Mortgage Rates Go Up to Highest Level in Seven Years

Exterior wall of an older building in Fort Lauderdale,FL
Exterior wall of an older building in Fort Lauderdale,FL

Freddie Mac released it’s Primary Mortgage Market Survey on May 17th, 2018. It shows U.S weekly average mortage rates.

Freddie Mac 5_17_2018. Primary Mortgage Market Survey
Freddie Mac. Primary Mortgage Market Survey. US weekly average mortgage rates for the last 10 years

For the week ending of  May 17th, 2018, 30-year fixed mortgage rate went up by six (6) points since the last week’s survey, and reached 4.61 percent. This matched the highest level since May 19th,2011. The 30-year fixed mortgage increased by 59 points in one year- when in May 18th, 2017 rate was 4.02%.

For the week ending of May 17th, 2018, 15-year fixed mortgage rate went up by seven (7) points since the last week’s survey, and now  it reached 4.08 percent. 15-year FRM increased by 81 points since the last year when it was 3.27 percent.

 

Freddie Mac 5_17_2018. US weekly avera mortgage rates
Freddie Mac – Primary Mortgage Survey. US weekly average mortgage rates os af 5/17/2018

When the interest rates are higher, the home-buyer has to pay more money when getting a loan.

The buyer gets a smaller house. If there is a set amount of money to be spend a month by a home-buyer, then a buyer has to spend more money for interest. There is less money left a month for an actual loan principal to pay.

What Is an Investment Property?

IMG_9624
Small older house in Hollywoood Lakes neighborhoood in Hollywood, FL

An investment property is purchased with the purpose of gaining a return on investment. It can be any type of real estate, be it a vacant land, an apartment building, a duplex, a single-family home, commercial property. Usually, the property is NOT occupied by the property owner. But sometimes investor buys a few units appartemnt building, live in one apartment and rent the rest. It could be a duplex, when the owner lives in one unit and rents the other unit to a renter.

How Is Profit Generated?

Profits are generated through rental income and/or capital gains.

Property investing involves buying, owning, renting, managing,  and/or selling of real estate for profit.

This type of property is purchased with the goal of  an income by renting the property, buying low and selling high, profiting over time from appreciation, renovating and fixing the property selling it for more than the purchase price.

Improvement of real estate as part of an investment game plan is generally considered to be a sub-specialty of real estate investing called real estate development.

 

Liquidity and Cash Flow

Real estate is an asset with limited liquidity when comparing to other investments.  It is not like cash in the savings acount, not like stocks or shares, when the owner can get cash withdrawal from the saving, or sell the stock and get the money fast. Real estate owner can’t get cash fast, unless sells real estate at discount.

Real estate depends on cash flow. It needs a lot of capital up front , but this capital can be gained with a mortgage. the owner borrows money.

This where the saying is “Make money with others’ people money

 

Mortgage Rates Are Leveling Out

Children decorated tiles
Children decorated tiles

Freddie Mac released its’ weekly Primary Mortgage Market Survey on May 10th, 2018:

FreddieMac.5_10_2018.Primary Mortgage Market Survey. US weekly mortgage averages as of 5_10_2018
Freddie Mac – Primary Mortgage Market Survey. US weekly mortgage averages as of 5_10_2018

Freddie Mac‘s survey shows U.S weekly average mortgage rates.

The survey results as of the May 10th, 2018 shows, that 30-year fixed rate mortage did not change during the week and stayed the same as last week 4.55% . But it is 50 point higher from a year ago.

The 15-year fixed-rate mortgage went down by 2 points. It is 4.01% now, when last week was 4.03%.

FreddieMac. 5_10_2018.Primary Mortgage Market Survey.
Freddie Mac – Primary Mortgage Market Survey. Interest Rates.

If you would like to read more about mortgages and interest rates, look into category in my blog Finance and Mortgage category.

What Is a Title in Real Estate?

Sheridan Lumbar - business building at 2044 Sheridan St., Hollywood, FL
“Sheridan Lumbar” business building located at 2044 Sheridan St., Hollywood, FL

The title in real estate are the legal rights of property ownership and they are protected and recognized by law. The ownership might be legal interest or equitable interest.

Those legal rights to real estate are many different ones – to own, to use, to posses, to  control, to enjoy, dispose of real estate or interest in real estate.

The main real estate rights are possession and use.

That bundle of rights can be separated even more and held by different parties, for example, some of the real estate rights are:

  • Water rights
  • Mineral rights,
  • Hunting rights,
  • Air rights .

In real estate, land and real property registration and recording gives public notice of ownership information.

Title evidence is proven through title report. This title report  is written up by title insurance company, which show the history of title as determined by the recorded public record.

What Are Mortgage Points?

Hallway hand-rail
Handrail in the open hallway. Old building in downtown Fort Lauderdale, FL

When homebuyer gets information from a lender about the mortgage cost, it often includes loan rates and points.

A mortgage point is a fee equal to 1 percent of the loan amount. For example, when home loan is $300,000 and it has a fee of two ( 2 ) mortgage points, it is going to be $6,000 fee.

A lender can charge one (1), two (2) or more mortgage points.

Mortgage points are fees paid directly to the lender in order to get a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments.

There are two (2) kinds of mortgage points:

  1. Discount points.
  2. Origination points.

Discount points:

These are prepaid interest on the mortgage loan. The more points home-buyer pays,  the interest rate is lower on the loan.

Origination points:

The lender charges this fee in order to cover the costs of making the loan.