Homebuilders are not getting a bump from lower mortgage rates

Mortgage applications to purchase a newly built home dropped 11 percent in November, annually, according to the Mortgage Bankers Association. MBA economists predict that sales of newly built homes in November fell 5 percent annually. 
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Mortgage rates drop to 2-month low—an unexpected holiday gift to housing

Mortgage rates are falling sharply, as investors head to the relative safe haven of the bond market. The average rate on the 30-year fixed has fallen 21 basis points in the past week to 4.73 percent, according to Mortgage News Daily. 
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Mortgage applications rise 2%, but buyers seem unimpressed by lower rates

While price gains are now shrinking, affordability is still at the lowest level in a decade and proving to be the biggest barrier to housing demand. Sales of newly built and existing homes continue to suffer.
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Mortgage refinance applications hit 18-year low

With no major move in interest rates and continued weakness in home affordability, there was not a lot of incentive for homebuyers to make a move last week, and there was even less for homeowners looking to save money on their mortgages.
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U.S. sues UBS, alleges crisis-era mortgage securities fraud

The U.S. government on Thursday filed a civil fraud lawsuit accusing UBS Group AG, Switzerland’s largest bank, of defrauding investors in its sale of residential mortgage-backed securities leading up to the 2008-09 global financial crisis.


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Mortgage Rates Are Rising. Here’s What That Means if You Want to Buy a Home

Earlier this year, mortgage rates hit a seven-year high, fueling speculation that it was time to buy if you were in the market for a new house.

But mortgage rates have continued to climb since then — up nearly a full percentage point this year to 4.85% in mid-October. And data from the National Association of Realtors suggests potential homebuyers may finally be feeling the pinch.

Existing home sales have fallen 4% since January, and the number of new homes under construction has dropped 10% during the same period.

So far, a monthly mortgage payment on a $ 250,000 home has gone up about $ 150, Freddie Mac Deputy Chief Economist Leonard Kiefer told The Penny Hoarder. “And that is quite substantial.”

And with the Fed likely to raise interest rates further in the coming year, it will just get pricier to take out a mortgage in 2019.

“Economists across the board are starting to forecast higher rates,” Kiefer said. And a lack of new housing just keeps pushing home prices up.

Still, there is some pent-up homebuying demand. The U.S. has one of the tightest labor markets in years, so the market might see modest growth in 2019, despite rate increases.

So if you are ready to make the leap from renting to buying, there are concrete ways to find savings.

Mortgage rates and housing prices vary across U.S. cities and lenders, Kiefer said. So if you are still planning to buy a home, make sure to do your research on the local market. Also, shop around for the lowest mortgage rate possible.

Getting one additional quote before locking in a rate and buying a home could save you $ 1,500 over the life of the loan, according to Freddie Mac.

Once you find the right rate, here are some other slick ways to save money on your mortgage.

Alex Mahadevan is a data journalist at The Penny Hoarder. He’s feeling the sting of regret for not shopping around for his mortgage.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.


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Should You Pay Off Mortgage Before You Retire?

(NerdWallet via AP)

Most people would be better off not having mortgages in retirement. Relatively few will get any tax benefit from this debt, and the payments can get more difficult to manage on fixed incomes.

But retiring a mortgage before you retire isn’t always possible. Financial planners recommend creating a Plan B to ensure you don’t wind up house rich and cash poor.

WHY A MORTGAGE-FREE RETIREMENT IS USUALLY BEST

Mortgage interest is technically tax deductible, but taxpayers must itemize to get the break — and fewer will, now that Congress has nearly doubled the standard deduction. Congress’ Joint Committee on Taxation estimates 13.8 million households will benefit from the mortgage interest deduction this year, compared to more than 32 million last year.

Even before tax reform, people approaching retirement often got less benefit from their mortgages over time as payments switched from being mostly interest to being mostly principal.

To cover mortgage payments, retirees frequently have to withdraw more from their retirement funds than they would if the mortgage were paid off. Those withdrawals typically trigger more taxes, while reducing the pool of money that retirees have to live on.

That’s why many financial planners recommend their clients pay down mortgages while still working so that they’re debt-free when they retire.

Increasingly, though, people retire owing money on their homes. Thirty-five percent of households headed by people ages 65 to 74 have a mortgage, according to the Federal Reserve’s Survey of Consumer Finances. So do 23 percent of those 75 and older. In 1989, the proportions were 21 percent and 6 percent, respectively.

But rushing to pay off those mortgages may not be a good idea, either.

DON’T MAKE YOURSELF POORER

Some people have enough money in savings, investments or retirement funds to pay off their loans. But many would have to take a sizeable chunk of those assets, which could leave them short of cash for emergencies or future living expenses.

“While there are certainly psychological benefits related to being mortgage-free, financially, it is only of the last places I would direct a client to pay off early,” says certified financial planner Michael Ciccone of Summit, New Jersey.

Such big withdrawals also can shove people into much higher tax brackets and trigger whopping tax bills. When a client is wealthy enough to pay off a mortgage and wants to do so, CFP Chris Chen of Waltham, Massachusetts, still recommends spreading the payments over time to keep the taxes down.

Often, though, people in the best position to pay off mortgages may decide not to do so because they can get a better return on their money elsewhere, planners say. Also, they’re often the ones affluent enough to have big mortgages that still qualify for tax deductions.

“Mortgages many times have cheap interest rates that are deductible and thus may not be worth paying off if your portfolio after taxes can outpace it,” says CFP Scott A. Bishop of Houston.

WHEN A PAYOFF ISN’T POSSIBLE, MINIMIZE THE MORTGAGE

For many in retirement, paying off the house simply isn’t possible.

“The best case ‘wishful thinking’ scenario is that they’ll have a cash windfall via an inheritance or the like that can be used to pay off the debt,” says CFP Rebecca L. Kennedy of Denver.

In pricey Los Angeles, CFP David Rae suggests mortgage-burdened clients refinance before they retire to lower their payments. (Refinancing is generally easier before retirement than after.)

“Refinancing can spread your remaining mortgage balance out over 30 years, greatly reducing the portion of your budget it eats up,” says Rae, whose office is in West Hollywood.

Those who have substantial equity built up in their homes could consider a reverse mortgage, planners say. These loans can be used to pay off the existing mortgage, but no payments are required and the reverse mortgage doesn’t have to be paid off until the owner sells, moves out or dies.

Another solution: downsize to eliminate or at least reduce mortgage debt. CFP Kristin C. Sullivan, also of Denver, encourages her clients to consider this option.

“Don’t fool yourself that your grown kids will be back visiting all the time,” Sullivan says. “Certainly don’t keep enough space and comfort for them to move back in with you!”

This column was provided to The Associated Press by the personal finance website NerdWallet.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.” Email: lweston@nerdwallet.com. Twitter: @lizweston.

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Weekly mortgage applications fall 1.7% as interest rates move above 5%

Extremely weak demand for mortgage refinances has been driving the overall drain on mortgage lending. Refinance volume fell another 3 percent last week and was 32 percent lower than a year ago.
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Mortgage fraud is getting worse as more people lie about their income to qualify for loans

Mortgage fraud risk jumped more than 12 percent year over year at the end of the second quarter, according to CoreLogic, which measures six fraud indicators: identity, income, occupancy, property, transaction and undisclosed real estate debt.
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