total debt balance has a big impact on your score, so reducing even one account can help immensely.

Additionally, don't open any new credit cards, take out a new car loan or put extra purchases on your existing cards when gearing up for a home purchase. Though this won't improve your score, it will keep it from getting worse -- and that's just as important.

A picture-perfect financial history isn't necessary to buy a home, but having good credit helps. If you have questions about how it affects the mortgage process, get in touch.

How to Be More Financially Organized

If you've resolved to improve your finances in the coming months, you'll need a solid plan to set yourself up for success. Here are three ways to help you better manage your money in 2018.

Start a budget. 
A budget is just a plan for every dollar you earn, and there are a lot of tools to help you strategize. Start with your monthly after-tax income and then list your monthly expenses, including set payments such as the rent or mortgage as well as those that vary, like utilities, credit cards and gas. Don't forget extras, such as streaming subscriptions, or expenses like car insurance that only crop up a few times a year.

Pay down debt. 
Your budgeting process should have identified your debts, so now you need to focus on repayment. Two common methods can help with this: There's the avalanche approach, which prioritizes your highest-interest debt, and then there's the snowball method, which focuses on paying back your smallest debts first. While the avalanche method saves you the most money in the long run, some say the small wins of the snowball approach can help keep you on track.

Build an emergency fund. 
Having three to six months' worth of savings can help you avoid relying on high-interest credit cards in the event of a job loss or other emergency. Cutting costs is an obvious first step in unearthing those savings, so try to make more meals at home, take advantage of loyalty programs and avoid small, frequent purchases like morning coffee. Once you've saved a little bit, make the most of these fundsby placing them where they'll offer better returns than a traditional savings account.

Getting your finances in order isn't always fun or easy, but following the guidelines above can help you get off to a good start.

3 Ways to Build Equity in Your Home

For homeowners, equity is like an extra bank account. Every dollar you put toward your property gives you a bigger stake in your home, as well as more money to pull from should you need it down the line.

Equity gives you additional funds to tap via a cash-out refinance, home equity loan or home equity line of credit. These essentially turn your equity into cash -- money you can use for home improvements, college tuition or even a family vacation.

But how do you get more equity? Here are some things you can do:

  • Make a bigger down payment. If you haven't bought a home yet, the easiest way to get more equity is to put more money down. And depending on the type of mortgage loan you choose, this could also lower your monthly payment or eliminate the need for private mortgage insurance, making your home more affordable.
  • Upgrade or renovate your home. Anything that increases the value of your home also increases your equity -- and the amount you stand to gain when you sell. Just be sure to choose your renovations carefully, as some offer higher returns than others.
  • Pay down your mortgage. The lower your mortgage balance, the more equity you have, so work on paying that loan off sooner rather than later. Try making an additional payment every quarter or dedicating your tax returns and holiday bonuses to the account. It'll make a significant difference in the long run.

Already have a good amount of equity in your home and want to put it to use? Get in touch today to learn how.  

Buy a Home, Even With Student Loan Debt

Student loan debts may be at all-time highs, but Americans aren't letting that stop them from buying a home. In fact, a recent report shows that 27 percent of all homebuyers have student loan debt. And first-time buyers? A whopping 40 percent have student loans.

So how do they do it? How do they keep making monthly loan installments while saving for a down payment or paying a mortgage at the same time? Here's how today's buyers are making it happen.

  • They're choosing the right loan programs. For buyers with student loan debt, an FHA loan can be a great option. And both Fannie Mae and Freddie Mac have made favorable changes to how student loan debt factors into the mortgage qualification.
  • They're getting gifts and co-borrowing. Many buyers are choosing to use gift money from family members to pay their down payment or other costs, while others are choosing to co-borrow their mortgage with a significant other or roommate. Both of these help lower the costs of homebuying at the outset.
  • They're taking advantage of down payment assistance programs. Saving for a down payment is often the hardest part when you've got student loan debt on your shoulders. Fortunately, there are hundreds of down payment (and closing cost) assistance programs that can help cover these expenses and more. Check your state, city and county to find out if there are any you qualify for.
  • They're working on their credit.A great credit score means a great mortgage rate -- and less money paid monthly and over the life of the loan. Today's buyers are boosting their scores by paying down their debts, avoiding late payments and watching their credit reports carefully.

As they say, "where there's a will, there's a way." And today's young buyers are proof of that. Do you have questions about buying a home while dealing with student loan debt? Get in touch today.