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    Need to Finance a Home Renovation? Here’s my advice.

    Welcome to my October newsletter featuring personal insights and advice on the mortgage market, plus financial news that affects our local and national economy.

    Interest rates are in flux.

    The rates on conventional and jumbo 30-year loans inched just over the 3% mark this week.

    If Friday’s U.S. jobs report is strong, there could be more upward movement on rates. The ADP new private jobs data released yesterday – beating expectations by 100,000. My vote is the full U.S. report will be decent.

    Speaking of employment, one of the more interesting data points I found in the UCLA Anderson Economic Forecast released last week is a look into why there are a record number of job openings in the U.S. One reason is excessive retirements; two million more Americans retired last year over the typical numbers. In California, UCLA economists predict we won’t return to full employment until the end of 2023.

    Local loan activity – problems with big banks

    I am getting a lot of loan fallouts from big banks who advertise low rates customers jump on, but ultimately the bank can’t perform because the borrower doesn’t fit into a narrow box of criteria.

    A loan market full of choices is where an experienced mortgage broker has tremendous value – to help clients choose the right lender and loan product, especially this year because, as I have said before, there are more loans to choose from than I have seen in my 38- year career.

    Refinance customers taking a closer look at cash-out options

    Many of our clients are taking advantage of the market-driven rise in home equity and excellent cash-out options to make home improvements.

    How much additional equity do homeowners in Los Angeles have to work with today? 

    According to Zillow, the average home value in the L.A. area jumped from $630,000 in 2017 to $953,00 in August 2021, an increase of 51.6% in just four years!

    Generally, lenders doing cash-out refinancing will allow the borrower to take out up to 80% of the home’s appraised value. However, I’m happy to see most of our customers following a conservative approach by doing smaller projects and cosmetic improvements that don’t require a big dip into equity.

    How much cash should you pull from your home? 

    The answer is – it depends. Factors I assess with clients include the current equity position, overall financial health, and long-term goals. I invest time and effort to put a loan together that creates a healthy financial decision because the long-term client relationship matters far more than one loan transaction.

    Please take a look at my latest interview.

    This month’s Scotsman Guide, a leading national media source for the mortgage industry, includes a Q&A interview discussing how my business principles, work ethic, and expertise have driven my success for the last decade. Click here to read more.

    Key economic data to watch for this month:

    October 8 – U.S. Jobs Report

    October 13 – Core Consumer Price Index (CPI)

    October 15 – Core Retail Sales

    October 19 – Building Permits and Housing Starts Reports

    October 21- Existing Homes Sales Report, Fed Manufacturing Index

    October 26 – New Homes Sales Report, Consumer Confidence Report

    In closing, remember the interest rate on loans is only part of the equation. Focusing on small fluctuations up or down isn’t productive. Instead, let’s work together to understand your financial goals, which allows me to put together a loan that fits your needs.