George Duarte, Author at George L. Duarte

5 Uncommon Mortgage Terms You Need to Know When it comes to finding a new home, there are lots of complex ratios, terms, and contracts that you’ll encounter – and at times, it’ll feel like you’re trying to navigate a minefield. Here are five mortgage terms you may not encounter regularly that you’ll need to know when buying a home.

Escrow: Money Held In Trust To Pay Taxes

An escrow account is a bank account that your lender maintains on your behalf. When you close your mortgage, you’ll need to deposit a certain percent of your annual property taxes into the escrow account, which your lender will hold in trust and use to pay your property taxes.

PITI: How Your Lender Calculates Your Monthly Payments

Your lender uses a specific formula used to calculate exactly how much money you need to pay your lender each month. Each month, your mortgage payment will include portions that go toward your principal loan amount (P), your interest payment (I), your property taxes (T), and your homeowner’s insurance (I). If you have private mortgage insurance, it’ll be included with this PITI payment.

Rate Buydown: Lowering Your Interest Rate With A Larger Down Payment

A rate buydown, also known as a discount point, is a chunk of your mortgage interest that you pre-pay in order to get a lower monthly interest rate over the life of the loan. Each point you buy reduces your interest rate by a small amount.

Loan Estimate: What Your Lender Must, By Law, Give You

A loan estimate is a form that your lender is required to give you when you apply for a mortgage, as per the Truth in Lending Act. Your loan estimate will include your estimated costs of carrying the loan – including monthly payments, interest rates, and processing fees. Loan estimates allow you to compare terms and rates across different lenders.

Loan-To-Value: Determining How Much House You Can Afford

Your LTV (loan-to-value) ratio is a ratio that is used to calculate the amount of equity you have in your home and to assess your risk as a borrower. Typically expressed as a percentage, your LTV is determined by dividing the total amount of your mortgage loan by the property’s fair market value. Borrowers generally prefer to see lower LTV ratios.

Mortgages contain a variety of legal terms that can be challenging for the uninitiated to understand. But with a qualified mortgage advisor on your side, you’ll have no difficulty navigating mortgage contracts and finding the right mortgage for you. Contact your local mortgage professional to learn more.

What's Ahead For Mortgage Rates This Week - January 31, 2022 Last week’s economic reporting included readings from S&P Case Shiller Home Price Indices and the FHFA on home prices, data on new home sales, and the Federal Reserve’s statement on the federal interest rate range. The University of Michigan released its monthly survey on Consumer Sentiment and weekly readings on mortgage rates and jobless claims were also published.

S&P Case-Shiller Home Price Indices: Home Price Growth Slows in November

Home prices rose at a seasonally-adjusted annual pace of 18.80 percent in November according to S&P Case-Shiller’s National Home Price Index. The 20-City Home Price Index, which is frequently used by real estate pros, reported that Phoenix, Arizona home prices rose by 32.20 percent year-over-year. Tampa, Florida home prices rose by 29 percent, and Miami, Florida home prices rose by 26.60 percent.

The Federal Housing Finance Agency, which tracks data on homes owned and financed by Fannie Mae and Freddie Mac, reported 17.50 percent year-over-year growth in home prices in November as compared to October’s reading of 17.40 percent.

New homes sold at an annual pace of 811,000 sales in December; analysts expected a reading of 757,000 sales. New homes sold at a pace of 725,000 sales year-over-year in November.

Fed Leaves Key Interest Rate Unchanged, Hints at Raising Rates in 2022

The Federal Open Market Committee of the Federal Reserve announced that it did not raise the key federal funds rate range of 0.00 to 0.25 percent, but indicated future rate increases would be used to control inflation. Combined impacts of rapidly rising home prices and mortgage rates presented challenges to first-time and moderate-income home buyers, but the median price of a single-family home fell to $377,700 in December.

Mortgage Rates, Jobless Claims Mixed

Freddie Mac reported little change in mortgage rates last week as the average rate for 30-year fixed-rate mortgages dropped by one basis point to 3.55 percent. The average rate for 15-year fixed-rate mortgages rose by one basis point to 2.80 percent. Rates for 5/1 adjustable rate mortgages averaged 2.70 percent and 10 basis points higher than in the previous week. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.20 percent.

Initial jobless claims fell to 260,000 new claims filed as compared to the previous week’s reading of 290,000 first-time claims filed. Continuing jobless claims rose to 1.68 million claims filed from the prior week’s reading of 1.62 million ongoing claims filed

What’s Ahead

This week’s scheduled economic reporting includes readings on construction spending, job openings and quits, public and private sector jobs growth, and the national unemployment rate. Weekly reports on mortgage rates and jobless claims will also be published.

5 Uncommon Mortgage Terms You Need to Know

What’s Ahead For Mortgage Rates This Week – January 31, 2022

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