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What has happened to the mortgage industry in 2022

DDA Mortgage • Sep 06, 2022

Mortgage rates started off at a record low in 2022. It was an exciting time for many homeowners, and a great opportunity to lock in a low rate on a mortgage. Low-interest rates also brought many buyers to the market causing home prices to increase as homes received multiple bids and offers over the asking price.



Mortgage Changes In The 2nd Quarter Of 2022


But things would quickly change in the second quarter of 2022 as the government decided to increase the federal funds rate to fight inflation starting in March. Higher rates made borrowing money more expensive, and the monthly out-of-pocket cost to borrowers increased. The FED has continued to raise the effective federal funds rate in an effort to combat inflation. The chart below shows the Effective Federal Funds Rate as reported by the New York FED.

Shifts In Mortgage Demand And Lender Supply


As the demand for mortgages has declined, the industry has had to shift. Some companies have been laying off employees. Non-QM lenders are having more trouble selling securities, and some lenders have decided to shut down altogether and stop lending.



What Should Homebuyers Expect


Buyers with strong financial positions are in great shape. There are less buyers in the market. That means there is less competition for homes and prices are stabilizing.


Buyers are being scrutinized more during the lending process. Underwriters are asking for more documentation and are asking for additional verification. The lenders want to make sure they can sell the loan, and if they have good documentation, they can.


Rates will inevitably come down. And borrowers at today's rate can always refinance into a lower rate.



Next Steps


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By Didier Malagies 25 Mar, 2024
Home equity levels among homeowners aged 62 and older are at record levels following the end of the pandemic. As a result, reverse mortgages may no longer be considered a “loan of last resort” as financial planners aim to highlight their uses as part of a comprehensive financial plan in retirement. This is according to a column published this week by Investment News, soliciting input from planner professionals well known to the reverse mortgage business, including Wade Pfau. But other data suggests convincing borrowers of the benefits remains very challenging. Reverse mortgage use as part of a broader financial plan “is really the intention in the financial planning space,” Pfau told the outlet. While reverse mortgage customers benefit greatly from low rates, the current high-rate environment doesn’t fully cancel out their potential use as a planning tool, he explained. “It’s all about the sequence-of-returns risk in retirement planning […] Spending from the home equity helps you preserve more investments, so there is going to be a bigger legacy at the end,” Pfau told the outlet. “The beneficiaries can get more. They can pay off the loan and still have a net windfall.” This perspective is consistent with prior statements Pfau has provided to other outlets, including to RMD . Other financial planners adjacent to the reverse mortgage space offered their own thoughts, including Steve Resch, vice president of retirement strategies at Finance of America Reverse (FAR). “The goal is for the client or the family to always retain an equity position in that property. […] Years ago, that wasn’t the case,” Resch said in the story, describing the housing crisis of 2008 as a “reckoning” for the reverse mortgage industry as well as the larger housing ecosystem. Resch explained that the ballooning length of retirement in America contributes to the potential utility of a reverse mortgage for qualifying borrowers. “It’s simply a matter of demographics,” he told Investment News. “We have an enormous population that is moving into retirement. We’ve got a massive amount of equity available. We’re looking at 20- to 30-year retirements. Bringing home equity into that plan really makes sense.” Another financial planner, Gateway Wealth Management founder David Foster, cited Pfau’s work in particular as helping to bring him around on the product category as a planning tool for clients, but convincing them to take a closer look at a reverse mortgage remains a major challenge. “I think reverse mortgages might be the single most underutilized retirement planning tool,” he told the outlet. “I have found it extremely difficult to have a rational conversation with my clients about reverse mortgages. Most people who’ve paid off their house just cannot fathom the idea of going back into debt. “No amount of logic will be able to convince them that it is wise to borrow against their house in retirement after having worked so hard to pay off their home prior to retirement,” Foster added. “I’ve even had people get borderline angry with me for even suggesting the idea.” Last year, Mutual of Omaha Mortgage released survey data suggesting that education hurdles remain very steep for the reverse mortgage industry when aiming to connect with a variety of different borrowers on multiple potential use cases. 
By Didier Malagies 25 Mar, 2024
You have Conventional Mortgages, FNMA/FHMC, FHA, VA, Reverse Mortgages, Bank Statement loans, DSCR, Reverse Mortgages, and 1099 mortgages. Depending on your particular situation, could be a choice based on credit scores, income, funds to close Buying a home using Bank statements to qualify for a mortgage Buying a home using a 1099 only to qualify for a mortgage Using rental income to qualify for a mortgage Or being a first-time home buyer with just 1% down to purchase a home tune in and learn more at https://www.ddamortgage.com/blog didier malagies nmls#212566  dda mortgage nmls#324329
By Didier Malagies 18 Mar, 2024
What if you refinanced your lower-rate first mortgage into a higher rate but consolidated all of your debt into one low payment. Getting rid of credit cards, car loans, installment loans, and student loans. What would your savings be a month and how much would you save? Then if property values were ever to plummet and rates came crashing down. Just go back to 2007 when we were able to refinance everyone on the HARP program. I just break things down to worse-case scenarios and how you can stay ahead of the game with your finances no matter what. I think it is time to get the house in order and save money, doesn't seem like food , medical or anything is going down but instead still going up Maybe everything we are told is not exactly correct tune in and learn https://www.ddamortgage.com/blog Didier Malagies nmls212566 DDA mortgage nmls#324329
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