Mortgage News Round-Up
It’s been another week of waiting to see if mortgage rates would rise, but so far, they’re holding steady. And refinance applications are on the rise again. If you’re still thinking of refinancing but haven’t yet, now might be a good time to talk to a reputable mortgage loan officer. They diligently track market trends and financial offerings to find you the best deal.
Fed’s Duke Sees Credit Easing Except in Mortgage Market
Bloomberg is reporting that Federal Reserve Governor Elizabeth Duke feels that the economy is strengthening.
“The economy does seem to be strengthening — particularly the housing market seems to be recovering at this point,” Duke said today at a Washington conference hosted by the American Bankers Association. “House prices are going up” though “a lot of that has to do with a shortage of houses on the market.”
Duke said “credit issues seem to be receding, and banks’ credit portfolios seem to be getting stronger and stronger and the delinquency ratios, non-performing asset levels seem to all be going down. So things seem to be going in the right direction there.”
The weak credit conditions of the past are improving in every sector except the mortgage market.
Duke’s comments come amid a sustained push by the central bank to spur the expansion and reduce unemployment. The Federal Open Market Committee in March reiterated its plan to buy $85 billion in bonds every month until the labor market outlook improves “substantially.” It also pledged to keep interest rates near zero as long as unemployment remains above 6.5 percent and the outlook for inflation is less than 2.5 percent.
The increase in mortgage interest rates would indicate an economic recovery. Since the other sectors are showing improvement, the expectation is that mortgage rates will start to rise soon. Big banks are already looking into cutting provisions for bad loans because the number of loans faulted on have decreased tremendously.
Alternative Ways to Pay Your Mortgage
Do you live near a major event like Coachella? A major art center or museum like the Sacramento Train Museum? Or a major sports team like the Seattle Mariners? Or a major vacation spot like San Francisco?
You could rent out your home for the weekend like Mark Magnum and his wife do. They live in Texas and during football season, they rent out their home for $1600 for the weekend. Their current mortgage is $1300/month, and they spend the weekends with the in-laws. He pays 20% to a management company who handles all of the booking and payments.
Things to be aware of:
- Zoning laws – Need to find out if you need a license or if it violates any zoning ordinances
- Tax laws – need to be certain you can still call it your primary residence
- Loan requirements – like the tax laws
Another way to defray the cost of your mortgage is to take on a boarder. If you do this, make sure you have a solid contract as to what the renter can and cannot do. Also, ensure you do a thorough background check, and get a substantial deposit.
Would you ever rent out your home?