Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: COVID-19 Impact Projections!

The COVID-19 health crisis is unlike any crisis the economy has experienced before. The economy is currently going through a self-induced, sudden-stop to contain and stabilize the spread of the virus and save lives. The size of the economic shock will likely result in losses that overshadow losses from the 2008-09 financial crisis.

The Texas economy is not immune to the pandemic. In fact, the state’s economy will be hit even harder than the world and the rest of the United States due to the simultaneous downturn in the oil industry.

This crisis has created a need for up-to-date economic indicators that can help forecast economic changes. The Real Estate Center at Texas A&M University has constructed a high-frequency economic activity index for Texas that estimates the timing and length of future upswings and downturns on a weekly basis.

After flattening the last two weeks of May, the Texas weekly leading index increased during the first week of June (see Figures 1 and 2). This was due to an increase in business applications, fewer people becoming unemployed, and growth in the real price of oil.

The index is signaling economic improvements going forward and possibly a rebound from the economic shutdown imposed in March and April due to the COVID-19 pandemic. COVID-19 Impact Projections!

New weekly data series (also called high-frequency data) and new methodologies to seasonally adjust the data on a weekly basis have allowed for the development of weekly coincident and leading economic indicators. The Center has a successful track record in estimating monthly residential and nonresidential construction leading indexes for Texas. Both indexes have proven useful in signaling directional changes and forecasting key indicators like single family home sales, apartment vacancy rates, and commercial vacancy rates.

The Center evaluates economic data to determine:

* economic significance,

* statistical adequacy (in describing the economic process in question),

* timing at expansion and recessions,

* conformity to historical business cycles,

* smoothness, and

* currency or timeliness (how promptly the statistics are available).

However, the indexes do have some weaknesses. Underlying indicators are subject to revision, and while errors often cancel out across indicators, revisions impact the index and future monitoring of business cycles. In addition, although leading indicators often show the direction of a business cycle, they do not measure the magnitude of the change.

Even with these caveats, leading indicators are useful for measuring business cycles. Seven variables were evaluated for this report. Four (business applications, high-propensity business applications, business applications with planned wages, and business applications from corporations) are business market variables that are tied to state business activity. One variable, weekly initial unemployment insurance claims, is tied to state employment.  Another, West Texas Intermediate (WTI) real oil price deflated by the all-urban consumer price index, is related to the oil industry. The last variable, the real ten-year Treasury bill estimated using same-period inflation expectations, represents the cost of credit in the economy.

Based on statistically reliable criteria, four variables were selected as economic activity leading indicators: business applications, initial unemployment insurance claims, real WTI oil price, and real ten-year Treasury bill. These variables demonstrated a significant leading relationship with Texas nonfarm employment. All other variables were found not to be statistically valuable or to perform below the business applications variable for the leading index.

Detecting turning points in any leading index on a month-to-month basis is difficult, because not all downturn (upturn) movements point toward recessions (expansions). It’s even more difficult to do on a weekly basis. The Center has converted the weekly leading economic activity index into a monthly leading index to evaluate its predictive usefulness.

Based on the National Bureau of Economic Research methodology, Texas nonfarm employment and the Dallas Federal Reserve Texas coincident indicator are used as references of peaks and troughs to measure the state’s business cycle (see table). This makes it possible to see if the weekly economic leading indicator can predict changes in Texas business cycles.

The Texas weekly leading index signaled a directional change in October 2007, 11 months before the prolonged downturn in employment that started in August 2008. Similarly, it signaled a recovery turning point in February 2009, 11 months before employment turned toward recovery in December 2009.

In addition, it predicted turning points and duration of expansion and contraction more accurately than another institution’s leading indicator–the one produced by the St. Louis Federal Reserve (see Figure 3).

Overall, the leading index is regarded as a good indicator to predict turning points in Texas employment, even leading both the Dallas Federal Reserve’s coincident and leading indicators for the state’s economy.

One major problem in evaluating the index was the short time period. For a more accurate evaluation of business cycle relationships, it’s best to study the relationships over many business cycles. Because the predictive ability of the leading index was evaluated over a short time, it’s possible that the relationship might not hold in the future. Thus, the leading index for economic activity will be best evaluated based on its ability to lead Texas employment in the future.

The inspiration for today’s edition came from this original article: https://www.recenter.tamu.edu/articles/special-report/COVID-19-Impact-Projections?utm_source=News+Releases&utm_campaign=cfd0ba7bb0-EMAIL_CAMPAIGN_2020_06_15_08_02&utm_medium=email&utm_term=0_d3707cf267-cfd0ba7bb0-67294929

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

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Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Summer is-good-for housing market!

The coronavirus pandemic all but halted U.S. home sales during widespread lockdowns, but new metrics confirm that home sales is making a comeback.

The housing market likely hit bottom in mid-April and is poised to have a shortened but strong sales season this summer, with new listings and rising prices, according to Realtor.com’s new May monthly housing trends report.

“There are a lot of indicators showing that the summer is going to be a good period for the housing market. I think we’re going to see some of the buying that would have happened in the spring shift into the summer,” Realtor.com Chief Economist Danielle Hale told Yahoo Finance.

Home sellers are re-listing their homes. Inventory was down 44.1% in April and 29.4% in May, compared to the same months last year — but it was only down 20% for the last week of May.  Summer is-good-for housing market!

“That’s definitely an improvement, a sign that we’re moving in the right direction. We’ve still got some ground to cover to get back to a more normal spring and summer housing market, but we’re moving in the right direction,” said Hale.

Home prices are higher than ever, hitting a median listing price high of $330,000 in May. After only a 0.6% annual price growth in April, the slowest pace in three years, home prices rose 1.6% in May year-over-year. And in the last week of May, prices rose 3.1% from the same time last year.

Of the nation’s top 50 cities, 35 posted price growth in May. Prices rose the most in Los Angeles, Pittsburgh and Cincinnati.  And economists expect listing prices to rise even higher this summer.

“We’re starting to see prices come back… and they strengthened throughout the month of May… So it’s definitely good news for owners and sellers in the market,” said Hale.

Still, homes are selling at a slower rate, as sellers re-enter the market. Homes sold in 71 days on average in May, compared to 58 days on average at the same time last year and 62 days in April.

“The process is taking longer. So as a buyer, you should be prepared for maybe a bit more extra time into the process, especially on the financing side. And as a seller, it might take buyers a little bit longer to find you, and then once you find your buyer, it might take a little bit longer to get to the closing table as people have adapted to working from home to combat the coronavirus,” said Hale.

Northeast and Midwest cities were hit harder by the pandemic than Southern cities: Inventory declines were worst in Philadelphia, Providence, R.I. and Baltimore, and prices actually declined in Detroit, San Antonio, Texas, and Seattle. The slowest sales activity was in Buffalo, N.Y., Pittsburgh, and Detroit.

“Where COVID cases have been highest, we do see the biggest impact as far as sellers not bringing their homes to market… [But] as the COVID cases improve, the sellers come back to the market. Nationwide we’re seeing that, and I expect to see that in those markets that are hardest hit as well,” said Hale.

Though the summer months are looking bright, sales may dip in the fall if a second wave of the pandemic hit America’s economy, Hale warned.

“The fall is a little bit more of an open question…  Buyers and sellers tend to take a pause when the overall economy shuts down. They choose to stay home as well. And that means we see a slowdown in housing activity, even though it’s not necessarily regulated as such,” said Hale. Summer is-good-for housing market!

The inspiration for today’s edition came from this original article: https://finance.yahoo.com/news/summer-is-going-to-be-a-good-period-for-the-housing-market-economist-184938968.html

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

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Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Disproportionate Effects on-Housing-Supply!

The Urban Institute says that homes categorized as low priced, that is in the bottom 20 percent of the distribution, appreciated 126 percent between the turn of the century and the end of 2019. During that same 20-year period, those in the top 20 percent of the price distribution increased only 87 percent. Disproportionate Effects on-Housing-Supply!

An analysis of 285 metropolitan statistical areas (MSAs) by Jung Hyun Choi, John Walsh, and Laurie Goodman found that rapid employment growth combined with supply constraints from zoning and other regulations was one driver of this disproportionate price growth on the low end.

Those MSAs with the greatest constraints on housing inventory experienced the greater price growth on the low end relative to the high. They measured this using two indices, Wharton Residential Land Use Regulatory Index and the Saiz Land Unavailable index. They also found that MSAs with a larger number of employed people in 2000 and higher employment growth experienced larger low tier price increases.

For example, low priced homes in Los Angeles saw a 313 percent increase over the 20-year period while prices declined 5 percent in Detroit. High priced homes increased to the greatest degree, 190 percent, in San Francisco but saw only 42 percent growth in Saginaw, Michigan.

The increase of housing prices is one reason UI says that, before the COVID-19 outbreak, affordability was one of the biggest problems facing the housing market. But it wasn’t the only reason.

The faster appreciation of low-priced homes is naturally felt the hardest by low income earners, both homeowners and renters, especially those in the bottom 25 percent of the income distribution. As home prices rise, potential homeowners with low incomes have trouble finding affordable homes so they remain renters, driving up demand for rentals and rent prices.

And, while the cost of both owning and renting has risen substantially for low-income households (an increase of 5.4 percent for homeowners and 10.9 percent for renters), those in the top quartile of income distribution saw their housing costs drop by 5.7 percent between 2000 and 2018.

These high-income homeowners also experienced the greatest increase in income, which led to a 10 percent increase in their residual income (household income minus housing costs) and a 1.2 percent drop in their housing cost burden (the ratio of housing costs to income).

Meanwhile, the residual income of low-income homeowners and renters dropped 14.5 percent and 24.3 percent. Although housing cost growth was highest for high-income renters, their growth in household income largely compensated for the increase in cost.

Despite the massive unemployment triggered by the pandemic, there has not yet been much impact on home prices as both supply and demand shrank simultaneously. But UI points out that lenders have been further closing down already tight credit. This will hit low income households the hardest and they will likely face greater difficulty accessing homeownership, even for homes within their financial reach. However, those with high incomes and credit scores will probably have more opportunities to buy homes and build housing wealth as the economy recovers from the coronavirus shock.

The home price trajectory is unlikely to change as demand from both owners and renters continue, but it is also the low-income homeowners and renters who tend to be working in industries more vulnerable to the pandemic shock. Owners may struggle more to sustain that status once the forbearance period is over while renters are less likely to be able to achieve homeownership. The homeownership rate is expected to decrease, making it harder for many families to build wealth.

The authors conclude that, if the pre-pandemic supply constraints remain unaddressed, “both low-price home and rental prices will continue to increase faster than prices for high-price homes, widening residual income inequality between low- and high-income homeowner and renter households. This could also hurt the ability of low-income households to build financial strength and could make them more vulnerable to future economic shocks.” Disproportionate Effects on-Housing-Supply!

The inspiration for today’s edition came from this original article: http://www.mortgagenewsdaily.com/06042020_housing_affordability.asp

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

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Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Real-Estate-Investment During The Coronavirus!

The usual ways to assess real estate markets are out the window this year. The standard equation is that more jobs lead to more demand for housing, but with a massive loss of jobs in all markets this year, that analysis doesn’t work. So, how can we now decide which markets are the best bets for investors in 2020?

We have to start with the belief that the current situation is temporary, that economic activity will resume over the next year or so, and that most jobs will eventually return. If that’s not the case (remember, the virus is in charge, not us – as Dr. Fauci says) you might as well keep your money in the bank because we’ll have a long slide in real estate values. But assuming that most jobs will return and that we won’t see a wave of home sales by desperate owners, there are other ways to figure out where and how an investment makes the most sense – and with the least risk. Real-Estate-Investment During The Coronavirus!

A second way to judge the relative attractiveness of markets is to see how badly the recession has affected them so far. We have very few hard facts as of now but will get more in the next couple of months. The first fact we do know is that 13 percent of all jobs in the US were lost in April. How did individual markets measure up against this average? At the good end, the Utah markets (Ogden, Provo, Salt Lake City) lost around 7 percent of their jobs. The big Texas markets were right behind along with Phoenix, Birmingham and Washington DC at 8 to 9 percent.

April was just the first month for which we have hard numbers; as time goes by this picture will get worse so we have to stay on top of it, but at some point each market will reach its own bottom and then we’ll have a true reading of how far it is from a ‘normal’ level of growth.

The speed with which jobs are then regained will be a third indicator investors can use to decide where and when to invest. This will be a drawn-out process and it’s not clear that every market will get back to the level of employment it had before the coronavirus struck.

But we can already make a guess about this: what types of jobs are most vulnerable to permanent lost because of how things will change?

We have some clues. Although the overall loss of jobs in April was 13 percent, only 2 percent were lost in the finance sector and only 4 percent in government. But 10 percent of manufacturing jobs were lost and a whopping 48 percent of jobs in tourism, hotels and restaurants.

Restaurants will change how they operate, local government budgets will be under huge strain for years, and other types of businesses will change too as the recession accelerates trends that have been underway for years. The retail sector will go on-line faster. Manufacturers will automate faster. More education will be on-line, and so will more healthcare. Everyone will try to do things with fewer people.

Some markets are more vulnerable to these changes than others. We can add up the numbers of jobs in each market that are most vulnerable to these larger forces and get a sense of the longer-term local growth prospects.

In a crude ranking, markets with low vulnerability include Richmond, Denver, Atlanta, Newark, Frederick County in Maryland, Raleigh, Dallas and Birmingham.

Markets with high vulnerability include Las Vegas, Grand Rapids, Orlando and Milwaukee.

These are useful ways to compare markets but they don’t give us final answers yet. It’s too early, we have too little data, too few facts. The important message in 2020 is to follow the data, in a few months we’ll have a lot more. Then investors will be able to form a complete picture of the best markets for investment.

Lastly, no matter where you choose to make an investment in rental property, you can minimize your risk by investing in the ‘favored price range’ – where the most renters are concentrated. That is essential at a time when both the high and low end of the rental market are under serious stress. Above the ‘favored price range’, demand may disappear altogether for a while, below the range a lot of renters will have financial difficulties.  We can find the favored range in each local zip code by back-calculating Census data from actual renters.

Growth before the recession, job loss during the recession, the speed with which jobs come back, long-term job vulnerabilities, and the ‘favored price range’. These are tools every investor should take advantage of. You still have to make the final decision but these easy indicators can help make it the best one.

The inspiration for today’s edition came from this original article: https://www.forbes.com/sites/ingowinzer/2020/06/04/the-best-markets-for-real-estate-investment-during-the-coronovirus/#7bb2af5540f2

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
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https://www.houstonrealestatebrokerage.com/
https://www.youtube.com/channel/UCsF3Rh4Akd1OAOAgTmzgqQg

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Homeowners Capitalize in Home-Equity!

An old saying states that a rising tide raises all ships. While many homeowners aren’t concerned with the state of home equity, maybe they should pay more attention to it. Home equity isn’t just a metric to make real estate professionals more money. Instead, it’s also a measure of the buying power that your home commands. Even if many homeowners usually don’t think about their house in terms of an asset, the truth is that a home is one of the most profitable assets a homeowner has and with rising equity, that profitability can grow quite a lot. Below, 10 experts from Forbes Real Estate Council offer advice to homeowners on how they could capitalize on the growing value of their home equity. Homeowners Capitalize in Home-Equity!

 

  1. Be Strategic

Refinancing or a home equity line of credit are two common ways to gain, but it’s important to stay aware of current market conditions. Right now, lenders are stricter in these areas, so you can also look into trading up. If your home has appreciated in value, consider selling it and then buying two lower cost homes—one as a residence and one as an investment property to diversify your portfolio. – Jennifer Anderson, Anderson Coastal Group

 

  1. Consider Refinance Options

If your house increased in value, find a local licensed mortgage broker and discuss a refinance of your property. Interest rates are historically low, so at the least, you can refinance your home and lower your interest rate, thus lowering your monthly as well. If you have excess equity you can refinance and take a line of credit to help keep you afloat until times return to normal. – Ari Rastegar, Rastegar Property Company

 

  1. Get A Line Of Credit

With equity in your home and interest rates at an all time low, there is not a better time to get a HELOC (home equity line of credit) at very low rates. This can be used to pay down higher interest loans that you may have. Moreover, investment vehicles, specifically those in the multifamily investment world, can yield you returns of 15-20%. This is a fantastic way to diversify with a “brick-and-mortar” investment. – Kevin Palka, MVP Equities

  1. Invest In Home Improvements

Keeping your property up to date and making smart choices when preparing your home for sale can greatly increase your profit margin. Neutral colors, refinished floors, new carpeting, upgraded appliances and fixtures all go a long way toward appealing to the current buyer demographic. Dated homes are not appealing and do not sell for nearly as much as homes with updates and staging. – Melinda Estridge, Estridge group

 

  1. Embrace Sweat Equity

Don’t be afraid of buying a house that’s under budget and building in value through remodels and additions. Pay attention to builder construction signs because new houses will push up prices in the area. Watch where new houses are going and get in early. – Justin Pistorius, Local Life Realty

 

  1. Add An Accessory Dwelling

Adding accessory dwelling is a simple way to use equity if you have the room. You can accommodate several different needs by building this type of addition. If you need more income, here is a way to make that happen. If you need to house a relative or friend, here’s your chance. Check with your local planning department for details as they apply to your property. – Michael J. Polk, Polk Properties / Matrix Properties

 

  1. Invest In Other Real Estate

I would use equity for investing in other real estate. Leveraging your money is a good thing if you have the capabilities to analyze a real estate deal. Flips are an ideal investment vehicle for this. There will also likely be a number of vacant homes after this pandemic ends. Since flipping is a short-term investment, be sure to have a tax reserve since you will have a tax bill. – Amy Tiemann, TM1 Properties

 

  1. Repurpose Equity

The simplest way to get equity is to sell, establish profit in a true “round trip” and repurpose this equity into the next investment. When an outright sale is not the preferred route, refinancing the mortgage at a higher amount or a second mortgage can free up equity for other investments. For commercial owners, residential owners and investors, this concept works at any level. – Damien Moore, Haüskey Inc.

 

  1. Keep It For Emergencies

One way that homeowners can take advantage of growing equity is to consider it an emergency fund and only use it in cases of emergency. People too often use it as a piggy bank for items that don’t relate to the property, i.e., debt consolidation, college tuition, property acquisition, etc. Since equity fluctuates, be wise and stay tuned in to the market so you won’t be left holding the bag! – Cheryl Abrams, Re/Max United Real Estate

 

  1. Liberate Equity Through Tokenization

With the emergence of property tokenization through blockchain-based smart contracts, we now can tokenize (fractionalize and securitize) a percentage of our ownership in real estate. This liberates our equity quickly, efficiently and transparently while eliminating the costs of refinancing, creating immediate liquidity which then can be invested in another property or capitalized as pre-sale profits. – Garratt Hasenstab, The Mountain Life Companies™

 

The inspiration for today’s edition came from this original article: https://www.forbes.com/sites/forbesrealestatecouncil/2020/05/20/10-ways-homeowners-can-capitalize-on-rising-home-equity/#2cb22d7747e0

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
https://www.blink.mortgage/app/signup/p/nexamortgageh/MortgageViking?campaign=MortgageViking
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https://commercial.billrapponline.com
https://doctorvideo.billrapponline.com
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https://veteransvideo.billrapponline.com
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https://privatemoney.billrapponline.com
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https://www.houstonrealestatebrokerage.com/
https://www.youtube.com/channel/UCsF3Rh4Akd1OAOAgTmzgqQg

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Refinancing Your Mortgage Tips!

If you’re a homeowner, refinancing your mortgage is a tool that could save you thousands of dollars. Here’s what you need to know:

 

  1. What Is Mortgage Refinancing?
  2. When Should You Refinance Your Mortgage?
  3. How Much Money Will You Save?
  4. What Fees Will You Pay?
  5. What Kind of Credit Score Do You Need?
  6. Where Should You Look for a Refinance?

 

  1. What Is Mortgage Refinancing?

Mortgage refinancing is a financial transaction in which you replace your current mortgage with a new one to gain some kind of financial advantage — such as a lower interest rate or a change in the length of your payment terms.

In general, you might consider refinancing your mortgage if you fall into one of these categories:

  1. You want a lower monthly payment. In this case, you might refinance into a loan term that’s equal to or slightly longer than your current term. But recognize that you’ll end up paying more interest over the life of the loan.
  2. You want to get out of debt faster. Refinancing from a 30-year mortgage into a 15-year is a slam dunk for saving money long-term, but your payment will be higher each month.
  3. You’re moving from an adjustable-rate to a fixed-rate mortgage to lock in a lower interest rate.
  4. You want to pull cash out of the equity in your home with a cash-out refinance (something money expert Clark Howard recommends only in limited circumstances).

 

  1. When Should You Refinance Your Mortgage?

Interest rates are at historic lows. If you currently have a rate above 4%, this is a great time to take a look at a refi.

But your decision shouldn’t depend only on the rate: It’s important to consider how long you plan to stay in your home. Money expert Clark Howard has a rule about break-even costs on refinancing.

We’ll get to an explanation of the associated costs with refinancing in a moment, but first here’s his rule:

“If you can make back the cost of the refinance in 30 months or less, you should do it,” Clark says. “It just makes financial sense. That’s the trigger.”

So you need to be sure you’ll stay in the house for at least two and a half more years to make up the cost of refinancing. Clark says most people end up staying in a house longer than they anticipate, but just be sure you plan to cross that 30-month threshold.

 

  1. How Much Money Will You Save?

To get a sense of how much money you’ll save by refinancing your mortgage, you can turn to any of several online calculators.

 

As you type in your numbers, make sure to take a look at what your monthly payment would be if you refinance into a 15-year mortgage.

Rates on 15-year loans are lower than those on 30-year loans. That’s because they’re a lower risk to lenders since they’ll get their investment back in half the time. The trade-off is that you’ll have a higher monthly payment on a 15-year loan. But if you can swing it, a 15-year mortgage is an opportunity to get out of debt in half the time.

“One of my favorite kinds of refinancing is going from a 30-year loan to a 15-year loan. If you have more than 23 years left on a 30-year mortgage and you refi into a new 30-year loan, you’ll extend the time you’re in debt,” Clark says. “But if you choose a 15-year loan instead, you’ll cut your interest rate even more and pay off the mortgage sooner.”

If you can’t afford the payments on a 15-year refi loan, Clark suggests looking at a 20-year refi instead.

 

  1. What Fees Will You Pay?

You should expect to pay anywhere between 2% to 6% of your loan amount in closing costs to refinance your mortgage, according to LendingTree.

The fees you pay fall into two categories:

  1. Closing Costs
  2. Points

Closing Costs

While exact closing costs vary by state, the average for a single-family home was $5,749 including taxes ($3,339 excluding taxes) in 2019. That’s according to ClosingCorp, a leading provider of residential real estate closing cost data.

Closing costs include fees for a lot of things: a property appraisal and pulling your credit report — as well as fees for processing, underwriting, attorneys, notarizing the transaction and title insurance. Depending on where you live, there might be more.

It is possible to refinance without paying closing costs upfront, though you’ll pay a slightly higher interest rate. But you’ll save so much money in the long run if you reduce your loan term. That’s why Clark says no-closing-cost refis can be a win/win.

If you do choose to go the route with closing costs, you’ll often have the option to pay those costs upfront or roll them into your new loan.

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The consumer champ says the former is a smarter move. “If you’re going to stay in the property for enough years, you want to prepay the closing costs,” notes Clark. “Because otherwise, you’re paying interest every month on the money you rolled into it, so you’re taking away some of the advantage.”

Points

Points are another kind of fee you need to know about. A point represents 1% of the total amount of money borrowed.

There two kinds of points:

  1. Origination points: This is simply a junk fee to line lenders’ pockets.
  2. Discount points: Money paid in advance to lower the interest rate over the life of a loan.

Keep in mind that not every lender charges points — credit unions often don’t — so if you can avoid paying points entirely, all the better.

 

  1. What Kind of Credit Score Do You Need?

As a result of the coronavirus crisis, many lenders are tightening standards for borrowers. That means you may need a higher credit score to refinance now than you would have last year.

In fact, MarketWatch reports some lenders are insisting on a minimum credit score of 700 to consider a cash-out refinance application.

Of course, that varies by lender. But it’s always better to have a higher credit score. We’ve got advice on how to raise your credit score fast here.

But it isn’t necessary to have an 800+ credit score to get a really great offer. As long as you can hit 760, you’ll basically get the same kind of offers as people who have top-tier credit, according to Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News & World Report.

“If you can get up to around a 760, you’re going to get the same benefits, the same offers, that someone who has an 840 score is going to get,” Harzog tells Clark.com.

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The bottom line: You’ll likely save thousands of dollars on refinancing your mortgage if you shop around. Clark recommends that you get quotes from at least three different sources.

But don’t fall into the trap of getting hung up on interest rate alone when comparison shopping. The interest rate is the bright, shiny object most people tend to focus on. But it’s only part of how you compare one loan offer to another. You’ve also got to consider points, if any, and closing costs.

When you put the offers side-by-side and compare all three factors — interest rate, closing costs and points — you’ll be able to see which is the best deal.

The inspiration for today’s edition came from this original article: https://www.bankrate.com/mortgages/coronavirus-could-bring-inflation/

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
https://www.blink.mortgage/app/signup/p/nexamortgageh/MortgageViking?campaign=MortgageViking
http://BillRapp.joinnexa.com
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Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Coronavirus could bring inflation!

 The Federal Reserve has defanged inflation, once a fearsome foe. For proof, consider that the U.S. inflation rate last topped 4 percent in 1991.

But as American taxpayers spend trillions to blunt the coronavirus’ economic carnage, consumer price increases might be heading back to that level or even higher, a prominent housing economist says. Lawrence Yun, chief economist of the National Association of Realtors, foresees a path from today’s massive government spending to a spike in inflation in perhaps five years.

Yun predicts overall inflation will land in a range of 4 percent to 7 percent, although it’s not a widely held forecast. Many economists and market watchers anticipate no return to inflation. Yun’s projection, if accurate, could force consumers to reshape their expectations about mortgage rates, home values and the pace of property sales. Coronavirus could bring inflation!

A rise in inflation would lead to higher mortgage rates, along with lower rates of homeownership and fewer home sales, Yun says. However, the news for property markets wouldn’t be all bad — if inflation were to rise to the range of 4 percent to 7 percent, home prices would appreciate by 5 percent to 10 percent a year, Yun says.

“Home prices would be rising because real estate is a very good hedge against inflation,” Yun says.

Inflation disappeared decades ago

Inflation hasn’t menaced the U.S. economy for decades. The last time rising prices posed a threat was 1991, when the rate reached 4.2 percent. Since then, inflation has averaged just 2.3 percent, according to World Bank data. That number is roughly in line with the Federal Reserve’s inflation target of 2 percent.

The massive stimulus of the Great Recession brought predictions that inflation ultimately would return, but those fears proved unfounded. Despite a spasm of spending by the world’s largest economies, inflation remained in check.

“The Fed’s balance sheet increased from about $900 billion before the 2007-09 financial crisis to a peak of $4.5 trillion in 2017, but inflation remained benign,” says Lynn Reaser, an economist at Point Loma Nazarene University in San Diego and former chief economist at Bank of America. “Central banks in Japan and Europe also have engaged in massive quantitative easing, but concerns have remained about inflation remaining too low rather than too high.”

During the decade-long rebound, U.S. inflation topped out at a modest 3.2 percent per year. In 2019, the level was just 1.8 percent, even as unemployment fell to historic lows.

Will things turn out different this time? Since March, American taxpayers have spent more than $3 trillion on stimulus programs, including $600-a-week unemployment benefits and hundreds of billions in loans through the Paycheck Protection Program.

More public stimulus spending seems likely. As the U.S. government cranks up its cash machine, Yun says the effects could ripple through the real estate market in the coming years.

“We will not have any inflation this year, next year or even 2022,” Yun says. “But with so much printing of the money, we have to ask the question.”

Recession, stimulus tend to ‘cancel each other out’

He’s not the only one wondering about inflation, of course. But other economists aren’t as convinced that inflation looms on the horizon.

“While printing money, all else equal, puts upward pressure on inflation, it’s less clear how it impacts inflation during and after recessionary periods,” says Ralph McLaughlin, chief economist at Haus, a financial technology firm that focuses on housing. “This is because without increasing the supply of money, recessionary periods tend to lead to deflation. So what can happen – and we saw this after the Great Recession – is that you can print large sums of money without terrible impacts on inflation as the two tend to cancel each other out.”

Michael Fratantoni, chief economist at the Mortgage Bankers Association, likewise is unconcerned about the specter of inflation. He sees the U.S. jobless rate jumping to 18 percent in June and remaining in double digits through 2020, a level of employment that’s not conducive to rising prices. “On my list of worries right now, inflation is low on the list,” Fratantoni says.

In testimony to the Senate Banking Committee Tuesday, Fed Chairman Jerome Powell said he was similarly unconcerned about inflation. Speaking of the Fed’s expanding balance sheet, Powell said, “It’s not something that raises financial stability or inflation concerns.”

To be clear, Yun doesn’t forecast a dramatic and devastating return to high inflation. That’s partly because the U.S. dollar is an international store of value that’s in demand worldwide, and therefore allows the U.S. to print new currency at a pace that would send Venezuela or Zimbabwe into hyperinflation. “The U.S. dollar halts the rise of inflation even as we print money,” Yun says.

While Americans benefit from their currency’s global profile, he sees coronavirus disturbing the era of permanently low inflation. In the meantime, Yun says, Americans have several years to lock in low mortgage rates before prices begin to rise.

‘What is one thing that will not be rising?” Yun asks. “It is the mortgage payment of those people who have locked in the rates today or next year.”

The inspiration for today’s edition came from this original article: https://www.bankrate.com/mortgages/coronavirus-could-bring-inflation/

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
https://www.blink.mortgage/app/signup/p/nexamortgageh/MortgageViking?campaign=MortgageViking
http://BillRapp.joinnexa.com
http://www.homesforheroes.com/affiliate/bill-rapp-1
https://www.billrapponline.com/
https://twitter.com/BillRappRE
https://mortgageviking.billrapponline.com
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https://www.houstonrealestatebrokerage.com/
https://www.youtube.com/channel/UCsF3Rh4Akd1OAOAgTmzgqQg

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Mortgage refinancing mistakes!

Case in point – refinance rates are dropping. Thirty-year fixed-rate home mortgage rates are down to 3.25-to-3.50 percent after the Federal Reserve lowered its benchmark interest rate, as of the second week of May. That’s a big deal if you want to refinance your mortgage and get a lower interest rate (in turn, lowering your monthly payments).

Why? While rates are low, mortgage holders can save a ton of cash by refinancing their current mortgage. With Credible, you can find out just how much you could save on interest by comparing multiple lender offers at once. Mortgage refinancing mistakes!

Take a homeowner with $250,000 remaining on their 30-year fixed home mortgage loan with an interest rate of 5.5 percent on a home valued at $325,000. If the homeowner has a good credit score (a 720 FICO credit score or higher), he or she can qualify for a newly refinanced home loan rate of 3.5 percent, and can easily save over $200 on their monthly mortgage payment.

In this low-interest rate environment, mortgage refinancing deals from mortgage lenders are easier to come by.

Since the emergency rate cut in March, the Federal Reserve has kept the federal funds rate at near zero, bringing home mortgage rates down in the process. With recent moves, many borrowers are likely considering refinancing. But there are some elements they should be aware of before proceeding.

Mortgage refinancing mistakes to avoid

In a word, refinancing your mortgage means you replace your current mortgage with a new one. Your new mortgage pays off your old one, and you’re then responsible for paying off your new mortgage.

Sounds easy enough, right? But landmines abound throughout your mortgage refinancing process. The trick is recognizing the potential refinancing mistakes along the way and avoiding them altogether.

What are the biggest mistakes to avoid during a mortgage refinancing deal?

  1. Not shopping around to find the best rates and fees

You wouldn’t buy a pair of shoes online without first shopping around for the best price but consumers often make the biggest financial decisions of their lives by going with the very first person who gets back to them.

Use Credible to shop for the most competitive rates and save more on your monthly payments.

  1. Not calculating the total cost of a refinancing deal

“People don’t calculate the total cost but only consider the interest rate,” said Earl Knecht, vice president and CFO of Napa Valley Wealth Management.

Given rates and fees plus additional costs, refinancing to a lower rate might actually cost you, Knecht said.

“Before signing anything, look at the fine print and the actual contracts,” he noted. “Compare the terms to your original loan docs, including the fees paid to the lender, estate fees, and all miscellaneous and additional costs.”

  1. Getting involved in a mortgage loan forbearance

Don’t put your mortgage on forbearance – that will cost you when you try to refinance your home loan.

“Some individual banks are offering a forbearance, allowing you to skip two or three payments for 60-90 days,” Knecht noted. “At the end of that time period, you’ll owe the outstanding balance in full. That’s a bit risky if your income is questionable now, and it’s akin to telling the bank, ‘We can’t pay the amount we previously agreed to pay.'”

“That’s not a good look for a refi deal,” he added.

  1. Not getting your credit in order

Don’t take out a new credit card or loan if you’re considering a refi.

“A new credit application could negatively impact your score and your refi rate,” Knecht said. “Also, know your credit score before you apply. Credit-slip surprises can derail a refinance deal.” Mortgage refinancing mistakes!

The inspiration for today’s edition came from this original article: https://www.foxbusiness.com/money/mortgage-refinancing-mistakes

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
https://www.blink.mortgage/app/signup/p/nexamortgageh/MortgageViking?campaign=MortgageViking
http://BillRapp.joinnexa.com
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https://www.billrapponline.com/
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https://www.houstonrealestatebrokerage.com/
https://www.youtube.com/channel/UCsF3Rh4Akd1OAOAgTmzgqQg

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Buy An Investment Property?

The coronavirus pandemic is a tragic global health crisis that has changed life as we know it, and has had one of the most significant impacts ever on the global economy. As I write this article, it continues to spread and upend people’s lives. I want to be very sensitive to the human nature of this crisis. We probably all know someone who has been personally affected — I’m extremely sad to say that I’ve lost my grandfather to COVID-19. He was a great man and I will miss him dearly.

So it’s no surprise that when talking about investing during this crisis, people are quick to vilify investors and companies that are seeking to profit from this crisis. And real estate investing in this time is often associated with profiting from the suffering or financial struggles of others.

But an alternative view is that real estate buyers, especially now, are necessary to prevent a market collapse. In most cases, buyers are not predatory in nature, and while they are looking for a “good deal,” they are not looking at taking advantage of the misery of others. Buy An Investment Property?

Sales Volume Versus Sales Price

Last October, I wrote an article titled, “Recession Talk Is Growing — Is It A Bad Time To Invest In Real Estate?” I couldn’t have predicted this pandemic back then, but a slowdown of the real estate market is something an informed investor should have been preparing for.

Over the last few months, we’ve seen a huge dip in sales volume across Canada and the United States. However, whether you are considering buying a home, selling one or investing, you probably don’t care as much about how many homes are sold in a given market, but rather about the impact the pandemic is having on real estate pricing.

One of the reasons I prefer investing in real estate versus in other assets is its resilience. Most of us have seen how volatile the stock market can be, losing a big chunk of its value within a few days. Real estate prices, however, have not budged much in most markets. For anyone owning real estate, whether as a primary residence or as an investment, that’s very good news.

My Perspective: How The Pandemic Will Impact Real Estate

So how do I think the pandemic will impact the real estate market? To understand how the market will be impacted, we have to understand how the price of real estate is fundamentally driven by supply and demand. If there are many houses on the market and not many buyers, prices go down. If there are few houses with many buyers, prices go up.

You might wonder about the impact of this health crisis on supply and demand. In my observation, most buyers and sellers alike are taking a wait-and-see approach. Listed numbers have fallen dramatically since the start of social distancing became the guideline across the world, and so has the number of buyers. As a result, most markets haven’t yet seen a big impact on prices. In the coming months, the impact this action will have on the market will largely depend on how long social distancing measures last and to what extent the economy is impacted.

When life is back to “normal,” I expect there will be a surge in houses hitting the market. People still need to sell their homes, so, high supply. The real question is if buyers will be lining up to buy those houses. I think that in most cases the answer is: not as many as there would have been otherwise. Why? Because a lot of households feel the pinch from an income perspective. People have lost their jobs in unprecedented numbers, entrepreneurs are struggling and potential down payment savings have been used to pay for day-to-day expenses.

If this prediction materializes and we see a high level of inventory with low demand, buyers will have more negotiating power and prices should decrease.

If you are thinking about buying, keep an eye on the market and wait a bit longer for cheaper deals. Now is the time to talk with your mortgage broker to find out how much you can afford, to get pre-approved and to hold a rate for you.

If you are buying rental properties, think about how the pandemic might impact your ability to find tenants and their ability to pay rent if they have their career or health impacted. Invest for cash flow, ensure you have plenty of reserve funds and look for exceptional deals. Invest in a strong market where the economy (and jobs) are expected to rebound and where the population is expected to keep growing.

It’s impossible to predict how long the pandemic will impact the economy, but history shows that North American housing markets will bounce back. I personally sleep much better with my investments being concentrated in real estate rather than in the much more volatile stock market. Buy An Investment Property?

The inspiration for today’s edition came from this original article: https://www.forbes.com/sites/forbesrealestatecouncil/2020/05/19/is-this-a-good-time-to-buy-an-investment-property/#7e1bc14a496f

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

https://www.zillow.com/lender-profile/BillRappMortgageViking
https://www.blink.mortgage/app/signup/p/nexamortgageh/MortgageViking?campaign=MortgageViking
http://BillRapp.joinnexa.com
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https://www.billrapponline.com/
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