Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates are flat but volatile week-over-week after surging much higher the week prior.
The pressure for higher rates was caused by a strong jobs report, more troubling inflation data, and a higher consumer spending.
The odds for the first rate cut by the Fed’s July meeting has now fallen below 50%.
Consumer Price Index (CPI)
The monthly report showed inflation was much hotter than expected in March, continuing a trend we’ve seen in recent months.
Rising energy, automobile insurance, and shelter costs were the main contributors to the increase in inflation.
Annual inflation still remains below the peaks in 2022, but stubbornly high inflation readings will likely delay the Fed’s timing for rate cuts this year.
Home Builder Sentiment
The most recent Home Builder Sentiment report by NAHB showed that sentiment among builders remains in positive territory.
Internal components of the report show that buyer traffic and current sales expectations ticked higher.
Forward looking sales expectations have softened a bit due to higher rates as some buyers remain on the fence.
MORTGAGE RATES FLAT – Rates are relatively unchanged week-over-week but the daily changes have been volatile. https://www.mortgagenewsdaily.com/…
RATE CUTS DELAYED – The Fed Funds Rate could stay higher for longer if inflation persists. https://www.morningstar.com/…
WHAT HOMEBUYERS WANT – A recent study shows that a vast majority of homebuyers are looking for a home with at least one home office. https://www.eyeonhousing.org/…
HOME PRICES KEEP CLIMBING – Higher rates are keeping a lid on housing supply and putting pressure on home price appreciation. https://www.housingwire.com/…
In recent years, the rental market has seen a significant trend: rent prices are steadily climbing year after year. According to a recent CoreLogic Index for US Single-Family Rent, February 2024 marked the highest annual increase in the last 10 months, with US single-family rents surging by 3.4% year-over-year. Many large cities, in particular, have witnessed spikes of over 5%, putting a strain on renters’ budgets as they also grapple with high inflation.
As rent prices continue to soar, many individuals and families are grappling with the question of whether renting or owning a home is the better financial choice. The answer becomes increasingly clear when considering the broader economic landscape and the long-term benefits of homeownership. In fact, data from the Federal Reserve reveals that the median net worth of homeowners is a staggering 40 times greater than that of renters.
Benefits of Owning A Home
Owning a home provides stability and predictability in housing expenses. Unlike renting, where landlords can raise rents at their discretion, homeowners enjoy fixed monthly payments, consisting of principal and interest, that do not fluctuate over time. This stability not only offers peace of mind but also serves as a hedge against inflation, as the cost of housing remains consistent regardless of economic conditions.
Homeownership enables individuals to build equity over time and leverage their asset. Home prices have historically appreciated, increasing in value in 74 out of the last 82 years. Additionally, as mortgage payments are made, homeowners accumulate equity in their property, which can then be tapped into for various purposes, such as funding home improvements, financing education, or even investing in additional real estate properties. This ability to leverage one’s home as an assets opens up a world of financial opportunities and contributes to long-term wealth accumulation.
In conclusion, as rent prices continue to rise annually, the case for homeownership as a superior investment becomes increasingly compelling. Not only does homeownership offer the potential for significant wealth accumulation, but it also provides stability, predictability, and the opportunity to leverage one’s assets for further financial growth. Aspiring homeowners should consider these factors carefully when making their housing decisions, as owning a home represents not only a roof over one’s head but also a pathway to financial security and prosperity.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates increased noticeably on Monday and are higher on a week-over-week basis.
The increase in rates was due to higher than expected numbers for the S&P and ISM manufacturing indices, which also mentioned higher prices in their reports.
Prices are crucial due to the persistent inflationary pressures, and if they fail to revert to the downward trend it will make it hard for the Fed to want to cut rates.
Personal Consumption Expenditures (PCE)
This is the Fed’s preferred measure of inflation and its goal is for the Core reading, which strips out volatile food and energy prices, to be at 2%.
Last week’s release of data showed that the Core headline reading fell to 2.8%, but the progress lower has been slowing.
With future data projecting a slow progress towards 2% for Core PCE, it may take weaker labor market data before the Fed cuts rates.
BLS Jobs Report
March’s job growth roared in above forecasts, as the BLS reported that 303K new jobs were created.
68% of the job gains came from three sectors: Leisure & Hospitality (49,000), Government (71,000), and Education & Health Services (88,000)
Revisions to the data for January and February added an additional 22K jobs to those months combined.
Unemployment rate declined to 3.8%.
Case-Shiller Home Price Index
The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 6% year-over-year in its most recent report for January 2024.
The 6% annual rate is the fastest increase since 2022 and all 20 cities in its composite index saw annual increases for the second straight month.
Home values are expected to remain supported throughout 2024 as housing demand remains high.
RATES MOVE HIGHER EARLY IN WEEK – The concern for higher prices and inflation after Monday’s manufacturing data pushed rates higher early in the week. https://www.mortgagenewsdaily.com/…
ISM INDEX TURNS POSITIVE – A barometer of business conditions at U.S. manufacturers turned positive in March for the first time in 17 months. https://www.marketwatch.com/…
BABY BOOMERS PLAN TO STAY IN HOMES – More than three-quarters of baby boomers plan to stay in their home as they grow older. https://www.businesswire.com/…
HOUSING MARKET STAYS TIGHT – New home listings are down to start the Spring market, but competition remains fierce as demand is still high. https://www.mpamag.com/…
You can read our previous blog post on trigger leads and how to reduce them by CLICKING HERE.
In the world of mortgage lending, trigger leads have long been a point of contention. While some praise them for their potential to foster competition and secure better rates for applicants, most oppose them for inundating borrowers with unwanted solicitations. However, developments in regulations over the past few years are refining rules for trigger leads in the pursuit of stronger data privacy and consumer protections. Most recently, the FCC announced a new ruling on December 13, 2023 that will effectively close the “lead generator loophole.”
The FCC’s adopted rule to close the lead generator loophole marks a significant change in the way consumer information is shared with businesses through comparison shopping websites. Under this rule, consumers must provide individual consent for their information to be shared with each business, effectively closing the loophole that allowed for the sale of a single lead to multiple businesses at once. This move aims to address consumer frustrations with receiving an overwhelming number of calls and texts after submitting an online lead.
How Will This Ruling Impact Borrowers and Businesses?
Mortgage applicants can expect relief from the inundation of solicitation calls. The previous influx of unwanted calls and texts from solicitors has been a source of frustration for many applicants, but the FCC’s actions aim to mitigate this issue, ultimately enhancing the borrower experience.
Requiring businesses to obtain one-to-one consent before contacting new leads. The rule will likely reshape lead strategies for businesses built on this type of lead generation model and challenge the operational models of comparison-shopping sites due to compliance regulations.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Last week’s comments on rate projections by the Fed Chair, Jerome Powell, retained the Fed’s previous expectation of 3 rate cuts by the end of this year and gave the forward-looking markets something to be hopeful for, which led to a decrease in mortgage rates.
The labor market has been showing signs of weakness with the unemployment rate ticking up.
Inflation Higher Than Expected
Recent inflation data for both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in higher than expected.
The month-over-month changes of 0.4% in CPI and 0.3% in PPI imply an annualized reading of 4.8% and 3.6%, respectively (the Fed’s target is 2% for core readings).
Inflation is the biggest concern for interest rates, so it was no surprise to see the Fed unwilling to cut rates just yet.
March Fed Meeting
The Fed left rates unchanged following their meeting that concluded today for the fifth straight time, but did acknowledge the recent higher inflation readings could be a result of seasonality that was impacting the data.
Federal Reserve Chair Jerome Powell stated that any adjustments to the policy rate would depend on incoming data and the evolving economic outlook.
The Fed’s dot plot showed they expect to cut rates three times in 2024 with the Fed Funds Rate decreasing to 4.6%.
RATES IMPROVE AFTER FED MEETING – Mortgage rates have trended higher over the last week due to inflation reports, but comments by Jerome Powell did help ease concerns. https://www.mortgagenewsdaily.com/…
FED HOLDS RATES STEADY – The Fed maintained its Fed Funds Rate following its two-day policy meeting as expected, and provided their thoughts on the recent inflation readings. https://www.cnbc.com/…
BUYERS’ DESIRED HOME SIZES – A NAHB study shows that buyers want smaller sized homes than they did 20 years ago. https://www.eyeonhousing.org/…
NAR SETTLEMENT MYTHS – Debunking some of the myths from the recent NAR settlement agreement. https://www.housingwire.com/…
Just as you would want a listing agent to help you maximize the sale of your home, navigating the intricate world of real estate demands the guidance of a buyer’s agent. After all, purchasing a home stands as one of the most significant financial decisions one can make. Amidst the myriad of decisions, paperwork, and negotiations, having trusted and knowledgeable professionals by your side can make all the difference in helping you avoid costly mistakes and missed opportunities. In this blog post, we’ll delve into the crucial role of a buyers agent in the home buying process and explore how their collaboration with mortgage lenders ensures a smooth and informed journey towards homeownership.
Expertise & Knowledge
One of the standout advantages of having a buyer’s agent by your side is their profound understanding of the local real estate market. They know the ins and outs of neighborhoods, property values, and current market trends. Additionally, they offer valuable insights into what it means to be a homeowner and provide education on topics such as insurance and utilities, ensuring you’re well-informed every step of the way.
Guidance & Support
Buyer’s agents are more than just property tour guides. They serve as trusted advisors, listening to your needs and preferences and assisting you in finding the perfect home. From scheduling viewings to gaining access to properties, they handle the logistics, making the process smoother and more efficient.
Negotiation & Advocacy
When it comes to negotiations, buyer’s agents are your advocates. With your best interests in mind, they navigate the intricacies of the negotiation process, ensuring you secure the best possible deal. Their keen eye for detail allows them to evaluate the value of a home relative to the local market, spot potential issues on the property, and advocate for necessary repairs or adjustments.
Example: Jon and Jane finally found a home they loved and were willing to offer $25,000 over the asking price. Their agent, however, suggested they only offer the asking price after performing a comparative market analysis (CMA) that calculates a home’s value based on the recent sales of similar real estate in the area. In the end, the sellers accepted Jon and Jane’s offer at the asking price and saved them the additional amount they were willing to include.
Orchestrating The Transaction
Buying a home involves a multitude of moving parts, from putting together the offer to coordinating with lenders and sellers. Buyer’s agents serve as conductors, guiding you through each stage of the transaction with clarity and expertise. They demystify the home buying process, ensuring you understand every document and decision along the way.
In conclusion, the significance of having a buyer’s agent in the home buying process cannot be overstated. Their expertise, guidance, and advocacy are invaluable assets, particularly when making such a substantial financial decision. As you embark on your home buying journey, remember the importance of seeking professional assistance. Together with Homeseed as your lender, we will work to ensure your home buying experience is seamless, informed, and ultimately, rewarding.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates are lower week-over-week after the recent PCE inflation data came in as expected.
Downward momentum on rates continued as yesterday’s ISM Services index showed a big decline in prices paid for the service sector where we are seeing most of the inflation.
Tomorrow’s BLS Jobs Report is potentially a market mover as recent comments by Fed members show they are paying close attention to the labor market.
Personal Consumption Expenditures
Fed’s favorite measure of inflation, Personal Consumption Expenditures, showed the headline or all-in inflation declined from 2.6% to 2.4% year-over-year.
Annualizing the last 6-months of core readings, which the Fed says they are looking at, puts Core PCE at 2.46% and close to their 2% target.
There are emerging signs that the consumer is coming under pressure when looking at income and spending data.
CoreLogic Home Price Insights
Home prices were up 5.8% year-over-year in January, which is an increase from 5.5% on the previous report.
Forecasts for February show home prices being flat and will rise by 2.6% over the next 12 months, but it is worth noting that CoreLogic has been very conservative in the past.
Despite fewer buyers in the current market, housing demand still exceeds available inventory which is why home prices remain supported.
RATES LOWER AHEAD OF JOBS REPORT – Recent inflation data helps mortgage rates move lower ahead of the important BLS Jobs Report. https://www.mortgagenewsdaily.com/…
FEBRUARY LAYOFF NUMBERS – Layoff announcements in February hit their highest level for the month since the global financial crisis in 2009. https://www.cnbc.com/…
HOME-SELLING SENTIMENT MOVES HIGHER – February data shows more consumers believe it is a good time to sell a home ahead of the spring homebuying season when compared to January. https://www.fanniemae.com/…
CREDIT SCORES WORSEN – For the first time in a decade, the average credit score for consumers fell according to FICO. https://www.investopedia.com/…
Homeownership brings with it a valuable asset beyond the comfort of having a place to call your own – home equity. Today, homeowners collectively hold trillions in equity, presenting an opportunity to leverage these funds for various financial opportunities. Whether it’s funding home renovations, consolidating debt, making financial investments, or covering life events, your home equity can be a valuable resource to leverage for your benefit. In this blog, we’ll discuss the many options you have available to access your equity!
Loan Products to Access Your Equity:
Home Equity Loan (HELOAN):
A fixed-rate loan offering a lump sum payment.Ideal for those with a clear vision of their financial needs.
Consistent monthly payments, providing stability.
Home Equity Line of Credit (HELOC):
A flexible credit line secured by your home’s equity.Allows for periodic access to funds when needed.
Adjustable interest rates, providing flexibility but requiring careful financial planning.
Cash-out Refinance:
Replace your existing mortgage with a new one, withdrawing excess funds.Fixed monthly payments and potential for lower interest rates.
Suitable for those looking to streamline mortgage payments and access substantial funds.
Renovation Loan Highlights:
Borrowing Based on Expected Home Value:
Allows you to access funds based on the anticipated post-renovation value of your home.
A great solution for those seeking additional funds for renovation but lacking sufficient equity in the home.
Building an Accessory Dwelling Unit (ADU):
Utilize renovation loans to finance the construction of an ADU.
Enhances the property’s value and provides potential rental income.
Purchasing a Property That Needs Upgrades:
The renovation loan product can also be used on a home purchase.
The downpayment can be as little as 3% with a HomeStyle renovation loan.
What Loan Product Is Best:
When deciding to access your home equity, it’s crucial to consider various factors that can significantly influence which loan product is best for your situation. Two key considerations are the amount of debt you are borrowing and the interest rate of the loan product. As your loan advisor, we help provide a blended interest rate calculation that takes into account the interest rates associated with your existing mortgage and the new loan you’re considering, weighted by the loan amounts. This helps you assess the potential impact of blended interest rates on your financial situation, providing clarity on the short-term and long-term implications of each loan option.
As you explore possibilities with your home equity, remember that your homeownership is not just a place to live but a gateway to financial opportunities. Now is the time to leverage your home equity and unlock its potential. Our dedicated team is here to guide you through the process, offering insights, expertise, and personalized solutions. Whether you’re considering a HELOAN, HELOC, or renovation loans, our goal is to empower you to make informed decisions as a homeowner.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
The main reason for higher mortgage rates this week was due to a weak 20-year bond auction that caused a sell off in the bond market.
Mortgage rates have seen a slight upward trend since the beginning of the year due to stronger inflation and labor market data.
The minutes from the most recent Fed meeting were released this week which confirmed that they are certain to cut rates this year, but this will likely not occur by the next meeting in March.
Existing Home Sales
Housing inventory remains low with about 3 months of supply of homes versus the normal market value of 4.6 months.
The median home price rose by 5% from the previous year, reaching $379,100.
Lawrence Yun, Chief Economist for NAR, notes that mid-priced homes are receiving multiple offers, with a significant share (32%) being cash deals, indicating a market driven by record-high housing wealth.
Producer Price Index
The Producer Price Index measures inflation from the perspective of producers.
Similar to the recent CPI report, inflation on the producer side was also higher than expected for the month of January.
Services were the main culprit in the high inflation reading that includes items such as health care and legal services.
RATES MOVE SLIGHTLY HIGHER – A weak 20-year bond auction pushes rates slightly up to highs not seen since November. https://www.mortgagenewsdaily.com/…
FHA HELPING BORROWERS KEEP HOMES – The new offering, called the Payment Supplement, will help borrowers bring their mortgage payments current and avoid foreclosure. https://www.hud.gov/…
ACTIVE INVENTORY IS UP – Recent data shows that active inventory is up 15.7% and new listings are up 0.9% YoY. https://www.calculatedriskblog.com/…
THE FED EXPRESSES CAUTION – Meeting minutes show that the Fed plans to cut rates this year, but express caution in lowering too quickly. https://www.cnbc.com/…
In today’s dynamic real estate landscape, a persistent housing inventory shortage defines the market’s competitiveness. This scarcity arises from two main factors. Firstly, household formations consistently outpace housing completions over the past decade, with projections indicating a continued trend. The growing population entering the median age of first-time home buyers (37 years old) further exacerbates this issue. Secondly, many homeowners are hesitant to sell due to the current higher interest rate environment. While they might have considered upgrading in the past, prevailing higher interest rates anchor them to their current residences. This dual dynamic, driven by increasing household formations and homeowners holding onto their properties, shapes the current sellers market and intensifies competition.
Making Your Financing as Competitive as Possible in the Seller Market
Where time is of the essence, the importance of offering a quick closing cannot be overstated. Enter Homeseed’s Cash Committed Program, a highly impactful tool in the homebuying process. Unlike traditional pre-approvals, this program provides an underwritten credit approval that signifies a more robust evaluation of your application and commitment to financing. The added assurance of a $10,000 guarantee for closing on time not only expedites the process but also builds trust with sellers, making your offer stand out in multiple offer situations.
Homeseed also offers a Buy Before You Sell Program that allows homebuyers to move quickly on the purchase of the new home rather than worrying about selling their current residence. This strengthens their offer on a new property as they are not contingent on the sale of their current home. Buy Before You Sell also offers the option to receive a bridge loan to help cover the down payment on the new purchase or to make repairs to the departing residence.
Create Your Inventory and Build the Home of Your Dreams
With inventory at an all-time low, homebuyers have also expressed a need to find alternative avenues for homeownership. Building a new home or rehabilitating an existing one emerges as a strategic move. These options often come with the enticing prospect of instant equity post-construction or rehab, where the appraised value exceeds the initial investment. Moreover, with low down payment options, such as 5% with conventional financing or 3.5% with FHA financing, these programs make homeownership more accessible.
It’s essential for homebuyers to adapt and thrive in this competitive market, and a crucial aspect of this is collaborating with a local lender who understands the nuances of the market. Working with someone knowledgeable about the local real estate landscape can provide invaluable insights and pave the way for a smoother and more successful homebuying journey. As you embark on your homebuying journey, consider exploring innovative financing options with Homeseed. The dynamic nature of the real estate market calls for proactive and informed decisions, and Homeseed is here to empower you on your path to homeownership.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates are higher this week as a result of strong labor market and manufacturing data.
The BLS Jobs Report showed nearly double the amount of jobs were added to the market than expected.
The ISM Non-Manufacturing PMI was also higher than expected and the upbeat economic data put additional upward pressure on rates.
BLS Jobs Report
The report for January showed that the 353,000 jobs created were nearly double the expected 180,000.
One thing to be mindful of is that January is a month of heavy adjustments due to new benchmarks, seasonal adjustments, and population controls.
Despite the job gains, the entire labor force is working on average 30 minutes less per week, which is equivalent to 2.4M jobs lost.
We will have to wait for February data to see if the labor market tightening once again.
Home Values Continue to Appreciate
The two most notable housing indices, Case-Shiller and FHFA, both recently released data showing that home prices set new highs.
Although data for December 2023 is not available yet, both indices show that home values were on pace to appreciate by 6% in 2023.
Lower numbers for existing inventory and active listings will continue to be supportive of home prices throughout 2024.
MEDIA SAYING HOUSING CRASH – But housing credit data today looks nothing like what was seen in 2008. https://www.housingwire.com/…
BOOST TO HOUSING SENTIMENT – The Fannie Mae Home Purchase Sentiment Index reached its highest level in nearly two years. https://www.fanniemae.com/…
TWO SIDES TO JOB MARKET – Economists and reports say the labor market is strong, but job seekers don’t share the same confidence. https://www.cnbc.com/…
Homeownership has long been considered a cornerstone of the American dream, providing not only a sense of stability and security but also a unique avenue for building wealth. For many, purchasing a home is not just about having a place to call their own; it’s a strategic financial move that can lead to long-term prosperity. Below we’ll provide a decade-by-decade analysis on home values and explore how homeownership is a powerful investment tool, enabling individuals to leverage their assets and capitalize on the appreciation of real estate.
Historical Appreciation By The Decade
Consistent Appreciation: Regardless of the decade, those who invested in homeownership and held onto their properties for 10 years experienced positive appreciation on average. This consistency underscores the enduring nature of real estate as a wealth-building asset.
Diversification of Investments: The data highlights how real estate can serve as a valuable diversification tool for investment portfolios. While other assets may experience volatility, real estate has historically shown a trend of appreciation over time.
The Power of Leverage in Real Estate
One of the unique aspects of real estate investment is the ability to use leverage. When you purchase a home, you typically make a down payment (an initial investment) while borrowing the rest through a mortgage. This means you control an asset’s full value with a relatively small upfront payment. As the property appreciates, the return on your investment is calculated based on the property’s entire value, not just your down payment. This leverage magnifies the potential for wealth accumulation.
Homeseed Can Help You Get Started
Discover the possibilities with our exclusive loan programs that offer little to no down payment options. This means you can potentially start building equity and wealth with very little upfront investment. Our commitment is to make homeownership accessible and financially advantageous for you. Contact us today to discuss your goals, explore available opportunities, and make informed decisions about your real estate investment. Your path to homeownership and financial prosperity starts with a conversation. Let’s connect and turn your homeownership dreams into reality!
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates are relatively unchanged week-over-week with some volatility mixed in due to economic data and bond auction results.
Last week saw 2-year, 5-year, and 7-year Treasury auctions that were met with weak demand and put upward pressure on mortgage rates.
Recent GDP and labor market reports came in stronger than expected and the Fed would like to see more economic weakness to support disinflation.
Personal Consumption Expenditures (PCE)
Headline inflation rose 0.17% in January, close to the expected 0.2%, while the year-over-year reading remained at 2.6%.
Annualized core PCE over the last 6 and 8 months is 1.85% and 2.08%, respectively, which are close to the Fed’s target of 2%.
Although the Fed prefers the Core PCE measure for gauging inflation, it should be noted that the CPI tends to move the markets a bit more.
Pending Home Sales
Pending Home Sales (signed contracts on existing homes) surged 8.3% from November to December.
The large jump was attributed to the decline in mortgage rates we’ve seen since the highs back in October 2023.
The Chief Economist at the National Association of Realtors, Lawrence Yun, noted that sales are expected to rise significantly in each of the next two years.
An increase in the supply of homes on the market will be essential to satisfying all of the demand that current exists.
RATES UNCHANGED WEEK-OVER-WEEK – Mortgage rates were volatile within a narrow range over the last week but are relatively unchanged. https://www.mortgagenewsdaily.com/…
ECONOMY BOOSTED BY NEW HOME SALES – Continue demand for new housing helped employ workers, stimulate the purchase of goods, and avoid a recession in 2023. https://www.housingwire.com/…
ACTIVE INVENTORY RISES – For the 11th straight week, active listings grew and looks to improve availability and affordability heading into the spring season. https://www.calculatedriskblog.com/…
INFLATION CONTINUING TO COOL – The recent PCE report showed inflation continuing to cool and near the Fed’s 2% target. https://www.cnbc.com/…
At some point in our lives, we’ve all pondered the age-old question: when is the ideal moment to embark on the journey of homeownership? This decision is often influenced by personal finances and life circumstances. Fortunately, for those with the desire and means, the current market offers an advantageous time to make the move into homeownership. Despite some headwinds like rising home prices and higher interest rates, the numerous benefits of purchasing now far outweigh these obstacles.
An Investment to Build Wealth:
Owning a home builds equity, but that takes time for the asset to grow. The earlier you can start the better. Remember, time in the market beats trying to time the market.
Mortgage payments contribute to your ownership stake, unlike rent payments that go into your landlord’s pocket.
In the future, your home equity becomes a powerful financial tool to be leveraged for other investments or major life expenses.
Property values historically trend upward, providing you one of the safest investments you can make.
Homeowners enjoy tax incentives, with tax-deductible mortgage interest payments.
An Opportunistic Time to Purchase Now:
Forecasts indicate an expected decline in mortgage rates in 2024, which will likely increase affordability and heighten competition on the limited supply of homes.
Purchasing now grants an advantage ahead of the projected surge in competition, while allowing you to capitalize on equity gains and refinance opportunities once rates drop.
The higher loan limits for 2024 contribute to an increase in affordability for you, especially in the earlier part of the year as home prices are expected to continue rising throughout 2024.
Homeseed’s Programs & Strategies for First-Time Homebuyers
Down Payment Assistance Programs: Programs designed to aid with down payment and closing costs, providing valuable financial support to ease the initial financial burden of purchasing a home.
Zero Down Payment Loans: Loan programs requiring no down payment, particularly beneficial for veterans (VA) or those residing in rural areas (USDA).
First-Time Homebuyer Programs: Loan programs with lower down payments and improved rates that are created for low- to moderate-income first-time homebuyers.
Seller Concessions: We offer financing strategies where the seller can help provide additional assistance to reduce the cash you need to close.
Choosing homeownership over renting is a strategic move that goes beyond the immediate advantages of financial investment. It’s a commitment to building wealth and securing long-term benefits for you and your family. With Homeseed’s support and specialized programs for first-time buyers, the path to homeownership becomes even more attainable. Take the next step with Homeseed and make the move towards homeownership today.
Welcome to Homeseed’s 2024 Mortgage & Real Estate Forecast! As we enter the exciting year of 2024, the anticipation and speculation surrounding the mortgage market and housing industry have prospective homebuyers carefully watching. In just the last three years, we’ve gone from seeing all-time low mortgage rates to some of the highest mortgage rates in the last two decades due to significant global events and economic shifts. To better understand what potentially lies ahead for this year, let’s dive into a forecast for the mortgage market and housing industry in 2024.
Inflation: The Driving Force for Mortgage Rates
Inflation has emerged as a pivotal factor shaping the mortgage market. After reaching a near 40-year high of 5.3% in March 2022, Core Personal Consumption Expenditures (PCE) has been on a gradual decline and now hovers at 3.2%, which is near the Federal Reserve’s (Fed) goal of 2%. Given the improvement on inflation, the Fed signaled they would begin rate cuts to their Fed Funds Rate before reaching the 2% target in hopes of easing into its inflation goal with minimal negative effects to the economy. With shelter accounting for 21% of Core PCE, CoreLogic’s most recent measure of shelter costs showed a 2.5% year-over-year increase in their real-time blended rents data. This suggests a continued improvement for inflation lies ahead as the shelter data used by the PCE report lags the real-time shelter data, and the markets are now predicting the first rate cut by the Fed as early as March 2024.
Supply and Demand: Limited Inventory Pushes Home Prices Higher
The housing market continues to grapple with enduring challenges in inventory shortage, fueling a steady increase in home prices. Despite efforts to address the housing deficit, housing starts persist below household formations, indicating a sustained scarcity of available homes for sale coming to the market that is unable to meet the escalating demand. This ongoing imbalance between the supply of homes and demand from buyers will likely intensify competition if mortgage rates continue to come down, leading to the possibility of bidding wars and soaring prices once again.
Mortgage Rate and Real Estate Forecasts
Given the trajectory of inflation, we forecast the 30-Year Fixed Rate Mortgage to fluctuate between a rate range of 5.75%-6.75% throughout 2024. If rates fall below 6%, this will potentially unlock move-up buyers who are current homeowners that want to upgrade their homes.
For home price appreciation, we forecast home values to increase between 4-5% in 2024. Values should stay strong as demand will remain high due to more households being formed than homes coming to market.
Seizing the Opportunity: A Time for Homeownership to Build Wealth
As we navigate the intricacies of 2024, this period stands as an opportunistic time for prospective homebuyers. With the likelihood of interest rates coming down and home prices on a continued ascent, buyers can consider the strategic move of securing a home now and later benefiting from potential refinancing opportunities in the near future. Here at Homeseed, we offer a Home Equity Forecast tool, shedding light on the significant wealth-building potential through home appreciation and amortization. It emphasizes that homeownership is not merely about costs and interest rates but extends to the concept of a home evolving into one of your most substantial investments for building wealth.
Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
Mortgage rates move lower once again this week with the biggest improvement happening yesterday after the Fed Meeting.
The improvement in rates were due to the Fed signaling that they plan to cut rates multiple times in 2024.
This week’s Consumer Price Index and Producer Price Index also showed inflation moving lower.
This Week’s Fed Meeting
The Federal Reserve had their last meeting of 2023 yesterday and maintained its benchmark Fed Funds Rate, opting to not raise or cut rates.
The big improvement in mortgage rates occurred when the Fed signaled it will likely cut rates by 0.75% in the year ahead, which is an increase of 0.25% from their previous meeting in September.
Remember, the Fed Funds Rate does not directly impact mortgage rates but this shift in outlook directly affects the bond market that mortgage rates are tied to.
CPI and PPI Inflation Reports
This was a good week for inflation news as many reports and forecasts showed inflation moving lower.
Tuesday’s release of the Consumer Price Index (CPI) report showed inflation moving lower year-over-year from 3.2% to 3.1%.
Yesterday’s Producer Price Index (PPI) report showed producer inflation falling from 1.2% to 0.9% year-over-year.
The Fed also announced yesterday that they also project inflation will fall to 2.4% in 2024, which is better than the 2.5% they projected in September.
GOOD NEWS FOR MORTGAGE RATES – Mortgage rates moved to the lowest levels since May with the help of some good news coming from the Fed yesterday. https://www.mortgagenewsdaily.com/…
FED MEETING RECAP – The Fed had their final meeting of the year and signaled rates cuts and a lower inflation prediction for 2024. https://www.yahoo.com/…
LARGE INCREASE IN MORTGAGE ACTIVITY – The Mortgage Bankers Association said that mortgage application volume was up 7.4% last week as rates continue to move lower. https://www.eyeonhousing.org/…
CONSUMER PRICE INDEX – The CPI for November showed inflation falling further to 3.1% compared to the pandemic-era peak of 9.1% in June of 2022. https://www.cnbc.com/…
Entrepreneurship offers numerous advantages, such as the exhilarating experience of building a business from scratch. However, many self-employed individuals are concerned the path to homeownership can present unique challenges compared to those with traditional employment since the nature of owning a business often leads to irregular income patterns and varied documentation. While that can be true in some cases, lenders will still be considering the same factors for a mortgage approval as any other type of borrower: your credit score, debt, assets, and income.
What Documents Do You Need To Provide?
Lenders need to ensure that a borrower can afford the loan they have applied for and will likely request the following documents from self-employed borrowers:
Last two years of filed personal tax returns
Last two years of filed business tax returns
Year-to-date profit and loss (P&L) statement
Evidence of your business existence
How Is Your Income Calculated?
Lenders will calculate your income by completing a cash-flow analysis from your last two years of tax returns and the income will be considered from various sources such as W-2, net business profits, K-1 earnings, and more. Let’s go over an example below:
Say your business earned $300,000 total in the last two years. If you had written off $180,000 in expenses in those two years, that would lower your net income down to $120,000. We would then divide your $120,000 net income by 24 months (two years) and qualify your monthly income at $5,000.
Please keep in mind that this is a very generalized example of how income is calculated and there are other factors that can impact qualification such as income stability, the location and nature of your business, the financial strength of your business, and the likelihood of you continuing to generate income in the future. We can also consider nonrecurring losses or expenses or depreciation, as a couple examples, to add back into income. In some cases, we only need to consider one-year of tax returns versus two-years.
Other Options For Self-Employed Borrowers
As a business owner, it’s understandable that you’d want to maximize your business deductions, which would result in a lower tax bill. However, showing low income on tax returns might not accurately represent the financial health or earning potential of the business. Homeseed recognized this issue and is also able to provide alternative solutions by offering unique loan programs such as Bank Statement loans, Profit and Loss (P&L) loans, and 1099 loans. These programs offer flexibility in income verification and cater specifically to self-employed individuals who may have non-traditional income documentation.
Bank Statement Loans: Bank statement loans are designed for self-employed borrowers who may not have consistent or easily verifiable income. Instead of tax returns, these loans consider bank statements over a specified period (often 12 to 24 months) to assess the borrower’s income. Lenders review regular deposits as income, thereby offering an alternative method for evaluating a self-employed individual’s financial stability.
Profit and Loss (P&L) Loans: P&L loans focus on the profitability of a business rather than personal income. These loans typically require the submission of profit and loss statements, business bank statements, and potentially other financial documents to assess the business’s overall health. This approach is beneficial for entrepreneurs who reinvest earnings into their business or pay themselves lower salaries for tax purposes. This loan type is also helpful when considering the timing of your purchase (for example, you have not filed current year’s taxes yet because the year is not complete, but you can provide a P&L statement to document current year-to-date income).
1099 Income Loan: Many freelancers, contractors, gig economy workers or other self-employed borrowers who file using W-9s cannot qualify for a mortgage under some Agency guidelines. Instead, these borrowers can use their 1099 earning statements in lieu of tax returns to qualify for a mortgage.
Tips for Self-Employed Borrowers
Self-employed borrowers face unique challenges in showcasing their income. This is especially important as we approach the end of the year and tax season approaches. Understanding the various methods of income calculation and different loan programs empowers individuals to prepare early for the mortgage process and purchasing a home. Seeking guidance from financial advisors or tax professionals will significantly aid in optimizing tax filings and accurately documenting income for loan applications as well.
Welcome to Homeseed’s Comprehensive Winter Mortgage Report, your guide to navigating the current landscape of the mortgage market and seizing opportunities in the real estate market! In this detailed report, we delve into crucial elements influencing the market, including the recently released 2024 loan limits, the impact of inflation and labor market dynamics, predictions regarding the trajectory of interest rates, insights into home values and appreciation trends, and most importantly, the window of opportunity awaiting potential buyers. Read on to equip yourself with essential knowledge for making informed decisions in the real estate sphere.
New Loan Limits
Annually, the Federal Housing Finance Agency (FHFA) sets conforming loan limits for the forthcoming year based on the November House Price Index (HPI), reflecting home price appreciation data. For 2024, the baseline conforming loan limit will rise to $766,550, marking a $40,350 increase from the 2023 limit of $726,200. This substantial increase aims to facilitate greater access to credit for home buyers in markets experiencing upward home price appreciation.
Inflation & Labor Market Data
The recent softening in economic data and the labor market holds significance for the inflation outlook and its potential impact on mortgage rates. A weakened economic landscape tends to alleviate inflationary pressures as reduced consumer spending and constrained demand mitigate the upward push on prices. This was reflected in the Personal Consumption Expenditures (PCE) report for October which saw both its headline and core rates continue to fall year-over-year.
Moreover, a softer labor market with elevated unemployment and a reduction in job gains leads to a slowing of wage increases and less consumer spending. We are likely seeing the intended effects of the Federal Reserve (Fed) rate hikes take effect.
Where Are Rates Headed?
Recent trends we just discussed indicating lower inflationary pressures alongside a weakening job market have significantly increased the likelihood of a potential cut for the Fed Funds Rate cut in the coming six months. The diminishing inflation data, coupled with sluggish economic activity reflected in the softening job market, have increased expectations for the Fed to consider easing its monetary policy stance. A cut in the Fed Funds Rate becomes a tool to manage economic growth and inflation to maintain its 2% target.
As the Fed lowers interest rates or signals a more accommodative policy, it directly influences downward movement in mortgage rates. This is evident in the recent drop in rates throughout the month of November. With many leading indicators pointing towards a weakening economy and job market, we are likely to see this downward trend in rates continue into 2024.
Home Values & Appreciation Trends
Amidst the current real estate landscape, home values continue to remain stable and exhibit consistent appreciation. In fact, five of the most notable home price indices highlight an annualized appreciation of 6% or higher through the end of 2023, underscoring the resilience and upward trajectory of property values. This has been primarily fueled by a shortage of home inventory. Forecasts for 2024 echo a continuation of this trend, as the imbalance between supply and demand remains a pivotal factor driving the market. The persistent shortage of available homes, compounded by a lag in housing starts failing to meet the pace of household formations, serves as a primary catalyst in the sustained appreciation of home values. This disparity between the growing demand for housing and the insufficient supply of available properties is anticipated to perpetuate the trend of appreciating home values well into the upcoming year where homeowners will gain significant equity.
The Current Window of Opportunity for Buyers
In the current winter market, a unique window of opportunity presents itself for prospective homebuyers, fueled by multiple favorable factors poised to shape the real estate landscape. Forecasts indicating an anticipated decline in mortgage rates set the stage for increased affordability, thereby widening the pool of potential buyers. As rates fall, accessibility to homeownership becomes more attainable, likely leading to heightened competition and subsequent upward pressure on home prices. Furthermore, the increase in new loan limits significantly contributes to affordability by granting buyers access to higher financing. Seizing this moment presents an advantage for buyers as purchasing now grants the advantage of entering the market ahead of the projected surge in competition. Moreover, buyers who secure properties during this time can capitalize on potential equity gains, with home values expected to appreciate into the upcoming year. Additionally, with the prospect of lower rates in the future, buyers have the option to refinance when rates decline further, maximizing financial benefits while ensuring a strategic investment in a burgeoning market. Hence, acting swiftly in the current market not only secures a foothold in less competitive conditions but also positions buyers to potentially gain from future equity growth and favorable refinancing opportunities.
When it comes to obtaining a mortgage for your dream home, Homeseed, an independent mortgage banker, is your go-to lender for a wide range of innovative loan programs strategies. As an independent mortgage banker, Homeseed offers correspondent, direct agency, and wholesale lending solutions, making it a one-stop-shop for all your mortgage needs. In addition to the standard conventional, government, and jumbo loan products, Homeseed provides a wide range of creative financing solutions and unique products designed to cater to your specific needs. In this post, we’ll take a closer look at the loan programs and strategies that many homebuyers are taking advantage of in today’s market and highlight all of the products offered by Homeseed.
Creative Financing Solutions
In a high-interest rate environment, securing an affordable mortgage becomes a paramount concern for prospective homebuyers. The importance of providing creative financing solutions cannot be overstated, as these solutions serve as a bridge between the desire for homeownership and the reality of higher interest rates. At Homeseed, we understand that clients should not be deterred from achieving their dream of homeownership due to market conditions and offer many financing solutions for clients to navigate these challenges effectively. Recently, homebuyers have found success using the following programs and strategies:
Down Payment Assistance Loans: These loans offer financial support that can help homebuyers cover the down payment requirements and closing costs.
DSCR (Debt Service Coverage Ratio) Loans: These loans are designed for real estate investors and focus on the rental income generated by the property to qualify for the mortgage. This is an excellent option for those wanting to get into real estate investment and even seasoned investors.
Temporary and Permanent Buydowns: Temporary and permanent buydowns offer clients the advantage of lower initial interest rates, lowering the monthly mortgage payments and making homeownership more accessible and affordable.
Buy Before You Sell Program: This program provides homeowners the flexibility to secure their new dream home before selling their current property, relieving the stress and need of having to submit a new offer with a contingency.
Construction/Renovation Loans: If you’re looking to build a custom home or purchased a discounted property that needs renovating, Homeseed offers construction and renovation loan options to help make your dream home a reality.
P&L (Profit and Loss) Loans: Homeseed offers loans that consider your business’s profit and loss statements, which can potentially help self-employed individuals and small business owners qualify for a higher purchase price on a home.
Bank Statement Loans: These loans use your bank statements to verify your income, making them an excellent choice for individuals with non-traditional income sources who also want to qualify more income for a higher home purchase price point.
HELOCs (Home Equity Line of Credit): Homeseed provides HELOCs that allow you to access the equity in your home for various purposes, such as home improvements, debt consolidation, or other financial needs while potentially allowing you to keep your primary fixed rate.
Ginnie Mae (FHA, VA, USD) seller-servicer & securitizer (direct bond market participant).
JUMBO LOANS
22 programs allowing 10% (or 10.01%) downpayment
Some programs allow 90% over $1.0M with <1 yr from a major credit event
40-yr mortgage & interest only options
10% downpayment on second homes
Lending with no max acreage limit
In-house delegated underwriting
RENOVATION LOANS
In-house funding & administration of FHA 203K, Fannie Mae Homestyle, and VA Renovation
Draws assisted and completed by Homeseed
CONSTRUCTION LOANS
In-house funding & administration of Conforming, FHA, VA, USDA & Jumbo construction loan.
0-5% downpayment options
Draws assisted and completed by Homeseed
DOWN PAYMENT ASSISTANCE
No income limit
Up to 5% assistance
Options for repayable and non-repayable assistance
Available on multi-family properties
OTHER LOAN PROGRAMS
Multiple programs that do 90% (or 89.99%) LTV on cash-out
DSCR: Investor cash flow
1099 Income Loan Program
Hobby farms: 5 programs including barndominiums and shouses
Raw land lending including farms
Agency & Non-agency manufactured homes
Programs for foreign national and ITIN borrowers
Multi-family and Fix & Flip programs (up to 25 units)
Programs that use 24- or 12- months bank statement for income (to 10% down)
Or use of previous year only income qualification
Use of stock units for income
Use of current financial assets to boost income for qualifying
For 2nd mortgages
Programs for non-warrantable condos (90% to $2.0M with 700)
Great programs with near-prime rates on condotels and non-warrantable condos
Multiple state & national down payment assistance programs
HELOCs & 2nd mortgages that can fund within a week, with a fee
*Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend. This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.
Homeseed is now offering a Buy Before You Sell program for current homeowners who are looking to purchase a new residence. One of the main advantages is that it can provide flexibility and alleviate some of the stress homeowners face when purchasing a new home. The program allows homebuyers to move quickly on the purchase of the new home rather than worrying about selling their current residence. Additionally, it strengthens their offer on a new property as they are not contingent on the sale of their current home. This can be especially advantageous in a competitive real estate market, where buyers may face multiple offers on a property. Furthermore, this loan program can provide buyers with a bridge loan to help cover the down payment on the new purchase or to make repairs to the departing residence.
Embarking on the homebuying journey, especially in a market with higher interest rates, requires savvy navigation of various financing strategies. One option that often flies under the radar for prospective homebuyers and real estate agents is utilizing a seller credit for a temporary interest rate buydown. While hunting for homes with reduced purchase prices is a standard practice, there’s a hidden gem in considering temporary buydowns that could significantly impact your financial strategy and expand your purchasing capabilities. This blog post will unveil these substantial benefits, emphasizing why this method could be an integral part of your home acquisition toolkit.
Expanding Your Property Horizon A seller credit for a temporary interest rate buydown can be a golden ticket for buyers operating within strict budget parameters. This approach decreases initial monthly mortgage payments, potentially qualifying you for homes that tick more boxes on your preference list. For real estate agents, this means you can present clients with a wider, more attractive array of properties, increasing the likelihood of a successful transaction that satisfies all parties.
Enhancing Financial Security The immediate benefit of lower monthly mortgage payments through a temporary interest rate buydown is a financial boon in itself. This strategy acts as a buffer against unexpected homeownership costs and provides an opportunity for strategic financial allocation, whether for home improvements, investments, or other expenses. It’s particularly beneficial for first-time or financially cautious buyers, creating a safety net during the initial years of homeownership.
Smart Refinancing Opportunities One of the standout advantages of temporary buydowns comes into play if you choose to refinance within the first years of the loan term. Unlike permanent buydowns, where the cost to buy down to a lower interest rate is essentially “lost” if you refinance, temporary buydowns offer a unique benefit. Any seller credit that hasn’t been used yet for the interest rate reduction can be applied directly to the loan’s principal at the time of refinancing. This means you’re effectively lowering the total loan amount, resulting in substantial long-term savings. This feature is a game-changer, offering financial flexibility and making temporary buydowns a smart choice for buyers anticipating early refinancing.
While the pursuit of the lowest price is standard in homebuying, the advantages of seller credits for temporary interest rate buydowns present compelling reasons to consider this underutilized strategy. Beyond the immediate relief in monthly mortgage payments, it offers financial security and a unique refinancing opportunity that safeguards your investment even further.
Nevertheless, such a decision should be made after meticulous consultation with loan advisors to ensure it fits your financial situation and homebuying goals. By understanding the profound potential of seller credits for temporary interest rate buydowns, homebuyers and real estate agents can wield this tool effectively, ensuring a more strategic, financially sound property purchase.
Temporary buydowns are financing options that allow borrowers to lower their initial mortgage interest rates, which gradually increase over a specified period. Three types of temporary buydowns offered by Homeseed are the 1-0 buydown, the 2-1 buydown, and the 3-2-1 buydown.
The 1-0 buydown involves a borrower paying an initial interest rate that is 1% lower than the actual rate for the first year of the loan. The interest rate will then revert to the fully indexed rate in the second year and remain constant for the remainder of the loan.
With a 2-1 buydown, the borrower starts with a rate 2% lower than the fully indexed rate in the first year, and in the second year, the rate is 1% lower than the fully indexed rate. The interest rate will then revert to the fully indexed rate in the third year and remain constant for the remainder of the loan.
The 3-2-1 buydown structure offers the most significant initial reduction. In the first year, borrowers pay a rate that is 3% lower than the fully indexed rate. In the second year, the rate decreases to 2% below the fully indexed rate, and in the third year, it becomes 1% lower than the fully indexed rate. After this three-year period, the interest rate reverts to the fully indexed rate and remains constant for the remainder of the loan.
Real estate has consistently been one of the best long-term investments people can make to build wealth. However, many potential investors find it difficult to enter the real estate investment world as they are unfamiliar with financing options and opportunities. This is where Debt Service Coverage Ratio (DSCR) loans can provide an accessible way for investors to get started on financing investment properties. In this post, we’ll discuss DSCR loans and explore what they are, how they work, and the opportunities they offer to both clients and agents.
Debt Service Coverage Ratio is a financial metric used to assess the ability of a property to generate income that can cover its debt obligations. Unlike traditional mortgage loans where the borrower’s income and creditworthiness are most important factors, DSCR loans primarily focus on the property’s income potential. This means you are qualifying the property’s ability to generate income rather than the income of a borrower. The DSCR is calculated by dividing the property’s Net Operating Income (NOI) by its total debt service, which is the total mortgage payment on the loan. A DSCR above 1.0 typically indicates that the property’s income can comfortably cover its debt obligations and is what a lender would like to approve. Higher DSCR values signify greater financial security. The formula is as follows:
DSCR = Net Operating Income / Total Debt Service.
DSCR loans offer a relatively low barrier to entry for new investors, enabling them to enter the real estate investment world without the need of conventional financing that typically has more stringent requirements. With the help of a Homeseed loan advisor and their partnering real estate agents, investors can find properties on the market that will allow them to benefit from both passive income generated by the property and long term equity growth associated with appreciation. Historically, real estate has proven to be a sound investment choice and DSCR loans provide a means to build wealth.
Real estate agents can use a DSCR loan through Homeseed to help sellers improve their property’s appeal by showing income potential. By identifying properties with strong DSCR potential, agents can provide valuable opportunities to clients who are looking to invest their money wisely for long-term growth. Working in tandem with a Homeseed loan advisor will undoubtedly allow them to provide a more comprehensive service to all of their clients.
To illustrate the power of DSCR loans with a real-world example, we recently had a client who wanted to do a cash-out refinance on an investment property to fund additional investments. After ordering an appraisal with a rent schedule, the licensed appraiser determined that the home could generate on average of $255/night for a total monthly income of about $7,700. With only a mortgage payment of about $4,000, the property’s DSCR would be roughly 1.4 and indicated that it had strong financial viability. The DSCR loan also provided better interest rates compared to hard money loans and the funds will allow the client to expand their real estate portfolio.
Homeseed continues to look for ways to provide value for our clients that extends past the transaction as their home is likely the largest asset they will ever own. In fact, by the time the average American retires, 83% of their retirement will come from their home equity. This makes it even more important to stay informed on your home’s equity and potential financial opportunities, which Homeseed allows you to do with our home equity management tool, Homebot.
For homeowners, Homebot presents a transformative approach to home equity management. Through personalized dashboards and regular email updates, homeowners gain valuable insights into their property’s market value, trends, and potential equity growth. This empowers them to make educated choices about refinancing, leveraging their properties, or making strategic financial moves. The platform’s ability to break down real estate and financial information into user-friendly formats not only ensures homeowners stay well-informed, but also helps them secure their financial futures, especially considering the significant proportion of their retirement tied up in their home equity.
CLICK HERE to receive a monthly Homebot Report for your home!
Investing in real estate has always been an attractive opportunity for those seeking to build wealth with quality investments. However, many potential investors find themselves daunted by the barriers that come with traditional financing options. That’s where the Creative Home Equity Product Suite comes into play, helping you find creative ways to finance and build your real estate portfolio. The Creative Home Equity Product Suite is designed to empower clients with the means to turn their real estate aspirations into a reality. It comprises four main product categories, each catering to specific investment goals:
Investor: The Invest product is tailored to investors looking to acquire additional income properties. Whether you want to purchase a rental property or expand your real estate holdings, this financing option allows you to seize opportunities and grow your portfolio.
Vacation: Have you always dreamed of owning a second home, a cozy retreat away from the hustle and bustle of everyday life? With the Vacation product, you can now make that dream come true. Whether it’s a cabin in the mountains or a beachside bungalow, Homeseed offers flexible financing options tailored to your needs.
Profit: For those with an eye for potential, the Improve product provides funding for fix-and-flip properties. Whether you’re a seasoned house flipper or just starting, this option gives you the financial flexibility to get the most out of your investment.
Improve: Renovations can breathe new life into a property and substantially increase its value. The Profit product is designed to fund renovation projects, making it an ideal choice for those looking to enhance their current real estate assets.
One of the standout features of the Creative Home Equity Product Suite is the flexibility it offers. Unlike traditional lending institutions that may have rigid terms and strict eligibility criteria, Homeseed understands that every investor’s journey is unique. The terms of each product are crafted to suit the specific requirements of the client, ensuring that they can seize opportunities and navigate challenges with ease.
Homeseed is committed to empowering clients from all walks of life to achieve their real estate goals. Traditional lending institutions often present numerous obstacles that can deter potential investors. The Creative Home Equity Product Suite of loan programs offers more ways to qualify, ensuring that the doors to real estate investment are open to more people than ever before. Whether you’re a first-time investor or a seasoned pro, Homeseed is here to support your journey in building your real estate portfolio!
Introducing Homeseed 360: A Revolutionary Mobile App To Simplifying Your Homebuying Journey
The mortgage process to purchase your dream home just got a whole lot easier with the launch of the Homeseed 360 Mobile App. This innovative mortgage app is designed to streamline the entire homebuying process, empowering our clients and agents with an array of powerful features and tools right at their fingertips.
One of the standout features of Homeseed 360 is its intuitive loan payment calculator, allowing users to effortlessly determine their monthly mortgage payments. No more complex calculations or guesswork – simply input the necessary details, such as loan amount, interest rate, and loan term, and let Homeseed 360 do the rest. Additionally, clients can view detailed amortization and loan information for various loan programs, gaining valuable insights into their mortgage structure and payment schedule.
Homeseed 360 takes convenience to the next level by enabling users to securely upload important documents directly from their mobile devices. Whether it’s financial statements, tax returns, or proof of income, clients can now easily submit required documentation with just a few taps, saving them valuable time and eliminating the hassle of manual paperwork. Furthermore, the application allows for seamless document sharing where loan advisors can quickly issue pre-approval letters for clients looking to move fast on their purchase.
Homeseed 360 also allows you to stay on top of your mortgage journey effortlessly by providing timely task notifications and ensuring users never miss an important deadline or milestone. From submitting documents to scheduling appraisals, Homeseed 360 keeps clients informed and organized, minimizing stress and maximizing efficiency. Agents will receive live updates of the loan process as well so they can follow along as the transaction progresses.
In a world where technology is revolutionizing industries, Homeseed 360 stands out as a game-changer in the home lending space. By combining powerful features like loan payment calculations, document uploads, seamless sharing, and task notifications, this innovative mobile app is empowering homebuyers to take control of their mortgage process like never before. Say goodbye to the complexities and uncertainties of traditional mortgage applications – Homeseed 360 is here to simplify and streamline your homebuying journey.
Maintaining a low debt-to-income ratio is crucial when applying for a mortgage due to its significant impact on your financial health and loan approval chances. The debt-to-income ratio is a measure of the percentage of your monthly income that goes toward paying off debts, including credit card balances, student loans, car loans, and your proposed mortgage payment. Lenders carefully consider this ratio as it provides an indicator of your ability to manage additional debt responsibly. By keeping your debt-to-income ratio low, you demonstrate financial stability and a higher capacity to handle mortgage payments. This lower ratio not only increases the likelihood of mortgage approval but also allows you to secure more favorable loan terms and interest rates. Overall, maintaining a healthy debt-to-income ratio is essential for a smooth mortgage application process and a solid foundation for your future homeownership journey.
PROGRAM ENHANCEMENT: We have increased our closing guarantee to $10,000. Homeseed’s Cash Committed Credit Approval™ program will guarantee the seller we close on time or we’ll issue $10,000 to them!
Homeseed’s goal is to reduce the stress of the mortgage process by helping our clients pre-pare early, and make our clients’ offers stand out in a competitive market. To do so, we’ve developed our Cash Committed Credit Approval™ program to help achieve this. We’ll provide you with a fully underwritten pre-approval for financing before you find your home so you can shop with confidence. Additionally, sellers will find your offer that much more attractive knowing that you’ll close on time or our Cash Committed Credit Approval™ program will issue a $10,000 credit to them. Please see rules for eligibility below.
TERMS & CONDITIONS (as of 3/27/2024)
ELIGIBILITY
Transaction must be for a home purchase
Borrower(s) must fully complete a loan application and request to enroll in Cash Committed Credit Approval™ with their Loan Advisor prior to making an offer
Borrower(s) must provide a copy of the purchase contract and the closing date must be scheduled no sooner than 28 calendar days from the date of executed purchase and sales contract
VA loans will require 30 calendar days
Jumbo loans will require 35 calendar days
Required disclosures must be executed and returned to Homeseed within two business days
Initial loan documentation and information requested by Homeseed must be received within five business days
Any additional documentation and information requests by Homeseed must be received within two business days
Borrower(s) may not request loan term changes within ten business days from the scheduled closing date. Loan changes include, but not limited to, loan program, term of loan, or down payment amount.
Borrower(s) must lock the loan rate and complete all loan requirements and conditions at least seven business days prior to the closing date
The final appraisal, completion certificate, and/or all revisions must be received five business days prior to the closing date
Loans with subordinate financing must have secondary loan approval five business days prior to closing
Borrower must be available for the in person signing of final loan documents with the title company on a date requested by Homeseed
The loan must close and fund with Homeseed in order for the Cash Committed Credit Approval™ credit to be paid
INELIGIBILITY
Any delays attributable to the borrower(s) outlined in terms, a third party, or the seller that cause the missed closing date
Information provided by the borrower(s) that could not be verified or was inaccurate
The loan amount is $2,000,000 or greater
The loan does not meet federal and state regulatory requirements and/or agency guidelines
The closing date is missed due to acts outside the control of Homeseed. Acts include, but not limited to, inclement weather, natural disasters, catastrophic events, or other public emergencies.
Homeowners in the United States have seen a record-high increase in home equity. According to MBS Highway, 76% of homeowners have at least $100,000 of equity in their homes while the median priced home has gained an average of $190,000 in appreciation in the last 10 years. This further emphasizes the immense value and wealth that homeownership provides for an individual. Homeowners can also take advantage of this equity by using it for a variety of purposes, such as home improvements, debt consolidation, or funding other financial investments.
Two popular options for accessing home equity are home equity lines of credit (HELOCs) and cash-out refinances. HELOCs allow homeowners to borrow against their home equity as needed, similar to a credit card. They often come with variable interest rates and typically have a lower upfront cost than a cash-out refinance. On the other hand, a cash-out refinance replaces the homeowner’s existing mortgage with a new, larger loan. The homeowner receives the difference between the old and new loans in cash, which can be used for any purpose. Cash-out refinances usually come with a lower fixed interest rate and a higher upfront cost than a HELOC. While both options can provide access to the home’s equity, your unique situation will determine which product is best for you. Contact us today to learn more!
A credit score is one of the critical factors that lenders consider when determining whether to approve a mortgage application. The score reflects a borrower’s creditworthiness and financial history, which indicates the likelihood of paying back the loan on time. A high credit score is an indicator of a responsible borrower and shows that the borrower has a history of making timely payments on their debts. A low credit score can make it challenging to obtain a mortgage, or the borrower may receive higher interest rates and less favorable loan terms.
Furthermore, a high credit score not only makes it easier to obtain a mortgage but can also help borrowers secure a more affordable mortgage loan. Lenders offer lower interest rates and better terms to borrowers with higher credit scores, which can result in significant savings over the life of the loan. Even a small difference in interest rates can add up to thousands of dollars in savings over the long term. Therefore, it is crucial to maintain a high credit score by consistently paying bills on time, keeping credit card balances low, and avoiding taking on new credit until after the mortgage has been secured. Check out the flyer below for more tips on maintaining and keeping your credit score high!
ARE YOU INTERESTED IN BECOMING A REAL ESTATE INVESTOR?
Becoming a real estate investor can be a wise financial decision for homeowners looking to build long-term wealth. With the investor cash flow (DSCR) loan program that Homeseed offers, it has become easier than ever to finance investment properties. Our DSCR loan program does not require you to qualify personal debt or income, and it simply looks at the property’s cash flow to decide on its approval. Real estate has historically proven to be a stable and profitable investment, and DSCR loan programs make it accessible to clients interested in becoming investors. Attached is a flyer with more information. Share or reach out with any questions!
Trigger leads are generated when a consumer’s credit report is accessed during a loan application process. Credit bureaus like Equifax, Experian, and TransUnion can sell the consumer’s information as trigger leads to other companies, and these companies will begin calling you multiple times to solicit business. It’s frustrating as Homeseed needs to request your credit scores from the credit bureaus for the purpose of a mortgage loan.
IS THIS LEGAL?
The sale of trigger leads is currently legal, but there is a proposed bill called the Trigger Leads Abatement Act of 2022 that aims to prohibit their creation and sale.
HOW DO I STOP THEM?
There is no way to completely stop trigger leads, but taking steps such as opting out of pre-approved credit offers can reduce them significantly.
Opt-Out of Phone Calls and Texts Visit www.optoutprescreen.com to register yourself for the Electronic Opt-Out for 5 years. You can also register yourself by calling 888-567-8688. Visit www.donotcall.gov and register up to 3 phone numbers. Be sure to click on the link emailed to you from register@donotcall.gov within 72 hours to confirm your registration.
Opt-Out of Email and Mail Offers Visit www.dmachoice.org and select Email Opt-Out Service to register up to 3 emails. Be sure to click on the link emailed to you within 30 days. You can also register up to 5 records for your household for 10 years. Please note they do charge a $4 admin fee for registration.
Every year the Federal Housing Finance Agency (FHFA) announces their conforming loan limits for the upcoming year immediately following the November release of their House Price Index (HPI). FHFA uses this data on home price appreciation to set the new loan limits for the upcoming year. For areas in the country that are considered high cost, FHFA increases loan limits further and will go up to 150% of the baseline conforming loan limit.
In 2023, the new conforming loan limit for most of the US for one-unit properties will increase to $726,200, an increase of $79,000 from $647,200 in 2022. This means in areas of high-cost or with special statutory provisions, the loan limit can reach as high as $1,089,300. An example in Washington State would be the counties of King, Snohomish, and Pierce, where the loan limit will increase to $977,500, an increase of $86,250 from $891,250 in 2022. This significant increase will help home buyers access more credit in many markets where home prices are still seeing double digit appreciation year-over-year.
If you have any questions or want to find out if you qualify for a conforming loan, please reach out today!
See the full 2023 Conforming Loan Limits map here.
In our community outreach effort for Homeseed of Hope, the Pelayo Lending Team at Homeseed is proud to be partnering up this holiday season with Toys for Tots in order to collect new and unwrapped toys for kids in need. Toys for Tots began in 1947, when Major Bill Hendricks’s wife, Diane, asked Bill to donate her homemade doll. When Bill determined that no agency existed, Diane told Bill that he should start one and he did. Since 1980, Marines have collected and distributed new toys. The goal is to deliver a message of hope, which will assist in building self-esteem and, in turn, motivate less fortunate children to grow into responsible, productive, patriotic citizens, and community leaders. A new toy of their own accomplishes this goal. The Pelayo Lending team will be working to collect toys at 4 locations listed below. We will be accepting donations until December 10, 2022 so that the kids may get these toys in time for Christmas.
Donation Box Locations Homeseed HQ – 3633 136th Pl SE Suite 210, Bellevue, WA 98006 Keller Williams – Kirkland – 11109 Slater Ave NE #200a, Kirkland, WA 98033 Vida Integrated Health – 11901 NE Village Plaza, Suite 261, Kirkland, WA 98034 Vida Integrated Health – 606 120th Ave NE Suite 100, Bellevue, WA 98005
About Homeseed of Hope
Community reciprocity and reinvestment have long been goals of Homeseed since we first launched in June of 2016. In addition to providing a uniquely empowering mortgage lending experience, Homeseed wanted to use its platform to support the individuals, businesses, and programs in the communities we serve. That desire remains true today and led to us creating Homeseed of Hope – an initiative to guide our community outreach efforts.
In our community outreach effort for Homeseed of Hope, we are featuring Homestead Community Land Trust and the incredible work this non-profit organization is doing to address the housing affordability crisis in the Greater Seattle and King County area. As this region has become a thriving tech sector, it has also become increasingly unaffordable for lower- and middle-income residents. In a city of Seattle housing affordability report published in 2018, data shows that the region has seen a 325% increase in the cost of housing while wages have only increased by 85% since 1997. Homestead Community Land Trust’s mission is to preserve and advance access to permanently affordable homeownership as a means to create thriving, equitable, and inclusive communities.
On October 29th, Homestead Community Land Trust is hosting a Halloween Trivia Night and members of the Homeseed Team will be sponsoring, fundraising, and joining in on the trivia games. We encourage you to learn more about the great work this non-profit is doing to serve marginalized populations across this region and consider donating to the Homeseed Team’s fundraising goal in the links below. Together we can further the impact of Homestead Community Land Trust!
Community reciprocity and reinvestment have long been goals of Homeseed since we first launched in June of 2016. In addition to providing a uniquely empowering mortgage lending experience, Homeseed wanted to use its platform to support the individuals, businesses, and programs in the communities we serve. That desire remains true today and led to us creating Homeseed of Hope – an initiative to guide our community outreach efforts.
The Federal Housing Finance Agency (FHFA) announced today that it will be no longer be collecting a fee on refinance transactions that was known as the “Adverse Market Refinance Fee” effective August 1, 2021 for all qualified mortgages. The lending industry is welcoming the news as this change will help more families take advantage of the low-rate environment and save more money.
If you have considered refinancing this past year but the costs did not justify the savings, now is a perfect time to reconnect to reevaluate your scenario. This is also a great opportunity to leverage your home’s equity to consolidate debt or fund the remodel you have been wanting. It is an extremely inexpensive time in mortgage lending for consumers and you can save even more by acting before rates increase as projected.
Please share this news with your neighbors, families, and friends. I very much appreciate the opportunity to answer any questions and serve your community.
Home appreciation continues to reach historic highs as tight supply and strong demand lead to an extremely competitive housing market. According to the S&P CoreLogic Case-Shiller home price index, prices in February rose 12% year over year across the US. This 12% gain is a 15-year high, and Seattle is one of the top cities with a gain of 15.4% year over year.
Those trying to enter the housing market are feeling the frustrations and disappointments of a competitive low inventory market. In many cases, buyers are having to make over five offers on homes before getting one accepted. However, the risk and rewards can quickly make sense when you consider the yearly equity gains with appreciation being higher than most full-time annual salaries. With a 15.4% gain in home prices year over year in Seattle, a person purchasing a $750,000 home last year would have gained $115,500 in appreciation on average. Historically low interest rates are also helping give a small boost to your purchasing power, so long as they remain low.
In the end, the most important thing prospective homebuyers need to consider is if are you in a position to responsibly take on a mortgage payment. Make sure you are evaluating a range of factors including your finances, personal life, and future. Connect with us today if you have any questions. If you have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!
In our competitive housing market, most homes are receiving numerous offers and sell for over the listing price. But what happens when the home appraises for less than its selling price? In a seller’s market, it’s often left to the buyer to cover the difference between the purchase price and the appraisal. And what happens if an appraisal comes in short by $50,000? Or even $100,000? If the borrower does not have extra funds to cover the appraisal gap, Homeseed has a back up plan to help your borrower save the deal.
A scenario we’ll use to go over our appraisal gap strategy is a purchase price of $700,000 with a 20% down payment. If the appraised value comes in $50,000 or $100,000 below the $700,000 purchase price, our loan to value ratio will increase above 80% and the borrower will be required to purchase a mortgage insurance policy. What we can then do is finance a single-premium mortgage insurance policy into the loan amount that helps us cover the appraisal gap. This also allows us to keep the required cash to close similar across all three scenarios. Financing the mortgage insurance premium will increase the loan amount and thus the monthly payment, but not by much. On a $50,000 short appraisal value, monthly payment only increases by about $28. On a $100,000 short appraisal value, monthly payment increases by about $41. This is a relatively inexpensive way to cover up a large appraisal gap in this market.
Please reach out if you’d like to learn more about this financing strategy and other ways to help you clients remain competitive in this market. If you also have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!
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