January Inflation Report – 7.48%
Just when you thought all the hard work and planning that our Federal Reserve has done must be paying off, the report this month showed inflation even higher than last month’s 7.04% rate. The report drove the stock market down on Thursday and while mortgage interest rates remained at Wednesday’s open, it likely won’t be long before they trend higher again.
The Fed has yet to do its first rate hike and we are already almost a full percent higher than we were in late December. The first rate hike will almost certainly occur in March. It is rumored there will be 5 to 7 raises in 2022, perhaps moving the .25% rate we have now back to the 2.25% the Federal Reserve was charging before the pandemic. Between bond purchase tapering, talks of starting a bond selloff and rate hikes on the near horizon, nothing J. Powell has done seems to quell the rising inflation.
Bottom line regarding interest rates, if you are refinancing and rates still work for you, get it done soon. If you are buying a home, though the payment today will be higher than a few months ago, owning an appreciating asset, building equity, tax write offs and paying for your own mortgage instead of someone else’s still makes sense. Again, not something to be put off as the longer you wait, the more it is likely going to cost.
The ILML Purchase Advantage – Existing Equity or Enhanced Pre-Approval
Existing Equity – Most property today is getting sold above asking price and all cash. If you don’t have dry powder, but you have equity in other property you own, it might make sense to draw some cash out to make your new purchase, then refinance once you own it.
Enhanced Pre-Approval – In a purchase market like this, time is the biggest enemy. Sellers can be choosy and if you aren’t coming in all cash, you need something to differentiate your offer from all the others. Appraisers are in high demand and are difficult to schedule. Lenders are extremely busy and loans are still taking longer than pre-pandemic to get done. ILML collects certain items; Intent to Proceed, CC Authorization, 4506t and other documents which allow us to move faster, for you and your seller. Once under contract we can order an appraisal and income documentation immediately, potentially cutting weeks off the lending process. It helps to have an edge.