Mortgage Rates Archives - Page 44 of 178

Does Shopping Around for A Mortgage Pre-Approval Hurt Your Credit Rating? Smart homebuyers know that mortgage rates and terms can vary widely among lenders. While your credit score and history will influence what rates and terms you’re offered, there’s a wide range of flexibility, which means shopping around for a pre-approval makes sense. At the same time, it’s important to minimize credit inquiries to protect your credit rating.

What is Mortgage Pre-Approval?

Mortgage pre-approval is often mistaken for mortgage pre-qualification. Pre-qualification is a process whereby the borrower personally submits their financial information to the lender. Pre-approval is the process whereby the lender does their own vetting regarding the income, debt and credit of a potential borrower. Pre-approvals will involve a hard “hit” to the credit score, due to the inquiry.

Pre-Qualification Doesn’t Guarantee Pre-Approval

Note that just because you are pre-qualified for a certain amount, that doesn’t guarantee pre-approval. So it’s important to go ahead and get the official pre-approval before shopping for a home. This will make you a more attractive homebuyer to sellers.

Mortgage Hard Inquiries Make Credit Scores Dip

When lenders do a true pre-approval inquiry, it will make the credit score dip temporarily. This is an automatic process that happens because it looks like the person is looking to get more credit, which they are. Small drops from hard inquiries are temporary and will bounce back up in a short period of time.

Mortgage Inquiries Don’t Count

However, mortgage inquiries now don’t count on a credit rating, anymore. Lenders know that borrowers will be shopping around for the best rates and terms. As long as the inquiries take place in a short period of time, the inquiries will count only as one single hard inquiry, rather than multiple hard inquiries. In the event that multiple hard inquiries are noted on a credit report, as long as they are all from the same type of lender—a mortgage lender—it won’t count against the borrower.

The bottom line is that it’s wise to get multiple quotes when shopping for a mortgage. It’s more important to have a long-standing history of paying bills on time and managing credit well, than it is to worry about mortgage “hard inquiries.” Your real estate agent will help you to navigate getting multiple quotes in a short time span. Contact your agent to learn more.

What's Ahead For Mortgage Rates This Week - January 10, 2022

Last week’s economic reporting included readings on construction spending and labor sector readings on jobs and unemployment. Weekly reports on mortgage rates and jobless claims were also released.

Construction Spending Unchanged, Falls Short of Expectations

The Commerce Department reported that construction spending rose by 0.4 percent in November to a seasonally-adjusted annual pace of $1.63 trillion and 9.30 percent year-over-year, Residential construction spending drove spending higher; month-to-month spending rose by 0.90 percent in November and was 16 percent higher year-over-year. Analysts expected overall construction spending to rise by 0.70 percent from October to November.

High demand for homes continued to drive residential construction spending, but spending on office construction fell by 32.10 percent year-over-year. Work-from-home options increased as employers and workers faced covid-related challenges.

Mortgage Rates Rise; Jobs Data Mixed

Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages rose 11basis points to 3.22 percent. The average rate for 15-year fixed-rate mortgages was 10 basis points higher at 2.43 percent. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.41 percent. 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 0.50 percent.

First-time jobless claims rose by 207,000 claims filed as compared to the prior week’s reading of 200,000 initial claims filed. Analysts expected 195,000 new claim filings. Continuing jobless claims rose last week with 1.75 million ongoing claims filed; 1.72 million continuing jobless claims were filed in the prior week.

The government’s Non-Farm Payrolls report for December reported 199,000 public and private sector jobs added, which fell far short of the expected reading of 422,000 jobs added and November’s reading of 249,000 jobs added. Analysts said that the spread of the omicron variant of the covid virus slowed job searches and hiring.

ADP reported 807,000 private-sector jobs added in December, which surpassed expectations of 375,000 jobs added and November’s reading of 505,000 private-sector jobs added. The national unemployment rate fell to 3.90 percent as compared to the prior month’s reading of 4.20 percent. The unemployment rate is based on the number of unemployed workers actively seeking work and does not include workers who stopped looking for work.

What’s Ahead

This week’s scheduled economic reports include readings on inflation and retail sales and weekly reporting on mortgage rates and jobless claims.