Breaking News

BREAKING NEWS: Medical Collections

The three nationwide credit reporting agencies - Equifax, Experian, and TransUnion announced some MAJOR changes on how and when medical collections can be reported. Starting July 1st of this year, all paid medical collection debt will no longer be included on credit reports. This is a HUGE victory! Paid collections continually linger and negatively impact a credit report long after it’s been paid and resolved. In addition, the credit bureaus are expanding the waiting period from 6 months to 1 year before an unpaid medical collection can be placed on a credit report. This means you will have more time to work with your insurance company or healthcare providers to find a solution before it is reported on your credit report. Also beginning in 2023, the credit bureaus will no longer include medical collection debt under $500 on credit reports. I talk to so many customers with minor medical debt that can’t qualify for a loan due to the minor medical debt affecting their credit scores. These joint measures will remove nearly 70% of medical collection debt from credit reports. This change will help so many people, especially those looking to buy real estate. Starting July 1st those who are stuck renting because of unforeseen medical debt that is beyond someone’s ability to control will now be in a much better position to purchase a home. If you’ve experienced this or you know anyone who has been through a tough time medically and haven’t been able to purchase a home because of it, please introduce us.

Effects from the War in Ukraine

If you’ve kept up with world news of late it’s no secret that a major land war has begun in Europe, which has brought perhaps the worst fighting there since WWII. Though Ukraine’s forces are admirable and sizable, Russia may not be stopped from conquering large chunks of Ukrainian territory and could even occupy the country in its entirety. Russia has too many advantages, in terms of technology and sheer weight of numbers and material resources. The U.S. and NATO will provide munitions and other support to Ukraine to boost its defenses. American forces will bolster NATO members in Eastern Europe to contain the fighting to Ukraine. But the U.S. has no plans to enter the fight. Russia’s invasion of Ukraine may inspire more countries to join NATO, the transatlantic military alliance that includes the U.S. and 29 other countries throughout Europe and North America. NATO membership has long been a sensitive issue for countries like in Finland and Sweden, who both manage substantial trade with Russia. This situation will likely have a bearing on their upcoming parliamentary elections. Western sanctions on Russia are very much in effect. The measures the U.S. and Europe are announcing will really hurt Russia, financially. Major companies such as Netflix, Boeing, Goldman Sachs, many major restaurant brands, and more are pulling out of operating in Russia. However, all of this has not been enough to deter Vladimir Putin, who appears dead set on his mission to roll back the losses of territory after the Cold War. (Although, Russia experts are starting to worry about Putin’s mental state.) Unfortunately sanctions on Russia will create economic blowback for the West in the form of even worse inflation. Russia’s main contributions to the global economy are commodities like oil, gas, wheat, nickel, aluminum, palladium, etc. To the extent that sanctions cut off those exports, prices will climb higher. It's important to note that Washington and Europe are hesitant to target Russian oil and gas at a time when energy prices are high in the U.S. and through the roof in Europe. Policies discouraging domestic oil and gas drilling look especially ill-timed right now. Sorry to say for the Federal Reserve, a tough job just got even tougher. The Fed needs to rein in already-high inflation this year, which would mean raising interest rates aggressively to counteract the inflationary effects of the Ukraine invasion. But the central bank is hesitant to raise rates quickly during times of geo-political turmoil. Thus, it’s expected for the Fed to lift rates, but more cautiously than they had intended. This raises the risk of even worse inflation in coming months. Some prices, like energy and food commodities, are bound to rise in the near term. Gasoline prices, typically averaging $3.54 per gallon for regular unleaded, are likely to hit $5 in the upcoming months. The global oil market was already tight before the Russian invasion. Demand is strong, and there is little spare production that could quickly make up for lost Russian barrels. The oil price spike is undoubtedly going to hurt the economy, the only question is: How badly? Certainly, it indicates that inflation is going to stay higher for longer. When it comes to your investments, don’t panic. Buckle up for volatility. Stocks are lower in response to reports that the talks between Russia and Ukraine ended in failure with no progress made on a cease fire or safe passage for civilians trying to flee. Mortgage Bonds are lower after the release of the Consumer Price Index Report. This index measures inflation on the consumer level and rose by 0.8% in the month of February, which pushed the year over year reading higher from 7.5% to 7.9%. This is the hottest reading since 1982 when it was at 8.4% Rising inflation, uncertainty about the Fed’s course of action and the unknowns of war will keep our market on edge this year. Market volatility will continue throughout global markets due to the uncertainty surrounding the ongoing invasion, especially with news that Russia has captured a Ukrainian nuclear facility.   Personally this situation hits close to home. My wife if from Lithuania and her family still resides there. We are watching the situation closely and staying in constant communication with our loved ones there. We are praying for the people of Ukraine and hoping there is a resolution of sort before more innocent lives are lost.

*Source: Kiplinger & MBS Highway*


Increased Loan Limits for 2022


Conventional loan limits are increasing in 2022 This will be effective for loans delivered on or after Jan. 1, 2022. This is huge news for Utah Counties! Give me a call today to discuss how this change could benefit your purchase in the new year, 801.206.4343 ALV Mortgage | NMLS # 888979

Refinance Ahead of Predicted Rate Increases

Interest rates have reached their highest level in six months. As the Fed have begun tapering their purchase of mortgage bonds, rates are likely to continue rising in the next few months

Basically, this means if you're still on the fence about refinancing, it's time to get moving!

Rates are still reasonably low— lower than they were before the pandemic, so refinancing remains a historically good deal.

Give us a call and let's review your situation to see if you could benefit from a refinancing before rates move more.


Act Now Before the Fed Begins Tapering

There’s a lot of talk about the Federal Reserve cutting back their buying of mortgage bonds, which is known as tapering. The purchases of mortgage bonds have helped keep interest rates low.

This can be very important to you if you are considering purchasing a home or looking to refinance your current mortgage to save money.

Interest rates are still extremely favorable. But this week at their meeting, the Fed said that they will likely begin reducing their purchases of mortgage-backed securities by the end of this year, with an official announcement likely on November 3. This could begin to raise interest rates as early as next year.

Once the Fed starts to pull back on their purchases, there is a risk that interest rates may move up, which makes this a great time to take advantage of low rates.

If you would like to take advantage of the low rates, while they are still available, to refinance here are some steps to follow:

Step 1: Set a clear goal and reason to refinance. From cutting your monthly payment, to shortening the term of your loan or pulling out equity for home repairs or paying off high interest debt. There are plenty of reasons why it’s smart to refinance now. You’ll want to clearly identify yours.

Step 2: Check your credit score. You’ll need to qualify for a refinance just as you needed to be approved for your original home loan. The higher your credit score, the lower your refinance rate will be.

Step 3: Determine how much home equity you have. To find how much equity you have acquired, check your mortgage statement to see your current balance. Then, give us a call so we can run an analysis to find the current estimated value of your home. Your home equity is the difference between the two. For example, if you owe $250,000 on your home, and its value is $325,000, your home equity totals $75,000.

Step 4: Get your paperwork in order. Gather recent pay stubs, federal tax returns, bank statements and anything else your mortgage lender requests. They may also look at your credit and net worth, so disclose your assets and liabilities upfront.

If you haven’t locked in a low rate, NOW IS THE TIME.

Give us a call today and let’s review your situation so you can capitalize on the market before it begins to move.


Refinance Fee Dropped

Recently the FHFA announced that it would be eliminating the adverse market refinance fee from Fannie Mae and Freddie Mac home loans delivered after August 1st. Originally this fee was designed to cover projected losses from the pandemic. With the fee borrowers were paying an extra $500 for every $100,000 they refinanced. However, the effectiveness of the market warranted "an early conclusion" of the fee. Now couple the fee being gone with the low rates we have been seeing this month and there has never been a better time to refinance. In fact more borrowers than ever can benefit from a mortgage refinance right now! If you have been considering refinancing, now is the time! Give us a call and let's see if you how much you could benefit.

Is the Market Cooling Off?

The housing market has been on fire this year, but the first signs of cooling down are beginning to appear. The market is sure to remain tight, with prices continuing to rise, inventories remaining low and buyer demand remaining strong. However, price gains look to be moderating after the spectacular and somewhat unsustainable pace we have seen so far this year. Nationwide, home prices were up double digits from the previous year. Home prices were rising beyond the level that many buyers could stomach. Look for home price gains to slow this year, up another 3.5% by year-end, after a sharp 8.2% so far (Kiplinger). Interest rates have fluctuated a bit in recent months, but they are still below 3%, making them attractive when compared to pre-pandemic rates. Since most homebuyers purchase as much home as their mortgage payment will allow, lower mortgage rates can quickly juice up demand and home prices, particularly when there is a shortage of homes like we’ve seen this year. Homebuyers will continue to get a great deal on their mortgage, thanks to mortgage rates hovering around those record lows. Sales are slowing though, with existing homes logging sale declines over the past four months. Pending sales were also down after peaking in May. Inventories though slim, aren’t falling the way they had been, and available listings are trending up. Competition is slightly less intense now than it was this spring. Some Realtors are reporting that new listings are no longer getting a flood of offers on the first day they hit the market, as was common earlier this year. The market is shifting as buyers are holding off on purchasing due to buyer fatigue. The wave of demand that powered the housing boom seems to be slowing as buyer optimism wanes. Buyers don’t want to be forced in a house they don’t love. Buying a home is a big deal and it’s not the time to make a rash decision and put in an offer on a home that you are not sure about. Builders are trying to take advantage of strong demand for new homes and help aid low inventory. However, with building materials increasing in expense and skilled labor being hard to find, there is only so much they can do. On a national level, construction isn’t going fast enough to effectively ease the shortage, but it certainly has helped. Experts predict we won’t be out of a seller’s market anytime soon but the signs of the market cooling off are there and it can only get better for buyers who are sticking with the market.

3.8 Million Homes Needed to Close the Affordable Housing Gap

A recent Freddie Mac study on the U.S. housing supply found that approximately 3.8 million additional homes are needed in order to close the affordable housing gap. The ongoing housing shortage is large and rising, due in part to the effects of the pandemic, as well as the high demand for homes coming from eager buyers rapidly entering into the purchasing market. Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage. In 2018, it was estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, it was estimated that the housing shortage increased to 3.8 million units by the beginning of 2021. The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes as builders struggle to meet exploding demand. In 2020, it was estimated that there were only 65,000 new entry-level homes completed—less than one-fifth of the entry-level homes constructed per year in the late 1970s and early 1980s. "The U.S. is currently experiencing an increase in housing demand that is well beyond what record low mortgage rates would typically yield as many people are spending more time at home. This high demand has driven the housing supply shortage even higher and has caused home prices to rise over 12% from a year ago." Freddie Mac experts do not expect housing demand to decrease any time soon.

*Source: Freddie Mac- Perspectives & Research*


Is Inflation Going to Get Out of Hand in 2021?

A question on many minds these days: Is inflation about to get out of hand from all of the money the Federal Reserve is creating and all the money that Congress is spending? The ingredients for inflation are active in the economy. There is a lot of fiscal and monetary stimulus as congress and the Federal Reserve work to jumpstart the economy after the hit it took from the pandemic. The Recent stimulus bill amounted to about $5 trillion. There is a lot of pent-up demand from consumers, who have had to defer much of their normal spending during the year, on everything from meals out, to travel, to haircuts, to professional clothes for the office. Already, signs of inflation rising are appearing with rising commodity prices and bond yields. Rising home prices don’t factor into government inflation numbers, but they do affect many people's cost of living. However, the Federal Reserve isn't worried. Chairman Jerome Powell is betting that inflation won't get out of hand and that reviving the economy is more important right now. In fact, he actually wants some inflation…not too much, but something a bit above the traditional ceiling of about 2%. If prices do start to jump, Powell figures the Fed can increase interest rates to restrain inflation sometime down the road. Still, higher inflation is expected in the months ahead. Inflation is roughly rising 0.2% a month, which is a reasonable base assumption. If that is the case, we should see 1.5% inflation in March, but it will quickly rise to 2.1% and then 2.4% in April and May, at that relatively being 0.2% assumption. As you can see the increase isn’t outrageous, but it is high enough that consumers will notice. Inflation should begin to relax as we continue to see the economy opening up. There was a surge of jobs added in March as more businesses get back to normal operations. Schools, food service, hotels and amusement parks made up half of the increase this year already. Construction jobs also increased as the weather continues to warm up across the country. With people returning to work the unemployment rate for the country is down to 6% and should continue to fall quickly, hopefully dropping below 5% by the end of the year. One silver lining of the increase in inflation this year is a bigger cost-of-living adjustment for Social Security recipients in 2022. This year's COLA came in at only 1.3%, largely because so many prices dropped or stayed steady in 2020, when pandemic shutdowns effected the economy. Now, prices of gasoline and many other goods and services are rebounding. Figure a jump of social security benefits of about 3% next January.

*Source: Kiplinger Letter: Vol.98, No.10**