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The Fed Raised Rates….Why Did Mortgage Rates Drop?

The Fed Raised Rates….Why Did Mortgage Rates Drop?

Homestead Financial | Mortgage Rates Drop

The U.S. Federal Reserve raised its key, Federal Reserve Funds Rate (Fed Funds) .25% on Monday, March 13th, 2017 for the second time this year, citing economic growth, job gains and confidence.

Then the mortgage market did something odd. Mortgage rates dropped. The yield on the 10 year US treasury peaked at 2.60% the day the FOMC chair, Janet Yellen announced the Federal Reserve would raise its key Fed Funds rate to 1.00%, from .75%.

The reason? Consumer debt gets pricing from DC and mortgages get their pricing from Wall Street. Fed Funds is the interest rate the Federal Reserve changes its member banks for short term loans. There is no direct correlation between the Federal Reserve raising rates and mortgage rates.

So in other words, Fed Funds going up has an effect on your credit card rates and consumer loan rates, rates tied to the prime lending rate, but not mortgage rates.

So what do I do if I’m in the mortgage market? The best indicator of mortgage rates is the yield on the 10 year US Treasury which can be found here https://finance.yahoo.com/quote/%5ETNX?p=^TNX

4 Tips for Using Child Support to Qualify for a Mortgage

Quite often we see mortgage applicants, generally single mothers applying for financing that have income from a job and child support.  Sometimes, the child support is the make or break item that is the difference in qualifying the applicant for a home loan.

However, due to the inconsistent nature inherent in some child support relationships, there are a number of rules that apply to getting the child support payments to qualify as income for a mortgage applicant.

Below are 4 tips to use in advance of your mortgage application to make sure child support income can be included by your mortgage lender.

1. 6 Months Backwards

In order for child support income to be considered, we must ba able to document a 6 month history of receipt. This is due to so many parents not making the required child support payments. Proving receipt for 6 months can be problematic though. In some cases where child support is administered by the state government, for example, state of MO Child Support Enforcement has a link to document payment history of their cases, which is available at https://dssapp.dss.mo.gov/payments/WbMdi3OrdersByCaseListSvr.ASP Each recipient is required t to obtain an 8 digit key code to access their account.

2. 3 Years Forwards

Also, like most income that is not directly derived from work, the rule of thumb to qualify for a mortgage is to show that the income stream will continue for at least 3 more years. Effectively, this means the children for which the borrower receives financial support can’t be any older than 15 at the time of application.

3. Check Please! 

If not paying via some online vehicle, try to be paid by check. It helps if there is a copy of the check which can be verified with the deposit receipt on the bank statements.

 

4. Deposit the check quickly, by itself and wholeSingle Dad Mortgage

The child support check should be deposited as quickly as you receive it, and should be deposited by itself and do not take any cash out of the deposit. So in other words, don’t hold on to the check to deposit with a payroll check and don’t take cash from the deposit.

So, for example, Sally, who lives in Warrenton, collects child support of $1,100 per month is paid by check for 2 children ages 12 and 10. She regularly copies the front of the check and deposits the check by itself and whole. A mortgage company will be able to use this as income towards qualifying for her mortgage by producing 6 months of bank statements and copies of the checks showing a check for $1,100 and deposits for $1,100.

To conclude, it is possible to include child support as income toward qualifying for a mortgage application. It does take some planning and documentation.

 

If you have anymore questions or want to discuss this further, please feel free to reach out to Jayson Hardie at 636-256-5712, it costs ZERO to find out!

Buying a Home with No Money Down – VA

Years ago, it was very easy to purchase a home with no money down, or 100% financing. Then this little thing hit called the “mortgage meltdown” hit in 2007 and everything changed where almost every program requires a borrower put some type of down payment on a purchase. However, there are still certain types of mortgages that will finance 100% of the purchase price of your home, they are a US Department of Agriculture(USDA) mortgage and a Veterans Administration(VA) mortgage. We will cover those today.
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What’s the Minimum Down Payment I Need to Buy a Home?

For anyone trying to save enough money to buy a home, especially their first home, the question always comes up about home much does a person need to put down on a home. This amount varies based on loan type. Here is a summary along with the pro’s and cons of each. Continue reading “What’s the Minimum Down Payment I Need to Buy a Home?”

Climbing Out of Debt – Part 1

Like many Americans, you have a few credit cards and do your best to manage your money responsibly but it seems every month you come up a few hundred dollars short. Trouble is your annual raise hasn’t kept pace with the rising costs of gas, groceries and other necessities let alone discretionary or luxury items like movie tickets, your fitness club membership or trips to the spa. You know if you don’t rein in your spending, you’re debt will grow and climbing your way out of debt will be even more difficult than it is right now. Nobody wants, or likes, to be in debt especially in today’s tough economy. While climbing your way out of debt may seem like achieving the impossible, there are several ways to do it. Continue reading “Climbing Out of Debt – Part 1”

A Refinancing Expansion

Unless you’re living under a rock, you know it’s a presidential election year, with Election Day less than two months away. And while many are already sick and tired of the mud-slinging and negative ad campaigns, there’s one thing that homeowners should be paying close attention to – a refinancing expansion bill the White House is urging the U.S. Senate to vote on as early as this week.
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Tips for Buying Your First Home

With depressed real estate markets across the country and an often confusing process, purchasing a home is a much scarier prospect than it used to be for first-time home buyers. Knowing the steps to take to get you to your goal is essential. Here is a road map to help you prepare to buy your first home.

When it comes to buying a home it seems like you have to put the tail before the dog. In other words you should figure out how much house you can afford and a lender who will loan you money at an attractive rate with good terms before you go house hunting. Some people are lucky enough to have generous parents or grandparents give them the cash they need for a down payment while others find a seller willing to help them with closing costs. Continue reading “Tips for Buying Your First Home”

Buying Your First Home with Bad Credit

Lenders are a lot more cautious these days making buying your first home with bad credit seem like mission impossible. Trouble is circumstances have changed in the past few years with new loan limitations making it harder for people to get loan approval. While there are things you can do to maximize your chances of getting a loan, you should ask yourself some tough questions before investigating loan options.

First, consider if buying a home is good for your financial situation. Owning a home can be a lot of pressure with costs like homeowners insurance, repairs and property taxes many first time homebuyers have not had to pay before. Buying a home is one of the biggest lifetime investments many people will make. So you’ll have to do some soul searching to determine if owning a home is right for you.
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