Chris Nooney

The Nooney Team

An Overview of Amortization: It Plays A Role In Monthly Mortgage Payments

An Overview of Amortization: It Plays A Role In Monthly Mortgage PaymentsEven though this may sound like a fancy word, amortization is simply a long word for a straightforward topic. Furthermore, it plays a significant role in the determination of monthly mortgage payments.

Before taking out a home loan, homeowners need to understand how their payment schedule works and what this means for the future of the home loan.

Amortization refers to the way monthly payments are calculated to make sure that homeowners pay the same amount every month throughout the life of the loan. Even if homeowners do not stay in the house for the life of the loan, amortization will still play a significant role in the amount of money they receive if they decide to sell the home.

Amortization Plays A Major Role In Calculating Monthly Payments

First, amortization plays a major role in calculating monthly payments because it ensures that homeowners pay the same amount of money over the life of the loan. Even though there is interest on the home loan, and inflation will play a role in the value of money during the life of the loan, the monthly payment is going to stay the same. This is particularly beneficial to homeowners who are still working and believe that their income is going to go up during the life of a 15 year or 30 year mortgage. Even if their income goes up, and even if inflation plays a role, their monthly mortgage payments will still stay the same thanks to amortization.

Amortization Divides Interest And Principal In Monthly Payments

On the other hand, amortization also plays a role in calculating interest versus principal in monthly mortgage payments. At the beginning of the loan, the majority of each monthly payment goes toward interest on the loan. At the end of the loan, the majority of each monthly payment goes toward principal. This also means that if homeowners decide to sell their home at some point during the loan, they might not get as much money as they think because most of their monthly payments have gone toward interest and haven’t built up any equity. This is another key factor homeowners should keep in mind when it comes to amortization.

DIY Lovers: ‘Greenify’ Your Home with These Three Eco-friendly Home Improvement Projects

DIY Lovers: 'Greenify' Your Home with These Three Eco-friendly Home Improvement ProjectsAre you a homeowner who is searching for ways to make your home a bit more eco-friendly? Equipping your home with “green” improvements can save a substantial amount of energy and money, especially over the long term.

In today’s post we’ll explore a few projects that handy do-it-yourselfers can undertake in order to make a home a bit friendlier to the local environment.

#1: Focus on the Windows

Depending upon the time of year, windows have an impact on both heating and cooling costs. In the summer, older windows can drastically heat up a home causing cooling costs to skyrocket. In the winter, older windows can leak cold air within the home and let out the heat, which causes the heating costs to rise as well.

A simple replacement of older windows can save a homeowner as much as 30 percent on annual energy costs, as newer windows are more efficient at insulating the home against the weather conditions outside.

Combining a window upgrade with other energy-related changes can lead to even greater savings. For example, consider installing a ceiling fan in rooms that are generally occupied – such as the living room or family room – as these can circulate cool and warm air and help to reduce energy use.

During the colder months, use as much solar heating as possible. Open up curtains, and trim trees to allow for natural light to enter the home. The sun heats up the home through radiant heating, which is an effective and essentially free source of energy.

#2: Improve Your Insulation

A home that is properly insulated will help to preserve its heat and cool air. Heat can leak out from the home through cracks, but it can also occur through convection heating. The air within the home will eventually cool down from a steady decline of heat when the heat is transferred outside through the walls.

Beyond hot and cool air leaking out from the home, each room within the home can indirectly influence the temperature in adjoining rooms. This is especially true for the garage and any room that shares common walls. By using insulation in the garage, the home may cool down by as much as 10 degrees Fahrenheit.

#3: Install Smart Thermostats

Some green options simply mean a change in which type of appliances are used. In terms of a thermostat, a “smart” one like the Nest Thermostat can be installed. Use of one can cut energy costs by 20 percent, at minimum, by simply adjusting to the homeowners’ schedule.

What’s Ahead For Mortgage Rates This Week – March 1, 2021

What's Ahead For Mortgage Rates This Week - March 1, 2021Last week’s economic reports included readings from Case-Shiller on home prices, the Federal Housing Finance Agency also reported on home prices and the Commerce Department released data on sales of new homes and pending home sales. The University of Michigan released its Consumer Sentiment Index, and weekly readings on mortgage rates and jobless claims were released.

Case-Shiller Home Price Indices Report Fastest Price Growth in 7 Years

The S&P Case Shiller National Home Price Index reported December home prices rose at the fastest pace since 2014. The National Home Price Index posted a year-over-year home price growth rate of 10.40 percent in December as compared to November’s home price growth rate of 9.50 percent.

Case-Shiller’s 20-City Home Price Index posted December home price growth at a year-over-year pace of 10.10 percent as compared to November’s home price growth rate of 9.20 percent according to Case-Shiller’s 20-City Home Price Index. Phoenix, Arizona home prices rose at a seasonally-adjusted annual pace of 14.40 percent; Seattle, Washington home prices held second place with 13.60 percent growth, and San  Diego, California held third place in the 20-City Home Price Index with 13.00 percent home price growth. 18 of 19 cities reported higher home prices;  Detroit Michigan did not report data for December.

The Federal Housing Finance Agency reported year-over-year home price growth of 11.40 percent in December for homes owned or financed by Fannie Mae and Freddie Mac. High demand for homes and short inventories of available and affordable homes created challenges for first-time and moderate-income home buyers. Builders said that rising materials costs and labor shortages continued to impact new home construction.

 

New Home Sales Increase as Shortages of Pre-Owned Homes Persist

The Census Bureau reported 823,000 sales of new homes in January on a seasonally-adjusted annual basis. Analysts expected 850,000 sales based on December’s reading of 885,000 new homes sold. Homebuyers are turning to new homes as supplies of previously-owned homes are in short supply. Shortages of previously-owned homes continued as homeowners stayed in their homes due to economic uncertainty, unemployment, and ongoing concerns over the pandemic.

 Pending home sales fell by – 2.80 percent in January as compared to December’s reading of – 0.50 percent.

Mortgage Rates Rise as Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week. Rates for 30-year fixed-rate mortgages rose 16 basis points to 2.97 percent; the average rate for 15-year fixed-rate mortgages rose 15 basis points to 2.34 percent. Rates for 5/1 adjustable rate mortgages averaged 22 basis points higher at 2.99 percent. Discount points averaged 0.60 percent for fixed-rate home loans and 0.10 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell to 730,000 new claims filed from the prior week’s reading of  841,000 initial jobless claims filed. Ongoing jobless claims were also lower; 4.42 million continuing claims were filed last week as compared to 4.52 million ongoing claims filed in the prior week.

The University of Michigan reported an index reading of 76.80 for its Consumer Sentiment Index in February, as compared to January’s index reading of  76.20.

What’s Ahead

This week’s scheduled economic reports include readings on construction spending, job growth, and the national unemployment rate. Weekly readings on mortgage rates and jobless claims will also be released.

Pursuant to the requirements of Section 157.007 of the Mortgage Banker Registration and Residential Mortgage Loan Originator License Act, Chapter 157, Texas Finance Code, you are hereby notified of the following: CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550. THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. © 2021 Draper and Kramer Mortgage Corp. All Rights Reserved.
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Christopher James Nooney (NMLS ID # 179371 (www.nmlsconsumeraccess.org) TX:179371) Roger G Ryman Jr. (NMLS ID # 180704 TX:180704) Michele Domenico Zugheri (NMLS ID # 179379 TX:179379) are agents of Draper and Kramer Mortgage Corp. (NMLS:2551) an Illinois Residential Mortgage Licensee located at 1431 Opus Place, Suite 200, Downers Grove, IL 60515, 630-376-2100. TX: Draper and Kramer Mortgage Corp. NMLS ID 2551.

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