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Mortgage News

By Mark Hamrick · Bankrate.com

Thursday, March 3, 2016
Posted: 6 am ET

The February jobs report will show how deeply bottoming oil prices has affected the U.S. labor market. Image courtesy Dan Bannister/Getty Images

The February jobs report due from the Labor Department tomorrow will give us a fresh indication as to whether the U.S. economy is being slowed down by a combination of rock-bottom energy prices and market turbulence overseas.

The oil industry, previously an engine of growth for the U.S., is now a negative thanks to oil prices that have dipped below $35 in recent weeks. Manufacturing is struggling because of economic weakness abroad. But so far, despite these challenges, the U.S. economy has continued to grow.

“It seems the labor market is not charging forward but rather cautiously advancing,” says Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.

While fears of a recession are on the rise, most experts believe the nation will avoid an outright prolonged contraction this year.

Job growth likely to continue

The U.S. has added an average of 221,000 jobs a month over the past year. We will probably need some luck to hit that number for February in the upcoming jobs report. But the job market has been adding enough jobs, all these many years into the recovery, to produce further improvement.

“The economy added a well-below-trend 151,000 jobs in January, but this is more than sufficient to keep pace with growth in the working-age population, which requires adding around 100,000 jobs per month,” says economist Ryan Sweet, a director at Moody’s Analytics.

While many economists regard the unemployment rate, at 4.9%, as historically low, most people would probably agree that the job market has plenty of room to improve.

Manufacturing woes, global weakness

One gauge of the nation's manufacturing sector, the Manufacturing ISM Report on Business, shows that manufacturing contracted (more serious than a slowdown) in February for the 5th consecutive month.

The forces behind that contraction are complex. One issue is currency; while we might tend to celebrate a strong dollar in that it reflects the relative strength of the U.S. economy, it has the negative effect of making U.S. produced goods and services more expensive when sold abroad.

Faltering economies in Japan, Europe and China have weakened foreign currencies, which has, in turn, driven up the relative value of the dollar, and that trend is unlikely to reverse in the near future.

Slow wage growth a source of financial, political tensions

In last month's report, the Labor Department told us that average hourly earnings have risen 2.5% over the past year. That's an improvement, but not enough to give Americans a broad sense that they're faring better.

Indeed, frustration over slow wage stagnation may be a contributing factor in the success of "outsider" candidates in this election cycle, particularly Donald Trump, who scored several big victories in this week's "Super Tuesday" primary contests.

In a February Pew poll, more than half of those who are Republican or lean Republican agreed that the U.S. economic system unfairly favors powerful interests, and 73% of Democrats and those who lean Democratic agreed.

Will the Fed stand pat?

This will be the last employment report before the March Federal Reserve meeting, where central bankers must make a decision on whether or not to raise short-term interest rates once again.

In our latest Bankrate Economic Indicator survey, most of the economists we surveyed say the Fed will likely keep rates steady at the March Federal Open Market Committee meeting. They cited a number of factors, including the volatility in global financial markets, weakness abroad and the fear that a further rate hike would boost the value of the already-strong dollar as reasons the Fed may hold back. If the jobs market does slow substantially this year, another Fed rate boost could be pushed further into the future.


Posted by Chris Styner on March 3rd, 2016 3:27 PM

As part of its ongoing effort to insinuate itself into every aspect of our lives, Google has just launched a mortgage calculator that pops up whenever you search for anything mortgage-related.

It’s got some pretty cool stuff. For one, the interface is stripped down to the absolute basics. Enter the amount of the loan, the interest rate, and the length of the mortgage, and boom—it computes your monthly payment. Or take the opposite route: Enter your hoped-for monthly payment, the interest rate, and length, and Google will tell you how much you can afford to borrow. Solid.

Google

Of course, you may have noticed that such mortgage calculators have been around various other websites for quite some time. And many of those other calculators (including—ahem—ours) do much more complex calculations, factoring in insurance, taxes, and adjustable-rate mortgages. Google’s approach is about as complicated as plugging them into an Excel spreadsheet.

Not that there’s anything wrong with that…

Except here’s our worry: Google is so dominant on the Internet that we worry that this calculator’s simplicity could be misleading. We’ve already been hearing stories about first-time buyers using such basic calculations to compute their potential expenses, only to be shocked at how many other factors affect their purchasing ability. If Google’s ubiquity adds to that, it won’t exactly be helping the prospective buyers it’s aiming to serve.

And this is Google we’re talking about! We <3 them, you know. And we expect their developments, in search and everything else, to push the limits of what’s doable on the Internet, and to inspire the rest of us to do better.

Of course, if you’re just sitting around in your pj’s and want to get some numbers in your head, this totally works. But buying a house isn’t an Internet-only transaction (or it shouldn’t be). When it comes time to make that move, you’ll need to talk to a real human being—the earlier the better.

Posted by Chris Styner on March 2nd, 2015 5:12 PM

Finance  By: October 2nd, 2014 

Picking out the perfect home can be a challenging task. But that’s only the first step.

You still need to be an attractive loan candidate, navigate the mortgage process and plan well for the future.

Since all that can get a little tricky, many home buyers made mortgage mistakes that cost them dearly.

In order to avoid some of the biggest missteps, you should first know what they are.

1. Picking Any Old Mortgage

You don’t want to be saddled for even a short period of time with the wrong mortgage.

Investigate all of your options, and then you need to lay your choices side-by-side and do the math—making sure you have an emergency savings for worst-case scenarios.

Loan shop with several different lenders and use the realtor.com® mortgage calculator to fine-tune your estimates.

2. Confusing Pre-Approval or Pre-Qualification With Commitment  

When you’re pre-qualified, the lender is simply giving you an estimate about how much you can borrow based on information you’ve provided.

When you’re pre-approved, the lender has verified everything you’ve provided and is offering to lend you up to a given amount at current interest rates—under certain conditions.

It’s much better to be pre-approved when shopping for a home, but it’s still not a guarantee: the lender’s final clearance and a loan commitment are subject to an appraisal satisfactory to the lender, a good title, a last-minute credit check and other verifications.

3. Having Too Much Debt

Even if you pay your bills on time, lenders tend to focus just as much on how much credit you have available to you—that is, your debt-to-income ratio—as they do on timeliness.

Being up to your ears in debt is a sure way to be turned down for a mortgage. Postpone any big-ticket purchases until after you buy your house.

4. Forgetting About Your Credit

Before you apply for a loan, you should know your credit score and credit report inside and out.

Thoroughly check your credit report for any possible mistakes. You can order a free credit report from each of the big three credit report agencies—Equifax, TransUnion and Experian—once a year.

If you see a mistake, dispute it. If your credit is bad, that’s okay: just work on repairing it before you apply for a mortgage.

5. Lying on Your Loan Application

Exaggerating your income on a mortgage application or putting down other untruths can be a federal offense.

If a lender finds out, they can make your loan due and payable. And while bad loan officers may stretch the truth to get a client approved, it’s the borrowers who end up paying the price.

6. Hiding From Payments

The worst thing you can do is ignore phone calls and letters from your lender when you are behind on your payments.

Lenders have many options at their disposal to help keep borrowers from losing their homes to foreclosure, but they can’t do anything for you unless they can talk to you about your difficulties.

7. Skipping a Home Inspection

Failing to make your purchase contingent on a satisfactory home inspection could be a costly mistake.

Good home inspectors examine houses from stem to stern. They’ll be able to tell you whether the roof or basement leaks, whether the mechanical systems are in good shape and how long the appliances should last.

Don’t get caught off guard by needed repairs, or it will mean more money for your mortgage payments.

If you’re unsure of where to find a good home inspector, ask a REALTOR® for a referral. 

8. Making Big Life Changes

Lenders like stability.

It’s a good idea to have kept your job for at least a year or two before applying for a mortgage, and it’s even more important to keep your job throughout the mortgage process.

If you’re looking to switch jobs, wait until after you’ve closed the deal.

Updated from an earlier version by Lew Sichelman.

Posted by Chris Styner on February 13th, 2015 3:40 PM

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