Friday, August 31, 2018

Should I Be Concerned About Rising Mortgage Rates?

On June 13th, the Federal Funds Target rate was officially raised by .25%. This increase marks the second time interest rates were raised in 2018 and experts expect another two increases this year.

The rate increase was prompted by optimistic feelings about the general state of the economy. The Fed pronounced the economy to be rising at a “solid rate” and claimed that inflation rates are close to their target goal of 2%. Most notably, unemployment rates have dropped to just 3.8% in May, 2018, tying with April 2000 for the lowest rate since 1969.

While this might be good news for the economy, all these indicators point to rising interest rates—and that might not be the best news for current and hopeful homeowners.

Is it a good time to buy a house? Should you choose an ARM or a fixed-rate mortgage? If you’re a homeowner, should you be taking any action now?

So many questions—and we’ve got answers! Read on for what you need to know about the rising interest rates and what it all means for you.

What you can expect for the rest of the year

Here’s what experts anticipate for the remainder of 2018:

·         More market increases. The fed is expected to raise interest rates again at their meetings in September and December.

·         A healthy economy that keeps growing. With unemployment rates at record lows and the recent tax cuts keeping the economy strong, business is booming across the country. Hiring is up and firing is down. If you’re an employee, you can anticipate a raise in 2018 and the security of a job you can hold onto for years.

·         More homeowners choosing to stay put. In 2017, U.S. homeowners gained $1 trillion in equity. This means most homeowners are now sitting on newfound wealth. It now makes more sense for them to tap into their home’s equity to fund renovations on their homes instead of going through the hassle and paying the costs of a move. Cash-out refinances, in which the homeowner takes out a bigger mortgage and pockets the difference in cash, will be especially popular. When homeowners stay put, it can create a tighter housing market which can make prices rise.

Why a healthy economy means higher mortgage rates

When the economy is thriving, inflation increases. This causes investors to seek higher returns for their investments. The only way to keep investors interested in mortgage bonds when the economy is booming is to raise interest rates on mortgages.

It’s more that, though. The Feds want to keep inflation stable so that it doesn’t spike suddenly and trigger a market panic which can lead to a crash or a recession. By gradually increasing interest rates, they can keep the economy growing at a steady, stable pace.

What do mortgage rates look like now?

Mortgage rates have already surpassed predictions set by major housing agencies at the end of 2017. As of August 1st, 2018, mortgage rates are hovering between 4.5% and 5% and are not expected to drop anytime soon. If anything, they’ll only continue rising throughout the rest of the year.

If you’re a homeowner

If you own a home and haven’t yet locked in your interest rate, now is the time to do so. Rates are only going to continue climbing and you want to get the best interest rate for your mortgage before it gets too expensive to handle.

If you haven’t already, consider refinancing your existing mortgage to one with a lower interest rate.

If you’re in the market for a home
House prices have soared over the last seven years. According to the National Association of Realtors, the average price tag for a home is now $264,800, up by almost 100K from 2011. When you adjust these numbers for inflation, house prices have seen a 33% increase in seven years.

If you’re house-hunting now, don’t pay more for your mortgage than you absolutely have to.

Housing agency Freddie Mac urges new-homeowners to shop around before choosing a mortgage. Get as many quotes as you can, do your research, and make some more phone calls. You do it before every other major purchase; why not shop around when it comes to a decision that will affect your monthly mortgage payments for years?

“One additional mortgage quote could save you $1,500 over the life of your loan,” Freddie Mac shares. “Five quotes could save $3,000.”

It’s also a good idea to consider an adjustable-rate mortgage (ARM). ARMS are 30-year loans that have fixed rates for a specified amount of time, usually 3-7 years. Rates will then change according to national rates. When mortgage rates are rising, ARMs are usually priced more reasonably than fixed-rate loans.  30-year fixed rates, now priced up to 5%, hovered in the high 3s throughout 2017. ARMs are now in the same range.

ARMs can give you a fixed, stable payment for up to 7 years. After the initial period, they can be adjusted just once a year—and there are limits to how much the rate can be increased.

Considering a refinance? Shopping for a mortgage? Don’t forget to call, click, or stop by First City Credit Union today to learn about the mortgage products we have available for you.

Monday, August 27, 2018

Beware Of Mortgage Scammers

Preparing to purchase your dream home is super-exciting. That’s partly because you’re choosing a property that may be your home for the next few decades – or more!

It’s also a time that’s jam-packed with activity and arrangements. In between looking at houses, you’re going to be consulting with your realtor, working with a mortgage broker, tying up loose ends in your current home, arranging for an inspection, and lots more. It’s enough to make anyone lose their head!

While you’re busy tending to everything on your list, be careful not to let this hectic time turn into a breeding ground for something sinister.

Yes, they’re at it again. This time, scammers are targeting hopeful new homeowners like you. Though this scam has been around for a while, a recent uptick in mortgage fraud means house-hunters need to be extra vigilant as they go about purchasing their new homes.

Here’s all you need to know about mortgage fraud:

How it works

You’ve picked out a property and worked out an agreeable price with the owner, so you’re ready to close the deal and move in. Your realtor and mortgage broker are in constant contact with you, telling you exactly what you’ll need to become the official new owner of the home. In the weeks leading up to the big day, you’re busily preparing for the closing.

Here’s where the hacker steps in.

If you’re targeted, you’ll get an email appearing to be from your real estate firm or your title company. The email looks just like any of the other you’ve been receiving and nothing stands out as suspicious about its address or sender. The message will tell you there’s been a last-minute change in the closing process. It will then instruct you to wire your closing cost fees to a specified account. Alternatively, it will ask you to share your account information so the company can withdraw the required amount on its own.

You probably know the script by now. The email is bogus and the account belongs to the scammer, who is eagerly waiting for you to take the bait and wire money directly into their hands. Sometimes, the hacker may even be bold enough to ask you to transfer your entire down payment to their account. In a matter of minutes, you can lose tens of thousands of dollars, with little hope of ever recouping the loss.

The hackers executing this scheme are clever. Instead of posing as a random real estate firm or title company, they crack the passwords of authentic companies and help themselves to vulnerable targets who are currently using these firms to purchase a new home. Since these companies are in constant contact with their clients, there’s little reason for the victim to be wary of these emails.

Red flags

Mortgage fraud may be played out cunningly, but you’re smarter than those scammers! Learn how to spot a fake email and hold onto your money.

Here’s what you’ll want to look for:

    Pre-closing payments. The fact that your “realtor” or “title company” is demanding payment before the actual closing is your first clue. Most closing-related fees are due on the day of the actual closing, not before.
    Wire transfers. Scammers love this payment method since it can rarely be canceled once it’s in process. Mortgage brokers and realtors, on the other hand, won’t insist that you wire funds. They’ll happily accept a personal check, or even cash.
    Email. Yes, your home-purchasing professionals will communicate with you via email, but they will never ask you to send financial information this way. They know – as should you – that email is never fully secure.

If you’re targeted

If you receive an email from your real estate firm or title company asking you to wire funds, do not respond. The email might appear to be from the actual company, but the only way you’ll know if it’s legitimate is by contacting the company on your own.

Do not click on any embedded links or respond directly to the email. Instead, open up a new message and email the professional you’ve been working with throughout the buying process. You can also call the company directly on the phone number you’ve been using to reach them all along.

Ask if there’s any legitimacy to this email. It’s unlikely that it’s authentic. When the scam is confirmed, take the following steps to protect yourself and others in the future:

    Delete the suspicious email immediately
    Alert your real estate firm and title company
    Tell your house-hunting friends about the scam
    Alert the FTC at

If you’ve already wired money to the scammer, you can still take steps to mitigate the damage.

If you’ve sent the money through First City, be sure to call us up about a wire recall as quickly as possible. If you’ve used a wire transfer company like MoneyGram, you won’t be able to reclaim the funds, but you can call their complaint line so they know to be suspicious of money being transferred to the scammer’s account.

If you’re in the market for a new home, it pays to be extra vigilant even during this hectic, fast moving time. Don’t let this exciting time become a nightmare!