The Fed Takes Action

This past week, the Federal Reserve hiked the Fed Fund Rate by .50%, the largest rate increase in 22 years. Let’s discuss what other action the Fed took, how the market reacted and what to look for in the week ahead. “I would like to first speak to the American people. Inflation is much too high, and the Fed understands the hardship and is moving expeditiously to bring down inflation.” Fed Chair Jerome Powell – May 4, 2022. How does the Fed move to bring down inflation? Raise rates and tighten monetary conditions. And this started last Wednesday when the Fed raised the Fed Funds rate by .50%. In a separate measure, the Fed will also begin shrinking its enormous $9T balance sheet of Treasuries and mortgage-backed securities (MBS). It is important to remember that this hike in Fed Funds Rate has no direct effect on home loan rates. Oddly enough, the measures the Fed is taking to lower inflation help preserve the value of long-term bonds like MBS. If the Fed is successful in bringing down inflation, it will help long-term bond prices improve and long-term rates remain relatively stable. The lift to the Fed Funds Rate will immediately impact all short-term loans, like auto loans, credit card debt, and home equity lines of credit. Increasing these rates is expected to slow consumer demand, which in effect will slow price increases. Powell gave the market comfort when he said there was “a good chance to have a soft landing”. Meaning the Fed can continue to raise rates more and slow demand without pushing the economy into a recession. How much more will the Fed hike rates? The Fed Chair signaled they are likely to raise rates by another .50% in both June and July. Of course, making these moves will depend on the incoming data. This means we should continue to expect high-interest rate volatility around key economic reports like inflation, GDP, and the labor market. “Beginning on June 1, principal payments from securities held in the System Open Market Account will be reinvested to the extent that they exceed monthly caps.” FOMC announcement on balance sheet reduction. The balance sheet reduction announcement means the Fed will be buying fewer bonds going forward. This is the opposite of what the Fed did through Quantitative Easing where they purchased $120B worth of Treasuries and MBS every month. It is not yet truly clear what will happen to home loan rates once the process in June commences as the Federal Reserve has only once shrunk the balance sheet for a limited amount of time back in 2018. “It’s a strong economy and nothing about it suggests it’s close to or vulnerable to a recession. We have a good chance to restore price stability (lower inflation) without a recession”. Jerome Powell. These words initially provided some comfort to both stocks and rates, but come Thursday, after sleeping on it, interest rates crept higher with MBS prices hitting 11-year lows and the 10-yr Note yield touching 3.09%. Despite the Fed Chair saying the Fed is not considering a .75% rate hike, the markets finished the week assigning a very high probability the Fed will hike by .75% in June. Bottom line: Home loan rates are at an important juncture. While MBS attempt to stabilize, there is a real threat they can go another leg higher and fast. If you are considering a purchase transaction, now is the time to lock. Source: carringtonwholesale.com/blog/2022/05/06/the-fed-takes-action/

Smart Kitchens, Smart Faucets

So-called “smart” devices are increasingly popular, adding new features and functionality to just about every room in your home. One room that you might not consider for a smart upgrade is the kitchen, but you should. There are a number of sensors and connected devices that can transform your kitchen into something special. One great option that’s often overlooked is the addition of a smart faucet to your sink. 

While smart faucets aren’t as well known (yet) as other smart home add-ons such as smart lighting and smart thermostats, they can have a significant impact on how you use your kitchen. Not only can you turn the faucets on and off in different ways, but you can also have your smart faucets automatically save you money on your water bill. If you’re wondering whether a smart faucet might be a good addition to your home, read on for more info on just how these faucets can help you. 

Smart Faucet Controls 

One big advantage to smart faucets is that there are multiple ways to control the flow of water. In addition to standard handles or levers, many smart faucets contain features such as touch panels and motion sensors that allow you to turn the water on and off with little to no contact with the faucet itself. This adds convenience to using the sink in general, and can help keep your kitchen area clean if your hands are dirty or covered with batter or other substances that you wouldn’t want to clean off of everything later. 

Depending on the model, some smart faucets can also be controlled remotely using apps or voice controls. In most cases, you can even pair the apps on your smartphone with digital assistants such as Alexa and the Google Assistant. This lets you control the faucet using Amazon Echo and Google Home devices, turning the water on and off as needed while doing prep work or otherwise getting things ready for the water.

Smart Water Usage

Another big benefit of smart faucets is the way that they help to control your water usage. The water-saving features of smart faucets help prevent wasted water by cutting off the flow when you aren’t actually using the sink. This keeps you from accidentally leaving the water running when you’re doing something that takes too long and can also help prevent drips and other problems that might occur when you don’t close a valve all the way.

Some smart faucets also let you track your water usage over time via their connected apps. This can make you more aware of how much water you’re using in the kitchen and may help you to ratchet back on your usage over time. Eliminating unnecessary water use will save you money and help the environment as well, and the awareness of how much water you’re using is a big part of cutting back on that unnecessary use. 

Installing Your Smart Faucet 

For the most part, installing a smart faucet is a lot like installing any other faucet. Depending on the faucet model, its smart features will be powered either by batteries or a nearby outlet; if the faucet is outlet powered, you’ll need to make sure that there’s a source of power close enough to hook the faucet up for it to work properly. Once installed, some smart features may require additional setup, especially if you plan to use the faucet with external devices such as an Echo or Google Home. 

Source

https://blog.homekeepr.com/smart-kitchens-smart-faucets?sharedby=beatrice-rauch&utm_source=ActiveCampaign&utm_medium=email&utm_content=Your+HomeKeepr+Daily+%7C+Your+Shareable+Blog+Post+is+Ready&utm_campaign=Thursday_Daily_Agent_Email 

RefiNow and Refi Possible available summer 2021

 

Blog Posted by Betty Rauch - Loan Originator NMLS#390883

Florida State Mortgage Group, Inc.  NMLS#393326

Written  by:  Aly J. Yale -The Mortgage Reports Contributor

June  2021 

It’s about to get easier for low-income homeowners to refinance. 

Thanks to a new initiative from the Federal Housing Finance Agency (FHFA), certain low-income borrowers will soon be eligible for reduced-cost refinances that guarantee a lower interest rate and monthly payment.

According to the agency, the option will save borrowers anywhere from $100 to $250 per month, on average. That’s a total savings of $1,200 to $3,000 per year.

How RefiNow and Refi Possible work

The new refinance option is dubbed RefiNow by Fannie Mae and Refi Possible by Freddie Mac. It targets lower-income borrowers with conforming mortgages, who could benefit from lower interest rates and payments but haven’t been able to refinance because of the upfront cost.

RefiNow will be available from June 5 for Fannie Mae-backed loans. Refi Possible starts in August 2021 for Freddie Mac-backed loans.

Those who qualify would see their monthly mortgage payment reduced by at least $50 and their interest rate lowered by 50 basis points (0.50%) or more.

Those who qualify would see their monthly payment reduced by at least $50 and their interest rate lowered by 0.50% or more.

For example, if your current interest rate is 3.5% and you qualify for Fannie Mae’s RefiNow program, your new interest rate would be 3.0% or possibly lower. 

Some borrowers could also receive a $500 credit to cover the home appraisal. And the adverse market refinance fee — which charges 0.50% on loans of $125,000 or more — may be waived.

With a typical refinance, these types of waivers and guaranteed reductions are not available. Any reductions in rate or payment are directly tied to the borrower’s qualifications — their credit score, debt-to-income ratio, home equity share, and more.

With RefiNow and Refi Possible, low-income homeowners will have a unique chance to refinance with guaranteed savings and reduced upfront costs.

Potential savings for homeowners 

The potential savings of the RefiNow and Refi Possible programs could be huge.

According to the FHFA, it should be around $100 to $250 per month on average. But depending on the borrower, it could be larger or smaller, too.

Here’s an example: Say you took out a $200,000 loan at a 5% interest rate in January 2018. The loan came with a $1,073 monthly payment. Since it’s been three years, you’ve paid down your balance slightly, and you currently have about $188,000 left on the loan. 

If you qualified for the program, you could refinance into a new, 30-year loan with an interest rate of 4.5%.

That would reduce your monthly payment to $952 per month — a difference of around $120 or, over the course of one year, more than $1,440 saved. 

That, of course, doesn’t include the savings from the appraisal waiver ($500) and the adverse market fee.

The adverse market fee charges 50 basis points (0.50%) of all loan balances over $125,000. So for a $188,000 loan, you’d pay $940.

That means refinancing will become much more affordable for homeowners who qualify to have the fee waived.

RefiNow and Refi Possible eligibility

To qualify for the new low-income refinance program, you’ll need to have a loan that’s guaranteed by either Fannie Mae or Freddie Mac.

If you’re not sure whether your loan falls into this category, use Fannie and Freddie’s lookup tools.

Other requirements for RefiNow and Refi Possible include:

• Your income must be at or below 80% of the area’s median income
• You must not have missed any mortgage payments in the last six months and no more than one in that last 12 months
• Your current loan-to-value ratio can be no larger than 97%
• Your debt-to-income ratio can be no higher than 65%
• Your credit score must be 620 or higher

Your home also must be a single-family, one-unit property that you occupy as your primary residence (no investment properties or multi-family homes/duplexes).

Apply.SFLmortgages.com

When will the new refinance programs be available? 

Fannie Mae’s RefiNow program will be available starting June 5, 2021 to homeowners with existing mortgages backed by Fannie Mae.

Freddie Mac’s Refi Possible will be available in August of this year for homeowners whose current mortgages are backed by Freddie.

Not sure whether your home loan is owned by one of these two agencies? You can find out using Fannie Mae’s lookup tool and Freddie Mac’s lookup tool.

Make sure you use both lookup tools if you’re unsure, because either agency may have bought your loan after it closed.

Why is FHFA targeting low-income borrowers? 

Refinancing has been hugely popular in the past year, especially with mortgage rates hovering near historic lows. But according to FHFA, lower-income homeowners didn’t have the same opportunities to refinance their homes.

“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by refinancing,” said Mark Calabria, FHFA director.

“This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”

“It’s a very homeowner-friendly move that should help people stay in their homes and give them more financial breathing room.” –Jeff Taylor, Co-founder, Mphasis Digital Risk

The program can also help lower-income families struggling due to the pandemic by freeing up cash flow and reducing their monthly financial burden.

It could even help down-on-their-luck borrowers keep their homes in some cases.

“The money saved by refinancing can be used to help those who have experienced a job loss or some financial impairment since the start of the pandemic,” said Jeff Taylor, co-founder of Mphasis Digital Risk and a board member at the Mortgage Bankers Association.

“It’s a very homeowner-friendly move that should help people stay in their homes and give them more financial breathing room,” he says.

Should you wait to use RefiNow or Refi Possible? 

There’s no way to perfectly time your refinance, but for lower-income borrowers, the FHFA’s new initiative just may be worth the wait.

With the guaranteed rate cut, reduced monthly payment, and waived fees, the savings could be significant.

If you’re worried about interest rates rising, you could consider applying for your refinance now and choosing an extended rate lock. This would allow you to lock in today’s historically low rates as you wait for summer to roll around.

You can also speak to a loan officer or mortgage broker for more specific advice. They can guide you on the best move for your financial situation.

Source: https://themortgagereports.com/76254/new-refinance-option-for-low-income

Refinances- contact Betty Rauch    954.410.1960   Apply.SFL mortgages.com