Darren Orshoff

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What’s Ahead For Mortgage Rates This Week -February 18th, 2020

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, Blog, Darren Orshoff, Darren OrshoffLast week’s economic reporting included releases on inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Inflation Hits Highest Growth Pace Since 2018

Consumer staples including rent, prepared food and medical expenses caused inflation to rise 0.10 percent from December to January, which was the smallest month-to-month growth in four months. Rents drove month-to-month inflation with a growth rate of  0.40 percent.

Year-over-year inflation grew from 2.30 percent to 2.50 percent, which was the highest year-over-year growth rate since Fall 2018. Analysts said that inflation remained low according to historical data and that no sharp inflationary growth was expected.

The rapid acceleration of rents and home prices continued to create obstacles for renters and homebuyers, who faced prices rising faster than the overall inflation rate and wage growth,

Retail Sales Dip in January

The Commerce Department reported an 0.30 percent drop in retail sales for January, which matched expectations, but was half the growth rate of 0.60 percent posted in December. January’s lower reading was largely attributed to clothing stores, which experienced a 3.10 percent decline in sales after the holiday season.

Analysts expected retail sales to grow at a pace fast enough to support economic growth throughout 2020.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher rates for fixed-rate mortgage loans last week; rates averaged 3.47 percent for 30-year fixed-rate mortgages and were two basis points higher. Rates for 15-year fixed-rate mortgages averaged one basis point higher at 2.97percent.

Rates for 5/1 adjustable-rate mortgages rose an average of four basis points to 3.28 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.80 percent for 15-year fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims rose to 205,000 new claims filed but fell short of an expected reading of 211,000 new claims filed. The prior week’s reading for new unemployment claims was 203,000 claims filed.

The University of Michigan reported higher consumer confidence for February; the Consumer Sentiment Index rose to 100.8 from January’s index reading of  99.8. Analysts predicted no change for February’s reading.

What’s Ahead

This week’s scheduled economic news includes readings on NAHB Housing Markets, Housing starts, building permits and sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.

Investment Property Down Payments: How Much Will You Need?

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, Blog, Darren Orshoff, Darren OrshoffInvesting in real estate is a great way for someone to diversify his or her assets; however, there is a common hurdle that almost all real estate investors face. This comes in the form of a down payment. 

It can be a challenge for someone to come up with enough cash to fund the down payment on a home or piece of land, let alone multiple properties. At the same time, how big of a down payment does someone really need? There are a few factors that someone is going to need to consider.

The Conventional Mortgage

There are plenty of investors who like to stick with a conventional mortgage for their investment properties. This makes sense because this is a format they are familiar with. For a conventional mortgage, the down payment is going to fall between 10 and 25 percent.

When taking out a conventional mortgage for an investment property, the lender is typically going to want a larger down payment. For a single-family property, most lenders are going to expect at least 15 percent of the purchase price. This number can be as high as 25 percent of those who are investing in an apartment building, condo structure, or any multifamily unit.

Those who are looking to put down a smaller down payment will need to finance the investment property as a second home. While this might be an interesting thought, anyone looking to purchase an investment property as a second home will need to spend at least some of their time at this location. For a second home, someone might be able to get away with a 10 percent down payment.

A Smaller Down Payment For Multifamily Buildings

There is another way that someone might be able to successfully apply for a smaller down payment. FHA mortgages tend to have higher fees; however, they require smaller down payments. For example, even a multifamily property may only require a 3.5 percent down payment with an FHA loan.

In this example, someone could purchase a multifamily building for $600,000 and only have to put $21,000 down. Those who are willing to stomach higher fees might want to check out the possibility of an FHA loan.

If you are interested in purchasing an investment property, be sure to consult with your trusted real estate professional.

Green Energy Tax Credits For Home Improvement & Energy Efficiency

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, Blog, Darren Orshoff, Darren OrshoffMany individuals and families are looking for ways to reduce their energy consumption. Running the heater during the winter and the air conditioner during the summer can have significant impacts on someone’s energy consumption and costs. It should come as no surprise that many people are trying to reduce their HVAC usage to save money; however, there is a better way.

Individuals and families can permanently reduce their fossil fuel usage and carbon footprint by investing in home improvements. Better yet, local, state, and even the federal government wants everyone’s home to be more environmentally conscious, or “green.” Many utility companies want people to act in the same way. That is why there is a slew of incentives for homeowners who are willing to make their homes more Earth-friendly.

Government Tax Credits For Green Initiatives

Many of the tax credits the government is offering for “going green” are going to run through the end of 2021. They are available to any homeowner in the United States who files a federal tax return. Applying for tax credits is done by filling out Form 5695 from the IRS.

Some of the biggest tax credits come from solar energy generation. The first example of a solar energy system comes in the form of a solar water heater. All Energy Star-rated solar water heaters will qualify for this tax credit. Typically, solar water heaters cost somewhere between $2,000 and $5,000. 

The other biggest source of solar energy comes in the form of solar panels. Solar panels need to generate electricity directly for the residency and must meet all safety codes. Typically, solar panels cost between $25,000 and $35,000. Even though these sound expensive, the costs are dropping quickly and the tax credit makes the system worth it in the eyes of many homeowners.

Wind Energy

Homeowners can also qualify for green energy tax credits through the use of wind energy. The cost of a wind turbine strong enough to power a home will vary widely. Some may cost $15,000 while others may cost $75,000. 

Keep in mind that, in addition to the tax credit, these systems may drastically cut someone’s utility costs. Eventually, these systems should pay for themselves. For this reason, green energy has become an attractive option for many homeowners. 

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.

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