Following their December decline, Existing Home Sales dipped again in January by 3.2%, to a 5.38 million annual rate. Though volatile month to month, home sales in 2017 racked up their best year since 2006, and, are expected to maintain that upward trend.

An IRS bulletin explains interest on home equity loans may still be deductible. The loan must be used to "buy, build or substantially improve" a home, and to deduct interest, all loans on the home cannot exceed a $750,000 limit ($350,000 if married filing separately).

As with all tax matters, always consult a tax or financial professional before making any tax-related decisions.


Review of Last Week

A crazy week on Wall Street, thanks to the Fed. Stocks went south on Wednesday after the Fed's Minutes from its last meeting revealed most members see stronger growth in the economy and inflation. This could necessitate more rate hikes, which investors don't much like.

But Friday, the Fed's semi-annual monetary policy report also noted broad improvement in the economy and increasing inflation, but did not suggest that rising prices dictated more aggressive rate hikes. Happy with that, the market rallied to another weekly gain.

GDP averaged 2.9% the last three quarters (after averaging 2.1% since 2010), unemployment is at a 17-year low, and wages, consumer confidence, and business investment are rising. A few rate hikes (which, remember, are starting from a very low level) may be a small price to pay for this progress.

The week ended with the Dow UP 0.4%, to 25310; the S&P 500 UP 0.6%, to 2747; and the Nasdaq UP 1.4%, to 7337.

Bond prices suffered from the inflation worries, but recovered a bit on Friday. The 30YR FNMA 4.0% bond we watch ended unchanged, at $102.47. National average 30-year fixed mortgage rates in Freddie Mac's latest Primary Mortgage Market Survey edged up.

Where are interest rates headed?

This Week's Forecast

Expect to see New Home Sales up in January, along with the Pending Home Sales index of contracts signed on existing homes. The Q4 GDP-2nd Estimate should show the economy growing at a 2.5% annual rate, enough to spur additional growth in Core PCE Prices, the Fed's favorite inflation read.

The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February  26, 2018 - March 2, 2018

Feb 26    08:30    New Home Sales
Feb 27    08:30    Durable Goods Orders
Feb 27    10:00    Consumer Confidence
Feb 28    08:30    Q4 GDP - 2nd Estimate
Feb 28    09:45    Chicago PMI
Feb 28    10:00    Pending Home Sales
Feb 28    10:30    Crude Inventories
Mar 1    08:30    Initial Unemployment Claims
Mar 1    08:30    Continuing Unemployment Claims
Mar 1    08:30    Personal Income
Mar 1    08:30    Personal Spending
Mar 1    08:30    Core PCE Prices
Mar 1    10:00    ISM Index 
Mar 2    10:00    U. of Michigan Consumer Sentiment - Final

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

In the Fed futures market, they still see a March rate hike as a near certainty. May gets a hold, then we go up another quarter percent in June.

Note: In the lower chart, an 83% probability of change is an 83% certainty the rate will move higher.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:   

Mar 21    1.50%-1.75%
May 2    1.50%-1.75%
Jun 13    1.75%-2.00%

Probability of change from current policy:

After FOMC meeting on:  

Mar 21           83%
May 2           22%
Jun 13           69%

Where are interest rates headed?

Call me now, 303.668.3350 or click here to apply!

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

Coming off their best year in a decade, Housing Starts surprisingly rose 9.7% in January, as home building heated up to a 1.326 million annual rate. The future looks good too, with Building Permits up to a 1.396 million annual rate.

The National Association of Home Builders (NAHB) found builder confidence in future sales expectations is now at a post-recession high. The NAHB Chair put this to "the pro-business political climate that will strengthen the housing market."

Finally, a recent study reports the median age at which consumers buy their first home is 29.1 years, yet some three quarters of millennials are not currently homeowners., what an opportunity!


Review of Last Week

After falling sharply the prior two weeks, the stock market rebounded last week, recovering about half its losses, and the three major indexes are again, ahead for the year. It seems the big dip on Wall Street was just a correction.

That's not to say we won't have greater volatility this year than last, when stocks gained more than 20%, while never posting even a 3% loss. This year, investors worry about inflation driving the Fed to more rate hikes, and last week saw a hotter than expected Consumer Price Index (CPI).

The economy doesn't seem in danger of overheating. Its strength is growing, with corporate earnings up more than 15% and revenues up nearly 8% the past year, plus historically low unemployment. It's no surprise Michigan Consumer Sentiment hit 99.9, its second highest print in 14 years.

The week ended with the Dow UP 4.3%, to 25219; the S&P 500 also UP 4.3%, to 2732; and the Nasdaq UP 5.3%, to 7239.

In bonds, prices generally softened, as investors shifted money back into equities. The 30YR FNMA 4.0% bond we watch dipped .08, to $102.47. Freddie Mac's latest Primary Mortgage Market Survey reported national average 30-year fixed mortgage rates continue to climb, reaching the level they posted in April 2014.

This Week's Forecast

Forecasters expect to see continued growth in Existing Home Sales in January, hitting an annual rate well above 5.5 million. Not much else gets reported during this four-day week, but we'll keep an eye on Unemployment Claims, predicted to remain historically low.

The U.S. stock and bond markets were closed yesterday in observance of Presidents' Day.

The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 19th through February 23rd:

Feb 21    10:00    Existing Home Sales
Feb 22    08:30    Initial Unemployment Claims
Feb 22    08:30    Continuing Unemployment Claims
Feb 22    10:00    Leading Economic Index (LEI)
Feb 22    11:00    Crude Inventories

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The futures market sees an even higher probability the Fed will hike rates a month from now, leave things alone in May, and bump up again in June. 

Note: In the lower chart, an 80% probability of change is an 80% certainty the rate will move higher.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:    

Mar 21    1.50%-1.75%
May 2    1.50%-1.75%
Jun 13    1.75%-2.00%

Probability of change from current policy:

After FOMC meeting on:  

Mar 21          80%
May 2           25%
Jun 13          66%

Where are interest rates headed?

Call me now, 303.668.3350 or click here to apply!

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

Do you need a 20% down payment in order to buy a house? Simply put, the answer is No.

The “20% down payment myth” has stopped many aspiring home buyers from purchasing a home.

This mindset comes from generations ago.

Several people that regard themselves as financial experts and professionals: parents, college professors, and even real estate professionals have always pitched 20% down as a wise move, but, is this truly the case?

Here is an excerpt from the National Association of Realtors®:

"Apparent confusion about down payment requirements may also be behind non-owners' lagging confidence about buying. NAR's Profile of Home Buyers and Sellers has shown that the median down payment for first-time buyers has been 6% for 3 straight years and 14% for repeat buyers in 3 of the past 4 years, however, when asked about the amount of down payment needed to purchase a home, a remarkable 87% of non-owners indicated that a down payment of 10% or more is necessary."

What Will it Take to Disregard the Mythical 20% Figure?

If you’re reading this (and willing to read until the end), you will have proven that you are ready for a greater insight into home buying wisdom.

Can I Really Buy a House Without 20% Down?

Yes, in fact, the massive upfront cost is not the "norm" so to speak. As mentioned above, and, according to the National Association of Realtors®, the average down payment for first time home buyers is just 6%.

The “20% Down Payment Myth” continues to propagate as a result of confusion between this and the fact you are required to have a 20% down payment, on a Conventional loan, to avoid paying private mortgage insurance.


Check this out, since the advent of FHA loans in 1934, the 20% down payment requirement has been gone, this was more than 80 years ago!

The Following are Ways in Which you Can Buy a Home with Minimal Down Payment:

The FHA mortgage requires just 3.5% down, however, most first-time buyers are unaware that the down payment can be sourced from a financial gift or approved down payment assistance program.

VA mortgages require zero down, and, another added benefit, do not require monthly mortgage insurance. This helps our nation's heroes to buy more house for less money. 100% of the closing costs can come from a seller concession or via gift funds from family. Those with current and former military service are likely eligible.

Conventional Loans Offer Down Payments as Low as 3%.

HomeReady™: allows non-borrowing household members to contribute toward qualifying income. Buyers can also use roommate income and/or mother-in-law unit, rental income, to qualify.
   
Home Possible® Advantage: a Freddie Mac 3% down loan offering reduced mortgage insurance
   
Conventional 97: Fannie Mae’s low down payment loan, with no income limits and no first-time buyer requirement.

USDA Home Loans: offers a zero down payment requirement. Property eligibility is location-based and homes outside of major metros are likely eligible. USDA loans are backed by the United States Department of Agriculture. Keep in mind, these loans are not for farms, but for typical single-family homes that happen to be in less-dense areas. USDA loans are available in every state.

1st/2nd or Piggyback Loans: require 10% percent down. Typically, we will originate an 80% first mortgage, followed by a 9.99% second mortgage, or home equity line of credit, and the buyer puts the remaining 10% down. This eliminates the need for private mortgage insurance. This loan scenario is available for buyers with great credit.

Down Payment Assistance (DPA) Programs

Down payment assistance programs are becoming increasingly popular. Government-run programs, plus approved non-profits, offer down payment assistance to support home ownership in select communities.

Nearly 90% of all single-family homes in the U.S. are eligible for some kind of down payment assistance according to a study by RealtyTrac. All of the major loan types mentioned above allow the borrower to apply DPA funds toward the required down payment.

Read more about the Metro Mortgage Assistance Plus grant that provides 4% of the loan amount to be applied towards down payment, and in some cases, closings costs, and best of all, does not have to be paid back!

What About Closing Costs?

Keep in mind, you will pay closing costs even if you select a loan program with no, or low down payment requirement.

Closing costs, on average, can range from 1%-3% of the home’s purchase price depending on many factors, such as, credit score, title fees, property taxes, escrow fees, etc.

The Following are Ways to Help Pay for Closing Costs:

Lender Credits Help With Closing Costs

Buyers can request a lender credit in return for a slightly higher mortgage interest rate. The credit helps pay costs and can also be applied to other fees.

Seller Concessions Reduce or Eliminate Closing Costs

The seller can agree to concessions, or a closing cost credit, to pay for all or part of the buyer’s closing costs. Seller concessions are more available in markets that favor the buyer, and this is not so much the case in Colorado.

4 Reasons It May Be Better Not To Put 20% Down

More Cash Available - it’s always a good idea to have cash on hand in case of an unforeseen event requiring emergency funds. Those who put all of their liquid assets into a down payment may not have the resources to weather a potential storm.

Buy Sooner - home prices, on average across the country, are rising at about 5% - 6% per year. That equates to $10,000.00 annually on a home costing $200,000.00. Waiting to save for a down payment could leave you chasing higher home prices.

Invest Elsewhere - you could deplete your 401k for a down payment, provided it’s allowed, however, you are probably better leaving retirement funds intact, not paying early withdrawal penalties, and continuing to invest. Removing funds for a down payment severely limits compound interest you could have potentially earned. This could be a decision you may end up regretting.

3 Drawbacks of Making a Small Down Payment

Mortgage Insurance - yes, it’s an extra cost.

Higher Mortgage Rates, Maybe - making a small down payment typically increases your rate for conventional loans, however, low down payment, government-backed loans like FHA, VA, and USDA all come with lower rates, when comparing against a conventional mortgage with 20% down.

Less Equity - you will have less equity in the home if you make a small down payment.

How Do I Check My Low Down Payment Eligibility?

Call me today, 303-668-3350. I can be reached any time and will verify your eligibility after I review your completed loan application.

You can get a jump start on the process by clicking here for a link to my secure, online loan application.

In closing, it's a terrific time to be a home buyer. Property values are rising in many U.S. markets, and especially in Colorado! Mortgage rates remain low, and, there is an abundance of low-down-payment mortgages available for today's home buyers.

Good Luck!

Call me now, 303.668.3350 or click here to apply! I would love the opportunity to work for you.

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

The information contained in this blog is for informational purposes only and is not an advertisement for loan products. The views and opinions expressed herein are those of the author and do not reflect the policy of any entity other than the author.

Not all applicants qualify. Please meet with the licensed loan originator listed for more information. Rates, fees, terms, and programs are subject to change without notice. Not all loan or products may apply. Loans subject to borrower qualifications, including income, property evaluation, sufficient equity to meet loan to value requirements, and final credit approval. Approvals are subject to underwriting guidelines. Program guidelines and are subject to change without notice. Nations Reliable Lending, LLC is an Equal Housing Lender. For more information visit www.nrlmortgage.com. Licensed by Colorado. Mortgage Company Registration expiration 12/31/2018. Scott Synovic NMLS #253799 Company NMLS #181407. For all list of our licenses visit nmlsconsumeraccess.org.

The Fannie Mae Home Purchase Sentiment Index rose in January to a new all-time high. More people say that now is a good time to buy and a good time to sell, home prices should rise and mortgage rates fall, and job loss is not a concern.

The National Association of Realtors latest Housing Opportunities and Market Experience survey reports, 72% of respondents think now is a good time to buy and 71% think now is a good time to sell, "good news for possible gains heading into 2018."

The NAR's chief economist feels, "housing demand in 2018 will be fueled by more Millennial's finally deciding to marry and have kids, and, the expectations that solid job growth and the strengthening economy will push incomes higher." That's pretty good.

Review of Last Week

If you like wild rides, you would have loved the one investors took last week. The Dow fell steeply (1,000 points) on two different days, then climbed back up Tuesday and Friday, though not enough to keep the major indexes positive for the year.

We heard lots of talk that the stock drop was caused by fears of higher inflation and more short-term rate hikes from the Fed, which is okay, but those concerns come from the expectation of stronger economic growth, which ultimately is good for stocks.

Many experts called this a "correction" after stocks shot up 7.5% the first four weeks of 2018 following last year's 19.4% surge. They say there's little concern for housing or the economy, with more Americans working than ever, the highest inflation-adjusted wages, and near historically low interest rates.

The week ended with the Dow down 5.2%, to 24191; the S&P 500 also down 5.2%, to 2620; and the Nasdaq down 5.1%, to 6874.

Bonds were kept in check by concerns over more federal spending. The 30YR FNMA 4.0% bond we watch fell .28, to $102.55. National average 30-year fixed mortgage rates hit their highest level since December 2016 in Freddie Mac's latest Primary Mortgage Market Survey, but, "initial readings indicate housing markets are sustaining their momentum so far."

This Week's Forecast

Returning to a feast of economic data, we should see a tasty Housing Starts number, up for January. Not so tasty is the predicted move up for inflation measured by the Consumer Price Index (CPI). Retail Sales, along with Philadelphia Fed Index manufacturing, are expected to keep cooking, just at a slightly slower pace

The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 12th through February 16th

Feb 12    14:00    Treasury Budget   
Feb 14    08:30    Consumer Price Index (CPI)
Feb 14    08:30    Core CPI
Feb 14    08:30    Retail Sales
Feb 14    08:30    Retail Sales ex-auto
Feb 14    10:00    Business Inventories
Feb 14    10:30    Crude Inventories
Feb 15    08:30    Initial Unemployment Claims
Feb 15    08:30    Continuing Unemployment Claims
Feb 15    08:30    Producer Price Index (PPI)
Feb 15    08:30    Core PPI
Feb 15    08:30    NY Empire Manufacturing Index
Feb 15    08:30    Philadelphia Fed Index
Feb 15    09:15    Industrial Production
Feb 15    09:15    Capacity Utilization
Feb 16    08:30    Housing Starts
Feb 16    08:30    Building Permits
Feb 16    10:00    U. of Michigan Consumer Sentiment - Prelim

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

Some say recent stock market volatility could restrain the Fed, but, the futures market still sees a quarter percent rate hike in March, and another in June.

Note: In the lower chart, a 72% probability of change is a 72% certainty the rate will move.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:   

Mar 21    1.50%-1.75%
May 2    1.50%-1.75%
Jun 13    1.75%-2.00%

Probability of change from current policy:

After FOMC meeting on: 

Mar 21           72%
May 2           31%
Jun 13           58%

Where are interest rates headed?

Call me now, 303.668.3350 or click here to apply!

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

The National Association of Realtors reported Pending Home Sales rose in December for the 3rd month in a row, ending 0.5% ahead of a year ago. This index of contracts signed on existing homes foretells sales gains a few months out. The NAR's chief economist predicts existing home sales will hit 5.54 million units in 2018: "larger paychecks most households will see from the tax cuts, and, the healthy labor economy, and job market, will continue to boost demand." Tight inventories in many markets remain a concern.

The Census Bureau reports Q4 home ownership reached its highest level in 3 years. Zillow's Senior Economist feels "after bouncing around near 50-year lows for the past few years, the home ownership rate seems to be gaining sustainable momentum."

Review of Last Week

The bad news was stocks tanked, but, that was blamed on the good news of the January jobs report. A better-than-expected 200,000 jobs were added, and average hourly earnings (wages) are now up 2.9% year-over-year, the highest growth rate since 2009.

Unfortunately, this wage growth can also drive up inflation, which could encourage the Fed to do more than the two additional rate hikes expected this year. Who knows. Some felt the big stock selloff was just a normal correction in a market that's come a little too far a little too fast.

More evidence of a faster growing economy came with Personal Income AND Spending up nicely in December, with Core PCE Prices, the Fed's favorite inflation read, still a ways from their 2% target. The University of Michigan Consumer Sentiment on the economy remains high.

The week ended with the Dow down 4.1%, to 25521; the S&P 500 down 3.9%, to 2762; and the Nasdaq down 3.5%, to 7241.

Bonds headed south from the same inflation concerns that hurt stocks. The 30YR FNMA 4.0% bond we watch fell by .73, to $102.83. In Freddie Mac's latest Primary Mortgage Market Survey, national average 30-year fixed mortgage rates edged up.

Where are interest rates headed?

This Week's Forecast

We're taking a breather from last week's avalanche of reports, with just a few bits of data worth watching. The ISM Services index is expected to show continued growth for the sector of the economy creating the most jobs. We would rather not see growth in our Trade Balance deficit, but it looks like imports will keep besting exports.

The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 5th through February 9th

Feb 5    10:00 ISM Services
Feb 6    08:30 Trade Balance
Feb 7    10:30 Crude Inventories
Feb 8    08:30 Initial Unemployment Claims
Feb 8    08:30 Continuing Unemployment Claims

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

A March rate hike is expected, then no move in May, but another quarter percent bump in June. Note: In the lower chart, a 78% probability of change is a 78% certainty the rate will move.

Current Fed Funds Rate:

After FOMC meeting on:  

Mar 21    1.50%-1.75%
May 2    1.50%-1.75%
Jun 13    1.75%-2.00%

Probability of change from current policy:
After FOMC meeting on: 

Mar 21          78%
May 2           26%
Jun 13           64%

Where are interest rates headed?

Call me now, 303.668.3350 or click here to apply!

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.