Watch Out For These Expenses and Fees When You Buy a House

When you’re preparing to buy a house, you might think about the purchase price, but that only tells part of the story. The costs of buying a house go well beyond what your mortgage payment would be. To truly figure out your budget and how much home you can afford, don’t forget to factor in other fees and expenses.

Down Payment

The down payment is what you’re going to need in cash, upfront to buy a house. It’s usually 10% or 20% of the purchase price. If you choose an FHA loan or a conventional loan, a down payment is required. For a conventional loan, your down payment depends on the lender. Some loans might require as little as 3% down. VA loans and USDA loans have stringent requirements but don’t require down payments.

Origination and Application Fees

When you work with a bank to get a loan, then you have to pay an origination fee. An origination fee is payment for the services required to create a loan. An underwriting fee might also be owed, and an application fee. The lender can also charge a fee for your credit report.

Origination fees can be anywhere from 0.5% to 1% of the loan amount. Origination fees may be negotiable, but not always. You might also hear origination fees called points or discount fees.

Origination and application fees are sometimes grouped together as closing costs. In total, closing costs will usually add up to anywhere from 2% to 5% of the purchase price of a home.

Title Fees

Title fees actually are part of the closing costs, but since some new buyers aren’t aware of them, they’re worth talking about on their own. Title fees represent the cost to transfer a home’s title from the seller to the buyer.

You might, for example, have to pay a title search fee. This covers the cost of searching for property records to make sure no one else can make a claim to the property you want to buy.

Insurance

There are two types of insurance that are especially relevant when you’re going to buy a home. There’s homeowners insurance, and then there’s private mortgage insurance (PMI).

Homeowners insurance is what’s going to protect you if your home is damaged. If you were the victim of a theft or a natural disaster, for example, homeowners insurance might cover your losses.

PMI is required by most lenders if you make less than a 20% down payment. PMI is a way for a lender to protect itself. Your PMI premium could on average be anywhere from .58% to 1.86% of the amount of your loan. Once you start building equity in your home by paying down your mortgage, you can eliminate your PMI.

Taxes

You may be responsible for taxes at closing. Usually you can expect to pay two months of property taxes when you close. Since most homeowners pay property taxes in advance, you might have to reimburse the seller for these. There’s also the potential you’ll have to pay a transfer tax. This is a tax for changing the title to the property. The amount you’ll pay in transfer taxes depends on where you live, and sometimes this is shared by both the buyer and seller.

Appraisal and Inspection Fees

If you’re going to get a loan to buy a home, you’re going to need an appraisal. An appraisal gives an estimated value of the home you’re going to buy. Lenders require it so that they know that you’re not overpaying for a home. Appraisal fees range from around $300 up to $1,000.

A home inspection fee is separate. A lender might want an inspection or you could want one for your own peace of mind. Inspection fees range from $300 to $500 most of the time. If you’re buying an older home you could also opt for a mold or pest inspection, each of which can be upwards of $200.

Real Estate Commissions

If you use a real estate agent, they’re going to get paid by commission, which is a percentage of the sales price. Sellers may pay these fees, but not always. You may have to pay them out of pocket, so be clear on the terms of your agreement. 

You may not have to pay all of the above fees, or you may have to pay even more. It varies depending on your state and individual situation, but you do need to be clear on any and all fees before you enter into an agreement to buy a home. Go over your loan disclosure carefully as well, and if you aren’t sure about anything, consider consulting with a closing attorney.

Original Post

5 Overlooked Factors That Can Affect Your Home’s Insurance Rates

Insurance rates—how are they even calculated? It can be complicated, but it all comes down to an algorithm that takes many variables into account. If keeping your rates as low possible is your number one concern, you need to know about these five factors that can affect your bottom line.

1. The age and condition of your house.

This is one of the most obvious factors and also one of the biggest. The age of your house and the wiring, pipes, roof, lumber, square footage, and even how many corners it has all play a role in the price of your insurance.

It comes down to the risk associated with the house and the costs that come with repair or replacement. For example, if your home was built in 1920, it may have old pipes and wiring that aren’t up to code. These materials come with a much higher risk of damage or fire, so the insurance companies will charge more to insure it.

2. In a flood zone? It can cost you.

Again, if the risk of destruction is high, your insurance will reflect it. If you have a beachfront home on the Gulf Coast, you can expect to pay more than if you’re in an area of the country where flooding is typically not a concern, such as the Midwest.

If you’re in any sort of flood zone and you have a mortgage on your home, your lender will probably require a separate flood insurance policy—and that costs money. Even if you aren’t in a flood zone, your mortgage company may still require coverage, so be sure to look into your lender’s requirements when you begin shopping around.

3. Some dog breeds can take a big bite out of your wallet.

In some cases, your family dog can bump up your premiums. Certain breeds, such as pit bulls and “bully” breeds, have a reputation of being more dangerous than others and historically come with larger liability concerns to your insurer, resulting in a higher rate.

Three things can happen if your dog is considered a “dangerous” dog breed: you could be charged a higher rate from your carrier, your provider may cover you but exclude any liability associated with the dog, or the carrier could decide not to insure you at all.

4. Your pool can put your rates in the deep end.

Pools, trampolines, and even backyard construction projects are in a category called attractive nuisances, which are recreational amenities added to a home that can raise liability concerns (and your rates) on behalf of an insurer. If there is something in your yard that can attract the attention of a minor and pose any level of danger, it will probably affect your insurance policy.

5. Proximity to the fire department affects your premiums.

If your house were to catch fire, how long would it take for the local fire department to get there? The faster they can get there and handle the situation, the better chance they have of minimizing the damage.

Every homeowner’s policy requires what’s called a Public Protection Class (PPC) rating. A PPC is rated between 1-10 (one being the best) and takes factors like proximity to the fire department, proximity and number of fire hydrants, municipal water towers, and even railroad tracks into account.

In some cases, you may be able to make some changes to help lower your rates, but never lie or intentionally exclude key information on your application—this could result in your coverage or renewal getting denied. Be honest with your agent, and they will help you find the right coverage and rate that works for your needs.

WRITTEN BY PAUL MARTIN, CPCU

Original Post 

Shopping For Mortgage Rates the Right Way

 When you’re getting ready to buy and finance  a home or perhaps refinance an existing  mortgage, one of the things you end up doing is shopping around for mortgage rates. Individual lenders set their own rates each and every day. Sometimes even more than once per day during an odd, but not unprecedented, volatile mortgage market. The Fed doesn’t set your typical 30 year fixed rate mortgage, it’s the individual lender. Yes, the Fed does affect mortgage rates but only indirectly. Some adjustable rates can reflect Fed actions but your everyday fixed rate loan is in the lender’s hands.

Okay, that said, how do you shop around for rates? Here are some things you should definitely do:

Shop for rates on the same day. 

Because mortgage rates react to certain market conditions, getting a rate quote on a Monday could be very different from a rate on Thursday. Market conditions can change in just a few days, so to be fair to yourself, set aside a rate shopping day and start making some calls. Note here, when you review rates on a website, pay attention to when the rate was posted. If it was a couple of days ago, you need to pick up the phone and make a few phone calls.

Shop at the same time of day.

Just as it’s important to shop around on the same day, you can also help by shopping at the same time of day as well. Again, things can change rather rapidly without your knowing and a rate quote in the morning might be different in the afternoon.

Shop for the same program. 

Only get a quote for the same exact mortgage program. You can’t compare rates for a 30 year loan with a 15, for example. And certainly don’t compare rates for a fixed with an adjustable. 

Points? 

If you’re getting 30 year quotes and you’re shopping in the morning, make sure you get the exact program and I mean exact. Get a quote for a 30 year loan with one point, for example. And also get the quote for the same ‘lock’ period. Most lenders offer various rate guarantees, or locks, at different periods of time. A lender might have a 10 day lock, a 30 day and so on. The longer the lock period, the higher the rate will be.

Finally, compare lender fees. One lender might have a much better rate than everyone else but that lender might also have higher loan charges.

It can be hard to compare apples and apples sometimes, but if you follow these steps, you’ll be doing exactly that.

WRITTEN BY DAVID REED

Original Post 

Washing Machines Spreading Deadly Superbugs

 

STORY AT-A-GLANCE

• Thirteen newborns in Germany were colonized with a dangerous bacterium after the washing machine used for their personal items began growing Klebsiella oxytoca, a bacterium normally found in the intestines, which may trigger life-threatening lung infections and damage
• The authors caution those doing laundry for people who are prone to infection, such as those who are immune compromised or the elderly, should take precautions with their machines at home. There are pros and cons to high efficiency top- and front-loaders and to standard top-loading machines
• Although front-loading washing machines are more prone to the development of toxic mold growth along the rubber gasket seal, even top-loading machines should be cleaned and sanitized routinely to reduce the growth of bacteria and mold, and to prolong the life of the machine
• While not implicated in the featured study, it bears noting that your dishwasher has the same type of rubber gasket to keep water in the machine and therefore the potential to grow mold and bacteria. Consider cleaning your dishwasher at least every two months to reduce your potential risk of exposure to mold spores

An early version of the washing machine was introduced in the 1850s and has since evolved from manual labor gear devices to high tech machines that assistance dogs are able to load and start.

Clothes used to be washed by pounding them on rocks or washing away dirt in streams and rivers. The metal washboard was invented in 1833 and by the mid-1800s a patent for the first washer was submitted.1 Interestingly, the machine invented in France was called the ventilator. After the washing machine, electric dryers began appearing in the U.S. just before World War I.

The first computer-aided washing machine sold to consumers was on the market in 1998.2 By 2019, computer-aided machines became smart devices able to connect to your smartphone.3 The machines detect dirt levels and adapt your washing cycles; some include a textile guard to protect synthetic fabrics.

Lee Maxwell was so enamored with washing machines he collected 1,600, now on display in the Lee Maxwell Washing Machine Museum.4 Commercial washing machines and dryers are used in hospitals.5 They make use of high extraction methods to save time and energy and are programmable to allow facilities the option of washing personal items, bed pads and mopheads efficiently.

Culprit: Rubber Ring on Front-Loading Washing Machine

In a published study in Applied and Environmental Microbiology6 it was revealed that 13 newborns and one child in a German hospital were colonized with Klebsiella oxytoca. The newborns were 1 week to 4 weeks old and, thankfully, none became seriously ill from the known superbug.7

The bacteria were passed on knitted socks and hats used to keep the babies warm; they had been washed in a machine found on the hospital unit. Ricarda Schmithausen, a hygienist from the University of Bonn, pointed out the machines did not meet standards for hospital use and were used only for the mothers’ clothes and baby wear.

Klebsiella oxytoca occurs naturally in the intestines but may cause severe infections outside the intestinal tract.8 Most infections happen in the health care setting. Long-term complications are uncommon, but lung infections may result in damage and can be life-threatening. Hygienist Martin Exner from the University of Bonn commented on the results of the study:9

"If elderly people requiring nursing care with open wounds or bladder catheters, or younger people with suppurating injuries or infections live in the household, laundry should be washed at higher temperatures, or with efficient disinfectants, to avoid transmission of dangerous pathogens."

The physicians found the superbug on the babies’ skin, but it did not trigger infections. Tests ruled out the bacteria being passed from the mother or health care workers. Ultimately the team learned the source was a rubber door seal on the washing machine.10

The authors cautioned that those doing laundry for individuals susceptible to infection, such as the elderly or people with a compromised immune system, may need to take precautions with their machines at home to avoid transmitting pathogens.

It may be important to be especially careful of energy efficient front-loading washing machines. These use lower water temperatures and rely on a rubber seal to contain the water in the machine.

Top-Loading or Front-Loading Washing Machine

When it comes to purchasing a new washing machine and dryer for your home, the options seem nearly limitless. Washing machines may start at $275 and go as high as $2,500 or more. Some even multitask and allow you to wash two loads at once or go straight into a drying cycle without touching the clothes.

Consumer Reports11 tested machines to determine cleaning efficiency and how gentle they were on fabric. Older machines use an agitator and load from the top. They're the least expensive with the shortest cycle times but are tougher on fabric and may increase water pollution leaving your home.

High-efficiency top loaders use less water and extract more of it, which shortens the amount of time you run the dryer. A front-loading machine is gentle on fabric and uses the least amount of water. In addition, front-loading machines may be stacked to save space. However, washing times are usually much longer and Consumer Reports finds mold can be a problem, especially in front loaders.

A high-efficiency top loader takes from 60 to 80 minutes to wash your laundry, compared to the 60 to 120 minutes of a front loader.12 The top-loading high-efficiency washing machine is gentler on your clothes than a standard and offers savings in water, detergent and energy.13 While all washing machines carry a risk of developing mold growth, it may be more difficult to keep a front-loading machine dry and clean.

Is There Mold in Your Washing Machine?

Top loaders and front-loading machines have the potential for growing mold and bacteria when the lids or doors are kept closed, which maintains a moist environment. However, front loading machines seem to have more problems as water has the potential to accumulate behind the rubber seal without any visual sign of mold.

When mold is there, each time you open the door, tens of thousands of spores may be released into the air. The problem has become so widespread that Whirlpool,14 Frigidaire15 and others have faced class-action lawsuits alleging front loading machines collect water and trigger the growth of mildew and mold.

Ruth Ogden reported she threw out hundreds of dollars of clothing when she believed the odor from her clothes was the result of her teenage son’s sloppy habits.16

One group of environmental testing professionals17 wrote the odor emanating from front-loading machines is a combination of a chemical release from microbial volatile organic compounds, similar to traditional volatile organic compounds released from paints and petroleum-based products.

The introduction of toxic mold spores to microbial, volatile organic compounds increases the potential health risks from chronic exposure. One woman described the scent, saying:18 “It kind of smells like a turtle pond.” In 2016 one class action lawsuit involving 6 million people was resolved and the participants received up to $50 in cash or a discount on a new appliance.

Protect Your Family From Mold and Bacteria in the Wash

All machines require a deep cleaning at least twice a year to prolong the life of the machine and reduce bacteria and mold growth.19 Front-loading machines may have a few trouble spots requiring extra attention. There are a few things you can do between deep cleanings to reduce the risk of mold and bacterial growth:20

• Leave the lid or door open after each washing to allow the machine to dry
• Take your clothes out promptly and use high-efficiency detergent in high-efficiency machines
• Use a dehumidifier in the laundry room if the humidity remains above 60%
• Clean the washer by using white vinegar in a hot water wash, without any clothes in the machine
• Wipe down the door and rubber gasket after each wash in a front-loading machine

Clean the inside of your machine every six months with a solution made with white vinegar. Vinegar is natural and mildly acidic, and will kill up to 82% of all mold species.21 It can be sprayed on the interior between washes. Fresh lemon is also an acidic mold killer, but I don’t recommend it as a leave-on spray because substances that break down may encourage mold growth.

Use a microfiber cloth to wash and dry the outside of the machine as well, since this removes visible grime where floating mold spores may colonize.22 Pay close attention to the top lid or door, as well as any small areas where you may need to use a toothbrush. Even if you don't see scum, you still want to clean the rubber door seal and lid or door.

Remove any dispensers used for bleach or fabric softener, even if you don’t use them. Wash these in the sink and dry thoroughly. After scrubbing out the inside of the tub, pour in lemon juice or vinegar and run the machine on the hottest setting to help remove stains, detergent buildup and mineral deposits.

Your Dishwasher Has the Same Rubber Ring

It's important to remember that dishwashers have the same type of rubber gasket, and that running the dishwasher does not clean the interior. It does increase the humidity inside the machine, which raises the risk of spreading mold spores throughout your kitchen.

Clean your dishwasher by taking out the detachable racks and using a towel or toothbrush to remove any scum you find.23 Next, replace the rack and fill a container with a cup of white vinegar. Run the machine completely empty with a cup of vinegar in the upper rack on the hot water cycle.

This helps to clear out detergent buildup, dissolve minerals and neutralize food odors. Once finished, sprinkle 1 cup of baking soda on the floor of the dishwasher and run it on the hot water cycle. Repeat these two steps every two months to prolong the life of your appliance and reduce the growth of any mold or bacteria.

Analysis by Dr. Joseph Mercola

Original Post

Home Sales Rise as More Sellers Cut Prices and Grant Concessions to Buyers

Home sales ticked up to their highest levels in a year last month as more sellers tried to sweeten the pot for buyers with price cuts and concessions.

Deterred by climbing home prices and high mortgage rates and homeowners insurance costs, would-be buyers backed out of deals at record levels in October, according to a new report from real estate brokerage Redfin. As a result, nearly a third of home sellers are making compromises to close the deal, including slashing prices and paying for closing costs, among other concessions.

“Home prices are high, mortgage rates are high and insurance costs are high, and when buyers see the final number, a lot of them are backing out,” Redfin Tampa Sales Manager Eric Auciello said in the report.

Homebuyers are backing out, sellers cutting prices

Pending home sales increased 1% from September to October, reaching their highest level in 12 months. While they sales are down 4.8% year-over-year, the annual decline was the smallest in nearly two years.

The housing market is far from ideal for buyers, even as mortgage rates fell (slightly) to 7.44% for the week ending in Nov. 16. The median U.S. home sale price climbed 3.5% last month to $413,874, and although the supply crunch eased a bit in October, the historically low number of homes for sale is keeping prices elevated and options limited.

Even though pending sales have crept up in the past few months, the number of closed home sales has continued to decline. Last month, closed sales were down 12.5% year–over-year.

Redfin found that a 54,000 home-purchase agreements were canceled in October. That’s 17.2% of homes that went under contract the same month, the highest percentage recorded by Redfin since it started tracking home sale data in 2017.

“Buyers want turnkey houses because everything is so expensive now, whereas in 2021 and 2022, they felt lucky to get any house,” Redfin Premier agent Heather Mahmood-Corley said in the report.

To compete in a tough market, sellers are slashing prices and yielding to buyers with concessions to close deals. Almost 21% of homes sold in October had a price cut, and 35% of sellers are offering concessions like cash for mortgage-rate buydowns, repairs or closing costs.

That said, Redfin expects the cancellation rate for home-purchase contracts may decrease in November thanks to declining mortgage rates.

Top 10 cities for home-purchase agreement cancellations

The following metropolitan areas saw the highest percentage of pending sales fall out of contract in October, according to Redfin:

• Jacksonville, Florida (25.3%)
• Atlanta, Georgia (24.6%)
• Orlando, Florida (23.7%)
• Fort Worth, Texas (23.6%)
• Fort Lauderdale, Florida (23.4%)
• Las Vegas, Nevada (22.6%)
• Tampa, Florida (22.1%)
• Houston, Texas (21.9%)
• Riverside, California (21.4%)
• Phoenix, Arizona (20.5%)

By: Mary Ellen Cagnassola

Photo: Olive Burd / Money; Getty Images, Shutterstock

Original Post 

USPS Changes Procedures for Changes of Address

According to a recent report on FOX Business, the U.S. Postal Service has initiated a new process for people who are moving and submitting a change of address for mail forwarding.   The new process introduces a more secure way to verify the customers’ identity by confirming their address change via a QR code sent to their email.  Then, you must then take your ID or driver’s license with that QR code to the post office in-person.

“Today a customer that submits a ‘change of address’ request must have their identity verified…There are three ways to initiate a change of address request: online, visiting a local retail office, or submitting the request by mail,”  James McKean, senior public relations representative, told FOX Business.

BY BRAD BECKETT 

Original Post

This French App Will Change the Way You Grocery Shop

 

Scan a barcode, any barcode. Yuka will give it a score.

Yuka’s arrived Stateside.

The health app has proven a sensation in France since it launched back in 2017. Using Yuka’s nifty barcode technology and an extensive database of registered products, consumers are able to summon definitive ratings of the snacks, drinks and ingredients they find along grocery store shelves — or already sitting in their own pantries.

Designed by brothers Julie Chapon, François Martin and Benoit Martin, Yuka became enough of a phenomenon in France that one supermarket giant, Intermarche, vowed to reform 900 of its saltiest/sweetest recipes. And it took a minute, but Yuka is now making waves on this side of the pond; it’s currently the fourth-ranked free health and fitness app in the App Store.

Spoiler alert: we’re fans, and we think you should download it. But the app has weathered some criticism as of late, especially from TikTok dietitians. Here’s how to use it, why you should and the reason a subsection of people are upset.

Plus: a sneak peak of the worst rating we’ve seen on the app yet.

How it works

Yuka’s a pretty instinctual app, and especially now that we’re so used to pointing our phones at “QR code menus” in restaurants. The homepage is a camera with a scanner, capable of capturing any product barcode in the app’s system. It’s uncommon that Yuka doesn’t have a product in its database, though the app’s international rollout is ongoing, so we can excuse them for not having information on every obscure granola bar at Whole Foods. Users are able to enter information for a product themselves, if the spirit moves them.

Once you’ve scanned an item, its product page pops up, with a score out of 100 and a traffic cone-type rating from red (bad) to forest green (excellent). Beneath will appear a summary of the product’s negatives and positives. The former might point out that the product has “additives to avoid,” like texturizing and anti-caking agents, while the latter might celebrate a product’s richness fiber, or lack of sugar.

We’re here for the recs

Everything you scan is permanently accessible under the History tab. And in the event that a product doesn’t receive a rating over 50 (the bare minimum to qualify as “good” in the Yuka app) it will also appear under the Reco tab, next to a product that you might consider subbing it for. In the wide world of wellness, this is typically where apps start to shill for brands, but Yuka is fiercely independent. It refuses to accept money from brands, and earns its bread via a sliding scale membership that maxes at $19 a year.

Personally, we think the flat fee is worth it, as it offers A) unlimited search of the Yuka database (otherwise you can only fetch the information of products you’re literally holding in your hand) and B) allows for offline scanning (which is clutch, considering how many grocery stores are underground…though admittedly, this is mainly an issue in urban areas).

At any rate, the free version of the app will auto-generate alternatives to whichever scanned product didn’t make the grade. It’s an appreciated and actionable extra step; when we learned our oat milk was chock-full of preservatives, we switched to one with no hazardous substances or synthetic herbicides. And after whimsically scanning our 4:00 office snack of choice (salt and vinegar potato chips), we discovered nominations for popcorn, seaweed snacks and nuts in a similar seasoning.

0/100

One of our favorite things to do with Yuka is find “foods” (relative term here) that throw up a goose egg. It helps to pay for premium here, so you can search on a whim, though there’s an aisle at the grocery store — you know the one — where 100 products would have a hard time adding up to a 100 rating…combined. Some proud zeroes: Cheetos Puffs, Captain Crunch, Coke. Anything with an anthropomorphic mascot is likely hovering down near nothing.

Meanwhile, there are plenty of “comfort foods” that draw somewhere between 5 and 30 points, due to crazy amounts of salt, or fat, or food coloring. We didn’t find this to be particularly surprising for any products. Of course Kraft Macaroni and Cheese, for instance, got a bad rating. We’d be more concerned if it rated well, as Yuka’s categorization strategy (which assesses a product’s Nutri-Score, use of additives and organic origins) would lose all credibility.

Finding a zero or similar in the wild is a reminder that highly-processed crap is still going strong. Is there ever a world where it makes sense to eat something without a single nutritional point of value? Not really — but maybe there’s something freeing in knowing that you can partake of nutrition’s absolute rock bottom once in a while (big games, road trips, birthday parties) and be okay.

“Clean eating”?

In order to combat self-defeatist diet cycling, nutritional experts have championed “intuitive eating” in recent years, imploring adults to stop thinking of foods as “good” or “bad,” and to start thinking about how food makes them feel — both in the moment, and in general. The idea being: same as the bladder or a knee, the body sends important biological clues as to whether it can handle a certain type of food, in a certain amount, at a certain time of day.

Fad diets, meanwhile, tends to advance inane and impersonal rules that put way too much pressure on their desperate followers. When these dieters slip up, they sometimes devolve into what’s known as the “what-the-hell-effect,” eating even more than they did before they signed up for their new meal plan. Some have expressed concern that Yuka advocates for a problematic and unattainable “clean eating” diet, via which its devotees will grow obsessed with the ratings of food, and swear off any products with too many calories or artificial ingredients.

Which is possible, of course. But it’s also a pretty depressing take. Yuka is no cult; it’s a tool. The reason it’s gotten so popular is because it’s meeting people where they are — the scanning tech, the out-of-100 rating…these are things that are more easily digested than poring over the vitamin percentages in a Nutritional Facts chart. Yuka’s system is by no means perfect, but that’s something that people need to learn from themselves along the way. (For example: the app tends to dock points from products like peanut butter, or extra virgina olive oil, for being too fatty or caloric. But these are healthy foods that just happen to be hefty.)

The rating is more of a guidepost. What’s the difference between a 78 and an 84? Well, who cares? Those are good scores, which capture the general essence of a product — go ahead, make a meal with it. The shitty ratings down near the bottom are the ones you probably shouldn’t see as negotiable. In other words: Yuka can disseminate an honest appraisal on the merits, or lack thereof, of a sugar-rich yogurt. But if you’re trying to reach a consensus on whether it would be healthier for you to cook sockeye salmon or Arctic char tonight, you’ve lost the plot.

TikTok critiques

Another critique, meanwhile (you can find some anti-Yuka sentiment on TikTok here) revolves around the perceived lack of respect that Yuka reserves for the inflated cost/paltry serving size of its recommended products. And it’s true — Yuka sort of just slots in whatever it’s determined as healthier, without acknowledging the fact that sometimes, the “lesser” product is simply more convenient.

But hey, Yuka’s job has to stop at some point. It’s free, after all. Perhaps that’s just where the app leaves you? Parents are especially familiar with the imperfect mental calculus that grocery shopping requires. Building out a fridge, pantry and snack drawer that satisfies a household’s worth of stomachs is a thankless ask. Yuka brings some order to the madness, though, by rooting out obvious no-gos, offering a bit of nuance between products that seem like the same thing, and suggesting a step away from brand loyalty, at least once in a while.

There’s also an aspirational/inspirational bent to the app; you could let bad ratings get you down, or you could try adding some good ratings to your weekly lineup. While we respect the tireless work that nutritional experts have done on this side of the 2020s to combat dietary obsession and weight loss culture, let’s remember: there is nothing wrong with pointing out that a particular food is healthy. Maybe there are no “good” foods, but there are certainly good decisions. Downloading Yuka is one of them.

BY TANNER GARRITY

Original Post

Huge Drop in Mortgage Rates After Friendly Inflation Data

 

November 3rd's jobs report brought an outstanding week for Treasuries and mortgage rates to an outstanding conclusion.  From there, the following week (last week) was sorely lacking in inspiration.  Markets were anxiously awaiting today's release of the Consumer Price Index (CPI) and it did not disappoint.  

If we had to pick the single, biggest consideration for interest rates these days, it would surely be inflation. CPI is the biggest market mover among the inflation reports and this one left no doubt.  By merely coming in 0.1% lower than expected for the month, CPI sparked one of the biggest single-day bond market rallies since last year (incidentally also due to a CPI report in November 2022).

While this is important confirmation of the prospective shift away from the recent rate ceiling, there are other economic reports and other factors that could make for a bumpy road on the way down.  In fact, we should keep in mind that there have been a few "false starts" in rates that have looked quite a lot like the past few weeks only to give way to another surge toward higher highs.  

Either way, it will be the balance of economic data and the Fed's response to that data that will do the most to dictate the broader trends in rates.  On that note, tomorrow morning brings more important reports.  The Producer Price Index and Retail Sales are certainly not on the same level as today's CPI, but if they speak loudly enough and in unison, they could add momentum to today's improvement or make a case for more consolidation before rates move any lower (equivocal, but accurate). 

By: Matthew Graham

Original Post

Definition of Mortgage Rates: What Are They Really?

Key Concepts

• Mortgage rates are interest rates on home loans
• There are really TWO mortgage rates: the interest rate (or “note rate”) applied to your loan amount (or “principal”) and the rate implied by certain upfront costs (the “effective rate”).
• APR (Annual Percentage Rate) attempts to convey that “effective rate.”
• Understand the tradeoffs between upfront costs and payments over time

Principal (definition): the current balance of a loan/mortgage. In the absence of any additional costs or fees, the initial principal balance of a mortgage is whatever was borrowed to buy the home. Let’s say you buy a $200,000 home and are able to make a $10,000 down-payment (an upfront payment that reduces the amount of money borrowed). The principal in this case would be $190,000.

Principal also refers to the remaining balance after a mortgage payment. Each payment is typically contains some interest for the lender and can also contain property taxes, homeowners insurance and mortgage insurance. Whatever is left over goes toward reducing the principal balance (the amount you owe, which is slightly different from a “payoff balance”). In other words, as you make payments, the amount you owe decreases. When that amount reaches zero, you own the home outright!

Payoff vs Principal: If you’ve refinanced or sold a home before, you may have noticed that the amount required to pay off the old mortgage was slightly higher than the principal balance on the mortgage. This occurs because your monthly mortgage payment covers interest charged during the previous month. If you pay-off your loan in the middle of any given month, the lender hasn’t yet collected interest for that month. They’re not going to charge you for the entire month, however, only the number of days between the 1st of the month and the payoff date.

For example, your mortgage payment on June 1st would cover interest for the month of May. If you pay off your loan on June 10th, the lender has not yet been paid interest for those 10 days, and will add them to your payoff amount. This is true for both purchases and refinances. Many lenders charge a small additional fee to obtain the payoff balance for administrative costs associated with an early payoff.

Mortgage Rates are simply the interest rates applied to the principal balance, but there is an important distinction. What most people refer to as “mortgage rates” are actually only part of the equation. The more accurate term would be “note rates.” This refers to the interest rate on the promissory note (an official document that you’ll sign during the mortgage process).

Think of the promissory note and the note rate as a sort of baseline for the overall cost of financing. While it’s true that the note rate is 100% responsible for determining the monthly mortgage payment, it’s typically NOT the only cost of financing. Most mortgages have an “upfront cost” component.

Upfront costs are charged by multiple parties (examples include: lender, appraiser, credit bureau, local government taxes, homeowners insurance companies, attorneys/title company, etc.) Most of these costs will not change regardless of the loan type or the lender, but some will.

Upfront lender-related fees are common. They add to the overall cost of financing. Therefore, the NOTE rate differs slightly from the actual or “effective” rate you’re paying on your money.

The Truth In Lending Act stipulates that lenders must quote that effective rate in the form of APR or annual percentage rate.  If you don’t read anything else on APR, it’s important to know that not all lenders calculate them the same way, and APR can’t necessarily be trusted as an apples to apples comparison between two or more lenders.

For the purposes of understanding mortgage rate building blocks, we’ll simply use the term “upfront costs.” Whether we’re talking about the interest portion of your mortgage payment or upfront lender-related costs, it’s all money that ends up going from your wallet to the lender. In most cases, you have some say in dividing up the lender’s upfront income versus their income over time.

For instance, you will typically have the option to pay more upfront in exchange for a lower interest rate. The industry has long referred to this type of extra upfront payment as “points” or “discount points.” Despite any negative connotation from certain financial media pundits, points are neither good nor bad--simply a choice to pay now or pay later.

Only you can decide which way makes most sense for your scenario. The only thing that really matters is the trade-off between the two choices.

If you invest your extra cash and earn a certain rate of return, you may be better off minimizing your upfront costs and putting that money into your investments.

If, on the other hand, you wouldn’t be earning a great return on that money and you know you’ll have the mortgage for a long time, it may make sense to “buy down” the rate with additional upfront cost.

Your lender should be able to show you the difference between those options in terms of the number of months it will take to break-even on the additional upfront cost. For example, you would pay $1200 in extra upfront costs and $14 less per month in scenario B. It would take 86 months to break even because $1200/$14 = 86.

SCENARIO A:

Upfront costs: $5000

Payment: $2000 per month

SCENARIO B:

Upfront costs: $6200

Payment: $1986 per month

86 months (or 7.16 years) is a fairly typical break-even time frame when you buy-down your rate. Break-evens vary from lender to lender and from rate to rate. In cases where the break-even time frame is 4-5 years or less, it’s an increasingly compelling option for people who plan to keep the new mortgage for a long time and who don’t have a great place to earn a high rate of return.

The bottom line is that it’s your choice and there’s no right or wrong way to do it.

In terms of understanding mortgage rates, the important concept is that of “upfront cost” vs “cost over time.” For any interest rate you hear about or see online, there are certain assumptions underlying that quote. It could be based on higher upfront costs than you had in mind or a higher credit score than you have (read more about how credit and other individual factors can affect rate. You won’t ever be able to know the actual rate until you know what those assumptions are.

NOTE: In lieu of choosing a mortgage with a higher rate and lower upfront costs, you may be able to increase the new mortgage balance in order to pay the costs--sometimes referred to as “rolling in.” This would keep the interest rate the same, but the payment would still be slightly higher because the loan balance is slightly higher. You’d also need to consider the fact that you’ll have more principal to pay off when it comes time to sell or refinance. Even then, this can sometimes be a more appealing option than raising the rate to cover the costs--especially if the upfront cost savings happens to be minimal between the quoted rate and the next rate higher (remember, they vary from rate to rate and lender to lender).

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Real Estate Ten Commandments

 

4 Reasons It's Actually a Good Time to Buy a House (for Some People)

A record number of Americans think it’s a bad time to buy a house, and with housing costs near an all-time high, it's hard to blame them.

Mortgage rates are higher than they've been in decades, and the sales price of the typical American home — $394,300 — has shot up about 40% in the last four years.

For many would-be homebuyers, this is a uniquely difficult time to get into the real estate game. But for some people, experts say, it's actually opportune.

With so many people spooked out of the market, there's a lot less competition (and a lot more negotiating power) for those willing to tough it out.

And while navigating a house hunt under the current conditions certainly isn't for everyone, buyers with good credit and enough cash to make a sizeable down payment can shield themselves from some of the pain of high interest rates — or rely on a well-padded savings account until they can eventually refinance.

If you're determined — and financially ready — to buy a house right now, here are four reasons the odds could be in your favor:

The housing market isn't so crowded

During the pandemic, mortgage rates were near historic lows, which drove up demand and led to bidding wars that pushed home prices well above asking. Current mortgage rates (which are hovering around 8%) and the fact that people who bought homes in 2020 and 2021 now feel "locked in" to their ultra-low rate (which is closer to 3%) have led to a shortage of homes for sale.

But there are also fewer homebuyers these days, and there's less competition between people who are in the market. That gives prospective buyers a lot more leverage than their pandemic-era counterparts — especially if the listing they're eyeing was posted weeks ago (or longer).

"When something's been on the market... there's typically more of an opportunity to negotiate, whether it be price or terms," says Sarah Glovsky, senior vice president at The Charles Realty in Boston.

Most of the buyers Glovsky has worked with recently have been able to seal the deal with traditional offers, comprehensive home inspections and contingencies that let buyers back out of a purchase if they're unable to secure a loan. That wasn't the case during the pandemic-era home buying frenzy, and if mortgage rates drop swiftly, it won't be the case in the future, either.

Qualified buyers can keep interest rates at bay

When mortgage rates are high, all-cash buyers have two major advantages: They get the benefits of less competition while avoiding the burden of large interest payments. That's why more than a third of home purchases were made by all-cash buyers in September, the highest level since 2014, according to Redfin.

Home buyers with good credit scores and enough money on hand to make sizeable down payments also have a leg up, though to a lesser degree. Mortgage lenders offer better rates to these buyers, and offering up a large down payment reduces the size of their loan.

Glovsky says about half of the deals she's brokered in the past year have been all-cash deals. And even though many of her clients are still financing their home purchases, she says, more buyers are putting closer to 35% down; up from the traditional 20% down payment.

Selma Hepp, chief economist for CoreLogic, says this is especially true for Americans moving out of expensive cities to smaller, more affordable markets, where the equity they've gained in their previous home goes much further.

Some older Americans who are ready to downsize may also have an advantage in today's market.

"If they have a lot of equity in their home, or own the home free and clear, they can cash out basically and buy the next home with cash," Hepp says.

For everyone else — that is, buyers willing to stomach a 7% or higher interest rate — there's always the option to refinance down the road, and replace their mortgage with a new loan when rates are more favorable. Keep in mind that this can be risky: It's a gamble when rates will fall (and by how much) and refinancing comes with additional costs.

Home sellers are more motivated to close

The fall and winter months are historically slow for the real estate market since it's hard for families to relocate during the school year and people are less inclined to move during the holidays or in bad weather.

That means, in many cases, the homes put on the market around this time of year "are being sold by people who need to sell and not by people who want to test the market," Glovsky says. "You may be able to negotiate."

When more buyers are looking in the spring, there's a good chance that the home you end up falling in love with will get multiple offers, she says. If you find a great home now, that's far less likely.

In a slower market, buyers can also try to get rate buydowns, where the seller pays to essentially lower the mortgage rate for a couple of years, Glovsky says. In a 2-1 rate buydown, one of the most common of these concessions, a home buyer with a 7% interest rate would pay 5% for the first year of the loan and 6% for the second.

Next year could be even worse

High mortgage rates may be an obstacle for homebuyers well into 2024, or longer. The Federal Reserve is still focused on controlling inflation, and the agency says it's not even considering interest rate cuts right now.

There's also uncertainty about where home prices are headed, and experts at CoreLogic and housing economists at real estate firms like Zillow are forecasting that even higher prices are in store, due to the lack of inventory.

The truth is, nobody knows what will happen next, and for people who can comfortably afford it, the age-old advice that buying a house is a good investment still holds true.

"Simply because home mortgage rates are higher and have, in fact, wiped out some of the purchasing power for homebuyers, [is] not in itself a reason to not buy," Hepp says.

By: Pete Grieve
Editor: Kristen Bahler

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Pre-Approved vs. Pre-Qualified: What’s the Difference?

Pre-Approved vs. Pre-Qualified: What’s the Difference?

When shopping for a loan, lenders might encourage you to get a pre-approval or pre-qualification. Either of these terms indicates you meet at least some of the lender’s requirements to take out a loan. But, understanding the differences can be helpful as you navigate the lending process. Let’s explore the distinctions between pre-approved vs. pre-qualified and what the difference means for prospective borrowers.  

What is a pre-approval? 

Every lender has a distinct process, which means a pre-approval might mean different things to different lenders. But in general, a pre-approval involves a close look at your finances, which can lead to higher approval chances for the actual loan. 

For some lenders, there’s no difference between pre-approval and pre-qualification. For example, getting a preapproved credit card offer or personal loan might not look very different from getting pre-qualified.  

But in the realms of real estate and auto lending, a pre-approval tends to carry more weight than a pre-qualification. For example, a pre-approval usually involves a relatively comprehensive look at your financial situation.

The application might include documentation of your income through bank statements, pay stubs, and tax returns. Plus, mortgage and auto lenders often require a hard credit check as a part of this process, which shows up on your credit report.
   

What is a pre-qualification? 

A pre-qualification often means the lender has conducted a review of your creditworthiness to determine whether or not you might qualify for a loan. But it’s not a guarantee that your loan application will be approved.  

In most cases, the lender will request some baseline information about your finances. For example, you’ll often need to provide your annual income, housing costs and agree to a soft credit inquiry. 

However, the information can be self-reported, which means you won’t have to dig out your bank statements or tax returns.  

The pre-qualification indicates that you are likely to qualify for the loan. But when you want to finalize the loan, you’ll need to submit a formal application that includes documentation of your financial situation.  

Pre-approved vs. pre-qualified: What are the key differences? 

As you navigate the borrowing process, both pre-approved and pre-qualified are preliminary steps in the application process.  

Even if you obtain either of these documents, you’ll need to submit a final application before you are officially approved for the loan. But the two options aren’t entirely the same. Below is a breakdown of the key differences between pre-approved vs. pre-qualified below.  

Depth of assessment: Generally, a pre-approval is more comprehensive than a pre-qualification.  

Level of commitment: Some pre-approvals involve a hard credit inquiry, which impacts your credit score. With that, a pre-approval can involve more of a commitment than pre-qualification. If you are closely managing your credit, then you might choose to stick to pre-qualifications to avoid the hard credit inquiry until you are ready to take out your loan.  

Verification of income: Many lenders will require a more extensive look at your income if you’re seeking a pre-approval. For example, prospective home loan borrowers may need to provide paystubs for pre-approval but just an estimate of their income for pre-qualification.  

Reporting: Pre-approval involves a thorough evaluation of credit, income, and financial history, while pre-qualification is a preliminary estimate based on self-reported information. 

Timeline: In many cases, a pre-qualification is faster to receive than a pre-approval. While a pre-qualification might happen in minutes, it might take days to get a pre-approval.  

The type of credit you are seeking might have an impact on the process. For example, receiving pre-approved credit card offers in the mail might be the same as a pre-qualification. But if you’re applying for a mortgage, the pre-approval process tends to be more involved.  

Pre-approved vs pre-qualified: Taking the first step 

Whether you are pre-approved or pre-qualified, it’s generally the first step in the loan approval process. If your financial situation doesn’t pass this first test, you’ll have the opportunity to improve it before officially applying for the loan.  

FAQs  

Does being pre-approved mean I’m guaranteed a loan?  

No. Being pre-approved for a loan doesn’t mean you are guaranteed to obtain a loan. Although a pre-approval is a good sign for your ability to get the loan, it doesn’t mean the lender is ready to finalize the loan. It’s possible a further review of your finances will lead to a loan denial.  

Can I opt out of credit offers?  

Yes. It’s possible to opt out of prescreened loan offers. You can sign up to opt out of credit offers at optoutprescreen.com.  

Does pre-approval or pre-qualification affect my credit score?  

For credit cards, neither pre-approval nor pre-qualification should have an impact on your credit score. When you submit a formal loan application and agree to a hard credit inquiry, your credit score might be impacted. But for some mortgage preapprovals, your credit score might be impacted. 

By: Sarah Sharkey | Edited by Rose Wheeler

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