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Homeownership Costs Soar: DDA Mortgage Insights

Tue, 21 Apr 2026 18:11:01 GMT

Navigating the New Reality: Why Homeownership Costs Have Doubled Since 2016

Remember 2016? It might not feel like ancient history, but a lot has changed in the world of homeownership since then. Back then, the average American only needed to earn around $43,000 a year to comfortably afford a median-priced home. Fast forward to 2026, and that figure is projected to skyrocket to an astonishing $93,000 annually. That's more than double the income required in just a decade! But here's the kicker: average wages haven't risen by over 100%, and neither has productivity. So, what gives? It feels like the American Dream of owning a home just got 100% more expensive, leaving many wondering how they can possibly keep up. At DDA Mortgage, we understand these concerns, and we're here to help you make sense of the shifting landscape and explore your best path forward.

Understanding the Income Gap: Why Your Earnings Need to Double for Homeownership

Let's talk numbers, because they paint a clear picture of the challenge facing prospective homebuyers today. The jump from needing $43,000 a year in 2016 to an estimated $93,000 by 2026 to afford a home isn't just a slight increase; it's a monumental shift. This isn't about people suddenly wanting bigger, more luxurious homes. This is about the fundamental cost of entry into the housing market. For many, it feels like the goalposts have been moved significantly, making homeownership seem out of reach. But why has this happened, and what does it mean for you?

The Real Estate Market's Perfect Storm

Several factors have converged to create this affordability crisis. It's not just one thing, but a combination of economic forces that have pushed housing costs upwards at an unprecedented rate:

Rising Home Prices: The most obvious culprit is the rapid appreciation of home values. Fueled by low interest rates for an extended period, limited inventory, and strong demand, home prices have surged across the country. What cost $200,000 in 2016 might now be selling for $400,000 or more.
Increased Interest Rates: While rates were historically low for a long time, they have increased significantly in recent years. Even a small percentage point change in interest rates can add hundreds of dollars to a monthly mortgage payment, requiring a higher qualifying income to absorb that cost.
Inflation and Cost of Living: Beyond just the mortgage, the overall cost of living has gone up. Property taxes, homeowners insurance, and even the basic costs of utilities and groceries have all seen substantial increases. These aren't just minor adjustments; they significantly impact a household's disposable income and their ability to save for a down payment or manage a mortgage.
Stagnant Wage Growth (Relatively Speaking): While wages have seen some increases, they simply haven't kept pace with the explosive growth in housing costs. A 20-30% wage increase over a decade feels good, but not when home prices have gone up 100% or more. This disparity is at the heart of the widening affordability gap.

Consider a hypothetical example: In 2016, a $43,000 income might have supported a $150,000 mortgage at 4% interest, with reasonable property taxes and insurance. Today, to afford that same home, now priced at $300,000, at a 7% interest rate, your monthly payment would be dramatically higher. Lenders use debt-to-income ratios to determine how much you can afford, and with higher payments, that qualifying income threshold naturally rises.

This isn't just about statistics; it's about real families and individuals struggling to achieve what was once a foundational part of the American Dream. It's about young couples postponing starting a family because they can't afford a home, or established individuals feeling priced out of their own communities. At DDA Mortgage, we see these challenges every day, and we're committed to helping you understand your options and find solutions that work for your unique situation.

The Ripple Effect: Why Construction is Down and FHA Delinquencies Are Up

The skyrocketing cost of homeownership isn't just a concern for individual buyers; it has broader implications for the entire housing market and the economy at large. When the cost of entry becomes prohibitive, it creates a ripple effect that touches everything from new home construction to existing mortgage performance. We're seeing clear signs of this in two significant trends: a slowdown in new construction and an uptick in FHA loan delinquencies.

Fewer New Homes: The Construction Conundrum

One of the long-term solutions to housing affordability is increasing supply. More homes on the market should, in theory, help stabilize or even reduce prices. However, instead of a boom in construction to meet demand, we've seen a noticeable slowdown. Why is this happening?

High Material Costs: The cost of lumber, steel, concrete, and other building materials has surged. Supply chain disruptions, inflation, and increased demand have made it significantly more expensive for builders to construct new homes.
Labor Shortages: The construction industry has faced persistent labor shortages, driving up labor costs and extending project timelines. Fewer skilled workers mean fewer homes can be built, even if builders have the capital.
Regulatory Hurdles and Land Costs: Zoning regulations, permitting processes, and the rising cost of developable land also add substantial expenses and delays to new projects. In many desirable areas, suitable land is scarce and expensive.
Increased Interest Rates for Builders: Just like homebuyers, builders rely on financing. Higher interest rates make construction loans more expensive, increasing the overall cost of a project and reducing profit margins, which can deter new ventures.

The result is a vicious cycle: fewer new homes mean less inventory, which keeps prices high, further exacerbating the affordability crisis. This lack of supply is a key contributor to why an income of $93,000 is needed to buy a home, rather than easing the burden.

Rising FHA Delinquencies: A Warning Sign

Another concerning trend is the rise in delinquencies for FHA (Federal Housing Administration) loans. FHA loans are designed to help first-time homebuyers and those with lower down payments or less-than-perfect credit achieve homeownership. They are a vital pathway for many into the housing market. When delinquencies on these loans start to climb, it indicates several underlying issues:

Financial Strain on Homeowners: Rising interest rates, coupled with increased property taxes, insurance premiums, and general cost of living, are putting immense pressure on household budgets. Many homeowners, especially those who stretched to buy a home, are finding it harder to keep up with their monthly payments.
Economic Uncertainty: Job insecurity, unexpected expenses, or a reduction in income can quickly lead to financial distress, particularly for those with less savings or higher debt-to-income ratios.
Market Correction Risk: A significant increase in delinquencies could, in some scenarios, lead to an increase in foreclosures, which can add more inventory to the market and potentially put downward pressure on home values. While this might sound good for buyers, it can be devastating for existing homeowners and the broader economy.

At DDA Mortgage, we monitor these trends closely because they directly impact our clients and the health of the communities we serve. Understanding these challenges helps us better advise you on how to navigate the current market conditions and make informed decisions about your homeownership journey.

Seizing Opportunity: How Dropping Rates Can Transform Your Mortgage

While the current landscape might seem challenging, it's crucial to remember that the housing market is dynamic. Economic cycles and global events inevitably lead to shifts, and often, these shifts present significant opportunities. Specifically, when interest rates drop due to various economic factors, a lot of great things can happen for both prospective homebuyers and current homeowners.

The Power of Lower Interest Rates

A decrease in interest rates can be a game-changer. Here's how it can positively impact your financial future:

Increased Affordability for Buyers: For those looking to buy a home, lower interest rates directly translate to lower monthly mortgage payments for the same loan amount. This can significantly reduce the income required to qualify for a mortgage, making homeownership more accessible. It could mean the difference between needing that $93,000 annual income and a more manageable figure, bringing the American Dream back within reach for many.
Reduced Overall Cost of the Loan: Over the lifetime of a 30-year mortgage, even a small reduction in the interest rate can save tens of thousands of dollars in total interest paid. This means more money stays in your pocket, year after year.
Stimulated Market Activity: Lower rates often encourage more buyers to enter the market, which can lead to increased sales and a healthier, more active real estate environment. This can also encourage builders to resume construction, knowing there's a stronger pool of qualified buyers.

Refinancing: Your Strategic Advantage When Rates Drop

For current homeowners, particularly those who purchased or refinanced during a period of higher interest rates, a drop in rates offers a powerful opportunity: refinancing . Refinancing means replacing your existing mortgage with a new one, typically with a lower interest rate or different terms. This can lead to substantial financial benefits:

Lower Monthly Payments: The most immediate and often most desired benefit is a reduction in your monthly mortgage payment. This can free up significant cash flow in your budget, making it easier to manage rising costs elsewhere or to save for other financial goals.
Access to Equity: Depending on your situation and goals, refinancing can also allow you to tap into your home's equity through a cash-out refinance. This can provide funds for home improvements, debt consolidation, or other major expenses, often at a lower interest rate than other forms of borrowing.
Shorter Loan Term: If rates drop significantly, you might even be able to refinance into a shorter loan term (e.g., from a 30-year to a 15-year mortgage) without a drastic increase in your monthly payment. This allows you to pay off your home faster and save even more on interest over the long run.

At DDA Mortgage, we specialize in helping homeowners understand their refinancing options. When rates come down, definitely you can refinance your higher rate and make the payment more affordable as costs rise. Our team is here to guide you through the process, ensuring you get the best possible terms for your financial situation. You can learn more about how refinancing can benefit you by visiting our dedicated Refinancing page .

Refinance Mortgage Amidst Middle East Uncertainty?

Fri, 10 Apr 2026 20:09:14 GMT

Is Now the Right Time to Refinance Your Mortgage Amidst Middle East Uncertainty?

The world feels a little more uncertain these days, doesn't it? With job markets shifting, the cost of... well, everything... seemingly on the rise, and the ongoing conflicts in the Middle East potentially impacting global oil supplies (and potentially the closing of the Straight of Hormuz), it's natural to feel a bit anxious about your financial future. You're probably asking yourself, "How can I get a better handle on my finances? Is there a way to consolidate debt, lower my monthly mortgage payments, and protect myself from the looming effects of inflation?" If these questions are on your mind, refinancing your mortgage might be a solution worth exploring.

Refinancing to Consolidate Debt: A Smart Move in Uncertain Times

One of the most compelling reasons to consider refinancing, especially when the economic outlook is cloudy, is to consolidate high-interest debt. Many families juggle multiple credit cards, installment loans (like car loans or personal loans), and other debts, each with its own interest rate and payment schedule. This can make managing finances feel overwhelming and expensive. Refinancing allows you to roll these debts into a single, lower-interest mortgage, simplifying your payments and potentially saving you a significant amount of money over the long term.

The Power of a Lower Interest Rate

Imagine you have $10,000 in credit card debt at an average interest rate of 18%. Paying the minimum each month could take years to pay off, and you'll end up paying thousands of dollars in interest. By refinancing your mortgage and including that $10,000 debt, you could potentially secure a much lower interest rate (depending on current market conditions and your credit profile). This translates to a lower monthly payment and faster debt repayment.

Simplifying Your Finances

Beyond the potential savings, consolidating debt simplifies your financial life. Instead of managing multiple bills and due dates, you'll have just one mortgage payment to worry about. This can reduce stress and free up your time to focus on other important aspects of your life. It's a smart way to take control of your finances in a turbulent environment. You can learn more about residential refinancing options here: Refinancing

Lowering Your Monthly Mortgage Obligations for Long-Term Savings

Even if you don't have a lot of high-interest debt, refinancing could still make sense if you can secure a lower interest rate than your current mortgage. Lowering your monthly obligations allows you to recoup closing costs quickly.

Understanding Break-Even Points

When you refinance, there are closing costs involved. It's crucial to calculate your "break-even point" - the amount of time it will take for your monthly savings to offset those costs. Our team at DDA Mortgage can help you analyze this calculation to determine if refinancing is a financially sound decision for you. Generally, the larger the difference between your current and potential interest rate, the faster you'll recoup your closing costs.

Creating Financial Breathing Room

Lowering your monthly mortgage payment can create valuable breathing room in your budget. This extra cash flow can be used to build an emergency fund, invest for the future, or simply cover everyday expenses without feeling as stretched. In times of economic uncertainty, having this financial cushion can provide peace of mind.

Refinancing to Access Cash for Home Improvements or Investments

Another strategic reason to refinance is to tap into your home's equity and access cash for home improvement projects or other investments. This is often referred to as a "cash-out refinance."

Investing in Your Home

Home improvement projects can increase the value of your property and make your living space more enjoyable. Whether you're planning a kitchen remodel, bathroom upgrade, or simply want to make some necessary repairs, a cash-out refinance can provide the funds you need to bring your vision to life. It's a great way to improve your home's value and make it more comfortable for you and your family.

Investing for Growth

Alternatively, you can use the cash from a refinance to invest in other opportunities that have the potential to grow your money. This could include stocks, bonds, real estate, or even starting a small business. While investments always involve risk, a cash-out refinance can provide the capital you need to pursue your financial goals. As always, do your research and consult with a financial advisor before making any investment decisions.

Important Considerations for Cash-Out Refinances

It's important to note that cash-out refinances typically come with slightly higher interest rates than rate-and-term refinances (where you're simply lowering your interest rate or shortening your loan term). It's also crucial to ensure that you have a solid plan for how you'll use the cash, as you'll be adding to your mortgage debt. Contact us at Contact DDA Mortgage if you would like to discuss this more

Is Refinancing Right for You? Take the Next Step

Navigating the complexities of mortgage refinancing can feel daunting, especially with the current global uncertainties. That's why it's important to work with a trusted mortgage professional who can assess your individual situation and provide personalized guidance.

At DDA Mortgage, we're committed to helping you make informed decisions about your home financing. We'll take the time to understand your financial goals and help you determine if refinancing is the right move for you.

Ready to explore your refinancing options? Give me a call or send me an email today. Let's discuss your situation and see what makes the most sense for you and your family. We are here to help you navigate the mortgage process with confidence and clarity, no matter what's happening in the world. Don't hesitate to reach out - we're here to help!

HECM Loan: Combat Inflation in Retirement

Mon, 06 Apr 2026 14:33:53 GMT

Is Rising Inflation Eating Away at Your Retirement Savings? A HECM Could Help

Ouch! Did you wince at the gas pump today? We all did. It feels like the cost of everything is going up, doesn't it? From filling your tank to stocking your fridge, inflation is hitting hard, and retirees on fixed incomes are feeling the pinch more than most. And those higher gas prices? They ripple through the economy, pushing up the cost of groceries, deliveries, and just about everything else you buy. If you're relying on a pension and Social Security, you might be wondering how you're going to make ends meet. Is it time to tap into the equity in your home to create a financial safety net? For many retirees, a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, might be the answer. Let's explore how a HECM line of credit could provide a valuable cushion during these inflationary times.

Navigating Inflation on a Fixed Income with a HECM Loan

Retirement should be a time of relaxation and enjoyment, not constant worry about stretching your budget. But with inflation stubbornly high, even carefully planned retirement budgets can quickly fall apart. How do you manage the rising costs of food, gas, and everyday supplies when your income is relatively fixed?

Supplementing Income with a HECM Line of Credit

A HECM loan allows homeowners aged 62 and older to borrow against the equity in their homes without making monthly mortgage payments. (You're still responsible for property taxes, homeowners insurance, and any applicable homeowners association fees). The loan proceeds can be received as a lump sum, a monthly income stream, or, most commonly, a line of credit. This line of credit is a flexible tool that you can access when you need it most, allowing you to supplement your income and cover unexpected expenses without selling assets or drastically cutting back on your lifestyle. Learn more about different mortgage options: Refinancing options .

Flexibility to Cover Essential Expenses

Imagine you need to replace a major appliance, like a refrigerator or washing machine. These unexpected costs can really throw a wrench into a tight budget. With a HECM line of credit, you can access the funds you need without having to dip into your savings or put the expense on a high-interest credit card. The funds can be used for anything you need, providing peace of mind and financial flexibility.

How a Reverse Mortgage Can Help Offset Rising Medical Costs

Healthcare costs are consistently one of the biggest expenses for retirees. As we age, we often require more medical care, medications, and potentially long-term care services. Inflation only exacerbates this problem, driving up the cost of everything from doctor's visits to prescription drugs.

Addressing Healthcare Expenses with HECM Funds

A HECM can be a valuable resource for managing healthcare costs in retirement. The loan proceeds can be used to cover:

Prescription medications
Insurance deductibles and co-pays
Home healthcare services
Assisted living expenses (in some cases)
Unexpected medical emergencies

Having access to a HECM line of credit can provide the financial security you need to address these expenses without jeopardizing your overall financial stability. Watch this informative video to learn more: HECM Video .

Peace of Mind During Medical Emergencies

Medical emergencies are stressful enough without the added burden of financial worries. Knowing you have a HECM line of credit available can provide peace of mind, allowing you to focus on your health and well-being without constantly worrying about how you're going to pay the bills.

Protecting Your Home: Using a HECM to Cover Home Repairs and Maintenance

Owning a home comes with responsibilities, including regular maintenance and occasional repairs. As homes age, they inevitably require more upkeep, and the costs of these repairs can be substantial. Inflation has driven up the price of building materials and labor, making home repairs even more expensive.

Addressing Unexpected Home Repair Costs with a HECM

A HECM can be a smart way to finance essential home repairs and maintenance, ensuring your home remains safe and comfortable. Here are some examples of how you might use HECM funds for home-related expenses:

Roof repairs or replacement
HVAC system maintenance or replacement
Plumbing repairs
Electrical work
Accessibility modifications (e.g., installing grab bars or ramps)

By using a HECM to cover these expenses, you can avoid depleting your savings or taking out a high-interest loan. You can also ensure that your home remains in good condition, which can help preserve its value. Contact us for a consultation: Contact Us

Maintaining Your Home's Value

Neglecting necessary home repairs can lead to more significant problems down the road, potentially decreasing your home's value. A HECM allows you to proactively address these issues, protecting your investment and ensuring your home remains a valuable asset.

A HECM Loan: A Line of Credit for Peace of Mind in Retirement

In conclusion, with rising inflation impacting every aspect of our lives, retirees on fixed incomes are facing unprecedented challenges. A Home Equity Conversion Mortgage (HECM) offers a potential solution by providing a flexible line of credit that can be used to supplement income, cover rising medical costs, and address necessary home repairs. Unlike a traditional mortgage, a HECM doesn't require monthly mortgage payments (you are still responsible for property taxes, homeowners insurance, and any applicable homeowners association fees), freeing up cash flow and providing peace of mind during these uncertain times.

If you're a homeowner aged 62 or older and are looking for ways to navigate the challenges of inflation, we encourage you to explore the possibilities of a HECM loan. Contact DDA Mortgage today to learn more about how a HECM can help you achieve financial security and enjoy a more comfortable retirement.

Home Equity Opportunity: Is Now the Time to Buy?

Mon, 30 Mar 2026 15:45:07 GMT

Is Now the Time to Buy a Home? Equity, Negotiation, and Opportunity Await

Remember the good old days? Back in the 1980s, the average home cost about 3.5 times the median income. Seems almost unbelievable now, doesn't it? Fast forward to 2008, and that ratio climbed to 4.7. Today? We're looking at over 5 times the median income. That's a significant jump, and it makes the dream of homeownership feel further away for many. But what if we told you there's a silver lining, a potential opportunity hidden within these numbers? The fact is, 76.7% of homeowners today have a loan-to-value (LTV) ratio of 60% or less. That means they have significant equity built up in their homes. And that equity, combined with other market factors, could make now a surprisingly good time to consider buying.

Tap Into Your Home Equity for Debt Consolidation

Having substantial equity in your home opens doors you might not even realize are there. One of the most powerful is the opportunity to consolidate debt. Many people carry multiple high-interest debts, from credit cards to personal loans. These debts can feel like a constant weight, draining your finances and limiting your options. But what if you could combine all those debts into a single, lower-interest loan, using the equity in your home to secure it? That's the power of a cash-out refinance.

Imagine simplifying your finances, reducing your monthly payments, and freeing up cash flow. With a cash-out refinance, you borrow more than you currently owe on your mortgage and use the difference to pay off those high-interest debts. This not only simplifies your financial life but can also save you thousands of dollars in interest over the long term. And with so many homeowners sitting on considerable equity, this option is more accessible than you might think.

Want to explore your refinancing options? Visit DDA Mortgage's refinancing page to learn more about how we can help you leverage your home equity for debt consolidation.

Benefits of Debt Consolidation Through Refinancing

Lower Interest Rates: Consolidate high-interest debt into a single loan with a potentially lower interest rate.
Simplified Payments: Make one monthly payment instead of juggling multiple bills.
Improved Cash Flow: Reduce your monthly payments and free up cash for other financial goals.

Negotiate Purchase Price and Secure Seller Concessions in Today's Market

The real estate market has shifted. We're seeing more inventory on the market, which means buyers have more choices and more bargaining power. This is a crucial advantage that shouldn't be overlooked. In a seller's market, you often have to accept whatever terms are offered. But in a more balanced market, you have the opportunity to negotiate the purchase price and even request seller concessions.

Seller concessions can be a game-changer, especially for first-time homebuyers or those with limited cash reserves. These concessions can cover closing costs, prepaid taxes, or even points on your mortgage. By negotiating effectively, you can significantly reduce your upfront costs and make homeownership more affordable. Don't be afraid to ask for what you need - the current market conditions may be in your favor.

Strategies for Effective Negotiation

Do Your Research: Understand the market value of comparable homes in the area.
Get Pre-Approved: Being pre-approved for a mortgage demonstrates that you're a serious buyer.
Work with an Experienced Real Estate Agent: A skilled agent can guide you through the negotiation process and advocate for your best interests.

Build Equity Instead of Paying Rent

Let's face it: rent is money you'll never see again. Every month, you're essentially building equity for your landlord. While renting provides flexibility, it doesn't offer the same long-term financial benefits as homeownership. When you own a home, you're not just paying for a place to live; you're investing in an asset that can appreciate over time. As you pay down your mortgage and the value of your property increases, you build equity. This equity can be a valuable source of funds for future needs, such as renovations, education, or retirement.

Think of your mortgage payments as forced savings. Each month, you're contributing to your own wealth-building process. And with interest rates still relatively low, now might be the perfect time to lock in a fixed-rate mortgage and start building equity instead of paying rent. While there are costs associated with homeownership, such as property taxes and maintenance, the long-term benefits often outweigh the drawbacks. Plus, you have the freedom to personalize your space and create a home that truly reflects your style and needs.

The Power of Home Equity

Long-Term Investment: Homeownership is an investment that can appreciate over time.
Forced Savings: Mortgage payments contribute to building equity.
Financial Security: Equity can be used for future financial needs.

Home Sales Are Down: Could This Be Your Opportunity to Buy?

Here's a statistic that might surprise you: home sales are down approximately 35% from their pandemic peak. While this might seem like bad news for the real estate industry, it presents a unique opportunity for buyers. When sales are down, sellers are often more motivated to negotiate and offer attractive deals. This can translate to lower prices, more favorable terms, and increased flexibility.

If you've been waiting for the right time to buy, now might be it. The combination of increased inventory, motivated sellers, and the potential to negotiate favorable terms makes the current market conditions particularly appealing. Don't let fear of the unknown hold you back. Do your research, work with a trusted real estate professional, and explore your financing options. You might be surprised at what you can achieve.

Ready to explore your homeownership options? Contact DDA Mortgage today to discuss your individual needs and learn how we can help you achieve your real estate goals. Our team of experienced mortgage professionals is here to guide you every step of the way, from pre-approval to closing.

Condo Insurance Changes: Fannie & Freddie 2026

Fri, 20 Mar 2026 19:00:05 GMT

Fannie Mae and Freddie Mac Condo Insurance Updates: What You Need to Know for 2026

Navigating the world of condo financing can feel like deciphering a secret code. Between HOA regulations, insurance requirements, and lender guidelines, it's easy to get lost in the details. And if you're in a state with high insurance costs, like Florida, the process can be even more challenging. That's why DDA Mortgage is here to break down the upcoming changes to Fannie Mae and Freddie Mac's condo insurance standards, set to take effect in March 2026. These revisions are designed to make condo financing more accessible and affordable, and we'll explain what they mean for you, whether you're a buyer, seller, or real estate professional. Think of this as your friendly guide to understanding how these changes could impact your next condo transaction. If this inspires you to refinance, please click here.

1. Lower Condo Insurance Costs: Expanding Financing Eligibility

One of the primary goals of these revisions is to address the rising cost of condo insurance, especially in areas where it's become a significant barrier to homeownership. By making more condos eligible for financing, Fannie Mae and Freddie Mac aim to inject some much-needed relief into the market.

Making More Condos Eligible for Financing

The new guidelines introduce updates to investor concentration limits and offer expanded waivers of project review. This means that more condo projects, including those with a higher percentage of units owned by a single investor, may now qualify for conventional financing. This is a significant shift that could open doors for buyers who were previously limited to less favorable financing options.

Addressing the Insurance Crisis, Especially in Florida

For states like Florida, where escalating insurance premiums have made condo ownership increasingly difficult, these changes are particularly welcome. The updated standards aim to mitigate the impact of high insurance costs by allowing for greater flexibility in project eligibility. This could translate to lower monthly payments for homeowners and a more vibrant condo market overall. We know that navigating these waters can be tricky, so feel free to contact us.

2. The End of the "Limited Review" Process for Condos

A key aspect of the Fannie Mae and Freddie Mac updates is the elimination of the "limited review" process. This shortcut, which previously allowed for a streamlined assessment of condo projects, is being replaced with a more comprehensive approach.

The Old "Limited Review" Shortcut Is Going Away

Under the previous system, the limited review process offered a faster, less rigorous evaluation of condo projects. While convenient, it sometimes overlooked potential issues that could impact the long-term financial health of the project and the individual homeowners. Now, there will be two options:

Full Review: A thorough examination of the project's financials, insurance coverage, and governing documents.
Waiver of Project Review: For certain projects that meet specific criteria, lenders may be able to waive the project review altogether.

Impact of Full Review vs. Waiver

The move to either a full review or a waiver of project review aims to provide a more accurate and reliable assessment of condo projects. While a full review involves more paperwork and scrutiny, it ensures that lenders and buyers have a complete understanding of the project's financial stability and potential risks. The expanded waiver option, discussed in the next section, offers a streamlined path for eligible projects.

3. Expanded Waiver of Condo Project Review: A Win for Small Buildings

The expansion of the waiver of project review is one of the most significant aspects of these updates. This provision now applies to a broader range of condo projects, making it easier for buyers to secure financing in certain situations.

Now Applies to Projects with Up to 10 Units

Previously, the waiver of project review was limited to smaller projects with a very limited number of units. The updated guidelines now extend this option to projects with up to 10 units. This change is a game-changer for smaller condo buildings, which often faced challenges in meeting the requirements for a full project review.

Huge Win for Small Condo Buildings

This expansion is a major win for several reasons:

Simplified Financing: Makes it easier for buyers to obtain financing for condos in smaller buildings.
Reduced Costs: Eliminates the need for costly project reviews, saving time and money for both buyers and sellers.
Increased Marketability: Enhances the marketability of condos in smaller buildings, as they become more accessible to a wider range of buyers.

Non-Warrantable Deals That Can Now Pass

One of the most significant benefits of the expanded waiver is its potential to turn "non-warrantable" deals into financeable opportunities. Non-warrantable condos are those that don't meet the standard requirements for Fannie Mae or Freddie Mac financing, often due to issues with the HOA, insurance coverage, or investor concentration. With the expanded waiver, some of these projects may now be eligible for conventional financing, opening up new possibilities for buyers and sellers alike.

⚖️ What This Means in the Real World for Condo Buyers and Sellers

So, how will these changes impact you in the real world? Let's break down the positives and potential trade-offs:

�� Positives of the Condo Changes

More Condos Become Financeable: The expanded eligibility criteria and waiver options will make it easier to secure financing for a wider range of condo projects.
Lower Insurance Costs → Lower Monthly Payments: By addressing the insurance crisis, these changes could lead to lower monthly payments for homeowners, especially in high-cost insurance markets.
Fewer "Non-Warrantable" Deal Killers: The expanded waiver of project review will reduce the number of deals that fall through due to non-warrantability issues.
Big Relief in High-Cost Insurance Markets (Like Florida): States like Florida, where insurance costs have been a major obstacle to homeownership, will benefit significantly from these changes.

⚠️ Trade-Offs of the New Rules

More Full Reviews = More Paperwork: While the expanded waiver option offers a streamlined path for some projects, others will still require a full review, which can involve more paperwork and scrutiny.
HOAs Face Higher Reserve Requirements: To qualify for financing, HOAs may need to meet higher reserve requirements, which could put a strain on their finances.
More Financial Scrutiny: Lenders will be scrutinizing the financial health of condo projects more closely, which could lead to more stringent underwriting standards.
Some Transactions May Slow Down: The increased scrutiny and paperwork could potentially slow down some transactions, particularly those requiring a full project review.

�� Bottom Line (Mortgage Perspective) on the Condo Updates

From a mortgage perspective, these changes represent a net positive for lending and housing access. By expanding eligibility, reducing insurance friction, and supporting condo market liquidity, Fannie Mae and Freddie Mac are making it easier for people to achieve their homeownership dreams.

Expands Eligibility ✅
Reduces Insurance Friction ✅
Supports Condo Market Liquidity ✅

However, it's important to recognize that these changes also shift more responsibility to HOAs and lenders to prove the financial health of condo projects. By implementing stricter reserve requirements and underwriting standards, they aim to ensure that condo projects are financially stable and sustainable over the long term.

If you're looking for more specific information about how these changes might impact your situation, we're here to help. We can break down the details specifically for:

Florida condo deals
Non-warrantable vs warrantable strategies

Or explain how to position this information with borrowers, which represents a huge opportunity for real estate professionals. Contact DDA Mortgage today to learn more about how these updates can help you navigate the ever-evolving world of condo financing.

Fannie Mae, Freddie Mac announce revisions to condo insurance standards Updates include investor concentration limits, a limited review process, and expanded waivers of project review

Fri, 20 Mar 2026 13:10:56 GMT

Refinance Savings: Reduced Fees on Title, Appraisal & More!

Thinking about refinancing your mortgage? You're not alone! Many homeowners are exploring refinancing to take advantage of potentially lower interest rates, shorten their loan term, or tap into their home's equity. But let's face it, the thought of all those closing costs can be a real deterrent. Title fees, appraisals, credit reports - they all add up! What if we told you there were ways to potentially reduce or even eliminate some of those pesky fees ? At DDA Mortgage, we're committed to finding you the best possible refinance options, and that includes exploring every avenue to save you money. The key lies in getting a solid loan approval through automated underwriting. Let's dive into how you might be able to save big!

Significant Title Savings on Refinances with DU Approval

One of the most significant expenses associated with refinancing is the title fee. This covers the cost of the title search, title insurance, and other related services that ensure clear ownership of your property. However, if your refinance application receives a " DU Approval " (Desktop Underwriter Approval) from Fannie Mae, you could be eligible for a substantial discount on your title fees! How substantial? At DDA Mortgage, we've seen savings of up to $1,500 on title fees for eligible refinance transactions. This can make a huge difference in your overall closing costs, putting more money back in your pocket.

Rate/Term and Cash-Out Refinances Qualify

Whether you're looking to simply lower your interest rate and shorten your term (rate/term refinance) or you want to access some of your home's equity through a cash-out refinance, these title savings can apply. The key is that initial DU Approval. Our team at DDA Mortgage knows exactly what to look for and how to navigate the process to maximize your potential savings. We'll work closely with you to gather all the necessary documentation and ensure your application is presented in the best possible light for a DU approval. Learn more about refinance options here .

Why the Discount?

You might be wondering, "Why the discount for a DU Approval?" It's simple. A DU Approval indicates a lower risk profile from the lender's perspective. The automated underwriting system has reviewed your credit history, income, assets, and other relevant factors and determined that you are a solid borrower. This reduced risk allows the title company to streamline their processes and offer a reduced fee. We strive for E-E-A-T standards with our experience, expertise, authoritativeness and trust. We're experts in this arena!

Potential Appraisal Waiver: Another Way to Save on Your Refinance

The appraisal is another significant expense in the refinance process. It's an assessment of your home's current market value, performed by a licensed appraiser. The lender uses this appraisal to ensure the loan amount is justified by the value of the property. However, in many cases, an appraisal may not even be required!

The Power of Automated Underwriting

Again, the power of automated underwriting comes into play. When your loan application is submitted to Fannie Mae or Freddie Mac's automated underwriting systems (DU or LPA), the system may return a finding that waives the appraisal requirement. This is more likely to occur if:

You have a strong credit history.
You have a low loan-to-value (LTV) ratio (meaning you have a significant amount of equity in your home).
Your property is located in an area with readily available sales data.

If an appraisal waiver is granted, you can save hundreds of dollars! Plus, it speeds up the refinance process significantly since you don't have to wait for an appraiser to schedule and complete the appraisal. Contact us for a review to see if you have the potential for a waiver here .

Don't Assume You Need an Appraisal!

It's important to note that not all lenders actively seek appraisal waivers. That's why it's crucial to work with a lender like DDA Mortgage that is committed to exploring every cost-saving opportunity for our clients. We'll run your loan scenario through the automated underwriting system to see if an appraisal waiver is possible. We believe in being transparent and providing you with all the information you need to make an informed decision.

Eliminating Credit Report and Survey Fees: More Savings on the Table

The savings don't stop with title and appraisal! At DDA Mortgage, we go the extra mile to identify other potential areas where you can reduce your refinance costs.

No Credit Report Fee with Select Lenders

While a credit report is a standard requirement for most refinance transactions, we partner with a particular lender that may waive the credit report fee under certain circumstances. This can save you anywhere from $50 to $100. This is just one example of how our extensive network of lenders allows us to find the best possible terms and pricing for our clients. Remember, we always have your best interests at heart. Please learn more about us here

No Survey Fee with Existing Survey

Did you already have a survey of your property completed when you purchased your home? If so, and if there have been no changes to the property lines or structures since that survey was conducted, you may be able to avoid paying for a new survey during your refinance. This can save you several hundred dollars. Make sure to provide us with a copy of your existing survey so we can determine if it meets the lender's requirements. This shows the value we bring to you as a mortgage provider.

Ready to Explore Your Refinance Savings?

Refinancing your mortgage can be a smart financial move, but it's important to understand all the costs involved. At DDA Mortgage, we're dedicated to helping you navigate the refinance process with ease and transparency. We'll explore every opportunity to reduce your fees and save you money, including leveraging DU Approvals for title discounts, pursuing appraisal waivers, and potentially eliminating credit report and survey fees.

Don't leave money on the table! Contact me today to see what savings we can unlock for your refinance. Give me a call at 727-421-6757, or apply online for a free consultation.

Older Americans maintain record share of housing wealth Redfin says housing wealth held by those 70 and older has reached $13 trillion

Wed, 18 Mar 2026 16:21:05 GMT

That Redfin data point—$13 trillion in housing wealth held by Americans 70+—is a big deal, and it ties into several powerful trends reshaping the housing and mortgage markets.

What’s driving this record wealth?

1. Long-term home price appreciation
Older homeowners bought decades ago at much lower prices and have benefited from massive appreciation, especially post-2020.

2. Low mortgage leverage
Many in this age group either:

Own their homes outright, or
Have very small remaining balances

So their equity = real wealth , not just paper gains.

3. Aging in place
Instead of downsizing, many are staying put longer, allowing equity to continue compounding.

Why this matters (big picture)

1. Supply constraint in housing
Fewer older homeowners are selling, which:

Keeps inventory tight
Supports higher home prices

This is one reason younger buyers are struggling to find affordable homes.

2. Wealth inequality across generations
Younger generations:

Face higher home prices
Have less access to equity

Meanwhile, older Americans control a disproportionate share of housing wealth.

Implications for mortgage and lending

1. Rise of equity-based lending
This trend directly fuels growth in:

Reverse mortgages (HECMs)
HELOCs
Cash-out refinances

That $13T is largely untapped liquidity .

2. “Living off equity” becomes more common
With concerns around:

Social Security stability
Inflation

More retirees are using housing wealth as:

Income supplementation
Emergency reserves

3. Intergenerational wealth transfer
We’re seeing more:

Parents helping kids with down payments
Early inheritance strategies using home equity

The hidden risk

This isn’t risk-free:

If home prices flatten or fall → equity shrinks
Property taxes + insurance (especially in places like Florida) can pressure fixed-income retirees
Liquidity is still “locked” unless accessed strategically

Bottom line

That $13 trillion figure isn’t just a stat—it represents a shift in where wealth lives in America :

Housing is now the primary balance sheet asset for older Americans
It’s becoming a retirement tool , not just a place to live
And it’s quietly shaping everything from housing supply to lending innovation

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New Title

Stop Renting, Start Owning: SBA 7(a) Loans for 100% Commercial Financing

Tue, 17 Mar 2026 16:00:09 GMT

Stop Renting, Start Owning: SBA 7(a) Loans for 100% Commercial Financing

Imagine this: Instead of writing that rent check every month, you're making a mortgage payment on a building you *own*. You're not just keeping a roof over your business's head, you're building equity, securing your future, and investing in a tangible asset. Sound too good to be true? It's not! With a Rent Replacement SBA 7(a) loan from DDA Mortgage, you can ditch the landlord and become your own property owner. We know the challenges small business owners face, and we're here to help you navigate the process of securing the financing you need to achieve your business goals. Ready to turn your rent payments into a valuable asset? Let's explore how!

SBA 7(a) Loan for Commercial Property: Occupancy Requirements

One of the key requirements for securing an SBA 7(a) loan to purchase commercial property is the owner-occupancy rule. This ensures the loan is primarily benefiting your business, not just a real estate investment.

Your Business Must Occupy at Least 51% of the Property

To qualify for an SBA 7(a) loan, your business must occupy at least 51% of the building's usable square footage. This means that more than half of the property should be used for your business operations. The remaining space can be leased to other tenants, providing you with additional income to help cover your mortgage payments. This is a crucial aspect of the loan and demonstrates that the primary purpose is to support your business's operational needs. Think of it as an investment in your business's future, not just a real estate play. If you are also paying a commerical mortgage on your home, visit our refinancing page .

Confirm Occupancy: Carefully calculate the square footage your business currently occupies and project its future needs.
Consider Growth: Factor in potential business growth when evaluating properties to ensure you'll continue to meet the occupancy requirement.
Document Everything: Be prepared to provide documentation demonstrating your business's occupancy, such as floor plans and lease agreements (if applicable).

Unlock 100% Financing for Your Commercial Property

The dream of owning your own commercial space can become a reality, even without a large down payment. The SBA 7(a) loan program offers the potential for 100% financing, making it a powerful tool for small business owners. However, securing this level of financing requires a strong financial profile.

Strong Credit and Cash Flow are Essential for 100% Financing

While 100% financing is possible with an SBA 7(a) loan, it's not a guarantee. Lenders will carefully evaluate your credit history, business cash flow, and overall financial stability. A strong credit score demonstrates responsible financial management, while healthy cash flow indicates your business can comfortably handle the mortgage payments. Be prepared to provide detailed financial statements, tax returns, and business plans to showcase your business's strength and potential. In some instances, depending on the lender, collateral may be necessary.

Improve Your Credit: Before applying, review your credit report and address any errors or outstanding debts.
Optimize Cash Flow: Analyze your business's revenue and expenses to identify areas for improvement.
Prepare Financial Documents: Gather all necessary financial documents, including profit and loss statements, balance sheets, and tax returns.

Purchase, Refinance, or Renovate: SBA 7(a) Loan Options

The versatility of the SBA 7(a) loan program extends beyond just purchasing commercial property. It can also be used for refinancing existing mortgages or renovating your current business space.

Office, Medical, or Industrial Facilities: The Possibilities are Vast

Whether you're looking to purchase an office building, a medical facility, or an industrial warehouse, the SBA 7(a) loan can be used to finance a wide range of commercial properties. Furthermore, you can use the loan to refinance existing commercial mortgages, potentially securing better interest rates and terms. Additionally, if you already own your business's location and it needs some upgrading, the SBA 7(a) can provide funding for renovations, expansions, or improvements to your facility. This flexibility makes it a valuable tool for businesses at various stages of growth. Keep in mind that each transaction is unique and is subject to lender and SBA approval.

Purchase: Acquire the commercial property your business needs to thrive.
Refinance: Secure more favorable terms on your existing commercial mortgage.
Renovate: Improve and expand your current business space.

The SBA 7(a) loan offers a powerful opportunity for business owners to take control of their real estate destiny. By understanding the occupancy requirements, preparing financially, and exploring the various uses of the loan, you can position your business for long-term success and financial stability.

Ready to take the next step? Don't let another rent check go to waste! Contact DDA Mortgage today to learn more about how a Rent Replacement SBA 7(a) loan can help you replace your current rent payment with a mortgage payment on a building you own, and build business equity. Our experienced team is here to guide you through the application process and help you achieve your business ownership dreams!

AI in the Mortgage Industry: Will it Replace Your Job?

Tue, 03 Mar 2026 20:45:00 GMT

AI in the Mortgage Industry: Will it Replace Your Job?

The mortgage industry is on the cusp of a major transformation, driven by the relentless march of Artificial Intelligence (AI). For many of us, that brings a big question to mind: Will AI take my job? Underwriters, processors, title specialists, appraisers, and countless other vendors - we're all wondering how this technological tidal wave will affect our livelihoods. It's a valid concern, and one we need to address head-on. Let's explore how AI is poised to reshape the mortgage landscape, and, more importantly, how you can not only survive but thrive in this new era.

How AI is Revolutionizing Mortgage Processing

Imagine a world where second mortgages can be approved in a mere three hours thanks to the power of AI. Sounds futuristic, right? Well, it's already happening! This glimpse into the future begs the question: what will become of the first mortgage process and the roles within it? The speed and efficiency AI brings to the table are undeniable, but let's break down exactly how it's impacting different areas of the industry:

AI's Impact on Underwriting

AI algorithms can analyze vast amounts of data, including credit scores, income verification, and property appraisals, with unparalleled speed and accuracy. This allows for faster loan approvals and reduced risk for lenders. Instead of spending hours manually reviewing documents, underwriters can leverage AI to identify potential red flags and focus on more complex cases that require human judgment. This doesn't necessarily mean fewer underwriters, but rather a shift in their role towards more strategic and analytical tasks.

AI's Impact on Loan Processing

Loan processing, often a tedious and time-consuming task, is ripe for AI automation. AI can automate tasks such as data entry, document verification, and communication with borrowers. This frees up loan processors to focus on building relationships with clients and providing personalized service. AI-powered chatbots can also handle routine inquiries, further streamlining the process and improving the borrower experience. This is where you are likely to see more efficiencies and likely consolidation of staff.

AI's Impact on Title and Appraisal

AI is also making inroads in the title and appraisal space. AI-powered tools can automate title searches, identify potential title defects, and generate title reports more efficiently. Similarly, AI algorithms can analyze property data and market trends to provide accurate property valuations, potentially reducing the need for traditional appraisals in certain cases. However, the human element remains crucial in these areas, particularly when dealing with complex legal issues or unique property characteristics. To get started refinancing with DDA Mortgage, click here Refinancing .

While some may fear job displacement, the reality is that AI is more likely to augment human capabilities rather than completely replace them. The mortgage industry is complex, requiring critical thinking, problem-solving, and empathy - qualities that AI cannot replicate. Instead, AI can handle the repetitive, data-heavy tasks, freeing up professionals to focus on the human aspects of the business.

Lower Closing Costs and the Rise of Appraisal Waivers

One of the most tangible benefits of AI in the mortgage industry is the reduction in closing costs. We're already seeing lenders offering more competitive rates and lower fees, partly due to the increased efficiency and reduced risk that AI provides. Furthermore, the prevalence of appraisal waivers is on the rise, with some lenders now waiving appraisals in up to 90% of refinance transactions.

Why are Appraisal Waivers Becoming More Common?

Appraisal waivers are largely driven by the availability of robust data and sophisticated AI algorithms. These algorithms can analyze historical sales data, market trends, and property characteristics to determine accurate property values without the need for a traditional appraisal. This not only saves borrowers money but also speeds up the loan process considerably.

The Impact on Borrowers

Lower closing costs and appraisal waivers are a win-win for borrowers. They make homeownership more affordable and accessible, while also simplifying the mortgage process. For example, if you are looking to buy a home with a residential mortage or a commercial loan then this is the perfect place to start https://www.ddamortgage.com/ .

The Impact on Industry Professionals

While appraisal waivers may seem like a threat to appraisers, they also present opportunities for appraisers to focus on more complex and specialized valuations. By leveraging AI tools to assist with routine valuations, appraisers can dedicate their expertise to cases that require a deeper understanding of local market conditions and property characteristics. This could mean a shift toward more specialized and higher-value appraisal services.

The key takeaway here is that the mortgage industry is becoming more efficient and cost-effective, thanks to the integration of AI. This benefits both borrowers and lenders, while also creating new opportunities for industry professionals to adapt and thrive.

Embrace AI: How to Prosper in the Evolving Mortgage Industry

So, how can you, as a mortgage professional, not just survive but prosper in this AI-driven world? The answer lies in embracing AI as a tool to enhance your skills and expertise, rather than viewing it as a threat.

Develop New Skills

Focus on developing skills that complement AI capabilities. This includes critical thinking, problem-solving, communication, and relationship building. Learn how to interpret and analyze data generated by AI algorithms, and use this information to make informed decisions and provide personalized advice to clients.

Become a Data Expert

Understanding data is becoming increasingly important in the mortgage industry. Invest time in learning about data analytics, statistical modeling, and AI technologies. This will allow you to better understand how AI is used in the mortgage process and identify opportunities to leverage data to improve your performance.

Specialize and Differentiate

Focus on developing a niche expertise that sets you apart from the competition. This could be anything from specializing in a particular type of loan (e.g., VA loans, jumbo loans) to focusing on a specific segment of the market (e.g., first-time homebuyers, self-employed borrowers). By becoming an expert in a specific area, you can provide valuable expertise that AI cannot replicate.

Embrace Technology

Stay up-to-date on the latest AI tools and technologies used in the mortgage industry. Experiment with different software and platforms, and learn how to use them effectively to streamline your workflow and improve your productivity. You can find information to contact DDA Mortgage here contact us .

Focus on the Human Element

Remember that the mortgage industry is ultimately a people business. Focus on building strong relationships with clients, providing excellent customer service, and offering personalized advice and support. AI can automate many tasks, but it cannot replace the human touch that is essential for building trust and loyalty.

By embracing AI and developing new skills, you can position yourself for success in the evolving mortgage industry. The future belongs to those who are willing to adapt and embrace change.

Take Action: Learn and Grow in the Age of AI

The mortgage industry is changing, and it's changing fast. AI is no longer a futuristic concept - it's a present-day reality that's reshaping the way we do business. Whether you're an underwriter, processor, appraiser, or any other type of mortgage professional, it's crucial to stay informed and adapt to the changing landscape.

The key to thriving in this new era is to:

Embrace lifelong learning: Continuously seek out new knowledge and skills to stay ahead of the curve.
Be open to change: Don't resist the adoption of new technologies - embrace them as tools to enhance your capabilities.
Focus on your strengths: Identify your unique skills and expertise, and leverage them to differentiate yourself from the competition.

The future of the mortgage industry is bright, but it will require a willingness to learn, adapt, and embrace change. By taking action today, you can position yourself for success in the years to come. The rise of AI is a challenge, but it's also an opportunity - an opportunity to grow, learn, and prosper in the industry we love.

AI and the Mortgage Industry: Will Your Job Survive?

Tue, 03 Mar 2026 17:30:14 GMT

AI and the Mortgage Industry: Will Your Job Survive?

The rise of artificial intelligence is on everyone's mind, especially when it comes to its impact on our jobs. In the mortgage industry, whispers of AI taking over tasks performed by underwriters, processors, title companies, appraisers, and other vital vendors are growing louder. Are these fears justified, or can we find a way to embrace AI and use it to our advantage? Let's explore how AI is already transforming the mortgage landscape and how you can prepare for the future.

How AI is Revolutionizing Mortgage Processing Speed

Imagine a world where mortgage approvals take hours instead of weeks. It sounds like science fiction, but it's closer to reality than you might think. We're already seeing glimpses of this future with the advent of AI-powered solutions in the mortgage industry. If a second mortgage can be approved in as little as three hours thanks to AI, what does that mean for the future of first mortgages? And more importantly, how will these advancements affect the jobs that currently support this process?

The Second Mortgage Speed Test: A Sign of Things to Come?

The ability to process a second mortgage in a fraction of the time it used to take is a significant achievement. This speed is achieved by AI algorithms that can quickly analyze data, assess risk, and make decisions with minimal human intervention. As AI technology continues to develop, it's reasonable to expect that similar efficiencies will be applied to first mortgages. This could lead to faster approvals, reduced processing times, and a more streamlined overall mortgage experience for borrowers.

The Impact on Jobs: Efficiency vs. Employment

The elephant in the room is, of course, the potential impact on jobs. If AI can automate many of the tasks currently performed by underwriters and processors, will there be a significant reduction in the workforce? While it's true that some roles may evolve or become obsolete, it's important to remember that AI is not a complete replacement for human expertise. Instead, it's a tool that can augment our abilities and free us from repetitive tasks, allowing us to focus on more complex and strategic work. The key is understanding that AI will change jobs, not necessarily eliminate them all. It's about adapting to the changing landscape and learning new skills.

The Role of Human Expertise in an AI-Driven World

Even with advanced AI systems, human judgment and experience will remain crucial in the mortgage industry. AI can analyze data and identify patterns, but it cannot replace the critical thinking and problem-solving skills that come from years of experience. Underwriters, for example, will still be needed to review complex cases, assess nuances that AI might miss, and make final decisions based on a holistic understanding of the borrower's situation. The ability to interpret results and apply context will be an even more sought after skill. This goes for title companies and the review of any title issues that might arise.

Reducing Closing Costs with AI-Driven Efficiencies

One of the most exciting benefits of AI in the mortgage industry is the potential to reduce closing costs for borrowers. We're already seeing this happen with lenders offering refinance options with reduced fees and appraisal waivers becoming increasingly common. At DDA Mortgage, we strive to provide our customers with the best possible rates and terms. Explore our options for refinancing your home.

Appraisal Waivers: A Growing Trend

Appraisal waivers are becoming increasingly prevalent, with some lenders now offering them in up to 90% of refinance transactions. This is largely due to the increased availability of data and the ability of AI to accurately assess property values without the need for a traditional appraisal. This saves borrowers time and money, making the refinancing process more accessible and affordable.

The Impact on Appraisers

While appraisal waivers are beneficial for borrowers, they do raise questions about the future of the appraisal profession. However, it's important to note that appraisals are still required in many purchase transactions and in situations where the property value is uncertain. Appraisers will continue to play a vital role in ensuring that homes are valued accurately and that lenders are making informed decisions.

Streamlined Processes, Lower Costs

AI is also helping to streamline other aspects of the mortgage process, such as title searches and document verification. By automating these tasks, lenders can reduce their operational costs and pass those savings on to borrowers. This can make homeownership more accessible and affordable for a wider range of people. Contact us to get more details on our refinance application .

Thriving in the Age of AI: Adapt and Prosper

The mortgage industry is undergoing a significant transformation, and it's essential to be proactive and adaptable to succeed in this new environment. Rather than fearing AI, we should embrace it as a tool that can enhance our abilities and improve the overall mortgage experience for borrowers. Here's how you can thrive in the age of AI.

Embrace Lifelong Learning

The key to success in the age of AI is a commitment to lifelong learning. Stay up-to-date on the latest trends and technologies in the mortgage industry, and seek out opportunities to develop new skills. This could include learning how to work with AI-powered tools, developing your analytical skills, or becoming an expert in a niche area of the mortgage process.

Data Analytics: Understanding how to interpret data and use it to make informed decisions is becoming increasingly important.
AI Tool Proficiency: Learn how to use the AI-powered tools that are being adopted by lenders and other mortgage industry players.
Specialized Knowledge: Focus on developing expertise in a specific area of the mortgage process, such as complex underwriting or compliance.

Focus on Human Skills

While AI can automate many tasks, it cannot replace the human skills that are essential for success in the mortgage industry. Focus on developing your communication, problem-solving, and relationship-building skills. These are the skills that will set you apart in an AI-driven world. Remember, the human touch is important, and we as a company are available to help you navigate the ever-changing mortgage process at DDA Mortgage .

Seek Opportunities to Collaborate with AI

Rather than viewing AI as a threat, look for opportunities to collaborate with it. Use AI-powered tools to automate repetitive tasks, freeing you to focus on more complex and strategic work. Embrace the opportunity to work alongside AI and leverage its capabilities to improve your performance.

The Future is Bright

The future of the mortgage industry is being shaped by AI, and those who are willing to adapt and embrace this new technology will be the ones who thrive. By focusing on lifelong learning, developing human skills, and seeking opportunities to collaborate with AI, you can position yourself for success in the age of artificial intelligence.

Learn and grow because this may affect the industry you are in. The mortgage industry is constantly evolving, and the introduction of AI is just the latest chapter in its ongoing evolution. By embracing change and adapting to new technologies, we can ensure that the industry continues to thrive and provide borrowers with the best possible mortgage experience.

AI and Mortgages: Will Robots Steal Our Jobs?

Tue, 03 Mar 2026 17:15:01 GMT

How is AI Going to Change the Mortgage Industry?

The mortgage industry, built on relationships and intricate processes, is facing a potential revolution. The question on everyone's mind, whispered in break rooms and shouted in online forums, is this: Will AI take our jobs? Will underwriters, processors, title specialists, appraisers, and other crucial vendors be replaced by algorithms and automated systems? It's a valid concern, and one we're going to address head-on. Instead of fearing the unknown, let's explore how AI is already reshaping the mortgage landscape and how we can adapt to not only survive but thrive in this new era.

The AI Mortgage Revolution: From Seconds to Savings

Imagine this: you need a second mortgage. In the past, that would mean weeks of paperwork, phone calls, and stress. Now, with AI-powered platforms, some lenders are closing second mortgages in as little as three hours. Three hours! That's faster than ordering a pizza and binge-watching a season of your favorite show. The implications are staggering.

What Happens When First Mortgages Follow Suit?

If AI can streamline second mortgages to that degree, what's stopping it from doing the same for first mortgages? While first mortgages are generally more complex, the trajectory is clear. AI is poised to accelerate and automate significant portions of the mortgage process. This includes:

Automated Underwriting: AI can analyze vast amounts of data - credit scores, income verification, debt-to-income ratios, and more - to assess risk and make lending decisions with speed and accuracy.
Document Processing: AI can extract information from documents, reducing manual data entry and errors.
Fraud Detection: AI can identify suspicious patterns and anomalies, helping to prevent mortgage fraud.
Personalized Customer Service: AI-powered chatbots can answer customer questions and provide support 24/7.

The Job Question: Transformation, Not Elimination

Okay, let's address the elephant in the room: jobs. Will AI eliminate roles in the mortgage industry? The more likely scenario is a transformation of roles. Repetitive, manual tasks will be automated, freeing up human professionals to focus on more complex, strategic, and customer-centric activities. Consider these shifts:

Underwriters: Instead of manually reviewing documents, underwriters will focus on analyzing complex cases, interpreting AI-driven insights, and making judgment calls.
Processors: AI will handle much of the paperwork, allowing processors to focus on customer communication, problem-solving, and ensuring a smooth closing process.
Loan Officers: With AI handling some of the initial data gathering and qualification, loan officers can dedicate more time to building relationships with clients, understanding their unique needs, and providing personalized advice.

Ultimately, AI isn't about replacing people; it's about augmenting their abilities and making them more efficient and effective. The human touch remains crucial, especially in an industry built on trust and major life decisions. DDA Mortgage understands the importance of personal connection, and we strive to maintain that in every transaction we handle. If you're thinking about refinancing, we can help. Check out our refinancing options: https://www.ddamortgage.com/residential-mortgages-commercial-loans-greater-tampa-area#Refinancing

Lower Closing Costs and Faster Approvals: The Benefits of AI in Mortgages

AI is not just about speed and efficiency; it's also about affordability. We're already seeing a significant reduction in closing costs, particularly with lender policies on refinances. AI-powered appraisal waivers are becoming increasingly common, now reaching up to 90% in some cases. This translates to real savings for borrowers.

Appraisal Waivers: A Game Changer

Traditionally, appraisals were a significant expense and a time-consuming hurdle in the mortgage process. AI is changing that. By analyzing property data, market trends, and comparable sales, AI can often determine the value of a property without requiring a physical appraisal. This not only saves borrowers money but also speeds up the closing process considerably.

Streamlined Refinancing Processes

Refinancing your mortgage can be a smart way to lower your monthly payments, shorten your loan term, or tap into your home equity. AI is making the refinancing process faster and easier than ever before. With automated underwriting and document processing, you can get approved for a refinance in a fraction of the time it used to take. Check out how DDA can help make that happen by visiting our website https://www.ddamortgage.com/ .

Increased Accuracy and Reduced Errors

Human error is inevitable, especially when dealing with complex paperwork and large volumes of data. AI can significantly reduce the risk of errors, leading to more accurate loan approvals and fewer costly mistakes. This benefits both lenders and borrowers.

A More Transparent Mortgage Experience

AI can also enhance transparency in the mortgage process. By providing borrowers with clear and concise explanations of their loan options and the factors influencing their approval, AI can empower them to make informed decisions. This builds trust and fosters stronger relationships between lenders and borrowers.

Embrace the Change: How to Thrive in the Age of AI Mortgages

Instead of fearing AI, we should embrace it as a powerful tool that can help us better serve our clients and grow our businesses. The key to success is adaptation and continuous learning.

Invest in Your Skills

The mortgage professionals who thrive in the age of AI will be those who possess strong analytical, problem-solving, and communication skills. Invest in training and development to enhance your skills and stay ahead of the curve. Consider these areas:

Data Analysis: Learn how to interpret data and use it to make informed decisions.
Customer Relationship Management (CRM): Master the art of building and maintaining relationships with clients.
Mortgage Technology: Familiarize yourself with the latest mortgage technology and how it can improve your efficiency.
Compliance: Stay up-to-date on the ever-changing regulatory landscape.

Focus on the Human Element

While AI can automate many tasks, it cannot replace the human element of the mortgage process. Focus on building strong relationships with your clients, providing personalized advice, and offering exceptional customer service. Remember, buying a home is a major life decision, and people want to work with someone they trust. DDA Mortgage embodies that sentiment.

Become a Technology Advocate

Don't resist technology; embrace it! Become a technology advocate within your organization and help others understand the benefits of AI. Share your knowledge and insights, and encourage your colleagues to experiment with new tools and technologies. Let DDA Mortgage help you understand the benefits of AI; contact us here: https://www.ddamortgage.com/contact-residential-mortgage-refinance-application .

Be Adaptable and Flexible

The mortgage industry is constantly evolving, and AI is just one of the many changes we'll face in the years to come. Be adaptable and flexible, and be willing to learn new things. The more adaptable you are, the better positioned you'll be to thrive in the long run.

AI is not a threat to the mortgage industry; it's an opportunity. By embracing technology, investing in our skills, and focusing on the human element, we can create a more efficient, affordable, and transparent mortgage experience for everyone. The future of the mortgage industry is bright, and we're excited to be a part of it.

The Future is Now: Learn, Grow, and Adapt

The changes brought by AI are already impacting the mortgage industry, and the pace of change will only accelerate. Now is the time to learn, grow, and adapt. Don't wait until it's too late. Embrace the possibilities of AI and position yourself for success in the future of mortgages.

Refinance Savings: Reduced Fees on Title, Appraisal & More!

Fri, 27 Feb 2026 22:30:00 GMT

Refinance Savings: Reduced Fees on Title, Appraisal & More!

Significant Title Savings on Refinances with DU Approval

Rate/Term and Cash-Out Refinances Qualify

Why the Discount?

Potential Appraisal Waiver: Another Way to Save on Your Refinance

The Power of Automated Underwriting

You have a strong credit history.
You have a low loan-to-value (LTV) ratio (meaning you have a significant amount of equity in your home).
Your property is located in an area with readily available sales data.

Don't Assume You Need an Appraisal!

Eliminating Credit Report and Survey Fees: More Savings on the Table

The savings don't stop with title and appraisal! At DDA Mortgage, we go the extra mile to identify other potential areas where you can reduce your refinance costs.

No Credit Report Fee with Select Lenders

No Survey Fee with Existing Survey

Ready to Explore Your Refinance Savings?

Don't leave money on the table! Contact me today to see what savings we can unlock for your refinance. Give me a call at 727-421-6757, or apply online for a free consultation.

Cash-Out Refinance: Is It a Smart Move With Lower Interest Rates?

Tue, 24 Feb 2026 19:00:09 GMT

Is a Cash-Out Refinance the Right Choice Now That Mortgage Rates Have Dropped?

Feeling squeezed by high-interest debt? Credit card bills piling up? Are those car payments and student loans making it hard to breathe financially? Or perhaps you've been dreaming of finally renovating your kitchen or adding that much-needed home office, but the funds just haven't been there. You're not alone. Many homeowners are looking for ways to leverage their home equity to improve their financial situation and achieve their goals. With recent dips in mortgage interest rates, a cash-out refinance might be the perfect strategy to consider. But is it really the right move for you ?

At DDA Mortgage, we understand that navigating the world of mortgages can be overwhelming. That's why we're here to provide clear, straightforward information to help you make informed decisions about your financial future. This article will explore the ins and outs of cash-out refinancing, focusing on how it can help you tackle high-interest debt, finance home improvements, and consolidate your finances, all while potentially lowering your overall monthly expenses.

Refinance Cash Out and Conquer High-Interest Debt: Credit Cards, Auto Loans, and Student Loans

One of the most compelling reasons to consider a cash-out refinance is the opportunity to eliminate or significantly reduce high-interest debt. Let's break down how this works with credit cards, auto loans, and student loans:

Credit Card Debt Relief with a Cash-Out Refinance

Credit cards often come with notoriously high interest rates. Carrying a balance can lead to a cycle of minimum payments that barely chip away at the principal. A cash-out refinance allows you to borrow against your home equity to pay off those credit card balances. Imagine replacing a credit card with a 20% interest rate with a mortgage rate that's significantly lower. The savings can be substantial!

Consider this example: You have $10,000 in credit card debt with a 20% APR. Your minimum monthly payment might be around $200, and it could take you years to pay it off, accumulating significant interest charges. By using a cash-out refinance to pay off that debt, you could potentially secure a mortgage rate of, say, 7%. Now, your monthly payment on that $10,000 (as part of your overall mortgage) will likely be lower, and you'll pay it off much faster, saving you thousands in interest.

Shedding Your Auto Loan Burden Through Refinancing

Auto loans, while generally having lower interest rates than credit cards, still represent a significant monthly expense. If you're struggling to keep up with car payments, or if your interest rate is higher than current market rates, a cash-out refinance can provide relief. By including your auto loan balance in your new mortgage, you can potentially lower your monthly payment and free up cash flow.

Think about it: you could potentially lower your car payment and only have one bill to pay. You can see the benefits of using a cash out refi and consolidating into one payment and lowering your monthly expenses.

Tackling Student Loan Debt with a Strategic Refinance

Student loans can be a significant financial burden for many years after graduation. While federal student loans often offer certain protections and repayment options, private student loans may not be as flexible. A cash-out refinance could be a viable option, especially if you have private student loans with high interest rates.

Before making this decision, carefully weigh the pros and cons, particularly if you have federal student loans. Refinancing federal loans into a mortgage will eliminate access to federal income-driven repayment plans and potential loan forgiveness programs. However, if you have private student loans or are confident in your ability to manage your mortgage payments, a cash-out refinance could offer substantial savings.

Regardless of the type of debt, it's crucial to calculate the total cost of borrowing under both scenarios - your current debt repayment plan versus the new mortgage - to ensure that a cash-out refinance truly saves you money in the long run. This is where a DDA Mortgage professional can help you analyze your situation and determine the best course of action.

Cash-Out Refinance for Home Improvements: Increase Your Home's Value and Enjoyment

Beyond debt consolidation, a cash-out refinance can be an excellent way to finance home improvements. Whether you're looking to increase your home's value, enhance its functionality, or simply create a more enjoyable living space, tapping into your home equity can make your dreams a reality.

Investing in Value-Adding Renovations

Certain home improvements offer a higher return on investment than others. Projects like kitchen and bathroom remodels, adding square footage, or updating outdated systems can significantly increase your home's market value. A cash-out refinance can provide the funds needed to complete these projects, potentially boosting your home's equity and attractiveness to future buyers.

Before embarking on any renovation project, it's essential to research which improvements are most desirable in your area and to obtain accurate cost estimates from qualified contractors. A well-planned and executed renovation can not only enhance your living experience but also generate a solid return on investment when you eventually sell your home.

Enhancing Your Living Space and Lifestyle

Sometimes, the best home improvements aren't about resale value but about creating a space that you and your family truly love. This could involve adding a home office, building a deck or patio, creating a backyard oasis, or finishing a basement to create a recreational area. A cash-out refinance can provide the financial freedom to customize your home to perfectly suit your lifestyle.

When considering these types of improvements, focus on projects that will bring you long-term enjoyment and enhance your quality of life. While they may not offer the same direct financial return as value-adding renovations, they can significantly improve your overall happiness and well-being.

Remember, any home improvement project should be carefully planned and budgeted for to ensure that you stay within your financial means and achieve the desired results. A cash-out refinance can provide the funding, but it's up to you to manage the project effectively.

Debt Consolidation Made Easy: Streamlining Your Finances with a Cash-Out Refinance

One of the most attractive benefits of a cash-out refinance is the opportunity to simplify your finances through debt consolidation. Instead of juggling multiple bills with varying due dates and interest rates, you can combine all your debts into a single, manageable monthly payment.

Simplifying Your Monthly Bills

Imagine the relief of having just one mortgage payment to worry about each month, instead of a stack of credit card bills, auto loan statements, and student loan invoices. Debt consolidation can significantly reduce the stress and hassle of managing your finances, freeing up time and mental energy for other priorities.

This simplification can also help you avoid late fees and penalties, which can further strain your budget. By streamlining your payments, you'll be more likely to stay on top of your financial obligations and maintain a healthy credit score.

Potentially Lowering Your Overall Monthly Expenses

In addition to simplifying your finances, debt consolidation through a cash-out refinance can often lead to lower overall monthly expenses. By securing a lower interest rate on your mortgage than you're currently paying on your other debts, you can potentially reduce your total monthly payments and free up cash flow for other needs and goals.

However, it's important to remember that the ultimate goal is to save money in the long run. While a cash-out refinance may lower your monthly payments, it could also extend the repayment period, resulting in higher overall interest charges. Therefore, it's crucial to carefully analyze the total cost of borrowing under both scenarios before making a decision.

We invite you to reach out to DDA Mortage to discuss a refinance to see if it makes sense for you. You can also visit our page to learn more about refinancing at: https://www.ddamortgage.com/residential-mortgages-commercial-loans-greater-tampa-area#Refinancing

Is a Cash-Out Refinance Right for You? Key Considerations and Potential Risks

While a cash-out refinance can offer numerous benefits, it's not a one-size-fits-all solution. It's essential to carefully consider your individual circumstances and financial goals before making a decision. Here are some key factors to keep in mind:

Assessing Your Financial Situation

Before considering a cash-out refinance, take a close look at your overall financial picture. Evaluate your income, expenses, debt obligations, and credit score. Are you comfortable with the idea of increasing your mortgage balance? Can you afford the higher monthly payments that may result from a cash-out refinance, even if they're lower than your current debt payments?

It's also important to assess your long-term financial goals. Are you planning to stay in your home for the foreseeable future, or are you likely to move in the next few years? If you're planning to move soon, the costs associated with a cash-out refinance may not be worth the potential benefits.

Understanding the Risks Involved

A cash-out refinance is essentially taking out a new loan secured by your home. If you fail to make your mortgage payments, you could face foreclosure and lose your home. Therefore, it's crucial to ensure that you have a stable income and a solid financial plan before proceeding.

Another risk to consider is the potential for your home's value to decline. If your home's value decreases, you could end up owing more on your mortgage than your home is worth, a situation known as being "underwater" on your loan.

Seeking Professional Advice

Navigating the complexities of mortgage refinancing can be challenging. It's always a good idea to seek advice from a qualified mortgage professional who can assess your individual situation and help you determine whether a cash-out refinance is the right choice for you. At DDA Mortgage, our experienced team is dedicated to providing personalized guidance and support to help you make informed decisions about your financial future. You can also seek out a financial advisor to determine if a cash out refi makes sense for you and your overall financial goals.

Take the Next Step: Contact DDA Mortgage Today!

If you're considering a cash-out refinance to consolidate debt, finance home improvements, or simply streamline your finances, we encourage you to contact DDA Mortgage today. Our experienced team can help you explore your options, assess your eligibility, and find the best mortgage solution to meet your needs. Don't let high-interest debt hold you back - let us help you take control of your financial future!

Ready to explore your options and see if a cash-out refinance is the right move for you? Contact DDA Mortgage today for a free consultation. We'll help you analyze your situation, answer your questions, and guide you through the refinancing process. Lower your overall monthly expenses by contacting us today!

Rate & Term Refinance: Are Points Worth It in Florida's Downturning Market?

Thu, 12 Feb 2026 22:29:33 GMT

Rate & Term Refinancing in Florida: Is Now the Right Time?

Are you staring at your mortgage statement, wondering if there's a better deal out there? You're not alone! Many Florida homeowners are considering a rate and term refinance, especially with fluctuating interest rates. The big question is: when should you jump, and are those tempting "points" really worth it? In Florida, a general rule of thumb is that a rate drop of around 2% is typically needed to make a refinance worthwhile, allowing you to recoup closing costs relatively quickly. But what happens when rates are trending downwards and another refinance might be just around the corner? Let's break down the key factors to consider, so you can make an informed decision that saves you money in the long run.

Is Paying Points Smart When Rates Are Downtrending?

The promise of a lower interest rate can be incredibly enticing. Lenders often offer "points," also known as discount points, which are essentially upfront fees you pay to reduce your interest rate. One point typically costs 1% of the loan amount. The catch? You need to calculate how long it will take to recoup that upfront investment through lower monthly payments.

The Downtrending Rate Dilemma

When interest rates are on a downward trajectory, paying points becomes a more complicated decision. If you lock in a rate today with points, but rates continue to fall significantly in the coming months, you might find yourself kicking yourself. You could refinance again to take advantage of the lower rates, but that means paying closing costs all over again, potentially negating any savings you achieved with the initial refinance and those upfront points. Consider exploring Refinancing options with DDA Mortgage to understand the current landscape: https://www.ddamortgage.com/residential-mortgages-commercial-loans-greater-tampa-area#Refinancing

Factors to Consider Before Paying Points

How long do you plan to stay in your home? The longer you stay, the more likely you are to recoup the cost of the points. If you plan to move in a few years, paying points might not be a wise investment.
How much will you save each month? Calculate the difference between your current monthly payment and the projected payment with the lower interest rate (after paying points).
What are the overall closing costs? Don't just focus on the points. Factor in all other closing costs, such as appraisal fees, title insurance, and origination fees.
What are the current economic forecasts? While no one has a crystal ball, staying informed about interest rate predictions can help you gauge the potential for further rate drops.

The Cost vs. Savings Analysis of Refinancing

To truly understand if a rate and term refinance is right for you, you need to conduct a thorough cost-benefit analysis. This involves comparing the costs of refinancing (including points, if any) with the potential savings over the life of the loan.

Calculating Your Break-Even Point

The "break-even point" is the amount of time it takes for your cumulative savings to equal your total refinancing costs. Here's how to calculate it:

Calculate your total refinancing costs: Add up all closing costs, including points, appraisal fees, title insurance, etc.
Calculate your monthly savings: Subtract your new monthly payment (with the lower interest rate) from your current monthly payment.
Divide the total refinancing costs by the monthly savings: This will give you the number of months it will take to break even.

Example:

Total refinancing costs: $5,000 (including $2,000 in points)
Monthly savings: $200
Break-even point: $5,000 / $200 = 25 months (just over two years)

In this example, you would need to stay in your home for at least 25 months to recoup the cost of the refinance. If you plan to move sooner, it might not be worth it. If you are considering a larger company for your refinance, check out the CFPB's website for resources.

Are You Recouping Your Savings Quickly Enough?

In Florida, with the general 2% rule, you're aiming for a break-even point that aligns with your long-term financial goals. If you anticipate refinancing again soon due to further rate drops, a long break-even period might not be ideal. Consider scenarios where you can recoup your investment faster, or explore options without points, even if the interest rate is slightly higher.

Refinancing Now: Is a 2% Drop Enough, Even Without Points?

While paying points can lower your interest rate, it's not always necessary. In fact, in a downtrending market, refinancing with no points might be the smarter move, especially if you can achieve a significant rate drop of around 2% with only standard closing costs. This approach allows you to take advantage of immediate savings without the added risk of locking in a rate that could soon be surpassed by even lower rates. Also, consider exploring resources to educate yourself further on market trends.

The Advantages of a No-Point Refinance

Lower upfront costs: Without points, your initial investment is significantly lower, making it easier to recoup your expenses quickly.
Greater flexibility: If rates continue to fall, you can refinance again without feeling like you wasted money on points.
Faster break-even point: With lower upfront costs, you'll start saving money sooner.

When a No-Point Refinance Makes Sense

Rates are trending downwards: If you believe rates will continue to fall, a no-point refinance gives you the flexibility to refinance again later.
You don't plan to stay in your home for long: A shorter break-even point makes a no-point refinance a safer option if you plan to move in the near future.
You prioritize immediate savings: If you need to free up cash flow each month, a no-point refinance provides immediate relief without a large upfront investment.

DDA Mortgage: Your Partner in Navigating Florida Refinancing

Deciding whether to refinance, and whether to pay points, can feel overwhelming. That's where DDA Mortgage comes in. We're committed to providing you with expert guidance and personalized solutions to help you make the best financial decision for your unique situation.

Key Takeaway: If you pay points, it takes on average 5 years to recuperate just on points alone. Understanding this simple fact can help you make a sound decision

Financial Stress for Retirees Over 62: How to Ease the Burden

Mon, 09 Feb 2026 20:52:41 GMT

Financial Stress for Retirees Over 62: How to Ease the Burden

The price of everything seems to be creeping higher, doesn't it? From the gas pump to the grocery store, rising costs impact everyone. But for retirees age 62 and older, the pinch can be particularly painful. Living on a fixed income often means limited flexibility to adapt when inflation surges. What was once a comfortable retirement budget can quickly become a source of anxiety and stress. At DDA Mortgage, we understand these challenges and are committed to helping seniors navigate their financial landscape. We believe everyone deserves to enjoy their golden years without constant worry about money.

Why Inflation Hits Seniors Harder Than Working Households

While everyone feels the sting of inflation, its impact on seniors often feels disproportionately harsh. Several factors contribute to this imbalance:

Fixed Incomes and Limited Earning Potential

Unlike working individuals who may have opportunities for salary increases or overtime pay, most retirees rely on fixed income sources like Social Security, pensions, and retirement savings. These sources may not adjust quickly enough to keep pace with rapidly rising prices. A cost-of-living adjustment (COLA) for Social Security helps, but it often lags behind real-time inflation rates. When the price of necessities like food, healthcare, and housing increases significantly, retirees on fixed incomes are forced to make difficult choices.

Healthcare Costs and Unexpected Expenses

Healthcare expenses tend to increase with age, and these costs often outpace general inflation rates. Doctor visits, prescription medications, and potential long-term care needs can quickly deplete savings. Unexpected expenses, such as home repairs or vehicle maintenance, can also create significant financial strain, especially when budgets are already stretched thin. For many seniors, these unpredictable costs become a major source of financial stress.

Limited Ability to Cut Back

While younger households might have the option to reduce discretionary spending, like entertainment or travel, retirees often have fewer areas where they can easily cut back. Many have already downsized, eliminated unnecessary expenses, and are living a fairly frugal lifestyle. When inflation hits, the only remaining options might involve sacrificing essential needs, which can impact their quality of life.

The Challenge of Rising Costs After Retirement

Retirement is often envisioned as a time of relaxation and enjoyment, but the reality for many seniors is overshadowed by financial worries. The challenge of rising costs extends beyond just day-to-day expenses. It impacts long-term financial security and peace of mind.

Erosion of Savings

Inflation erodes the purchasing power of savings. What might have seemed like a comfortable nest egg at retirement can quickly shrink as prices rise. This can lead to anxiety about outliving one's savings and uncertainty about the future. Many retirees find themselves dipping into their savings more frequently than anticipated to cover essential expenses. Over time, this can deplete their financial resources and increase their vulnerability to unforeseen circumstances.

Strained Budgets and Difficult Choices

The rising cost of living forces many retirees to make difficult choices between necessities. They might have to choose between buying groceries and filling prescriptions, or between paying for utilities and maintaining their home. These trade-offs can significantly impact their quality of life and overall well-being. The constant pressure of managing a strained budget can lead to stress, anxiety, and even depression.

The Psychological Impact of Financial Stress

Financial stress can take a toll on mental and emotional health. Retirees who are constantly worried about money may experience anxiety, sleeplessness, and feelings of hopelessness. The inability to enjoy retirement due to financial constraints can lead to frustration and resentment. It's important to recognize the psychological impact of financial stress and seek support when needed. Resources like financial counseling and support groups can provide valuable assistance and guidance.

Why Homeowners Age 62+ Have Options Others Do Not

Fortunately, homeowners age 62 and older have unique options available to them that can alleviate financial stress and improve their quality of life. One such option is a reverse mortgage. This financial tool can provide access to tax-free cash by leveraging the equity built up in their homes. At DDA Mortgage, we specialize in helping seniors explore the potential benefits of reverse mortgages and make informed decisions about their financial future. To learn more about our team and services, visit our about us page .

What is a Reverse Mortgage?

A reverse mortgage is a type of loan available to homeowners age 62 and older that allows them to borrow against the equity in their home without having to make monthly mortgage payments. The loan proceeds can be used for various purposes, such as paying off debt, covering healthcare expenses, or supplementing retirement income. Unlike a traditional mortgage, the borrower is not required to make monthly payments. Instead, the loan balance grows over time as interest accrues. The loan becomes due when the borrower sells the home, moves out, or passes away.

Benefits of a Reverse Mortgage

Tax-Free Cash: The proceeds from a reverse mortgage are tax-free, providing a valuable source of income without increasing your tax burden.
No Monthly Mortgage Payments: You are not required to make monthly mortgage payments, freeing up cash flow for other expenses.
Flexibility: You can receive the loan proceeds in a lump sum, as a monthly income stream, or as a line of credit.
Maintain Homeownership: You retain ownership of your home and can continue to live there as long as you meet the loan obligations, such as paying property taxes and homeowners insurance.

Using a Reverse Mortgage to Ease Financial Stress

A reverse mortgage can be a valuable tool for easing financial stress in retirement. By accessing the equity in their home, seniors can:

Supplement Retirement Income: Receive monthly payments to cover essential expenses and maintain their standard of living.
Pay Off High-Interest Debt: Eliminate debt and reduce monthly payments, freeing up cash flow for other needs.
Cover Healthcare Costs: Pay for medical expenses, long-term care, or home healthcare services.
Fund Home Improvements: Make necessary repairs or renovations to improve the safety and comfort of their home.

For instance, imagine a homeowner struggling to cover their monthly expenses on a fixed income. By obtaining a reverse mortgage, they could receive a monthly payment that supplements their income, allowing them to pay for groceries, utilities, and other necessities without depleting their savings. This can significantly reduce their financial stress and improve their overall quality of life. You can learn more about how a reverse mortgage works and how it can benefit you on this page: Reverse Mortgage Information .

Is a Reverse Mortgage Right for You?

Deciding whether a reverse mortgage is the right choice requires careful consideration. It's essential to understand the terms and conditions of the loan, including the interest rates, fees, and repayment obligations. It's also important to consider the potential impact on your estate and heirs. Consulting with a financial advisor and a reverse mortgage specialist can help you evaluate your options and make an informed decision. At DDA Mortgage, our experienced professionals are dedicated to providing personalized guidance and support throughout the reverse mortgage process. We can help you determine if a reverse mortgage is a suitable solution for your unique financial situation.

Explore the possibilities and see how much more money you could have each month after age 62 with a reverse mortgage .

Is Refinancing Right for You? Unlocking Cash & Financial Freedom

Tue, 03 Feb 2026 14:36:15 GMT

Is Refinancing Right for You? Unlocking Cash & Financial Freedom

Feeling squeezed? Juggling multiple debts with varying interest rates? Dreaming of that kitchen remodel you've been putting off? Or maybe you just need a little extra breathing room in your monthly budget? You're not alone. Many homeowners find themselves in situations where they need access to cash, and for a significant portion of them, the answer is refinancing their mortgage. In fact, last year, a whopping 40% of all mortgage activity was refinances! But what exactly is driving this trend, and could refinancing be the right move for you ?

Refinancing to Unlock Cash: Home Improvements, Debt Consolidation, and More

One of the primary drivers behind the refinance boom is the desire to tap into home equity. Your home is likely your largest asset, and as you pay down your mortgage and your property value increases, you build equity. A cash-out refinance allows you to borrow against that equity, receiving the difference in cash at closing.

Home Renovations and Upgrades

Imagine finally getting that dream kitchen! Or adding a much-needed bathroom. Home improvements not only enhance your living space, but they can also significantly increase your home's value. Instead of relying on high-interest credit cards or personal loans, a cash-out refinance provides a more affordable way to finance these projects.

Debt Consolidation: Streamline Your Finances

Are you overwhelmed by multiple credit card bills, student loans, or other high-interest debts? A cash-out refinance can be a powerful tool for debt consolidation. By using the cash from your refinance to pay off these debts, you can simplify your finances, potentially lower your overall interest rate, and reduce your monthly payments. This can free up cash flow and make it easier to manage your finances.

Unexpected Expenses and Opportunities

Life throws curveballs. Unexpected medical bills, job loss, or even a fantastic investment opportunity can create a need for immediate cash. A cash-out refinance can provide a financial safety net, allowing you to address these situations without resorting to high-interest options.

Beyond Lower Rates: Other Reasons to Refinance

While a lower interest rate is often the primary motivation for refinancing, it's important to recognize that it's not the only reason homeowners choose to refinance. Many factors contribute to the decision, and sometimes, a lower rate isn't even the main goal.

Switching Loan Types: From ARM to Fixed-Rate

Adjustable-rate mortgages (ARMs) can be attractive with their initially lower interest rates. However, as the name suggests, the rate can adjust over time, potentially leading to higher monthly payments. Refinancing from an ARM to a fixed-rate mortgage provides peace of mind by locking in a stable interest rate for the life of the loan. This can be especially appealing in a rising interest rate environment.

Shortening Your Loan Term

Refinancing to a shorter loan term, such as from a 30-year mortgage to a 15-year mortgage, can save you a significant amount of money in interest over the life of the loan. While your monthly payments will likely be higher, you'll pay off your mortgage much faster and build equity more quickly. This is a great option for homeowners who are financially secure and want to accelerate their path to homeownership.

Removing Private Mortgage Insurance (PMI)

If you initially put down less than 20% when you purchased your home, you're likely paying private mortgage insurance (PMI). PMI protects the lender in case you default on your loan. However, once you've built up enough equity in your home (typically 20%), you can request to have PMI removed. Refinancing can be a way to get a new appraisal and demonstrate that you've reached the required equity threshold, allowing you to eliminate this extra monthly expense. You can reach out to us through our contact page to learn more about your specific scenario.

The Rise of Cash-Out Refinancing: A 2023 Trend

As we mentioned earlier, a substantial portion of 2023 refinance volume was cash-out refinancing. This indicates a shift in homeowner priorities. While securing lower interest rates remains important, the need for accessing equity for various financial needs is becoming increasingly prevalent.

Economic Factors Influencing Refinance Decisions

Several economic factors contribute to the popularity of cash-out refinancing. Rising home values have created more equity for homeowners to tap into. Additionally, inflation and rising costs of living are putting pressure on household budgets, making debt consolidation and access to cash more appealing. Economic uncertainly may lead homeowners to consolidate their debts and protect against future economic shock.

Weighing the Pros and Cons: Is Cash-Out Refinancing Right for You?

While cash-out refinancing can be a valuable tool, it's crucial to carefully consider the pros and cons before making a decision. On the positive side, it can provide access to cash for important needs, consolidate debt, and potentially lower your overall interest rate. However, it also means taking on a larger mortgage, potentially extending your loan term, and paying closing costs. A recent [Housing Wire article]( "") discussed the importance of working with an expert to determine what option is best for each homeowner.

Important Considerations Before You Refinance

Assess Your Financial Situation: Carefully evaluate your current debt obligations, income, and expenses.
Compare Interest Rates and Fees: Shop around for the best refinance rates and terms. Don't just focus on the interest rate; consider all associated fees.
Calculate the Break-Even Point: Determine how long it will take to recoup the closing costs associated with refinancing.
Understand the Tax Implications: Consult with a tax advisor to understand any potential tax implications of refinancing.

Does Refinancing Make Sense to Consolidate Debt? Let's Talk!

Refinancing can be a powerful tool for achieving your financial goals, whether it's consolidating debt, funding home improvements, or simply gaining more financial flexibility. But it's not a one-size-fits-all solution. That's why it's essential to work with a trusted mortgage professional who can assess your individual needs and help you determine if refinancing is the right choice for you.

At DDA Mortgage, we're committed to providing personalized guidance and helping you navigate the complexities of the mortgage process. If you're considering refinancing, we encourage you to contact us today for a free consultation. Let us help you explore your options and find the best solution for your unique situation. Check out our Refinancing page to learn more, and then reach out to one of our team members!

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult with a qualified financial advisor before making any financial decisions. Interest rates and loan terms are subject to change without notice.

gen x investors are confident, but they often lack a formal retirement plans says reverse mortgage

Mon, 02 Feb 2026 18:56:20 GMT

gen x investors are confident, but they often lacka formal retirement plans says reverse mortgage

Yes — that statement reflects a real and growing trend among Gen X (roughly ages 45–60 today) that’s showing up in multiple retirement and housing finance studies, including research frequently cited by the reverse mortgage industry.

Here’s how both parts can be true at the same time:

�� Gen X Is Confident About Retirement…

Many Gen Xers report they believe they’ll be “okay” in retirement because:

They expect to work longer than previous generations
They anticipate using home equity as a backstop
They’ve lived through multiple economic cycles and feel resilient
They often expect Social Security to still provide partial support

Surveys routinely show a majority of Gen X respondents say they feel moderately or very confident they’ll be able to retire.

�� …But Often Lack a Formal Retirement Plan

At the same time, a large share of Gen X households:

Do not have a written retirement plan
Haven’t calculated a target retirement income
Don’t know their expected monthly expenses in retirement
Haven’t mapped out drawdown strategies (which accounts first, tax planning, etc.)

This gap is especially common among homeowners who view their house as their primary safety net rather than part of a coordinated plan.

�� Why Reverse Mortgage Research Highlights This

Reverse mortgage and housing finance groups focus on this issue because:

Gen X owns a large and growing share of U.S. home equity
Many are asset-rich but cash-flow constrained
Home equity can be structured into retirement income via:
HECM reverse mortgages
Home equity lines of credit
Downsizing or sale-leaseback strategies

From their perspective, Gen X confidence is psychological , while formal planning is structural — and the two don’t always align.

�� The Risk

Confidence without planning can lead to:

Claiming Social Security too early
Running down 401(k)s faster than expected
Taking reactive cash-out refis or high-interest debt later in life
Being forced to sell during a downturn

�� The Opportunity

For Gen X homeowners, even a simple plan dramatically improves outcomes:

Project baseline retirement income
Stress-test expenses against inflation
Decide in advance how home equity fits in
Coordinate Social Security timing, investments, and housing

This is why many advisors now talk about “housing wealth as a fourth retirement pillar” alongside Social Security, pensions, and savings.

Bottom line:
Gen X investors tend to be optimistic and resourceful — but optimism often substitutes for formal planning. Reverse mortgage research calls this out because home equity may become the key tool that closes the gap.

40% of all mortgages last year were refinances

Mon, 02 Feb 2026 14:47:22 GMT

a large share of the refinances in 2025 were indeed driven by homeowners taking cash out of their home equity to consolidate debt or tap housing wealth, not just refinancing to get a lower interest rate. The data available on refinance activity in early and mid-2025 show this clearly:

�� 1. Cash-Out (Equity Extraction) Was a Big Part of Refinances

When mortgage rates stayed relatively high (often above ~6.5%), fewer borrowers could refinance purely to lower their rate or monthly payment. In that environment, lenders and borrowers often shifted toward cash-out refinances — where you borrow more than your existing mortgage and receive the difference in cash. According to Federal Housing Finance Agency (FHFA) data:

In early 2025, cash-out refinances made up a majority of refinance activity — rising from about 56 % of refinances to roughly 64 % in the first quarter of the year. That means most refinance borrowers were actually pulling equity out.

�� 2. Cash-Out Often Leads to Debt Consolidation

Borrowers commonly use the cash from a cash-out refinance to pay down higher-interest personal debt, like credit cards or auto loans. A Consumer Financial Protection Bureau report (covering broader refinance behavior) found that the most frequent stated reason for cash-out refinancing was to “pay off other bills or debts.”

This happens because:

Mortgage interest rates on large balances may still be lower than credit card or personal loan interest rates.

Consolidating high-interest debt into a mortgage can simplify payments and reduce total interest costs — as long as the homeowner plans correctly and understands the risks of converting unsecured debt into home-secured debt.

�� 3. Rate-Reduction Refinancing Was Less Dominant

Compared with past refinance cycles (especially when rates plunged), rate-and-term refinances — where the main goal is lowering your interest rate and monthly payment — were less dominant in 2025. The FHFA reports suggest that because average mortgage rates stayed relatively elevated during the first part of 2025, cash-out refinances became a bigger share — not just refinance for rate savings.

�� What This Means in Simple Terms

Not all refinance activity is about getting a lower rate.

A substantial chunk of 2025 refinance volume was cash-out refinancing.

Many homeowners took some of that cash to consolidate other debt, meaning part of the high refinance share reflects debt consolidation activity, not solely traditional mortgage refinancing for rate/term improvement.

So yes — while refinancing to lower the rate still happened, a lot of the refinance volume in 2025 was linked to cash-out and debt consolidation purposes. This helps explain why refinance activity remained relatively strong even when interest rates weren’t plummeting. Let me know if you want some numbers or examples of how much debt consolidation affected total refinancing!

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Asset based lending with no min fico score

Mon, 26 Jan 2026 14:38:07 GMT

• 12-Month Bridge Loans with interest-only payments

• Cash-Out Refis, Purchase Loans, Second Liens, and Portfolio Loans

• Nationwide lending on non-owner occupied residential properties, including condos

• No FICO minimum – We welcome credit-challenged borrowers

• No income or employment verification

• No seasoning required

• No appraisal contingencies

• We fund mid-foreclosure and past bankruptcy deals

• Pure asset-based lending –

• Closings in as fast as 3–5 days

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Cost of retirement comfort soars, leaving most far short

Wed, 14 Jan 2026 14:08:50 GMT

Cost of Retirement comfort soars, leaving most far short

Here’s a clear summary of what the Clever Real Estate survey found about retirement savings and expectations — and how it reveals a widening gap between what retirees think is needed to retire comfortably and what most actually have:

�� Key Findings from the Clever Real Estate Survey

Retirees say $823,800 is needed to retire comfortably in 2026.
This is the average amount retirees believe someone needs in savings and investments to have a comfortable retirement — up sharply from about $580,310 last year.
But the reality is far lower:
The average retiree actually has only about $288,700 saved. That’s roughly one-third of what many believe is necessary.
Nearly one in three retirees has no retirement savings at all.
About 29% of those surveyed reported having zero saved for retirement.
Expectations continue to rise while savings stagnate or fall.
The perceived amount needed jumped by nearly $250,000 in a year, even as the average savings figure edged down since last year.
Many retirees feel a retirement crisis is underway.
A majority believe the U.S. is facing a retirement crisis, and 92% say most people underestimate how much money is needed for a comfortable retirement.

�� What This Gap Means

The survey highlights a significant disconnect between retirees’ expectations and their actual financial preparedness — a gap that has widened over recent years .
This may reflect rising costs of living, healthcare concerns, inflation, and other pressures that strain retirement budgets.
It also suggests that many retirees might need to adjust spending, consider part-time work, or rely more on Social Security and other income sources in retirement.

Does your condo association needs funds for a new roof

Mon, 12 Jan 2026 15:08:42 GMT

1. HOA / Condo Association Loans (Most Common)

These are commercial loans made directly to the association, not individual unit owners.

Typical uses

Roof replacement

Structural repairs

Painting, paving, elevators, plumbing

Insurance-driven or reserve shortfalls

Key features

No lien on individual units

Repaid through monthly assessments

Terms: 5–20 years

Fixed or adjustable rates

Can be structured as:

Fully amortizing loan

Interest-only period upfront

Line of credit for phased projects

Underwriting looks at

Number of units

Owner-occupancy ratio

Delinquency rate

Budget, reserves, and assessment history

No personal guarantees from owners

2. Special Assessment Financing (Owner-Friendly Option)

Instead of asking owners to write large checks upfront:

The association levies a special assessment

Owners can finance their portion monthly

Reduces resistance and default risk

Keeps unit owners on predictable payments

This is especially helpful in senior-heavy or fixed-income communities.

3. Reserve Replenishment Loans

If reserves were drained for an emergency repair:

Association borrows to rebuild reserves

Keeps the condo compliant with lender and insurance requirements

Helps protect unit values and marketability

4. Florida-Specific Reality (Important)

Given your frequent focus on Florida condos, this resonates strongly right now:

New structural integrity & reserve requirements

Insurance-driven roof timelines

Older associations facing multi-million-dollar projects

Financing often prevents forced unit sales or assessment shock

Many boards don’t realize financing is even an option until it’s explained clearly.

5. How to Position the Conversation (What to Say)

You can frame it simply:

“Rather than a large one-time special assessment, the association can finance the project and spread the cost over time—keeping dues manageable and protecting property values.”

That line alone opens the door.

6. What Lenders Will Usually Ask For

Current budget and balance sheet

Reserve study (if available)

Insurance certificates

Delinquency report

Project scope and contractor estimate

Bottom Line

Condo associations do not have to self-fund roofs or major repairs anymore. Financing:

Preserves cash

Reduces owner pushback

Helps boards stay compliant

Protects resale values

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Unexpected retirement expenses can strain senior homeowners

Fri, 09 Jan 2026 15:02:20 GMT

Unexpected retirement expenses can strain senior homeowners

In any given year, 83% of retired households face at least one unexpected expense , underscoring how fragile retirement cash flow can be—even for homeowners who appear financially stable.

Common surprise costs retirees face

Medical and dental bills
Medicare gaps, prescriptions, hearing aids, dental work, and long-term care often come out of pocket.
Home repairs and maintenance
Roofs, HVAC systems, plumbing, insurance deductibles, or storm damage can run into the tens of thousands.
Property tax and insurance increases
Rising home values and insurance premiums—especially in states like Florida—can shock fixed budgets.
Family support
Adult children or grandchildren may need help with housing, education, or emergencies.
Transportation issues
Vehicle replacements, repairs, or mobility accommodations are often unplanned.

Why homeowners feel the pressure more acutely

Most retirees are asset-rich but cash-poor
A large share of net worth is tied up in home equity, not liquid savings.
Fixed income doesn’t adjust quickly
Social Security and pensions rarely keep pace with sudden or inflation-driven costs.
Selling isn’t always practical
Emotional attachment, market timing, taxes, and relocation costs make downsizing difficult.

How seniors typically respond

Cutting discretionary spending (travel, hobbies, gifting)
Delaying necessary medical care or home repairs
Tapping savings faster than planned
Increasing credit card or personal loan debt
Exploring ways to access home equity without selling

Financial planning takeaway

The 83% figure highlights a key retirement reality: unexpected expenses are not rare—they’re normal . For senior homeowners, planning isn’t just about income replacement, but about liquidity and flexibility .

That’s why many retirees evaluate:

Emergency reserves sized for homeownership risks
Property tax exemptions and insurance reviews
Strategic use of home equity (line of credit, second mortgage, refinance, or reverse mortgage—depending on age, cash flow, and goals)

Social Security proposals raise stakes for senior homeowners Social Security’s trust funds are projected to be depleted by 2032

Thu, 08 Jan 2026 20:58:08 GMT

Social Security proposals raise stakes for senior homeowners

Social Security’s trust funds are projected to be depleted by 2032

Social Security proposals raise stakes for senior homeowners

Trust funds projected to be depleted by 2032

The core issue

Social Security’s combined trust funds are projected to run out around 2032 .
If Congress takes no action, benefits would be automatically reduced by roughly 20–25% at that point.
This puts added financial pressure on retirees—especially those who rely heavily on monthly benefits.

Why homeowners are directly impacted

Most seniors’ wealth is tied up in home equity , not liquid savings.
A reduction in Social Security benefits increases reliance on:
Home equity
Retirement accounts
Family support
For many retirees, the home becomes the backstop asset for income shortfalls.

Proposals under discussion

Common ideas being debated include:

Raising the full retirement age
Increasing or removing the payroll tax cap
Means-testing benefits for higher earners
Slowing benefit growth for future retirees

Each option shifts financial responsibility in different ways—but none fully protect current retirees without tradeoffs.

Why timing matters

Seniors retiring between now and 2032 face uncertainty in:
Long-term income planning
Healthcare and long-term care affordability
Housing decisions (downsizing vs. aging in place)
Inflation and property taxes compound the risk if income drops.

Home equity as a pressure valve

As Social Security becomes less certain:

More retirees may tap equity through:
Reverse mortgages (HECMs and proprietary products)
Home equity loans or HELOCs
Downsizing or sale-leaseback strategies
Equity is increasingly viewed as income replacement , not just a legacy asset.

Broader housing market implications

Increased equity tapping could:
Keep seniors in their homes longer
Reduce housing inventory turnover
Shift more wealth transfer to later in life
Policymakers are watching how benefit changes ripple into housing stability.

Bottom line

Social Security uncertainty raises the stakes for senior homeowners
Home equity is becoming a central pillar of retirement planning
Decisions made in the next few years—by Congress and by retirees—will shape financial security well into the 2030s

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Interesting Stats on mortgages for 2025

Thu, 08 Jan 2026 20:02:50 GMT

There are now more loans with interest rates over 6% than those with rates under 3%. 40% of the volume closed were refinances, and 30% of the loans done were NON-QM loans. There was a 10% drop in mortgage volume at the end of 2025, with a drop in interest rates.

With 1.4 trillion in credit card debt, it seems that 1.4 trillion in credit card debt may be the reason for the refinancing.

It is interesting that the NON QM loans captured so much of the closed business, and will only grow more in 2026

Popular program is the bank statement loan, which does not require tax returns, 1099's or W-2s

If you are looking at doing a rate term refinance, remember to look for a 2% drop with no points

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Do you need cash out, consolidate or no mortgage payment

Mon, 05 Jan 2026 14:50:48 GMT

�� Option 1 — Cash-Out Refinance

Meaning: Replace your current mortgage with a larger loan and take the difference in cash. Bankrate

Often lower interest rate than a second mortgage because it replaces your first mortgage. Rocket Mortgage

Can consolidate debt (e.g., high-interest credit cards) into one loan. Bankrate

If you refinance to a lower rate, you can reduce monthly payments while getting cash. Sunflower Bank

When it might make sense:

✔ You currently have a higher interest mortgage (e.g., 7%+) and could refinance into ~6%

✔ You want a single payment

✔ You’re using the cash for productive purposes (debt consolidation, home improvements)

�� Option 2 — Second Mortgage / Home Equity Loan (HELOC)

Meaning: Take out a loan on top of your existing mortgage without replacing it. Better Mortgag

Keeps your current mortgage rate and terms if they’re favorable. Better Mortgage

You borrow only what you want — no resetting your main mortgage.

Often easier/faster to access cash than a full refinance.

�� Option 3 — Reverse Mortgage

Meaning: Available only if you are typically 62+ — you borrow against home equity and don’t make monthly principal/interest payments. Balance is due when you move or pass. FHA

Can provide steady cash flow or a lump sum with no monthly mortgage payments.

Useful in retirement when income is fixed.

When it might make sense:

✔ You are retiree near retirement

✔ You want to boost retirement income without monthly payments

✔ You don’t plan to leave the home as a large inheritance

�� Which Option Should You Consider (High-Level Guidance)

➡ If your goal is lower monthly payments + access to cash:

→ Cash-out refinance could be ideal if today’s rates are lower than your current mortgage.

➡ If you want cash but want to keep a great existing rate:

→ Second mortgage or HELOC may be better than resetting your core mortgage.

➡ If you are 62+ and need income without monthly payments:

→ Reverse mortgage might be worth exploring but only with deep planning (especially for heirs).

�� Bottom Line (2026 Real-World Thinking)

✔ Mortgage rates are lower than recent highs but not back to historic lows, meaning refinancing could still save money if your current rate is significantly higher than ~6%. Rocket Mortgage

✔ Cash-out refinance is often cheaper than a second mortgage because of lower interest, but you must be okay restarting your loan term. Rocket Mortgage

✔ Reverse mortgages are specialized tools — great for some retirees but not suited to everyone. FHA

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Closing in January when the property taxes are super low

Fri, 26 Dec 2025 18:23:18 GMT

When someone has lived in a home for many years, their property taxes are often artificially low because of long-standing exemptions and assessment caps (like Florida’s Save Our Homes).

If you close in January of the following year, here’s what happens:

What you get at closing

Property taxes are paid in arrears

At a January closing, the tax proration is based on the prior year’s tax bill

That bill still reflects:

The long-term owner’s capped assessment

Their homestead exemption

As the buyer, you effectively benefit from those lower taxes for that entire year

Why the increase doesn’t hit right away

The county does not immediately reassess at closing

The new assessed value is set as of January 1 of the year after the sale

The higher tax bill is issued the following year

Timeline example

January 2026 – You close on the home

All of 2026 – Taxes are based on the prior owner’s low, capped value

November 2026 – You receive the first tax bill, still using the old assessment

January 2027 – Reassessment takes effect at the higher value

November 2027 – You receive the higher tax bill

Key takeaway

You enjoy the lower taxes for the full year after closing

The adjustment does not occur until the second year

This is why January closings after a long-term owner can look very attractive up front—but the increase is delayed, not eliminated

Why this matters

Many buyers think the taxes shown at closing are permanent. In reality, they’re just on a one-year lag due to how property tax assessments work.

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Refinancing, what is the real rates not the ones they are making up

Wed, 17 Dec 2025 19:58:39 GMT

Here’s what’s really happening and why consumers are confused:

Why “low rates & no closing costs” isn’t true

Rates aren’t actually low

Headline ads often quote temporary buydowns, ARM teaser rates, or perfect-credit scenarios that very few borrowers qualify for.

The real, fully indexed 30-year fixed rate is meaningfully higher once you look at actual pricing.

“No closing costs” usually means one of three things

Lender credits: The borrower pays through a higher interest rate.

Seller concessions: Only possible if the seller agrees — not universal.

Costs rolled into the loan: Still paid, just financed over time.

Rate buydowns are being marketed as permanent

2-1 or 1-0 buydowns lower payments only for the first year or two.

Many borrowers don’t realize their payment will increase later.

AI-driven and online lenders amplify the issue

Automated platforms advertise best-case pricing without explaining:

LLPAs

DTI adjustments

Credit overlays

Property type impacts

What customers should be told instead (plain truth)

There is always a trade-off between rate and costs.

If closing costs are “covered,” the rate will be higher.

If the rate is lower, the borrower is paying for it upfront.

There is no free money — just different ways to pay.

How professionals are reframing the conversation

Showing side-by-side scenarios:

Low rate / higher costs

Higher rate / lender credit

Focusing on total cost over time, not just the rate

Explaining break-even points clearly

Given your background in mortgages and rate behavior, this kind of misrepresentation usually shows up late in the process, when the borrower sees the LE and feels misled.

If you want, I can help you:

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Fed dropped the rate but also starting QE, what does that mean for us

Thu, 11 Dec 2025 16:53:58 GMT

If the **Federal Reserve cuts interest rates by 0.25% and simultaneously restarts a form of quantitative easing (QE) by buying about $40 billion per month of securities, the overall monetary policy stance becomes very accommodative. Here’s what that generally means for interest rates and the broader economy:

�� 1. Short-Term Interest Rates

The Fed’s benchmark rate (federal funds rate) directly sets the cost of overnight borrowing between banks. A 0.25% cut lowers that rate, which usually leads to lower short-term borrowing costs throughout the economy — for example on credit cards, variable-rate loans, and some business financing.

Yahoo Finance

In most markets, short-term yields fall first, because they track the federal funds rate most closely.

Reuters

�� 2. Long-Term Interest Rates

Purchasing bonds (QE) puts downward pressure on long-term yields. When the Fed buys large amounts of Treasury bills or bonds, it increases demand for them, pushing prices up and yields down.

SIEPR

This tends to lower mortgage rates, corporate borrowing costs, and yields on long-dated government bonds, though not always as quickly or as much as short-term rates.

Bankrate

�� 3. Combined Effect

Rate cuts + QE = dual easing. Rate cuts reduce the cost of short-term credit, and QE often helps bring down long-term rates too. Together, they usually flatten the yield curve (short and long rates both lower).

SIEPR

Lower rates overall tend to stimulate spending by households and investment by businesses because borrowing is cheaper.

Cleveland Federal Reserve

�� 4. Market and Economic Responses

Financial markets often interpret such easing as a cue that the Fed wants to support the economy. Stocks may rise and bond yields may fall.

Reuters

However, if inflation is already above target (as it has been), this accommodative stance could keep long-term inflation elevated or slow the pace of inflation decline. That’s one reason why Fed policymakers are sometimes divided over aggressive easing.

Reuters

�� 5. What This Doesn’t Mean

The Fed buying $40 billion in bills right now may technically be labeled something like “reserve management purchases,” and some market analysts argue this may not be classic QE. But whether it’s traditional QE or not, the effect on liquidity and longer-term rates is similar: more Fed demand for government paper equals lower yields.

Reuters

In simple terms:

✅ Short-term rates will be lower because of the rate cut.

✅ Long-term rates are likely to decline too if the asset purchases are sustained.

➡️ Overall borrowing costs fall across the economy, boosting credit, investment, and spending.

⚠️ But this also risks higher inflation if demand strengthens too much while supply remains constrained.

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How will AI reshape the mortgage industry in the future

Tue, 09 Dec 2025 14:33:57 GMT

How will AI reshape the mortgage industry

. Faster, Almost “Instant” Approvals

AI will increasingly automate:

Income and asset verification
Employment checks
Creditworthiness modeling
Fraud detection

Instead of hours or days, many approvals could become real-time —especially for borrowers with digital income/asset data.

2. AI-Underwritten Loans Become Normal

Fannie Mae/Freddie Mac already use automated systems (DU/LPA).
The next phase:

AI models that can evaluate loan risk beyond traditional credit scores
Alternative data (cash flow, rental payment history, bank account behavior)
More approvals for thin-credit borrowers

This could expand access to credit safely by capturing a fuller picture of borrower stability.

3. Mortgage Closings Become Highly Automated

What you’re already noticing—AI helping close a 2nd mortgage in hours—will extend to:

Automated document prep
AI-driven title searches
E-closing with automated compliance checks
Smart scheduling and real-time status updates

A closing that used to take 30 days could drop to less than a week , and some loan types to same-day .

4. Lower Costs and Fees

With automation:

Lenders need fewer manual processors
Title and closing services become cheaper
Errors and conditions are reduced

This could bring down:

Origination fees
Title fees
Processing/underwriting costs

Not dramatic at first, but meaningful over time.

5. Better Rate Shopping for Borrowers

AI will:

Compare lender pricing in real time
Predict which day/hour may offer the best rate
Match borrowers to the best loan program without human bias

Borrowers will have more transparency and fewer surprises.

6. Risk Management Gets More Accurate

Expect:

Better early-warning systems for delinquencies
AI-based portfolio management
More precise loan pricing

This allows lenders to expand credit while keeping risk under control.

7. Compliance Gets Much Easier

Regulatory requirements (TRID, HMDA, ECOA) will:

Be checked automatically
Generate alerts before violations happen
Keep full audit trails

This reduces legal risk and cuts paperwork delays.

8. Human Loan Officers Don’t Disappear — They Shift Roles

AI handles:

Data collection
Document review
Routine communication

Loan officers focus more on:

Relationship-building
Complex borrower situations
Counseling and strategy

The job changes but isn’t eliminated.

Big Picture

AI will make the mortgage process:

Faster, cheaper, more accurate, and more accessible.

Borrowers will get:

Shorter timelines
More program options
Fewer headaches
More predictable pricing

Lenders will get:

Lower costs
Better compliance
Lower risk

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HECM vs HELOC, what are the advantages

Mon, 08 Dec 2025 18:49:58 GMT

HECM vs HELOC

When it comes to leveraging the value of a home, a home equity line of credit (HELOC) is probably the most well-known option. However, it’s not necessarily the most appropriate option for older homeowners, ages 62+.

Unlike HELOCs, reverse mortgages and jumbo reverse mortgages are designed specifically to help seniors manage their cash flow. They also offer senior homeowners more flexibility – most notably, through optional monthly mortgage payments1. And with a HECM, seniors cannot be locked into any possible payment spikes. That’s why it’s a much better product for retirees. Unfortunately, many who could benefit from it have never considered it.

For example, many people get a HELOC while still working—but the problem arises ten years later when they’re living on retirement cash flow that’s about 75-80% of what it used to be. And when their HELOC payment suddenly spikes up ten years after they’ve retired, it may create a serious cash flow problem. One that often results in customers refinancing from a HELOC to a reverse mortgage, once they realize it’s the better choice in the long run.

A HECM is insured by the Federal Housing Administration (FHA)2 and cannot be frozen or reduced at any time. But perhaps the biggest benefit of a HECM is that, unlike a HELOC, there are no monthly mortgage payments required1. The borrower simply needs to pay taxes, insurance and keep up to date on home maintenance. And with the average monthly payment on a 30-year fixed mortgage now hovering around $2,064 – this presents a major savings opportunity every month.

The HECM program also offers more flexibility as compared to a HELOC. While HELOCs require money to be disbursed as a revolving credit as needed during a designated draw period, HECM offers several options for receiving funds. With a HECM, money can be disbursed either via a one-time lump sum, monthly payment, line of credit – or a combination of these methods. Plus, any unused portion of a line of credit can grow over the life of the loan, which is not the case with a HELOC.

Another advantage of HECMs over HELOCs is that they are less risky in terms of repayment. With a HECM, there is no deadline for paying back the loan. The loan does not become due until the final borrower no longer lives in the home, but they must continue to meet loan terms and use the home as their primary residence. And since a HECM is a non-recourse loan, the borrower and their heirs are not required to pay back more than the value of the home.

With a HELOC, the loan typically becomes due after ten years. However, making interest-only payments or paying the minimum required each month will not pay off the line of credit by the end of the 10-year period. In these cases, the bank may require a balloon payment – a larger, lump-sum payment that covers any remaining balance. This requires the borrower to potentially come up with thousands of dollars at once to eliminate their debt.

HW: How are HECMs especially beneficial for homeowners age 62+?

AP : For homeowners ages 62 and older, HECMs offer a variety of benefits over HELOCs. In terms of loan eligibility, a HELOC requires borrowers to qualify based on credit score and income. For those homeowners who are retired or adjusting to a limited or fixed income, this is not ideal. With a HECM, credit score and income are not the sole determining factors. Instead, the borrower must simply be a homeowner at least age 62, use the home as their primary residence and have sufficient equity available in the home.

Another advantage of HECMs over HELOCs is that they’re FHA-insured and offer unique borrower safeguards. Along with the non-recourse protection mentioned earlier, HECMs also require borrowers to attend independent HUD-approved counseling as part of the process. This counseling session provides potential borrowers with the education and resources to decide whether the HECM is the right option, explore alternative financial solutions and provide support throughout the entire application process.

Senior homeowners also appreciate the HECM because there are not any annual fees to keep the loan open. This is not the case with a HELOC.

How will AI revolutionize the mortgage industry

Fri, 05 Dec 2025 17:48:06 GMT

This is a subtitle for your new post

�� How AI Will Revolutionize the Mortgage Industry

1. Ultra-Fast Approvals (Minutes Instead of Days)

AI can instantly analyze:

Income, assets, and employment
Credit behavior and alternative data
Property valuation and risk layers

This means:

Approvals in minutes , not days
Conditional approvals issued with extremely high accuracy
Reduced need for large underwriting teams

Your recent example—closing a second mortgage in 3 hours—is exactly where the industry is headed.

2. “No-Doc” or “Smart-Doc” Mortgages

AI will pull and interpret verified data directly from:

Payroll systems
Banking APIs
IRS transcripts
Property records
Utility and rent payment histories

Documents won’t disappear, but AI will generate and validate them automatically , reducing fraud and eliminating manual paperwork.

3. AI-Driven Underwriting That’s More Precise

Traditional underwriting uses rigid guidelines.
AI underwriting uses:

Thousands of risk variables
Non-linear pattern recognition
Real-time market, borrower, and property analytics

This results in:

More accurate risk assessment
Better pricing
Safer approvals for “thin-file” borrowers (no credit scores, gig workers, retirees)

4. Instant Closings and Title Automation

AI will massively accelerate:

Title searches
Fraud detection
Ownership verification
Document generation

This cuts the closing timeline from weeks → hours .

5. Automated Compliance & QC

AI can audit every loan file:

Check guideline overlays
Validate RESPA/TILA disclosures
Detect missing or inconsistent data
Flag potential fraud

This reduces post-closing defects and repurchase risk.

6. Personalized Loan Options for Every Borrower

AI will:

Analyze borrower goals
Evaluate long-term cost scenarios
Compare mortgage, HELOC, reverse, and investment property strategies
Recommend the optimal loan structure

Borrowers get custom-built mortgage plans , not generic rate sheets.

7. Lower Operational Costs → Lower Rates

Automation reduces:

Processing labor
Underwriting labor
Title costs
QC expenses
Closing delays

This leads to cheaper mortgages , especially for lenders that adopt AI early.

8. AI Servicing: Proactive, Not Reactive

For serviced loans, AI will:

Predict borrower default risk
Trigger early intervention
Identify refinance opportunities
Monitor escrow and tax issues
Improve customer retention

Servicing becomes preventive, not corrective.

9. Better Fraud Prevention

AI can detect patterns such as:

Altered paystubs
Synthetic identities
Income inconsistency
Title fraud
Occupancy fraud

Fraud attempts drop significantly.

10. The 2030 Vision: Fully Digital Mortgages

Within 5–7 years, most borrowers will:

Apply on their phone
Get approval instantly
Sign digitally
Close in 1–24 hours
Have a personalized AI loan advisor throughout the loan life

Humans will still oversee the process, but AI will do 80–90% of the work .

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Closed a 2nd mortgage in 3 hours thru AI

Thu, 04 Dec 2025 21:33:27 GMT

That is wild — and honestly a sign of where mortgage tech is heading fast.

A three-hour closing versus three days used to be unheard of. What likely made it possible:

�� Why it happened so fast

1. Automated income/asset verification

Lenders now pull bank statements, payroll data, and tax transcripts digitally instead of waiting for uploads.

2. Instant credit + DU/LPA underwriting

If everything lines up, AUS can issue an immediate approve/eligible.

3. e-sign + remote online notarization (RON)

Cutting out scheduling delays saves days.

4. Title automation

Many second mortgages use “property data reports” or streamline title searches that don’t need a full title commitment.

�� Why second mortgages close faster than first mortgages

They don’t require an appraisal if AVM hits.

Fewer compliance disclosures.

Title and insurance requirements are lighter.

No escrow setup.

�� Bigger picture

The mortgage industry is absolutely racing toward:

close-in-a-day loans

fully digital underwriting

AI-assisted document interpretation

more instant approvals for clean files

We’re going to see more of what you just experienced—especially for HELOCs and seconds.

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Rates cuts and lets close in December for Homestead

Mon, 01 Dec 2025 16:19:51 GMT

✅ Why mortgage rates can rise even when the Fed cuts rates

Mortgage rates don’t move directly with the Fed Funds Rate. Instead, they are primarily driven by the 10-year Treasury yield and investor expectations about inflation, recession risk, and future Fed policy.

Here are the main reasons this disconnect happens:

1. Markets expected the rate cut already

If investors already priced in the Fed’s cut weeks or months beforehand, then the cut itself is old news.

When the announcement hits, mortgage rates may not fall—and often rise if the Fed hints at fewer future cuts.

2. Fed cuts can signal economic trouble

Sometimes the Fed cuts because the economy is weakening. That can cause:

Investors to worry about higher future inflation, or

A “risk-off” move where money leaves bonds

Both of these drive the 10-year yield UP, which pushes mortgage rates UP even though the Fed cut.

3. Bond investors wanted a bigger cut

If markets expect a 0.50% cut but the Fed only delivers 0.25%, that’s seen as “too tight.”

Result:

10-year yield jumps

Mortgage rates move higher

4. Fed messaging (“forward guidance”) matters more than the cut

Example:

The Fed cuts today, but says:

“We may need to slow or pause future cuts.”

That single sentence can raise mortgage rates, even though short-term rates just went lower.

5. Inflation surprises after the cut

If new inflation data comes in hot after a Fed cut, the bond market panics → yields go up → mortgage rates go up.

Quick summary

Fed Cuts Rates Mortgage Rates Move

✔ Expected or priced in Can rise or stay flat

✔ Fed hints at fewer future cuts Often rise

✔ Inflation remains sticky Rise

✔ Economy looks unstable Rise

❗ Only when 10-year yield falls Mortgage rates fall

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Conforming loan amounts increase to $832,750

Fri, 28 Nov 2025 14:40:27 GMT

New conforming loan limits increase to $832,750, which is great considering we have had price decreases on homes this year. So if you put down 3% the purchase price would be $858,051, and 5% down would be $876,578.

Why would that matter? Well, you go above, and you are in Jumbo territory, where you have to put 20% down vs the 3% or 5% down. So, really great news that there is an increase, and when rates do come down, there will be all the homeowners who have the low interest rates, probably make a move to either downsize or upsize on their home, which will create activity and an increase in home prices.

So overall, exciting to see the loan amounts increase to help offset the higher home prices

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Older Americans are sitting on over 14 trillion in equity

Mon, 24 Nov 2025 20:57:07 GMT

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What the Trend Is

Huge Senior-Held Home Equity

Older Americans are sitting on a lot of home equity — reports suggest more than $14 trillion . HousingWire+2National Mortgage Professional+2
This represents a big source of wealth that could potentially be mobilized for other uses — including helping younger generations.

Helping the Next Generation Buy Homes

According to a recent discussion of this phenomenon, more seniors are using their equity to help their adult children buy homes. HousingWire
For example, some are taking out reverse mortgages or other home-equity loans and using the proceeds to provide down payments. HousingWire+1
There are real-life stories: one couple gave their daughter over $600,000 for a down payment so she could stay in a high-cost area (rather than having to move somewhere cheaper).
According to the National Association of Realtors (NAR), 1 in 4 first-time buyers are getting some family assistance.

Motivations and Risks

On the one hand, this can be a strategic way for older generations to pass on wealth in a way that helps with their children’s long-term prospects.
On the other hand, tapping too much equity can risk reducing the senior’s resources in retirement (less cushion for medical costs, maintenance, or other needs).
There’s also the risk profile of certain home-equity products: reverse mortgages, for example, have specific terms, costs, and potential trade-offs.

Wider Implications

This trend reflects broader intergenerational wealth dynamics: as housing becomes less affordable, the “bank of Mom and Dad” is playing an increasingly important role.
At the same time, relying on family help to get into homeownership might exacerbate housing inequality: not everyone has parents or family with large equity.
There’s also a policy dimension: how financial products (like reverse mortgages) are regulated, and whether there are incentives or protections for seniors who choose to use their equity to help others.

My Thoughts / Analysis

This trend makes sense in the current housing environment: for many younger buyers, it’s very hard to accumulate enough savings for a down payment, so family help can be a lifeline .
For seniors, using home equity this way can be seen not just as “spending” but as investing in their family , especially if they view this as a legacy or want to help their children stay in certain areas.
But it’s not risk-free: the decision should be made carefully, ideally with financial planning. Seniors need to balance current needs , future costs , and how much they’re willing to give up .
From a policy/market standpoint, this could be a growing area of tension: how to support intergenerational wealth transfer without creating dependency or encouraging risky borrowing.

Managing savings, homeownership during first retirement year

Tue, 18 Nov 2025 20:27:14 GMT

This is a subtitle for your new post

“Managing savings, homeownership during first retirement year” by Sarah Wolak:

The first year of retirement is extremely important — it sets the tone for long-term financial stability. H
Advisors say retirees need to balance spending and saving carefully so they don’t deplete savings too fast.
It’s common for new retirees to overspend in what’s called the “go-go years” — the early retirement phase when people may travel or spend more.
On the other hand, being too cautious can mean missing out on meaningful goals or experiences.
Experts — including Scott Van Den Berg of Century Management — advise waiting 6–12 months after retiring before making major financial decisions like big gifts, property purchases, or large withdrawals.
It’s recommended to keep 12–18 months of cash reserves (or liquid assets) to avoid needing to sell investments in a market downturn.
For homeowners, strategies like reverse mortgages or home-equity lines of credit (HELOCs) can provide financial flexibility without forcing a house sale during volatile times.
Retirees should build a sustainable withdrawal plan that mimics a paycheck — this helps manage taxes, spending, and market risk.

If ‘free money’ broke housing before, a 50-year mortgage will finish the job

Mon, 17 Nov 2025 14:23:34 GMT

This is a subtitle for your new post

Slip out the back, Jack!
Make a new plan, Stan.
You don’t need to be coy, Roy.
Just get yourself free.

As Paul Simon sang in the song “50 Ways to Leave Your Lover,” just change the word “Lover” to “50-Year Mortgage,” and you have some really good advice. Being free of too much debt is key.

The 50-year mortgage, in my opinion, is a gimmick that, if put into place, would hurt the consumer and possibly the economy on a long-term basis.

The danger, of course, is that when debt feels cheap and the horizon looks endless, people convince themselves the rules don’t apply to them. I watched that mindset take hold once before.

In 2005, we went out to dinner with my wife’s hairdresser and her handyman husband. In the car, he told us that he purchased four homes to flip. I later went to list a home at a ritzy country club. The sellers were upset with the number I gave them on two estate homes they recently closed on. The couple wanted a $300,000 profit on a million-dollar purchase. After all, their friends made $150,000 on a home they flipped, and they were surely smarter than them.

Yet another one never looked up from her papers while looking at an investment condo. When I told her there is a commission and title costs on the flip side, let alone carrying costs if it didn’t sell right away, I got scolded. She had just graduated from a real estate university, and if I wouldn’t help her, she would find someone who would. I passed on that one.

Free money is tempting

Fast-forward, and 2006–2014 was more of a real estate depression than a Great Recession in South Florida. Having survived through the Big Short market, I saw firsthand how consumers, if given the chance at free money, will take it — even to their own detriment. That market, and the free money with it, caused ghastly harm to the economy. I had hundreds of people doing short sales with the fantasy of getting free from their ball-and-chain house and into a rental.

Dodd-Frank corrected much of that. People will choose to save a few hundred dollars and buy into a 50-year mortgage. Many of them are the same people who will take on a college education with hundreds of thousands in debt. Fifty-year mortgages will let people take risks to get into housing when they shouldn’t.

The good news is that inventory is starting to taper down and, in some cases, reverse the other way. Plus, 6% mortgage rates have been the sweet spot where the buyer can afford a home or move on from their precious 3% to 4% rate.” Furthermore, home prices are not going up with inflation. Home purchases have been the outlier of the economy since everything from auto parts to food to clothing has gone up in double digits. Put another way, resale homes are depreciating in real time.

The one caveat regarding 6% mortgage rates being the magic number where the consumer pulls the trigger is the cost to the consumer on other items affected by inflation. Does 6% become too pricey because other costs are eating into that affordability model? Five percent might have to be the new 6% tipping point.

The Fed, dealing with inflation, might not be able to lower rates further, because they need tools to combat inflation. Thus, the need for the 50-year mortgage gimmick.

If you see it, hop off the bus, Gus — and make sure to keep yourself free.

Jeff Lichtenstein is the CEO & Broker of Echo Fine Properties – Palm Beach Gardens.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

Now no credit scores for Conventional financing

Mon, 17 Nov 2025 14:23:26 GMT

What Does “No Credit Score Mortgage” Mean (for FNMA)

Policy Change

As of November 15, 2025, Fannie Mae’s automated underwriting system (Desktop Underwriter, or DU) will no longer require a minimum third-party credit score.

Fannie Mae

Instead of relying on a fixed cutoff (like “you must have a 620 FICO”), DU will use Fannie Mae’s proprietary risk-assessment model to evaluate credit risk.

Fannie Mae

That model considers more than just credit score: payment history, “trended” credit data, nontraditional credit sources like rent, utilities, and so on.

Fannie Mae

Nontraditional Credit Allowed

Fannie Mae’s Selling Guide includes rules for “nontraditional credit” — that is, credit history documented without a standard credit score.

Selling Guide

When a borrower truly has no credit score, lenders must document nontraditional credit history. For example, they might look at 12 months of cash flow or payment history (rent, utilities, insurance, etc.).

Fannie requires borrowers without any credit score to complete homeownership education before closing.

Selling Guide

Why This Could Be a Good Thing

Greater Access to Homeownership

This change will likely help people who are “credit invisible” (i.e., they don’t have a traditional credit score) get conventional mortgages.

Historically underserved groups (such as those who rent, use nontraditional credit, or have limited credit history) could benefit.

More Holistic Underwriting

By removing the rigid score minimum, DU can look at the whole financial picture. This means more weight on things like debt-to-income ratio, reserves, employment, and nontraditional credit.

Using more data (rent history, payment trends) can be more predictive of whether someone will make mortgage payments than just a credit score.

Potential Cost Benefits for Some Borrowers

If done right, borrowers with limited credit but solid finances could qualify for a conventional loan (which may have more favorable terms than some other high-risk or subprime options).

It may reduce the need for more expensive or risky loan products for people who don’t fit the “traditional” credit profile.

Risks and Downsides

Higher Risk for Lenders → Possibly Higher Cost

Without a credit score floor, lenders are taking on more uncertainty. They may require larger down payments, lower loan-to-value ratios (LTVs), or more reserves to compensate.

If the borrower is truly “credit invisible,” the lender’s verification burden is higher (to safely assess risk), which could make underwriting more stringent in non-score cases.

Potential for Higher Interest Rates / Pricing Risks

Even if a borrower qualifies, the interest rate may be higher compared to someone with a very good credit score, because the risk model may not “discount” as heavily without a high score.

There could be loan-level price adjustments (or other risk-based pricing) tied to the riskiness of nontraditional credit profiles.

Performance Uncertainty

This is a newer underwriting paradigm for Fannie Mae, so long-term performance is less “battle-tested” at scale for certain nontraditional credit borrowers.

If default rates go up for these loans, it could have negative implications for lenders or investors (or for how such loans are underwritten in the future).

Lender Overlays

Just because Fannie Mae has this policy doesn’t mean all lenders will be aggressive in offering no-score loans. Some may add their own stricter requirements (“overlays”) that make it harder than it sounds.

You’ll need a lender that is comfortable underwriting nontraditional credit and willing to do the extra documentation.

Is It a Good Thing For You Personally?

It depends on your situation:

Yes, it could be great if:

You don’t have a traditional credit score but have a solid financial picture (stable income, low debt, documented payment history for rent/utilities).

You want access to a mainstream, conventional mortgage.

You have enough reserves/down payment to satisfy lender’s risk assessment.

Be cautious if:

Your income or cash flow is marginal, because the lender may not be comfortable with “no score + limited reserves.”

You don’t have much documentation of nontraditional credit (you’ll need to show 12 months or more of payment history).

You’re not working with a lender that understands or is experienced with Fannie Mae’s nontraditional credit program.

My Verdict

Overall, yes — this is a positive shift by Fannie Mae toward more inclusive, flexible underwriting. It’s likely to help more people who’ve been shut out of conventional mortgages. But it’s not “free risk”: borrowers still need to show financial responsibility, and lenders will underwrite carefully.

If you are considering this type of mortgage (or someone offered it to you), I strongly recommend:

Talking to a lender experienced with Fannie Mae’s nontraditional credit program.

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What would the 50 year mortgage do for you

Mon, 10 Nov 2025 14:26:30 GMT

✅ the principal you borrowed

✅ all interest paid over the years

❌ It does NOT include taxes, insurance, or HOA unless noted.

Because longer terms spread payments out more slowly, they lower the monthly payment but massively increase total interest paid.

Below is a simple example to show how total payments change by loan term.

✅ Example: $300,000 loan at 6% interest

15-Year Mortgage

Monthly payment: ≈ $2,531

Total paid: ≈ $455,682

Total interest: ≈ $155,682

30-Year Mortgage

Monthly payment: ≈ $1,799

Total paid: ≈ $647,514

Total interest: ≈ $347,514

40-Year Mortgage

Monthly payment: ≈ $1,650

Total paid: ≈ $792,089

Total interest: ≈ $492,089

50-Year Mortgage

Monthly payment: ≈ $1,595

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Total paid: ≈ $956,140

Total interest: ≈ $656,140

✅ Summary: Total Payments by Loan Term

Term Monthly Payment Total Paid Over Life Total Interest

15-Year ~$2,531 $455,682 $155,682

30-Year ~$1,799 $647,514 $347,514

40-Year ~$1,650 $792,089 $492,089

50-Year ~$1,595 $956,140 $656,140

✅ Key Takeaway

A longer mortgage = lower payment, but the total paid skyrockets because interest accrues for decades longer.

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Will 6% interest rate create more activity for homebuyers

Wed, 05 Nov 2025 19:28:39 GMT

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My prediction for what is coming next

Mon, 03 Nov 2025 16:19:31 GMT

Here are the main types of events that typically cause the 10-year yield to drop:

Economic slowdown or recession signs

Weak GDP, rising unemployment, or falling consumer spending make investors expect lower future interest rates.

Example: A bad jobs report or slowing manufacturing data often pushes yields lower.

Federal Reserve rate cuts (or expectations of cuts)

If the Fed signals or actually cuts rates, long-term yields like the 10-year typically decline.

Markets anticipate lower inflation and slower growth ahead.

Financial market stress or geopolitical tension

During crises (wars, banking issues, political instability), investors seek safety in Treasuries — pushing prices up and yields down.

Lower inflation or deflation data

When inflation slows more than expected, the “real” return on Treasuries looks more attractive, bringing yields down.

Dovish Fed comments or data suggesting easing ahead

Even before actual rate cuts, if the Fed hints it might ease policy, yields often fall in anticipation.

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Feds cutting rates what will happen?

Mon, 27 Oct 2025 18:30:54 GMT

�� 1. Fed Rate vs. Market Rates

When the Federal Reserve cuts rates, it lowers the federal funds rate — the rate banks charge each other for overnight loans.

That directly affects:

Credit cards

Auto loans

Home equity lines of credit (HELOCs)

These tend to move quickly with Fed changes.

�� 2. Mortgage Rates

Mortgage rates are not directly set by the Fed — they’re more closely tied to the 10-year Treasury yield, which moves based on investor expectations for:

Future inflation

Economic growth

Fed policy in the future

So, when the Fed signals a rate cut or actually cuts, Treasury yields often fall in anticipation, which can lead to lower mortgage rates — if investors believe inflation is under control and the economy is cooling.

However:

If markets think the Fed cut too early or inflation might return, yields can actually rise, keeping mortgage rates higher.

So, mortgage rates don’t always fall right after a Fed cut.

�� In short:

Fed cuts → short-term rates (credit cards, HELOCs) usually fall fast.

Mortgage rates → might fall if inflation expectations drop and bond yields decline — but not guaranteed.

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What is trending right now in the mortgage business

Mon, 20 Oct 2025 13:19:09 GMT

�� 1. FHA Streamline Refinance

Purpose:

Simplify refinancing for homeowners who already have an FHA loan — lowering their rate or switching from an ARM to a fixed rate with minimal paperwork and cost.

Key Features:

No income verification usually required

No appraisal required in most cases (uses the original home value)

Limited credit check — just to confirm good payment history

Must benefit financially (lower rate, lower payment, or move to a more stable loan)

Basic Rules:

You must already have an FHA-insured loan

No late payments in the past 12 months

At least 6 months must have passed since your current FHA loan was opened

The refinance must result in a “net tangible benefit” — meaning it improves your financial situation

Appraisal Waiver:

Most FHA Streamlines don’t require an appraisal at all — it’s based on the original value when the loan was made.

�� So, the loan amount can’t exceed your current unpaid principal balance plus upfront MIP (mortgage insurance premium).

�� 2. VA Streamline Refinance (IRRRL)

(IRRRL = Interest Rate Reduction Refinance Loan)

Purpose:

For veterans, service members, or eligible spouses who already have a VA loan, this program allows them to lower their rate quickly and cheaply.

Key Features:

No appraisal required (uses prior VA loan value)

No income or employment verification

Limited or no out-of-pocket costs (can roll costs into new loan)

No cash-out allowed — it’s only to reduce the rate or switch from ARM to fixed

Basic Rules:

Must have an existing VA-backed loan

Must show a net tangible benefit (like lowering monthly payment or rate)

Must be current on mortgage payments

Appraisal Waiver:

VA Streamlines typically waive the appraisal entirely, meaning your home value isn’t rechecked.

This makes the process much faster and easier.

�� 3. The “90% Appraisal Waiver” Explained

This term often shows up when:

A lender chooses to order an appraisal, but wants to use an automated value system (AVM) or

When the lender uses an appraisal waiver (like through FHA/VA automated systems) up to 90% of the home’s current estimated value.

In practice:

It means the lender or agency allows the loan amount to be up to 90% of the home’s estimated value without a full appraisal.

It’s a type of limited-value check — often used when rates are being lowered and no cash-out is being taken.

It helps borrowers avoid delays and costs tied to a new appraisal.

Example:

If your home’s estimated value (per AVM or prior appraisal) is $400,000, a 90% waiver means your loan can go up to $360,000 without needing a new appraisal.

✅ Summary Com

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what other income can be used besides tax returns

Mon, 13 Oct 2025 14:04:57 GMT

Here are alternative ways to qualify for a mortgage without using tax returns:

�� 1. Bank Statement Loans

How it works: Lenders review 12–24 months of your business or personal bank statements to calculate your average monthly deposits (as income).

Used for: Self-employed borrowers, business owners, gig workers, freelancers.

What they look at:

Deposit history and consistency

Business expenses (they’ll apply an expense factor, usually 30–50%)

No tax returns or W-2s required.

�� 2. Asset Depletion / Asset-Based Loans

How it works: Instead of income, your assets (like savings, investments, or retirement funds) are used to demonstrate repayment ability.

Used for: Retirees, high-net-worth individuals, or anyone with substantial savings but limited current income.

Example: $1,000,000 in liquid assets might qualify as $4,000–$6,000/month “income” (depending on lender formula).

�� 3. P&L (Profit and Loss) Statement Only Loans

How it works: Lender uses a CPA- or tax-preparer-prepared Profit & Loss statement instead of tax returns.

Used for: Self-employed borrowers who can show business income trends but don’t want to use full tax documents.

Usually requires: 12–24 months in business + CPA verification.

��️ 4. DSCR (Debt Service Coverage Ratio) Loans

How it works: Common for real estate investors — qualification is based on the property’s rental income, not your personal income.

Formula:

Gross Rent ÷ PITI (Principal + Interest + Taxes + Insurance)

DSCR ≥ 1.0 means the property “covers itself.”

No tax returns, W-2s, or employment verification needed.

�� 5. 1099 Income Loan

How it works: Uses your 1099 forms (from contract work, commissions, or freelance income) as income documentation instead of full tax returns.

Used for: Independent contractors, salespeople, consultants, etc.

Often requires: 1–2 years of consistent 1099 income.

Higher down payment and interest rate required.

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Now offering a 3rd Mortgage

Mon, 06 Oct 2025 13:10:01 GMT

A third mortgage is an additional loan secured by the same property after a first and second mortgage already exist. It’s essentially a third lien on the property, which means it’s in third place to be repaid if the borrower defaults — making it riskier for lenders.

Because of this higher risk, third mortgages typically:

Have higher interest rates,

Offer smaller loan amounts, and

Require strong borrower profiles or solid property equity.

�� How AI Is Transforming 3rd Mortgage Lending

AI tools can make offering third mortgages much more efficient and lower-risk by handling the data-heavy analysis that used to take underwriters days. Here’s how:

1. AI-Powered Lead Generation

AI platforms identify homeowners with significant equity but limited cash flow — ideal candidates for third liens.

Example: AI scans property databases, loan records, and credit profiles to spot someone with 60–70% total combined LTV (Loan-to-Value).

The system targets those borrowers automatically with personalized financing offers.

2. Smart Underwriting

AI underwriters use advanced algorithms to evaluate:

Combined LTV across all liens,

Income stability and payment history,

Real-time credit behavior,

Local property value trends.

This allows the lender to make quick, data-backed decisions on small, higher-risk loans while keeping default rates low.

3. Dynamic Pricing

AI adjusts rates and terms based on real-time risk scoring — similar to how insurance companies use predictive pricing.

For example:

Borrower A with 65% CLTV might get 10% APR.

Borrower B with 85% CLTV might see 13% APR.

4. Automated Servicing and Risk Monitoring

Post-funding, AI tools can monitor the borrower’s financial health, detect early signs of distress, and even suggest restructuring options before default risk rises.

�� Why It’s Appealing

Opens a new revenue stream for lenders and brokers,

Meets demand for smaller equity-tap loans without refinancing,

Uses AI automation to keep costs low despite higher credit risk,

Attracts tech-savvy borrowers seeking quick approvals.

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Always look at the 10 year treasury

Mon, 29 Sep 2025 13:27:03 GMT

Great question — the 10-year U.S. Treasury Note (T-Note) is one of the most important benchmarks in finance, and it’s tightly linked to interest rates. Here’s a breakdown of how it works and why it matters:

1. What the 10-Year Treasury Is

It’s a bond issued by the U.S. government with a maturity of 10 years.

Investors buy it, loaning money to the government in exchange for:

Semiannual coupon payments (interest), and

The face value back at maturity.

Because it’s backed by the U.S. government, it’s considered one of the safest investments in the world.

2. Yield vs. Price

The yield is the effective return investors earn on the bond.

The yield moves inversely with the bond’s price:

If demand is high and price goes up → yield goes down.

If demand falls and price goes down → yield goes up.

3. Connection to Interest Rates

The 10-year Treasury yield reflects investor expectations about:

Future Federal Reserve policy (Fed funds rate).

Inflation (higher inflation expectations push yields higher).

Economic growth (slower growth often pushes yields lower).

While the Fed directly controls only the short-term Fed funds rate, the 10-year yield is market-driven and often moves in anticipation of where the Fed will go.

4. Why It’s So Important

Mortgage rates & lending costs: 30-year mortgage rates generally move in step with the 10-year yield (plus a spread). If the 10-year goes up, mortgage rates usually rise.

Benchmark for global finance: Companies, governments, and banks often price loans and bonds based on the 10-year yield.

Risk sentiment: Investors flock to Treasuries in times of uncertainty, driving yields down (“flight to safety”).

5. Practical Example

Suppose the Fed raises short-term rates to fight inflation.

Investors expect tighter policy and possibly lower inflation later.

If they believe inflation will fall, demand for 10-years might rise → yields drop.

But if they fear inflation will stay high, demand falls → yields rise.

Mortgage rates, business loans, and even stock valuations all adjust accordingly.

✅ In short:

The 10-year Treasury is the bridge between Fed policy and real-world borrowing costs. It signals market expectations for growth, inflation, and Fed moves, making it a crucial guide for interest rates across the economy.

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AI underwriting to human underwriting and this is what happened

Wed, 24 Sep 2025 21:07:59 GMT

Speed & Efficiency

AI Underwriting:

Processes applications in seconds to minutes.

1.Can instantly pull data from multiple sources (credit reports, bank statements, income verification, property valuations, etc.).

Ideal for high-volume, standardized cases.

Human Underwriter:

Takes hours to days, depending on complexity.

Manually reviews documents, contacts third parties, and applies professional judgment.

Slower, especially for complex or edge cases.

2. Data Handling

AI:

Uses algorithms and machine learning to analyze massive datasets.

Can detect patterns humans might miss (e.g., spending behavior, alternative data like utility payments, even digital footprints in some markets).

Human:

Relies on traditional documentation (pay stubs, tax returns, appraisals).

Limited by human bandwidth—can’t process as much raw data at once.

3. Consistency & Bias

AI:

Decisions are consistent with its rules and training data.

However, if the data it’s trained on is biased, the system can replicate or even amplify those biases.

Human:

Brings subjective judgment. Can weigh special circumstances that don’t fit a neat rule.

Risk of inconsistency—two underwriters might interpret the same file differently.

May have unconscious bias, but also flexibility to override rigid criteria.

4. Risk Assessment

AI:

Excels at quantifiable risks (credit scores, loan-to-value ratios, historical claim data).

Weak at unstructured or nuanced factors (e.g., a borrower with an unusual income stream, or a claim with unclear circumstances).

Human:

Strong at contextual judgment—understanding unique borrower situations, exceptions, or “gray areas.”

Can pick up on red flags that an algorithm might miss (e.g., forged documents, conflicting information).

5. Regulation & Accountability

AI:

Regulators are still catching up. Requires transparency in decision-making (explainable AI).

Hard to appeal an AI decision if it can’t explain its reasoning clearly.

Human:

Provides a clear chain of accountability—borrower can request explanations or escalate.

Easier for compliance teams to audit decision-making.

6. Cost & Scalability

AI:

Scales cheaply—one system can process thousands of applications simultaneously.

Lower ongoing labor costs once implemented.

Human:

Labor-intensive, costs grow with volume.

Better suited for complex, high-value, or unusual cases rather than mass processing.

✅ Bottom line:

AI underwriting is best for speed, scale, and straightforward cases.

Human underwriters are best for nuanced judgment, exceptions, and handling edge cases.

Most modern institutions use a hybrid model: AI handles the bulk of simple files, while humans step in for complex or flagged cases.

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Boomers aren't selling: 61% plan to stay put indefinitely

Wed, 17 Sep 2025 17:46:20 GMT

A new survey from Clever Real Estate shows that 61% of baby boomer homeowners say they “never” plan to sell their homes, a jump of 7 percentage points from 2024. The main reason? More than half want to age in place.

That’s a big shift. Baby boomers now make up the largest share of U.S. homeowners, and if more than 6 in 10 say they’ll “never” sell, that has ripple effects:

Inventory squeeze : With fewer boomers putting homes on the market, younger buyers have less supply to choose from, which can keep prices elevated.
Aging in place trend : The desire to stay put often means investing in accessibility upgrades—things like stair lifts, walk-in showers, and smart home tech for safety.
Generational divide : Millennials and Gen Z face higher borrowing costs and limited starter-home availability, while boomers are holding onto larger family homes longer.
Long-term planning : Some experts note that many of these homes will eventually transfer through inheritance rather than sales, changing how housing stock re-enters the market.

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Finally, putting a stop on the trigger list

Wed, 10 Sep 2025 20:09:41 GMT

Excited to share a major update that will make the homebuying process more secure and less stressful.

President Donald Trump recently signed the Homebuyers Privacy Protection Act of 2025 into law. This bill is a significant victory for the real estate industry, as it directly addresses the problem of unwanted calls, texts, and emails that often flood clients upon mortgage application.

What's Changing?

For years, many borrowers have experienced a barrage of unsolicited contact from different lenders immediately after their mortgage application. This happens because of "trigger leads"—a process where credit reporting agencies sell information to other companies once a credit inquiry is made.

Effective March 5, 2026, this new law will put a stop to this practice. It will severely limit who can receive client contact information, ensuring client privacy is protected. A credit reporting agency will only be able to share trigger lead information with a third party if:

• Clients explicitly consent to the solicitations.

• The third party has an existing business relationship.

This change means a more efficient, respectful, and responsible homebuying journey.

We are committed to a seamless process and will keep you informed of any further developments as the effective date approaches.

In the meantime, you can use the information below to inform clients how to proactively protect themselves from unwanted solicitations.

Opting Out:

• OptOutPrescreen.com: You can opt out of trigger leads through the official opt-out service, OptOutPrescreen.com.

• Do Not Call Registry: You can also register your phone number with the National Do Not Call Registry to reduce unsolicited calls.

• DMA.choice.org: For mail solicitations, you can register with DMA.choice.org to reduce promotional mail.

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Finally putting a stop to the Trigger leads from happening

Wed, 10 Sep 2025 13:38:18 GMT

We're excited to share a major update that will make the homebuying process more secure and less stressful.

What's Changing?

• Clients explicitly consent to the solicitations.

• The third party has an existing business relationship.

This change means a more efficient, respectful, and responsible homebuying journey.

We are committed to a seamless process and will keep you informed of any further developments as the effective date approaches.

In the meantime, you can use the information below to inform clients how to proactively protect themselves from unwanted solicitations.

Opting Out:

• OptOutPrescreen.com: You can opt out of trigger leads through the official opt-out service, OptOutPrescreen.com.

• Do Not Call Registry: You can also register your phone number with the National Do Not Call Registry to reduce unsolicited calls.

• DMA.choice.org: For mail solicitations, you can register with DMA.choice.org to reduce promotional mail.

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When is the right time to refinance your mortgage

Mon, 08 Sep 2025 14:21:38 GMT

Good question — refinancing can be a smart move, but the timing really matters. The "right time" to refinance your mortgage depends on a mix of personal and market factors. Here are the main ones to weigh:

1. Interest Rates

If current mortgage rates are at least 2% lower than your existing rate, refinancing could save you money.

Example: Dropping from 7% to 6% on a $300,000 loan can save hundreds per month.

2. Loan Term Goals

Switching from a 30-year to a 15-year mortgage can help you pay off your home faster (though monthly payments are higher).

Extending your term may lower your monthly payment but increase total interest paid.

3. Equity in Your Home

Lenders usually want you to have at least 20% equity for the best rates and to avoid private mortgage insurance (PMI).

If your home’s value has increased, refinancing can help eliminate PMI.

4. Credit Score

If your credit score has improved since you got your mortgage, you may now qualify for much better rates.

5. Life Situation

Planning to stay in the home at least 3–5 years? That’s often how long it takes to “break even” on refinance closing costs.

If you might sell sooner, refinancing may not make sense.

6. Debt or Cash Needs

A cash-out refinance can help if you want to consolidate higher-interest debt, fund renovations, or free up cash — but it raises your loan balance.

✅ Rule of Thumb:

Refinance if you can lower your rate, shorten your term, or eliminate PMI, and you’ll stay in the home long enough to recover the costs.

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Reverse purchase financing: The financing option no one is talking about

Tue, 02 Sep 2025 18:43:05 GMT

Did you know that in 2022, both younger and older Baby Boomers made up the largest generation of American homebuyers? This cohort accounted for 1,950,000 properties — equating to 39% of total homes purchased!

With over 12,000 Americans turning 65 every day in 2024, this burgeoning market will undoubtedly continue to bring more buyers and sellers to the table over the next decade.2 However, these potential clients will also face challenges — namely market volatility, unpredictable interest rates and limited purchasing power due to increasing debt.

That’s where reverse purchase financing comes into play, the funding option specifically designed for older Americans. With this option, older homebuyers can increase their purchasing power with fewer financial worries and limitations as they move towards or through retirement. For real estate professionals, this option presents an opportunity to capture more sales.

Yet staggeringly few are aware of its existence.

What is reverse purchase financing?

Established in 2009 by the Department of Housing and Urban Development (HUD), reverse purchase financing or “Home Equity Conversion Mortgage ( HECM ) for Purchase loan program” allows those aged 62 and older to purchase a new house or certain condos by combining a one-time investment of their funds (such as profits from the sale of their current home) with reverse mortgage loan proceeds to complete the purchase. They own the home with their name on the title, as with any mortgage, traditional or reverse.

But unlike financing with a traditional mortgage, monthly principal and interest payments are not required on the loan, so long as the homeowner keeps up to date with real estate taxes, homeowners’ insurance and property maintenance. As long as the buyer complies with these ongoing loan obligations, a HECM for Purchase loan doesn’t have to be repaid until a maturity event, such as when the home is sold or is no longer considered their primary residence.

The down payment percentage required on the loan is higher than with a traditional mortgage (usually 60% to 65% of the cost of the new home)3 and the owner does build less equity — but unlike a traditional loan, the borrower is not at risk of owing more than the home is worth at the time of repayment when the home is sold due to its non-recourse feature.

The HECM for Purchase is not a refinancing tool; it is not akin to a Home Equity Line of Credit ( HELOC ). Rather, it’s an age-specific, federally-insured loan option that helps eligible buyers aged 62+ make a residential purchase while retaining more of their money than they could with a conventional mortgage or an all-cash purchase, generally leaving their savings and assets intact for retirement and any heirs.

In addition to improved cash flow throughout the life of the loan due to the optional repayment feature,4 buyers also enjoy additional spending power with reverse purchase financing. They are able to maximize their cash investment on a new home and more comfortably afford an upscale home or a property in a more desirable location — whether it be closer to family or in a luxury housing development with additional amenities.

Very few are reaping the benefits, but they keep on coming

Reverse purchase financing can help older homebuyers improve their financial flexibility when purchasing a new home and help real estate professionals expand their business within the fast-growing segment of the market. Yet despite this, it remains a niche product that is largely misunderstood or maligned, and quite frankly, unknown to the general public.

Consumers who are introduced to the HECM for Purchase loan option are often skeptical at best, with many thinking it’s too good to be true. But the fact is, most people simply don’t know that a new home can be purchased with a reverse mortgage. And after years of advertisements and TV commercials promoting the benefits of better-known reverse mortgage loan uses like continuing to live in your current home while tapping your home equity,4 who could blame them?

According to the Federal Housing Administration (FHA), there were only 2,063 HECM for Purchase loans endorsed in 2022 — that’s less than 1/10th of 1% of homes sold last year.5 But even as professionals and consumers continue to leave the benefits of reverse purchase financing on the table when transacting, advancements to the now 15-year-old program continue.

Recently, Interested Party Contributions (or seller concessions) have been allowed with HECM for Purchase loans. This is a huge boon for the program as seller concessions have not been allowed within the FHA-insured program since its inception.

With this latest enhancement, homebuyers aged 62+ can participate in seller concessions for up to 6% of the sales price toward borrower origination fees, other closing costs, prepaid items, and discount points. The 6% limit also includes payment of the Up-Front Mortgage Insurance Premium (UFMIP).

“The lack of seller concessions may have been one of the biggest reasons that reverse purchase financing has not become more mainstream and widely promoted to and by the Baby Boomer generation,” said Rob Cooper, National Purchase and Builders Sales Leader for Longbridge Financial . “We in the industry are very hopeful that this will be an eye-opener, especially for real estate agents and builders to start recommending this product to clients more regularly.”

The times they are a-changin’

The real estate industry has flourished over recent years due to record-high home appreciation, lower interest rates and motivated clients — but as they say, nothing lasts forever. In fact, a veritable upheaval is headed for the housing market already.

According to financial analysts, a “Silver Tsunami” is headed our way, beginning in 2024, as millions of homeowners aged 50 and older make the move to downsize as they inch closer to retirement.6

“The truth is the real estate industry hasn’t really needed to learn about this financing option over the past decade. We have experienced one of the longest ‘seller’s markets’ in our country’s history, so there wasn’t an immediate need for real estate professionals to educate themselves on financing tools beyond traditional mortgages or all-cash transactions,” Cooper said.

“They have been able to reach sales goals with relative ease for over a decade. But economic forecasts and housing market predictions suggest that businesses need to be prepared for another shake-up in the near future. And reverse purchase financing may finally find its rightful place within these industries,” he continued.

The bottom line

The reverse mortgage (HECM) for purchase program was designed to help older Americans buy a more suitable home in retirement, while still conserving cash and assets for future expenses.

And as an added bonus, the program can help real estate professionals turn more shoppers into buyers and close the gap on aging fence-sitters who are hesitant to begin the home-buying process all over again in retirement, all while the U.S. stares down the barrel of a considerable economic downturn.

It begs the question, “When will more real estate agents and builders begin recommending reverse purchase financing to more eligible American seniors as a viable, strategic funding option to buy the home of their dreams in retirement?

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AI to AI and what does that mean for me in the mortgage business

Thu, 28 Aug 2025 16:46:53 GMT

1. Getting Leads from AI

AI can help you find and qualify homeowners who may be interested in a second mortgage (home equity loan or HELOC). Common approaches:

Predictive Analytics – AI models look at property values, loan-to-value (LTV), credit trends, and household income estimates to flag homeowners who may be equity-rich but cash-flow constrained.

Behavioral Targeting – AI scrapes signals from online behavior (searches, social media, property sites) to identify homeowners exploring refinancing, debt consolidation, or home improvement.

List Enrichment & Scoring – AI takes raw lead lists (from credit bureaus, title data, etc.) and ranks prospects by likelihood of conversion.

Chatbots & Virtual Assistants – Automated lead capture on websites or ads, qualifying borrowers by asking pre-screening questions 24/7.

2. Using AI in the Mortgage Process (Second Mortgages Specifically)

Once a lead is captured, AI can help streamline:

Prequalification – Instantly running soft credit pulls and property value AVMs (automated valuation models).

Risk Assessment – AI models assess borrower income stability, equity position, and repayment ability faster than traditional underwriting.

Automated Marketing – Personalized drip campaigns (emails/texts) tailored to where the borrower is in their decision cycle.

Compliance Guardrails – AI tools scan communications and ads to make sure they meet RESPA, ECOA, and fair lending rules.

✅ Important Note: Regulations are tightening around AI in lending (bias, transparency, fair lending laws). Any AI-driven lead-gen or underwriting must remain compliant with ECOA, Fair Housing Act, UDAAP, RESPA, and FCRA.

Do you want me to map out an AI-driven workflow for generating and closing second mortgage leads (step by step with tools you could use), or do you want a higher-level overview of companies already doing this?

You said:

Customers are finding thru AI and I am getting them second mortgages thru AI

ChatGPT said:

Got it — you’re saying customers are finding you through AI (likely through AI-driven search, recommendations, or even chatbots), and then you’re also using AI on your end to help them get second mortgages (home equity loans or HELOCs).

Here’s how that usually plays out, and how you can structure it:

�� How Customers Find You Through AI

Search + Recommendation Engines

Borrowers ask tools like ChatGPT, Google Gemini, or even lender chatbots about “best second mortgage lenders.”

AI-driven SEO tools route them toward your website or ads.

AI-Powered Marketing

Predictive ad platforms (Google Ads, Meta, programmatic ads) use AI to match your services with homeowners who are likely equity-rich.

Smart drip campaigns + automated SMS/Email nurtures keep them engaged until they’re ready to apply.

Conversational AI (Front Door)

Website chatbots or virtual assistants pre-qualify by asking: “What’s your home value?”, “What’s your current balance?”, “What’s your income?”.

These instantly filter serious borrowers from casual shoppers.

�� How You Help Them Get the Loan With AI

Lead Intake & Pre-Screening

AI pulls in property data (AVM: Zillow/Black Knight/CoreLogic) + soft credit pulls.

Instantly calculates Loan-to-Value (LTV) and debt-to-income (DTI).

Automated Prequalification

If borrower has enough equity + meets credit standards → AI engine generates a prequalification in minutes.

AI Underwriting Support

OCR (document reading AI) extracts paystubs, W2s, bank statements → fills in 1003 automatically.

AI models flag potential risk (income inconsistencies, high utilization).

Personalized Loan Matching

AI matches the borrower to the best second mortgage product (fixed-rate 2nd lien, HELOC, blended loan).

Could even run “what-if” payment scenarios instantly for the customer.

Automated Compliance & Closing

AI scans communications to avoid UDAAP/ECOA violations.

Auto-generates disclosure packages and checks for missing signatures.

�� Big Picture

You’re essentially creating an AI-driven pipeline:

Customer → AI finds you → AI captures lead → AI helps you qualify → AI supports underwriting → You close the 2nd mortgage faster.

This model is gaining traction because borrowers want instant answers, and AI cuts weeks off the traditional process.

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When Fed says they may drop rates next month, what is really happening now

Mon, 25 Aug 2025 13:03:11 GMT

Great question. Markets don’t usually wait until the Fed actually cuts rates to react — they move in advance, based on expectations.

Here’s how it works:

Forward-looking nature of markets – Bond yields, stock prices, and mortgage rates are influenced by what investors think will happen, not just what has already happened. If traders believe the Fed will cut rates in September, they start pricing that in now.

Fed communication – The Fed often signals its intentions ahead of time through speeches and policy statements. If Chair Powell or other Fed officials strongly hint at a cut, the market will react immediately.

Data-dependent – If new data (like inflation cooling or unemployment rising) supports the case for a cut, markets may rally or yields may drop months before the Fed makes the move.

The actual cut – When September arrives, if the Fed cuts exactly as expected, the market reaction may be small (because it’s already “priced in”). But if the cut is bigger, smaller, or delayed compared to expectations, that’s when you see sharper moves.

�� So to your point: yes, the market already reacts now to a possible September cut. By the time the Fed announces it, most of the impact could be baked in.

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As Social Security turns 90, what will its future hold?

Mon, 18 Aug 2025 14:06:54 GMT

Here’s a clearer breakdown of what lies ahead for Social Security as it turns 90:

1. Trust Fund Depletion: A Real and Growing Threat

2025 Trustees Report projects that the OASI (Old-Age & Survivors Insurance) Trust Fund will be depleted by 2033 . At that time, beneficiaries would receive only about 77% of scheduled benefits. Social Security Peterson Foundation
The Disability Insurance (DI) Trust Fund is expected to remain solvent through at least 2099. Social Security Peterson Foundation
If OASI and DI were merged hypothetically, the combined OASDI reserves would be exhausted around 2034 , with roughly 81% of benefits payable at that time. Social Security AARP
Other sources echo this timeline: some forecasts suggest insolvency might arrive as early as 2033 or 2034 , with 20–26% cuts unless reforms are enacted. The Week+1 TIME+1 The Sun Kiplinger investopedia.com

2. Contributing Factors to the Crisis

Demographics : The worker-to-beneficiary ratio has plummeted—from 16.5 per retiree in 1950 to around 2.7 today—coping with an aging population and declining birth rates. The Sun investopedia.com Peterson Foundation Wikipedia
Policy Changes : Recent laws like the Social Security Fairness Act (2025) that restored withheld benefits for certain groups raised payouts without funding offsets, accelerating depletion. AARP investopedia.com
Reduced Agency Resources : The SSA saw significant staffing reductions—estimates suggest about 20% of field staff were let go —compromising service delivery. investopedia.com HousingWire

3. What Happens After Depletion?

Benefits won't vanish—but if no corrective action is taken, they would be automatically reduced to the level sustainable by ongoing payroll tax revenue—approximately 77–81% of the current scheduled amounts. investopedia.com TIME AARP Peterson Foundation
That represents a 19–23% cut in benefits. For instance, a retiree currently receiving $2,000/month would see payments drop to around $1,545–$1,600/month . investopedia.com TIME The Week

4. Solutions & Proposals to Preserve the Program

Here are some of the leading ideas under consideration:

a. Raising Revenue

Payroll Tax Increase
Tax hikes—from 12.4% toward 16% —could close funding gaps, though they carry economic trade-offs. The Sun The Week Wikipedia Bipartisan Policy Center
Tax Higher Incomes or Remove the Earnings Cap
Increasing or eliminating the taxable earnings ceiling, or taxing benefits/investment income, could improve funding. AARP Wikipedia Bipartisan Policy Center Kiplinger

b. Reducing or Restructuring Benefits

Reduce Benefits for New Recipients
A modest 5% cut starting in 2025 could extend solvency only a few more years. AARP
Means-Testing or Adjust COLA
Lowering cost-of-living adjustments (COLA) or reducing benefits for wealthier retirees could help but are unpopular. AARP
Raise Retirement Age Gradually
Incremental increases to the full retirement age could yield sizable savings. AARP

c. Structural Reforms & Investment Strategies

Bipartisan Investment Fund (Cassidy–Kaine Plan)
This proposal would inject $1.5 trillion into a separate fund that invests in stocks and bonds, aiming to generate growth over 75 years and preserve all benefits without resorting to general government borrowing. The Washington Post investopedia.com
Brookings Blueprint
Advocates a system that maintains core principles, ensures universal participation, and restores long-term solvency without expanding general fund use. Brookings

5. The Road Ahead: What’s Likely to Happen?

Inaction isn’t an option—delaying reform would escalate the scale of necessary changes. Peterson Foundation The Week Kiplinger Politically, topics like benefit cuts, tax hikes, and raising the retirement age remain extremely sensitive. Successful reform will likely involve a mix of revenue increases, eligibility tweaks, and investment innovations , crafted in a way that spreads burden fairly and maintains public support.

Some bipartisan pathways—like the Cassidy–Kaine plan—offer creative long-term strategies, but most require immediate bridging solutions (e.g., modest tax increases or cost adjustments) to prevent cuts in the next decade.

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Shop your homeowners insurance annually

Mon, 18 Aug 2025 12:48:40 GMT

yes — shopping for your homeowners' insurance annually is generally a smart move.

Here’s why:

1. Rates change more than you think.

Insurance companies regularly adjust premiums based on inflation, claims data, weather patterns, and even changes to your credit or risk profile. A company that was cheapest two years ago might now be in the middle of the pack.

2. Your coverage needs can shift.

If you’ve renovated, added security systems, bought expensive personal items, or paid off your mortgage, you may need to adjust your coverage — and some insurers may reward those updates with lower rates.

3. Loyalty discounts can fade.

While some insurers offer loyalty perks, others quietly raise rates on long-term customers (“price optimization”), counting on you not to shop around.

4. Bundling opportunities change.

If you’ve switched auto or other policies, you might qualify for better bundle discounts elsewhere.

Tips for shopping annually:

Compare at least 3–4 quotes.

Match coverage limits exactly when comparing prices — don’t just look at the premium.

Check both local agents and online marketplaces.

Ask about claim satisfaction and financial stability, not just price.

Reassess your deductibles; a higher deductible can lower your premium.

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Learn about the 1% down program

Mon, 11 Aug 2025 13:10:21 GMT

Program Overview

Borrower Contribution: You pay 1% of the purchase price as the down payment.

Lender provides a 2% grant, bringing your total to 3% down, which is the typical minimum for conventional loans.

For example, on a $250,000 home:

You pay $2,500 (1%)

Lender adds $5,000 (2%)

You start owning 3% equity from day one

Eligibility Requirements

To qualify for ONE+, you must meet all of the following:

Income: At or below 80% of your area's median income (AMI)

National Mortgage Professional

Credit Score: Minimum FICO® score of 620

Property Type: Must be a single-unit primary residence (no second homes or investments)

Loan Limit: Loan amount must be $350,000 or l

Total Down Payment: With their 2% grant included, your total down payment cannot exceed 5%

Mortgage Insurance (PMI)

Despite the grant taking you to 3% equity, the program does require mortgage insurance (PMI).

National Mortgage Professional

The Mortgage Report

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Learn about the 40 year , 10 year interest only

Mon, 04 Aug 2025 13:05:32 GMT

A 40-year interest-only fixed for 10 years mortgage is a specialized loan product with the following structure:

�� Loan Term: 40 Years

Total length of the mortgage is 40 years.

�� Interest-Only Period: First 10 Years

For the first 10 years, the borrower only pays interest on the loan.

No principal is paid down during this time (unless the borrower chooses to).

Monthly payments are lower because they do not include principal repayment.

�� Fixed Interest Rate: First 10 Years

The interest rate is fixed during the 10-year interest-only period.

This provides payment stability during that time.

�� After 10 Years: Principal + Interest

After the initial 10 years:

The borrower starts making fully amortizing payments (principal + interest).

These payments are higher, because:

The principal is repaid over the remaining 30 years, not 40.

And the interest rate may adjust, depending on loan terms (some convert to an adjustable rate, others stay fixed).

✅ Pros

Lower payments early on—can help with cash flow.

May be useful if the borrower plans to sell or refinance within 10 years.

Good for investors or short-term homeownership plans.

⚠️ Cons

No equity is built unless home appreciates or borrower pays extra.

Big payment increase after 10 years.

Can be risky if income doesn't rise, or if home value declines.

�� Example

Let’s say:

Loan amount: $300,000

Interest rate: 6% fixed for 10 years

First 10 years: Only pay interest = $1,500/month

After 10 years: Principal + interest on remaining $300,000 over 30 years = ~$1,798/month (assuming same rate)

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Look for the 10 Year Treasury to come down

didier@ddamortgage.com (Didier Malagies) — Mon, 28 Jul 2025 13:18:54 GMT

When the 10-year Treasury yield goes down, it generally signals lower interest rates and increased demand for safe-haven assets like U.S. government bonds. Here’s what typically happens across different areas of the economy and markets:

�� Why the 10-Year Treasury Yield Drops

Increased demand for bonds: Investors buy Treasuries during uncertain times (e.g., recession fears, geopolitical risk), which drives prices up and yields down.

Expectations of lower inflation or interest rates: If the Federal Reserve is expected to cut rates or inflation is cooling, yields tend to fall.

Weak economic outlook: Slowing growth or a poor jobs report can trigger a yield decline.

�� Impacts of a Lower 10-Year Treasury Yield

�� 1. Mortgage Rates and Loans

Mortgage rates (especially 30-year fixed) tend to follow the 10-year Treasury.

As yields fall, mortgage rates usually decline, making home loans cheaper.

This can stimulate the housing market and refinancing activity.

�� 2. Stock Market

Lower yields often boost stock prices, especially growth stocks (like tech), because:

Borrowing costs are lower.

Future earnings are worth more when discounted at a lower rate.

Defensive and interest-sensitive sectors (like utilities and real estate) also benefit.

�� 3. Consumer and Business Borrowing

Lower Treasury yields can lead to lower interest rates across the board, including for:

Auto loans

Credit cards

Business loans

This can boost consumer spending and business investment.

�� 4. U.S. Dollar

Falling yields can make U.S. assets less attractive to foreign investors.

This can weaken the dollar, which may help U.S. exporters by making goods cheaper abroad.

�� 5. Inflation Expectations

If the yield is falling due to low inflation expectations, it may indicate deflationary pressure.

However, if it's just due to safe-haven buying, it might not reflect inflation at all.

⚠️ Potential Risks

A sharp drop in the 10-year yield can signal a recession or loss of confidence in the economy.

A flattening or inverted yield curve (when short-term rates are higher than long-term) can be a recession warning.

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Mixed Use and Mutlifamily

didier@ddamortgage.com (Didier Malagies) — Mon, 21 Jul 2025 12:26:30 GMT

Resi/commercial

Typical 2-3 units over a 1-unit ground-floor commercial space

LTV’s up to 75%

A mixed-use property is a type of real estate development that combines two or more different uses within a single building or development. The most common combination is residential and commercial — for example, apartments or condos above ground-floor retail or office space.

�� Key Characteristics of a Mixed-Use Property:

Feature Description

Use Types Typically includes residential, commercial, retail, office, and sometimes hospitality or industrial components.

Zoning Must be zoned for mixed-use by the local municipality.

Layout Different uses are separated vertically (e.g., retail on the bottom, housing on top) or horizontally (different sections of the development).

Ownership Can be owned by an individual, company, REIT, or government entity; may be leased or sold as separate units.

Financing Considered commercial real estate; underwriting depends on the income mix and proportions of use types.

�� Common Mixed-Use Examples:

Urban Buildings: Apartments above restaurants or retail stores (like Starbucks or a dry cleaner).

Suburban Developments: Townhome communities built around a retail plaza or office park.

Live/Work Units: Ground-floor office or retail space with a residence above, often used by entrepreneurs.

Transit-Oriented Developments: Mixed-use buildings near train stations or bus hubs.

�� Benefits of Mixed-Use Properties:

Diversified Income Streams (residential + commercial)

Increased Foot Traffic for businesses

Live-Work-Play Environment appeals to urban dwellers

Higher Land Use Efficiency and potentially better returns

Encouraged by city planning to reduce sprawl and support sustainability

�� Key Characteristics of a Mixed-Use Property:

Feature Description

Use Types Typically includes residential, commercial, retail, office, and sometimes hospitality or industrial components.

Zoning Must be zoned for mixed-use by the local municipality.

Layout Different uses are separated vertically (e.g., retail on bottom, housing on top) or horizontally (different sections of the development).

Ownership Can be owned by an individual, company, REIT, or government entity; may be leased or sold as separate units.

Financing Considered commercial real estate; underwriting depends on the income mix and proportions of use types.

�� Common Mixed-Use Examples:

Urban Buildings: Apartments above restaurants or retail stores (like Starbucks or a dry cleaner).

Suburban Developments: Townhome communities built around a retail plaza or office park.

Live/Work Units: Ground-floor office or retail space with a residence above, often used by entrepreneurs.

Transit-Oriented Developments: Mixed-use buildings near train stations or bus hubs.

�� Benefits of Mixed-Use Properties:

Diversified Income Streams (residential + commercial)

Increased Foot Traffic for businesses

Live-Work-Play Environment appeals to urban dwellers

Higher Land Use Efficiency and potentially better returns

Encouraged by city planning to reduce sprawl and support sustainability

and

�� Key Characteristics of 5–10 Unit Multifamily Properties:

Feature Description

Number of Units 5 to 10 self-contained rental units, each with a kitchen and bathroom.

Zoning Generally zoned as multifamily residential or mixed-use, depending on the area.

Financing Category Considered commercial real estate by most lenders (5+ units triggers commercial underwriting).

Ownership Typically owned by small investors, partnerships, or LLCs.

Management Can be owner-managed or managed by a third-party property manager.

4. Private or Bridge Loans

Short-term, higher interest

Used for rehabs, quick purchases, or properties that don’t qualify for traditional financing

�� Why Investors Like 5–10 Unit Multifamily:

Easier to manage than large apartment complexes

More scalable than single-family rentals

Still eligible for economies of scale (one roof, one lawn, multiple rents)

Can often house hack (live in one unit, rent the others)

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What happens when the Feds drop the rates

didier@ddamortgage.com (Didier Malagies) — Mon, 14 Jul 2025 13:40:01 GMT

�� 1. Borrowing Becomes Cheaper

Mortgage rates tend to fall, making it easier for people to buy homes or refinance.

Car loans, personal loans, and credit cards may also have lower interest rates.

Businesses can borrow more cheaply to invest in growth.

�� 2. Consumer Spending Increases

Since borrowing is cheaper and savings earn less interest, people are more likely to spend money rather than save it.

This can boost demand for goods and services, helping to stimulate economic activity.

�� 3. Savings Yield Less

Savings accounts, CDs, and bonds typically offer lower returns.

This can push investors to move money into riskier assets like stocks or real estate in search of higher returns.

�� 4. Stock Market Often Rallies

Lower rates can mean higher corporate profits (due to cheaper debt) and increased consumer spending.

Investors may shift funds from bonds into stocks, driving up equity prices.

�� 5. The U.S. Dollar May Weaken

Lower interest rates can make the dollar less attractive to foreign investors, potentially weakening the currency.

This can help U.S. exporters (as their goods become cheaper abroad) but may also increase the cost of imports.

�� 6. Inflation Could Rise

More spending and borrowing can increase demand, which may push prices up, leading to higher inflation—especially if supply can’t keep up.

��️ 7. Real Estate Activity Tends to Pick Up

Lower mortgage rates can boost homebuying, refinancing, and construction, which helps stimulate related industries.

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Why mortgage purchase apps are on a 22-week growth streak

didier@ddamortgage.com (Didier Malagies) — Tue, 08 Jul 2025 18:36:46 GMT

Mortgage purchase applications are on a 22-week growth streak primarily due to a combination of improving market conditions, seasonal trends, and changing consumer behavior. Here's a breakdown of the key reasons behind the sustained growth:

�� 1. Falling Mortgage Rates

Mortgage rates have been gradually declining from the highs seen in 2023.
Even small drops in interest rates significantly improve affordability, prompting more buyers to apply for loans.
Borrowers are locking in rates with the hope that they’ve hit a local low.

�� 2. Pent-Up Demand from 2023

Many potential buyers delayed purchases during 2023 due to high rates and limited inventory.
As conditions improve, backlogged demand is being released into the market.

�� 3. Spring & Summer Buying Season

The U.S. housing market typically sees a seasonal increase in purchase activity starting in spring and continuing through summer.
Families prefer to move during school breaks, contributing to more applications in this window.

�� 4. Improved Inventory Levels

While still tight, housing inventory has started to improve slightly in some regions.
Builders are offering incentives and new constructions are increasing, drawing more buyers into the market.

�� 5. Confidence in the Economy

A strong labor market and steady wage growth are boosting consumer confidence , encouraging people to buy homes.
Some buyers are moving before potential rate hikes or home price increases .

�� 6. Shift Toward Homeownership

Rising rents and lifestyle changes post-pandemic are pushing many toward owning rather than renting .
First-time homebuyers are a large portion of this demand.

Summary:

The 22-week growth streak in mortgage purchase applications is being driven by lower mortgage rates, seasonal buying trends, improved inventory, and returning buyer confidence . While challenges like affordability and supply remain, these positive signals suggest a slow but steady rebound in the housing market .

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What about all the disclosures I get during the loan process

didier@ddamortgage.com (Didier Malagies) — Mon, 07 Jul 2025 12:55:03 GMT

During the mortgage process, several disclosure documents are provided to help you understand the terms of the loan, your rights, and the costs involved. These disclosures are required by law and are designed to promote transparency and protect you as a borrower. Here’s a breakdown of the key disclosures you'll receive:

1. Loan Estimate (LE)

When: Within 3 business days of submitting a loan application.

Purpose: Provides a summary of the loan terms, estimated interest rate, monthly payment, closing costs, and other fees.

Key sections:

Loan terms (rate, type, prepayment penalty, balloon payment)

Projected payments (principal, interest, taxes, insurance)

Costs at closing (origination charges, services you can/cannot shop for)

Why it matters: Lets you compare offers from multiple lenders.

2. Closing Disclosure (CD)

When: At least 3 business days before closing.

Purpose: Provides final details of the mortgage loan, including actual costs.

Key sections:

Final loan terms (rate, payments, closing costs)

Cash to close (how much you need to bring to closing)

A detailed breakdown of costs and payments over time

Why it matters: Helps you confirm everything is accurate before you close.

3. Mortgage Servicing Disclosure Statement

When: Within 3 business days of application.

Purpose: Explains whether your loan might be sold or transferred to another company for servicing.

Why it matters: Tells you who will manage your payments and account.

4. Affiliated Business Arrangement (AfBA) Disclosure

When: At the time of referral to an affiliated business (e.g., title company).

Purpose: Discloses any relationships between the lender and other service providers and explains you’re not required to use them.

Why it matters: Ensures you know if there’s a potential conflict of interest.

5. Home Loan Toolkit (for purchase loans)

When: Within 3 business days of application.

Purpose: A consumer-friendly booklet from the CFPB that explains the mortgage process, costs, and how to shop for a loan.

Why it matters: Helps first-time buyers understand the steps and choices.

6. Right to Receive a Copy of Appraisal

When: Within 3 business days of application.

Purpose: Notifies you that you can get a copy of the appraisal at no additional cost.

Why it matters: Gives you insight into the value of the home you’re buying or refinancing.

7. Initial Escrow Disclosure

When: At or within 45 days of closing.

Purpose: Details amounts to be collected in escrow for taxes and insurance.

Why it matters: Shows how your monthly mortgage payment is allocated.

8. Notice of Right to Rescind (for refinances only)

When: At closing (for primary residence refinances).

Purpose: Gives you 3 business days to cancel the refinance loan.

Why it matters: Protects you from making a rushed decision.

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Buying a new home and keeping your existing home

didier@ddamortgage.com (Didier Malagies) — Mon, 30 Jun 2025 13:03:49 GMT

Buying a new home while keeping your current one can be a smart investment strategy—but it does come with financial challenges, especially when it comes to managing debt. Here are ways you can offset or manage the debt to make this dual-home scenario work:

�� 1. Rent Out Your Current Home

Offset: Use rental income to cover the mortgage on your existing home.

Pros: Helps cover the mortgage or even generate cash flow.

Note: Lenders often count a portion of projected rental income toward your debt-to-income (DTI) ratio.

�� 2. Use Equity from Your Current Home

Offset: Take out a cash-out refinance, HELOC, or home equity loan to fund the down payment or reduce new home debt.

Pro: Lower the mortgage balance on the new home or avoid PMI.

Con: Increases debt on the existing property and monthly obligations.

�� 3. Refinance to Lower Monthly Payments

Offset: Refinance either or both homes to reduce interest rates and monthly payments.

Goal: Free up cash to manage both mortgages more easily.

�� 4. Increase Your Income or Reduce Expenses

Offset: Boost your DTI ratio eligibility or free up monthly cash.

Ways to Increase Income: Side gig, bonuses, rental income, etc.

Ways to Cut Costs: Pay down other debts, reduce discretionary spending.

��️ 5. House Hack

Offset: Live in part of one home (e.g., basement, ADU) and rent the other part out.

Useful If: You’re open to creative living arrangements to reduce out-of-pocket costs.

�� 6. Tax Deductions

Offset: If one home is rented, you can deduct expenses like mortgage interest, taxes, repairs, and depreciation.

Talk to a CPA to maximize tax benefits.

�� 7. Consider a Bridge Loan (Temporary Fix)

Offset: Use a bridge loan to cover the gap between buying a new home and selling (or refinancing) the old one later.

Note: Short-term, higher-interest debt—use with a clear exit strategy.

Example Scenario:

You keep your current home and rent it out for $2,000/month. Your mortgage on that property is $1,500/month. The $500/month profit helps cover your new home's mortgage, easing your debt load and possibly helping with mortgage approval.

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How does a specific power of attorney work for a mortgage closing

didier@ddamortgage.com (Didier Malagies) — Mon, 23 Jun 2025 13:13:11 GMT

A Specific Power of Attorney (POA) for a mortgage closing is a legal document that allows one person (the principal) to authorize another person (the agent or attorney-in-fact) to act on their behalf only for the purpose of completing a mortgage transaction—typically when the principal cannot be physically present at the closing.

Key Points of How It Works:

✅ Purpose-Specific Authorization

The document limits the agent’s authority strictly to the mortgage transaction, such as signing loan documents, the note, deed of trust, and other closing forms.

It does not grant broad financial powers—only what’s specifically listed.

✅ Common Uses

When the borrower is:

Out of the country or state

In the military

Hospitalized or otherwise unavailable on closing day

✅ Lender and Title Company Approval Required

The lender must approve the POA in advance. Some lenders are strict and may require the POA to be:

Dated close to the closing date

Notarized and possibly recorded

The title company must also approve the document to ensure it's valid and complies with local regulations.

✅ Execution Requirements

It must:

Clearly describe the property address

State the exact powers being granted (e.g., “to execute all documents required to close on the mortgage loan for [property address]”)

Be notarized, and in some states, also witnessed

Sometimes be recorded with the county clerk if it’s used to sign a deed or deed of trust

✅ Expiration

Some are written to expire after a short period (e.g., 30 or 60 days), or immediately after closing.

✅ Revocation

The principal can revoke it at any time before the closing by notifying the agent and any third parties relying on it (like the lender or title company) in writing.

Example Scenario

Suppose Jane is buying a home but will be overseas on the closing date. She signs a Specific POA authorizing her sister to sign all documents necessary to complete the mortgage transaction for the home at 123 Main St. The lender and title company review and approve the POA ahead of time. On the day of closing, Jane's sister signs the documents on her behalf, using the POA.

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AI and second mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 16 Jun 2025 12:37:55 GMT

Buying a condo is different from purchasing a single-family home, and it's important to understand the unique consid

Here’s a simple and clear breakdown of how AI is making second mortgages easier for homeowners and lenders alike:

�� What Is a Second Mortgage?

A second mortgage lets homeowners borrow against their home's equity, without replacing their existing mortgage. Common types:

Home Equity Loan (lump sum)

HELOC (Home Equity Line of Credit)

�� How AI Makes Second Mortgages Easier

1. Faster Approval Times

AI streamlines credit, income, and property evaluations.

Cuts days or weeks off traditional underwriting.

2. Smarter Risk Assessment

Machine learning analyzes borrower profiles more accurately than standard models.

Lenders can offer better rates to lower-risk borrowers.

3. Better Property Valuations

AI-powered AVMs (automated valuation models) assess home value using up-to-date market data, photos, and even satellite imagery.

4. Chatbots & Virtual Assistants

Available 24/7 to answer questions, guide users through the process, and gather documents.

Reduces human error and friction for borrowers.

5. Fraud Detection

AI systems detect unusual patterns in applications to flag potential fraud before approval.

6. Personalized Loan Offers

Based on data from credit, home value, and income, AI can recommend the right loan product—tailored to the borrower’s needs.

�� Why It Matters for You

Quicker access to cash

Less paperwork

More competitive offers

Lower costs thanks to automation

If you want, I can help you compare second mortgage options, estimate your equity, or show AI-powered lenders making waves in 2025. Just let me know!

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Trigger leads bill advances to the House

didier@ddamortgage.com (Didier Malagies) — Thu, 12 Jun 2025 19:52:56 GMT

The federal bill that seeks to eliminate abusive trigger leads took a major step forward this week, advancing in the U.S. House of Representatives and reigniting hopes across the mortgage industry that it could soon become law.

Yes, that's an important development for the mortgage and consumer protection landscape.

The federal bill to eliminate abusive trigger leads recently advanced in the U.S. House of Representatives , which is a significant step toward potentially becoming law. Here’s what this means:

�� What Are Trigger Leads?

When a consumer applies for a mortgage and a credit inquiry is made, credit bureaus can sell that information to other lenders. These are known as trigger leads . While legal, they often result in a flood of unsolicited calls or offers from competing lenders — many of which may be misleading or aggressive.

��️ About the Bill

The legislation seeks to ban or strictly limit the use of trigger leads unless the consumer explicitly consents. It aims to:

Protect consumers from confusing or predatory offers .
Curb misleading solicitations that impersonate the original lender.
Improve privacy and control over a borrower’s financial data.

�� Industry Reaction

The mortgage industry and consumer advocacy groups have largely welcomed the move, arguing that trigger leads:

Cause consumer confusion.
Undermine trust in legitimate lenders.
Lead to identity theft or fraud in some cases.

�� What’s Next?

The bill now moves to the Senate , where it will need to pass before reaching the President’s desk.
Industry stakeholders are pushing for bipartisan support, noting the broad agreement on consumer protection.

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What are all the mortgage programs we offer

didier@ddamortgage.com (Didier Malagies) — Mon, 09 Jun 2025 12:53:16 GMT

We offer 2nd mortgages on primary, secondary, and investment properties

we do purchases or refinances on Conventional, FHA, VA, and Non- Qm mortgages, We do Reverse Mortgages, Construction Permanent loans, FHA203k, and Conventional Renovation loans.

Let me know how we can help you or someone you know

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How will AI integrate with mortgages

didier@ddamortgage.com (Didier Malagies) — Thu, 05 Jun 2025 19:25:23 GMT

✅ What AI Will Do in Mortgages:

Speed Up Approvals & Underwriting:

AI can instantly verify income, assets, and credit.
It reduces manual errors and shortens approval time from days to hours.

Enhance Risk Assessment:

Lenders use AI to evaluate risk more precisely, especially for non-traditional borrowers (e.g., gig workers, freelancers).

Improve Customer Experience:

Chatbots and virtual assistants handle common questions 24/7.
Personalized loan options and real-time updates via apps or portals.

Detect Fraud:

AI is excellent at spotting red flags in documentation or transaction patterns.

Automate Paperwork:

AI can auto-fill forms, read legal documents, and streamline disclosures.

❌ What AI Won’t Do (Yet):

Replace Human Loan Officers Entirely:

Borrowers still want a human guide for major financial decisions.
Emotional support, judgment calls, and trust still require human touch.

Understand Complex Situations Fully:

Edge cases like self-employed income, family co-borrowers, or mixed credit histories need human interpretation.

Replace Regulatory Oversight:

Compliance and legal accountability still rely on humans to interpret nuanced and changing rules.

�� Looking Ahead:

Hybrid mortgage models (AI + human advisors) are becoming the norm.
Lenders that use AI wisely will be faster, cheaper, and more customer-friendly.
Borrowers may not realize how much AI is helping behind the scenes.

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What are some reasons to get a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Wed, 04 Jun 2025 19:37:14 GMT

A reverse mortgage can be a strategic financial tool for older homeowners, typically 62 or older. Here are the main reasons to consider getting one :

�� Supplement Retirement Income

A reverse mortgage can provide monthly payments, a lump sum, or a line of credit — helping cover:

Living expenses
Medical bills
Long-term care
Travel or leisure activities

�� Stay in Your Home

It enables aging in place by converting home equity into cash without needing to sell or move .

�� No Monthly Mortgage Payments

You’re not required to make monthly payments on the loan (though you must still pay property taxes, insurance, and maintain the home).

�� Access to Tax-Free Funds

Loan proceeds are generally not considered taxable income , making it an efficient income source for retirees.

�� Flexible Payout Options

Choose a payment method that fits your needs:

Lump sum
Monthly payments
Line of credit (grows over time)
Combination

�� Bridge to Other Income

It can serve as a temporary cash flow tool while delaying Social Security or waiting for other investments to mature.

�� Pay Off Existing Mortgage

If you still have a mortgage, a reverse mortgage can eliminate monthly payments by paying off the balance.

�� Emergency Fund

The line-of-credit option can act as a buffer against unexpected financial needs or market downturns.

�� Non-Recourse Loan Protection

You (or your heirs) will never owe more than the home is worth when the loan is due, even if the balance exceeds the home's value.

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What esle should I know about Condos when buying

didier@ddamortgage.com (Didier Malagies) — Mon, 02 Jun 2025 13:07:12 GMT

Buying a condo is different from purchasing a single-family home, and it's important to understand the unique considerations involved. Here’s a comprehensive list of what you should know before buying a condo:

1. Understand What You're Buying

Ownership: With a condo, you own the interior of your unit, but share ownership of common areas (lobby, pool, gym, etc.) with other residents.

HOA (Homeowners Association): This governing body manages shared areas and enforces rules.

2. Evaluate the HOA

Fees: Ask for the current monthly fees and whether they’re likely to increase.

What’s Included: See what the fees cover (e.g., water, insurance, maintenance, amenities).

Reserve Fund: Check if the HOA has a healthy reserve fund for unexpected repairs.

Rules and Bylaws: Review pet policies, rental restrictions, noise rules, and renovation limitations.

Meeting Minutes: Request past meeting minutes to identify ongoing disputes, major projects, or complaints.

3. Financial Health of the Building

Special Assessments: Are there upcoming or recent one-time fees for big repairs?

Delinquency Rate: A high number of owners not paying dues can be a red flag.

Insurance Coverage: Confirm that the building has proper insurance coverage (you’ll need your own unit insurance too).

4. Location and Building Condition

Location: Evaluate the neighborhood, proximity to work/public transit, schools (if relevant), and future development.

Building Age and Maintenance: Older buildings may need major upgrades; review recent renovations (roof, elevators, HVAC).

Noise and Privacy: Check unit positioning and wall/floor sound insulation.

5. Unit-Specific Considerations

HOA Restrictions on Renovations: Can you remodel the kitchen? Change flooring?

Storage and Parking: Confirm assigned parking, storage lockers, bike racks, etc.

Utilities: Understand what utilities are included and how they’re billed.

Views and Natural Light: Are there any plans to build next door that could block your view?

6. Legal and Resale Aspects

Title and Liens: Ensure there are no legal issues tied to the unit or HOA.

Resale Value: Check sales trends in the building; talk to a local agent about demand for similar condos.

Occupancy Rate: Higher owner-occupancy rates often mean better-maintained buildings.

7. Financing

Lender Requirements: Not all lenders finance condos easily—make sure the condo is on their approved list.

Warrantable vs. Non-Warrantable: Some buildings are considered riskier (too many renters, lawsuits, etc.) and may need special financing.

8. Inspections and Disclosures

Professional Inspection: Even if the HOA handles exterior maintenance, get an inspection for internal systems (plumbing, electrical, HVAC).

Disclosures: Review all seller-provided documents carefully—especially HOA disclosures and financials.

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Should I lock in my interest rate with Tariffs and the environment we are in now

didier@ddamortgage.com (Didier Malagies) — Mon, 26 May 2025 13:26:21 GMT

Locking in your interest rate can be a smart move under the right circumstances—especially when there's economic uncertainty, like tariffs, geopolitical tension, or volatile inflation.

Here are a few key considerations to help you decide:

✅ Reasons to Lock in Now:

Rising Rate Environment: If inflation is persistent and the Fed continues to signal rate hikes (or holding rates higher for longer), mortgage and loan rates might increase.

Market Volatility: Tariffs and global economic uncertainty can lead to unpredictable swings in rates. Locking in now protects you from upward movement.

You’re Close to Closing: If you're within 30-60 days of needing the loan (e.g., buying a house), rate locks are usually worth it.

Peace of Mind: Locking gives you certainty in an uncertain time, helping you budget better and avoid surprises.

❌ Reasons to Hold Off:

You Expect Rates to Drop: If there's strong indication that rates will fall due to recession fears or easing inflation, waiting could save money.

You're Not Ready to Act: If your closing is still months away or you're just shopping around, locking too early may be premature (and rate locks often have time limits and fees)

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American are living longer - but they aren't prepared for retirement impacts

didier@ddamortgage.com (Didier Malagies) — Mon, 19 May 2025 15:04:08 GMT

Recent research from the Nationwide Retirement Institute and The American College of Financial Services highlights a significant disconnect between Americans' increasing life expectancy and their financial preparedness for retirement. As more individuals are living into their 90s and beyond, many are at risk of outliving their savings due to inadequate planning.

Key Findings

Longevity Risk : The U.S. Census Bureau projects that the number of Americans living to 100 will quadruple by 2054. However, only 29% of Americans express a desire to live that long, primarily due to concerns about declining health and financial insecurity.
Underestimating Lifespan : A significant portion of Americans underestimate their potential lifespan. Only 27% could accurately estimate the average longevity of a 65-year-old, leading to insufficient retirement planning.
Financial Literacy Gaps : The Retirement Income Literacy Study reveals that many older Americans lack knowledge in key areas such as Social Security, investments, and longevity planning, which are crucial for retirement readiness. Delayed Retirement : Economic uncertainties, including inflation and market volatility, have led 76% of surveyed individuals to consider delaying retirement to ensure financial stability. Business

Recommendation

To address these challenges, experts suggest:

Longevity Planning : Incorporate realistic life expectancy estimates into retirement planning to ensure savings last throughout one's lifetime.
Financial Education : Enhance understanding of retirement-related financial topics, including Social Security benefits and investment strategies.
Guaranteed Income Streams : Consider products like annuities that provide a steady income to mitigate the risk of outliving savings.

Professional Guidance : Work with financial advisors to develop comprehensive retirement plans tailored to individual needs and longevity expectations.

Also look and see what a Reverse Mortgage can help with as well

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Where do I do Mortgages?

didier@ddamortgage.com (Didier Malagies) — Mon, 19 May 2025 13:02:11 GMT

I do Residential Mortgages in the State of Florida only, that is where I am licensed. Most of my business is from Pinellas, Hillsborough, and Pasco County. I am doing more loans all over the State as time goes on. I love to go to my closings and will drive up to 1 hour to be there at your closing. I do Fnma/FHMC, FHA, VA, C/p, Nonqm mortgages. On the Commercial side the whole Country is open and if you are having difficulty with your lender and not going anywhere, go to www.ddamortgage.com and complete a form and I will get back with you.

Technology has made it so easy to help get your mortgage processed and closed

I am always available to help out and I answer your questions and teach you along the way

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What are the benefits in getting a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 12 May 2025 19:02:43 GMT

After years of identifying the housing market as unhealthy — culminating in a savagely unhealthy housing market in early 2022 — I can confidently assert that the housing market in 2024 and 2025 is on better footing. This transformation sets an extremely positive foundation for what’s to come. Some recent headlines about housing suggest that demand is crashing. However, that’s not the case, as the data below will show.

Today on CNBC , I discussed this very point: what is happening now is not only in line with my price forecasts for 2024 and 2025, but it’s why I am so happy to see inventory grow and price growth data cool down. What we saw in late 2020, all of 2021 and early 2022 was not sustainable and we needed higher mortgage rates to cool things down — hence why I was team higher rates early in 2021. The last two years have ushered in a healthier market for the future of existing home sales.

Existing home sales

Before the existing home sales report was released Thursday, I confidently predicted a month-to-month decline, while estimating the existing home sales print to be just a tad above 4 million. That’s precisely what occurred — no surprises there, as every month in 2025 has consistently exceeded 4 million. However, it’s important to note that our weekly pending home sales data has only recently begun to show growth compared to last year. We have an advantage over the data from the National Association of Realtors since our weekly pending home sales data is updated weekly, making their report somewhat outdated.

The notable surprise for me in 2025 is the year-over-year growth we observe in the data, despite elevated mortgage rates. If mortgage rates were ranging between 6%-6.64%, I wouldn’t have been surprised at all because we are working from the lowest bar in sales ever.

Purchase application data

If someone had said the purchase application data would show positive trends both year to date and year over year by late April, even with mortgage rates not falling significantly below 6.64%, I would have found that hard to believe. Yet, here we are witnessing consistent year-over-year growth . Even with the recent rate spike, which has clearly cooled demand week to week, we are still positive. If mortgage rates can just trend down toward 6% with duration, sales are growing.

Housing inventory and price growth

While my forecast for national price growth in 2024 at 2.33% was too low and in 2025 at 1.77% may be too low again, it’s encouraging to see a slowdown in price growth, which I believe is a positive sign for the future. The increase in inventory is also promising and supports long-term stability in the housing market.

We can anticipate that millions of people will continue to buy homes each year, and projections suggest that we’re on track for another nearly 5 million total home sales in 2025. As wages rise and households are formed, such as through marriage and bringing in dual incomes, this influx of inventory returning to normal levels provides an optimistic outlook. This trend in inventory data is truly heartening.

Conclusion

With all the data lines I added above, you can see why I have a renewed optimism about the housing market. If price growth significantly outpaced inflation and wages, and inventory wasn’t increasing, I’d be discussing a much different and more concerning state of affairs. Thankfully, that’s not the case.

Historically, we’ve observed that when home sales dip due to higher rates, they may remain subdued for a while but ultimately rise again. This is common during recessions, as I discussed in this recent HousingWire Daily podcast . As you can see in the existing home sales data below, we had an epic crash in sales in 2022 but found a base to work from around 4 million.

This trend has shaped the landscape of housing economics since post-WWII, reminding us that resilience and recovery are always within reach.

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How to choose the right mortgage person to help you purchase or refinance

didier@ddamortgage.com (Didier Malagies) — Mon, 12 May 2025 14:49:21 GMT

When choosing a mortgage lender, it's important to carefully compare several key factors to ensure you get the best deal and the right fit for your financial situation. Here’s who you might consider and how to evaluate them:

1. Types of Lenders to Consider

Banks: Traditional option; may offer relationship discounts if you have accounts there.

Credit Unions: Often have lower rates and fees; membership may be required.

Mortgage Brokers: Shop multiple lenders on your behalf but may charge a broker fee.

Online Lenders: Often streamlined and convenient; compare their rates carefully.

Non-bank lenders: Can be more flexible for unique financial situations.

2. What to Look For

Interest Rates: Fixed or variable—get quotes from multiple sources to compare.

Fees: Application, origination, underwriting, appraisal, and closing costs.

Loan Types Offered: Conventional, FHA, VA, jumbo, etc., based on your eligibility.

Customer Service: Look for responsive, transparent, and helpful communication.

Reputation: Read reviews and check ratings from the Better Business Bureau or Trustpilot.

Preapproval Process: A good lender should make this easy and informative.

3. Best Practice

Get at least 3 quotes from different lenders.

Ask for a Loan Estimate from each so you can compare total costs side-by-side.

Consider long-term value, not just the lowest monthly payment—compare APRs.

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How does a Bridge loan work

didier@ddamortgage.com (Didier Malagies) — Mon, 05 May 2025 13:07:47 GMT

A bridge loan is a short-term loan used to "bridge the gap" between buying a new home and selling your current one. It's typically used by homebuyers who need funds for a down paymenme before their existing home sells.

Here's how it works:

You own a current home and want to buy a new one.

You haven't sold your current home yet, so your cash is tied up in its equity.

A bridge loan gives you access to that equity—before the sale closes—so you can make a down payment or cover closing costs on the new home.

The bridge loan is secured by your current home, and repayment typically comes from the proceeds once it sells.

Key Features:

Term: Usually 6–12 months.

Interest Rates: Higher than a traditional mortgage.

Repayment: Often interest-only during the term, with a balloon payment (full payoff) at the end.

Loan Amount: Usually up to 80% of the combined value of both homes (existing + new).

Example:

Your current home is worth $400,000 with a $250,000 mortgage (so $150,000 equity).

You want to buy a $500,000 home.

A bridge loan lets you borrow against some of that $150,000 equity to cover the new home's down payment while waiting for the current home to sell.

Is this conversation helpful so far?

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Why the housing market is actually much healthier in 2025

didier@ddamortgage.com (Didier Malagies) — Mon, 28 Apr 2025 17:11:21 GMT

Existing home sales

Purchase application data

Housing inventory and price growth

Conclusion

This trend has shaped the landscape of housing economics since post-WWII, reminding us that resilience and recovery are always within reach.

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Different options on gettting cash out on your investment property

didier@ddamortgage.com (Didier Malagies) — Mon, 28 Apr 2025 13:15:37 GMT

1. Cash-Out Refinance

How it works: You replace your current mortgage with a new, larger loan and take the difference out in cash.

Pros:

Often lower interest rates compared to other methods.

Longer repayment terms.

Cons:

Closing costs (typically 2–5% of the loan amount).

Resets your loan term (could be 15, 20, or 30 years).

Tougher underwriting for investment properties vs primary residences.

2. Home Equity Line of Credit (HELOC)

How it works: You get a revolving line of credit based on your property’s equity.

Pros:

Flexibility — borrow what you need, when you need it.

Pay interest only on what you draw.

Cons:

HELOCs for investment properties are harder to get and may have higher rates.

Variable interest rates (payments can increase).

3. Home Equity Loan ("Second Mortgage")

How it works: A lump-sum loan secured by your property's equity, separate from your existing mortgage.

Pros:

Fixed interest rates and predictable payments.

Cons:

Higher rates than primary mortgages.

Separate loan payment on top of your existing mortgage.

4. Sell the Property

How it works: You sell the investment property and realize your equity as cash.

Pros:

Immediate full access to equity.

No debt obligation.

Cons:

Capital gains taxes may apply.

You lose future appreciation and cash flow.

5. Portfolio Loan

How it works: A loan based on a group (portfolio) of your properties' combined value and cash flow.

Pros:

Useful if you have multiple properties.

Lenders may be more flexible on qualifications.

Cons:

Complex underwriting.

Higher costs.

6. Private or Hard Money Loan

How it works: Short-term, high-interest loan based on property value, not personal credit.

Pros:

Fast funding (days instead of weeks).

Less strict underwriting.

Cons:

Very high interest rates (often 8%–15%+).

Short loan terms (often 6–24 months).

7. Seller Financing (if you're buying another property)

How it works: If you own a property free and clear, you could "sell" it and carry financing, creating cash flow and upfront cash through a down payment.

Pros:

Passive income from note payments.

Cons:

Risk if the buyer defaults.

Key Factors to Think About:

How quickly do you need the cash?

How much do you want to borrow?

How long do you want to be repaying it?

How the new debt impacts your overall portfolio.

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Funds leftover after going to closing is a smart idea after closing on your home

didier@ddamortgage.com (Didier Malagies) — Mon, 21 Apr 2025 14:35:21 GMT

When you're buying a home, it's not just about affording the purchase price or down payment. You’ve got closing costs, moving expenses, and all the “surprise” things that come up after you move in — like needing a new appliance, fixing a plumbing issue, or just furnishing the place.

Keeping some cash reserves is smart. A good rule of thumb is to have at least 3-6 months of living expenses saved after the purchase, just in case life throws a curveball.

Are you thinking about buying soon or just planning ahead?

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Wade Pfau: how market volatility could renew reverse mortgage discussion

didier@ddamortgage.com (Didier Malagies) — Tue, 15 Apr 2025 13:37:52 GMT

Wade Pfau, a leading voice in retirement income planning, has long advocated for the strategic use of reverse mortgages —and current market volatility could reignite interest in this often misunderstood tool.

�� Why Market Volatility Renews Reverse Mortgage Talks

In times of market downturn, retirees face sequence of returns risk , meaning early losses can severely impact the longevity of their portfolio. Pfau suggests that reverse mortgages , particularly Home Equity Conversion Mortgages (HECMs) , can act as a buffer asset to avoid selling investments at a loss. Here's how:

During market dips , retirees can pull funds from a reverse mortgage line of credit instead of their investment accounts.
This gives their portfolios time to recover before resuming withdrawals.
Result : More sustainable income and potentially greater long-term financial security.

�� Shift in Strategy: Not Just a Last Resort

Pfau argues that reverse mortgages should be considered early in retirement planning , not just as a last-ditch effort:

Opening a HECM line of credit early can grow over time due to the compounding credit line.
Provides flexibility and tax-efficient access to funds.
Helps retirees coordinate income sources between portfolio withdrawals, Social Security, and home equity.

�� Changing Advisor Perspectives

Financial advisors—previously skeptical—are beginning to see reverse mortgages in a new light:

Volatile markets have prompted a more open-minded view among planners.
More are incorporating reverse mortgages into holistic retirement income strategies .

Bottom line : Market volatility doesn’t just threaten retirement—it also opens the door to rethinking traditional strategies . As Pfau puts it, home equity is too significant a resource to overlook, and when used wisely, reverse mortgages can enhance retirement resilience

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Questions frequently asked about on job history and funds to close when getting a mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 14 Apr 2025 13:20:40 GMT

Are you a salaried employee, hourly, self-employed, or a contractor?

Do you receive bonuses, commissions, or overtime? How consistent is that income?

Can you provide recent pay stubs, W-2s, or tax returns?

Self-Employment (if applicable):

How long have you been self-employed?

Can you provide two years of business tax returns and profit/loss statements?

�� Funds to Close Questions

Lenders want to confirm you have enough money to cover the down payment, closing costs, and reserves. Questions may include:

Source of Funds:

How much money do you have saved for the down payment and closing costs?

Where are these funds coming from (savings, checking, retirement account, gift, etc.)?

Are you receiving any gift funds? If so, from whom?

Asset Documentation:

Can you provide bank statements from the past 2–3 months?

Are there any large or unusual deposits? Can you explain them?

Reserves:

Do you have additional savings left after closing (reserves)?

Can you show evidence of other assets (stocks, bonds, retirement)?

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What are the benefits of having a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Thu, 10 Apr 2025 16:26:11 GMT

Yes, the reverse mortgage market is projected to experience growth in 2025. Analyses indicate that the market size will increase from $1.79 billion in 2024 to $1.92 billion in 2025, reflecting a compound annual growth rate (

A reverse mortgage can be a useful financial tool for certain homeowners, especially older adults looking to access home equity without selling their home. Here are the key benefits of a reverse mortgage:

�� 1. Access to Home Equity Without Selling

You can tap into your home's equity and receive funds as a lump sum , monthly payments , or a line of credit , without having to sell your home or move out.

�� 2. No Monthly Mortgage Payments

Unlike a traditional mortgage, you don’t make monthly payments . Instead, the loan is repaid when you sell the home, move out permanently, or pass away.

�� 3. Flexible Payout Options

You can choose how to receive the funds:

Lump sum
Monthly payments (tenure or term)
Line of credit
Or a combination

This flexibility helps match your financial needs.

✅ 4. Stays in Your Name

You retain ownership of your home, and as long as you meet the loan requirements (like maintaining the home and paying property taxes/insurance), you can continue to live there.

��️ 5. Non-Recourse Loan

You (or your heirs) will never owe more than the home is worth . If the home’s value drops below the loan balance, the FHA insurance (if it's a HECM—Home Equity Conversion Mortgage) covers the difference.

��‍��‍��‍�� 6. Heirs Have Options

When you pass away, your heirs can:

Repay the loan and keep the home
Sell the home and keep any remaining equity
Walk away if the loan balance exceeds the home’s value

�� 7. Supplement Retirement Income

Reverse mortgages can provide a source of income during retirement, helping cover expenses, delay Social Security, or preserve investments.

Would you like a quick rundown of the downsides too, just so you have the full picture?

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Is the Reverse Mortgage volume going to increase in 2025

didier@ddamortgage.com (Didier Malagies) — Wed, 09 Apr 2025 16:50:57 GMT

Several factors contribute to this anticipated growth:

Higher Lending Limits : The Federal Housing Administration (FHA) has raised the Home Equity Conversion Mortgage (HECM) lending limit to $1,209,750 for 2025, up from $1,149,825 in 2024. This increase enables homeowners with higher-valued properties to access more equity. MLS Reverse Mortgag e
Industry Collaboration : Reverse mortgage professionals are enhancing outreach efforts to collaborate with traditional mortgage sectors and related industries. This strategy aims to expand distribution channels and increase product awareness among potential borrowers. HousingWire
Demographic Trends : As the population ages, more seniors are exploring financial solutions like reverse mortgages to support their retirement, contributing to market expansion.

While these factors suggest a positive trajectory for reverse mortgages in 2025, it's essential for potential borrowers to assess their individual financial situations and consult with financial advisors to determine if this option aligns with their retirement goals.

Reverse Mortgage Market Poised for Growth in 2025

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Rates! Rates! Rates! Is it time to refinance your mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 07 Apr 2025 13:40:49 GMT

Break-Even Point: Calculate how long it will take for your monthly savings to offset the closing costs associated with refinancing. If you plan to stay in your home beyond this break-even period, refinancing could be advantageous.

Bankrate

Loan Term Adjustment: Refinancing provides an opportunity to modify your loan term. For instance, switching from a 30-year to a 15-year mortgage can lead to significant interest savings over time, though it may increase your monthly payments.

Credit Score and Debt-to-Income Ratio: Lenders assess these factors when determining your eligibility and interest rate for refinancing. A higher credit score and a lower debt-to-income ratio can secure more favorable terms.

Market Outlook:

Experts predict that mortgage rates may continue to decline slightly throughout 2025. For example, Fannie Mae forecasts the 30-year fixed mortgage rate to average 6.2% in the final quarter of 2024, with a further decrease to 6% in the first quarter of 2025. However, these projections are subject to change based on economic conditions and Federal Reserve policies.

Next Steps:

Assess Your Current Mortgage: Review your existing loan terms, interest rate, and remaining balance.

Compare Offers: Obtain quotes from multiple lenders to ensure you're getting the best possible rate and terms.

Consult a Financial Advisor: Seek personalized advice to determine if refinancing aligns with your financial goals and circumstances.

In summary, refinancing can be a strategic move to reduce your mortgage payments and total interest costs. However, it's essential to carefully evaluate the associated costs and your long-term plans to ensure they align with your financial objectives.

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If you have lower credit scores which mortgage is better suited for you

didier@ddamortgage.com (Didier Malagies) — Mon, 31 Mar 2025 13:50:48 GMT

1. FHA Loan (Federal Housing Administration Loan)

Credit Score Requirement: As low as 500 (with 10% down) or 580+ (with 3.5% down).
Best For: First-time homebuyers and those with lower credit.
Pros: Low down payment, flexible credit requirements.
Cons: Requires mortgage insurance premiums (MIP).

2. VA Loan (Veterans Affairs Loan) (For eligible military members & veterans)

Credit Score Requirement: No official minimum, but lenders may require 580-620+.
Best For: Veterans, active-duty military, and qualifying spouses.
Pros: No down payment, no private mortgage insurance (PMI), competitive interest rates.
Cons: VA funding fee required.

3. USDA Loan (United States Department of Agriculture Loan)

Credit Score Requirement: 580+ preferred, some lenders may allow lower.
Best For: Buyers in rural or suburban areas with low-to-moderate income.
Pros: No down payment, lower mortgage insurance costs.
Cons: Must meet income and location eligibility.

4. Subprime or Non-Qualified Mortgage (Non-QM Loans)

Credit Score Requirement: 500-620+ (varies by lender).
Best For: Borrowers who don’t qualify for conventional loans.
Pros: Flexible underwriting standards, alternative income verification.
Cons: Higher interest rates and fees.

5. Conventional Loan (With a Non-Traditional Lender)

Credit Score Requirement: Typically 620+, but some lenders allow lower with compensating factors.
Best For: Borrowers with a higher down payment or strong income history.
Pros: No upfront mortgage insurance if you put 20% down.
Cons: Stricter credit requirements, PMI required if <20% down.

Tips to Improve Mortgage Approval with Low Credit

Increase your down payment (higher down payments can offset low credit).
Work on improving your credit score before applying.
Look for lenders specializing in low-credit borrowers.
Consider a co-signer or joint application with someone with better credit.

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Where are interest rates today

didier@ddamortgage.com (Didier Malagies) — Mon, 24 Mar 2025 13:57:54 GMT

The difference between warrantable and non-warrantable condos primarily relates to whether a condominium project meets the eligibility requirements set by Fannie Mae, Freddie Mac, or other government-backed entities like the FHA (Federal Housing Administration) and VA (Veterans Affairs). These classifications impact the availability of financing for buyers.

Warrantable Condos

A warrantable condo meets the lending guidelines set by Fannie Mae and Freddie Mac, making it easier for buyers to secure conventional financing. To be considered warrantable, a condo project typically must meet the following criteria:

Owner-Occupancy Ratio – At least 50% of the units must be owner-occupied or second homes (not rentals or investment properties).

HOA Financial Health – The homeowners' association (HOA) must have sufficient budget reserves (at least 10% of the annual budget).

No Litigation – The condo project must not be involved in major litigation that could affect its financial stability.

Commercial Space Limits – No more than 35% of the building can be used for commercial purposes (like retail or office spaces).

Single-Entity Ownership Limits – No single entity (like an investor or company) can own more than 20% of the total units.

Project Completion – The development must be fully completed (not under construction or in a phased build-out).

Non-Warrantable Condos

A non-warrantable condo does not meet one or more of the guidelines above, making it riskier for lenders and harder for buyers to secure traditional financing. Common reasons a condo is considered non-warrantable include:

A high percentage of investment units (e.g., more than 50% of units are rented out).

The HOA has low reserves or is financially unstable.

The condo is involved in litigation, especially if it affects safety or structural integrity.

A single investor owns too many units (e.g., one person owns more than 20%).

Excessive commercial space within the building.

The condo is in a new development or still under construction.

Financing Differences

Warrantable condos qualify for conventional loans backed by Fannie Mae and Freddie Mac, often with lower interest rates.

Non-warrantable condos may require portfolio loans, jumbo loans, or non-traditional lending with higher interest rates, larger down payments, and more stringent requirements.

Why It Matters

If you're buying, a warrantable condo is easier to finance with better loan options.

If you're selling, having a warrantable condo increases the pool of potential buyers.

If you're an investor, a non-warrantable condo might provide rental income opportunities but may require cash or specialized financing.

Tune in and learn at https://www.ddamortgage.com/blog

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Federal Reserve keeps benchmark interest rates unchanged

didier@ddamortgage.com (Didier Malagies) — Thu, 20 Mar 2025 19:40:49 GMT

On March 19, 2025, the Federal Reserve announced that it would maintain the federal funds rate within the existing range of 4.25% to 4.50%. This decision reflects the central bank's cautious approach amid heightened economic uncertainties, particularly those arising from recent tariff implementations.

The Fed's updated projections indicate a downward revision in economic growth, with the 2025 GDP forecast adjusted from 2.1% to 1.7%. Concurrently, inflation expectations have been raised to 2.7%, primarily due to the impact of tariffs. Fed Chair Jerome Powell emphasized the challenges posed by these trade policies, noting that tariffs contribute to higher inflation and dampen economic growth.

Despite these adjustments, the Fed anticipates implementing two 25-basis-point rate cuts later this year, contingent upon evolving economic conditions. The next Federal Open Market Committee meeting is scheduled for May 6-7, during which policymakers will reassess the economic landscape and adjust monetary policy as necessar

Financial markets responded positively to the Fed's announcement. Major indices, including the Dow Jones Industrial Average, S&P 500, and Nasdaq, experienced gains, reflecting investor optimism regarding the central bank's measured stance.

In summary, the Federal Reserve's decision to keep interest rates steady underscores its commitment to navigating economic uncertainties with a balanced approach, aiming to foster sustainable growth while keeping inflation in check. Business Insider

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The housing market is 'failing older adults' Urban institute says

didier@ddamortgage.com (Didier Malagies) — Wed, 19 Mar 2025 15:46:04 GMT

The Urban Institute has highlighted significant challenges facing older Americans, particularly concerning housing affordability and financial security as life expectancies rise. A recent report indicates that the housing market is increasingly failing to meet the needs of older adults, leading to a growing number of cost-burdened senior households.

HousingWire

The share of older households experiencing housing cost burdens has risen notably. In 2000, 11.5% of these households reported such burdens; by 2016, this figure had increased to over 16%.

https://kaizengroup.net

This trend underscores the escalating financial pressures on seniors, many of whom rely heavily on fixed incomes like Social Security. Even those who own their homes outright face substantial expenses related to utilities, maintenance, insurance, and property taxes. Urban Institute

The implications of these housing cost burdens are profound. Older adults forced to allocate a significant portion of their income to housing often have to cut back on other essential needs, including food and healthcare. For instance, severely cost-burdened households aged 50 and over in the bottom expenditure quartile spend 43% less on food and 59% less on healthcare compared to those living in affordable housing.

Novogradac

Moreover, the rising financial insecurity among seniors is prompting many to re-enter the workforce. Economic pressures, such as increasing inflation and living costs, have made it challenging for seniors to rely solely on Social Security, pushing many back into part-time or seasonal jobs.

Midland Daily News

In summary, while rising life expectancies are a positive development, they present financial challenges for older Americans, particularly concerning housing affordability. Addressing these issues requires comprehensive strategies to ensure that seniors can maintain a reasonable standard of living without compromising other essential needs.

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Warrantanble and Non-Warrantable Condos

didier@ddamortgage.com (Didier Malagies) — Mon, 17 Mar 2025 13:42:04 GMT

Warrantable Condos

Owner-Occupancy Ratio – At least 50% of the units must be owner-occupied or second homes (not rentals or investment properties).

HOA Financial Health – The homeowners' association (HOA) must have sufficient budget reserves (at least 10% of the annual budget).

No Litigation – The condo project must not be involved in major litigation that could affect its financial stability.

Commercial Space Limits – No more than 35% of the building can be used for commercial purposes (like retail or office spaces).

Single-Entity Ownership Limits – No single entity (like an investor or company) can own more than 20% of the total units.

Project Completion – The development must be fully completed (not under construction or in a phased build-out).

Non-Warrantable Condos

A high percentage of investment units (e.g., more than 50% of units are rented out).

The HOA has low reserves or is financially unstable.

The condo is involved in litigation, especially if it affects safety or structural integrity.

A single investor owns too many units (e.g., one person owns more than 20%).

Excessive commercial space within the building.

The condo is in a new development or still under construction.

Financing Differences

Warrantable condos qualify for conventional loans backed by Fannie Mae and Freddie Mac, often with lower interest rates.

Non-warrantable condos may require portfolio loans, jumbo loans, or non-traditional lending with higher interest rates, larger down payments, and more stringent requirements.

Why It Matters

If you're buying, a warrantable condo is easier to finance with better loan options.

If you're selling, having a warrantable condo increases the pool of potential buyers.

If you're an investor, a non-warrantable condo might provide rental income opportunities but may require cash or specialized financing.

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Older Americans are increasingly reliant on credit cards to cover basic living expenses

didier@ddamortgage.com (Didier Malagies) — Thu, 13 Mar 2025 14:09:34 GMT

Nearly half of older Americans are reliant on using credit cards to cover basic living expenses they don’t have the cash for. And nearly 20% of this cohort consistently relied on this type of high-interest debt on a monthly basis over the past year, according to survey results released this week by AARP .

These basic expenses include food, housing and utilities, as well as health care expenses and other unexpected financial burdens. The rising costs associated with such necessities “are threatening financial well-being and retirement security for many older Americans,” the organization said.

A reverse mortgage could help older Americans who rely on credit cards to cover expenses, but it's not always the best solution. Here’s a breakdown of how it could help, along with some potential downsides:

How It Could Help:

Provides Monthly Cash Flow – Instead of accumulating credit card debt, a reverse mortgage can give homeowners access to their home’s equity in monthly payments, a lump sum, or a line of credit .
No Monthly Mortgage Payments – Unlike a traditional mortgage or home equity loan, a reverse mortgage does not require monthly payments. The loan is repaid when the homeowner sells the home, moves out, or passes away.
Pays Off Existing Mortgage – If the homeowner still has a regular mortgage, a reverse mortgage can pay it off, freeing up cash for other expenses.
Better Than High-Interest Credit Cards – Credit card interest rates are high, often 20% or more , while a reverse mortgage typically has a lower interest rate.

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How is AI working with Mortgages

didier@ddamortgage.com (Didier Malagies) — Fri, 07 Mar 2025 17:12:47 GMT

AI is transforming the mortgage industry in several ways, making processes faster, more efficient, and more customer-friendly. Here are some key impacts:

1. Streamlining Loan Origination & Underwriting

AI-powered algorithms can quickly analyze an applicant’s financial history, credit score, and risk factors, reducing the time it takes to approve loans.

Machine learning models can assess alternative data (such as rental payment history and utility bills) to approve borrowers who may not have traditional credit histories.

Automated underwriting systems can detect inconsistencies or potential fraud more effectively than manual review.

2. Enhancing Customer Experience

AI-driven chatbots and virtual assistants provide instant answers to mortgage-related questions, guiding customers through the application process 24/7.

Personalized recommendations based on a borrower's financial profile help customers find the best mortgage products.

3. Improving Risk Assessment & Fraud Detection

AI can analyze vast amounts of data to detect patterns indicative of fraud, such as falsified documents or identity theft.

Predictive analytics help lenders anticipate potential loan defaults, allowing for proactive risk mitigation.

4. Automating Document Processing

Optical Character Recognition (OCR) and Natural Language Processing (NLP) enable AI to scan, extract, and verify information from documents like pay stubs, tax returns, and bank statements.

This automation reduces manual errors and speeds up the mortgage approval timeline.

5. Enhancing Regulatory Compliance

AI helps mortgage lenders stay compliant with regulations by continuously monitoring transactions and flagging potential compliance risks.

Automated reporting tools simplify the audit process, ensuring transparency and reducing human error.

6. Market Insights & Pricing Optimization

AI analyzes real estate market trends, interest rates, and borrower behavior to help lenders set competitive mortgage rates.

Predictive analytics help lenders anticipate market shifts and adjust strategies accordingly.

7. Expanding Access to Homeownership

AI-driven alternative credit scoring models provide more opportunities for individuals with non-traditional credit backgrounds to qualify for mortgages.

More inclusive lending practices can help close homeownership gaps for underserved communities.

Challenges & Concerns

While AI brings efficiency, there are some concerns:

Bias in Algorithms: AI models may unintentionally reinforce biases if they are trained on biased historical data.

Data Privacy: The increased use of AI requires stronger data protection measures to prevent breaches.

Human Oversight: AI should complement, not replace, human decision-making to ensure fairness and accuracy.

Overall, AI is reshaping the mortgage industry by making it more efficient, customer-friendly, and data-driven. However, balancing innovation with ethical considerations remains crucial.

Are you exploring AI for a mortgage-related business, or just interested in how it’s evolving?

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What is a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 03 Mar 2025 14:19:20 GMT

When you apply for a loan, you receive several important disclosures that outline key terms, costs, and your rights as a borrower. These disclosures are required by law to ensure transparency and help you make informed decisions. Here are some common disclosures you might encou

A reverse mortgage is a type of loan available to homeowners aged 62 and older that allows them to convert part of their home equity into cash. Unlike a traditional mortgage, where the homeowner makes monthly payments to a lender, a reverse mortgage pays the homeowner. The loan is repaid when the homeowner sells the home, moves out permanently, or passes away.

Key Features of a Reverse Mortgage:

No Monthly Payments: Borrowers receive payments instead of making them, though they must continue paying property taxes, homeowner’s insurance, and maintenance costs.

Loan Repayment: The loan balance increases over time as interest accrues and is repaid when the borrower no longer lives in the home.

Home Retention: The homeowner retains ownership of the home as long as they meet loan obligations.

FHA-Insured Option: The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA).

Ways to Receive Funds:

Lump Sum – A one-time payment.

Monthly Payments – A steady income stream.

Line of Credit – Borrow as needed.

Combination – A mix of the above options.

Pros & Cons

✅ Pros:

Provides financial relief for retirees.

No repayment is required while living in the home.

Flexible payment options.

❌ Cons:

Loan balance increases over time.

May reduce inheritance for heirs.

Fees and interest rates can be high.

Would you like to explore if a reverse mortgage is right for your situation?

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Retirees may be turning to home equity to finance healthcare shocks: report

didier@ddamortgage.com (Didier Malagies) — Wed, 26 Feb 2025 19:50:03 GMT

Long-term care (LTC) will likely play a large part in the lives of Americans as the population continues to age, but financing it can be a financial challenge for people particularly on a fixed income. While many retirees often do not intend to tap their home equity to finance such moves, they may often end up doing so.

This is according to a new research brief published by Boston College ’s Center for Retirement Research .

“Retirees face the risk of a large healthcare spending shock for medical or long-term care (LTC) either because their health insurance involves significant cost sharing or because they lack insurance entirely in the case of LTC,” the brief said. “ If these shocks are big enough, they can devastate a household’s finances.”

Retirees are reasonably well-insured against medical shocks, the brief said. But they remain largely exposed to LTC expenditures, leading some to go against their expectation and to tap their home’s equity to cover these costs.

“When asked what alternatives they would consider if they could not afford their healthcare expenses, over 60% said they would consider spending down to Medicaid, while only 30% said they would consider using their home equity or moving in with their children,” the brief said.

But Medicaid comes with onerous eligibility requirements, and a measured decline in home values for the affected cohort impacted by a financial shock related to healthcare suggests that “households do draw down their home equity to finance LTC shocks,” the brief said.

Despite the stated expectations of retirees, the data used in the brief’s construction suggests instead that “tapping equity is actually a typical response to LTC shocks,” the brief explained. “Such shocks also lead to reductions in expected bequests.”

Ultimately, the availability of Medicaid benefits is seen as an essential tool to help older Americans avoid feeling the full impact of economic shocks stemming from LTC or other medical expenses.

“[T]he results speak to the relative lack of protection retirees have against LTC shocks, and underscore the importance of Medicaid as a payer of last resort for those who develop LTC needs at older ages,” the brief said.

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Can government job cuts lead to lower mortgage rates for spring?

didier@ddamortgage.com (Didier Malagies) — Mon, 24 Feb 2025 16:59:29 GMT

Could the loss of jobs in the government sector and the withdrawal of funding from the economy significantly increase the unemployment rate and a surge in jobless claims? If this happens, will we see lower mortgage rates this spring?

It’s an intriguing thought, especially considering how this aligns with White House officials’ strategy to boost labor supply, reduce aggregate demand, and potentially drive down the 10-year yield.

I have been delving into this topic for a while now and I took another deep dive in this recent episode of the HousingWire Daily podcast. The government’s actions impact the livelihoods of many Americans — not just through layoffs of federal workers but also by cutting funding that will result in more jobs being lost. It feels like a broader game plan is at play here, worth exploring as we navigate these economic changes together.

10-year yield and mortgage rates

In my 2025 forecast, I anticipate the following ranges:

Mortgage rates will be between 5.75% and 7.25%

The 10-year yield will fluctuate between 3.80% and 4.70%

So far in 2025, we have consistently been near the upper end of the year’s forecast. However, last week saw a decline in mortgage rates due to softer economic data, which led to an influx of money into the bond market as stocks sold off on Friday. Since 2022, whenever mortgage rates have approached 6% it’s because the bond market is concerned about the economy slowing down.

Currently, with the economic data available, the 10-year yield and Fed policy align reasonably well. However, the bond market may be concerned that if the unemployment rate rises, particularly with jobless claims increasing due to government layoffs and more negative impacts from less money circulating in the economy, we could see more money flowing into bonds, sending yields and mortgage rates lower.

We need to be more mindful of the labor data as we go further into 2025. Each year, millions of people are fired from the private sector. However, if we focus on government workers and government contractors, it’s likely that the unemployment rate will rise in 2025. This increase could challenge the Federal Reserve ‘s target limit of 4.3%.

The White House is looking for a lower 10-year yield and the bond market has in the past gotten ahead of the Fed when it smells an economic growth scare, this has meant the 10-year yield and mortgage rates go lower. As you can see in the chart below, we are 36 basis points lower than the peak of what we saw on Jan. 14.

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What is with all the disclosures during the loan process

didier@ddamortgage.com (Didier Malagies) — Mon, 24 Feb 2025 14:14:59 GMT

1. Loan Estimate (LE)

Provides details about the loan terms, interest rate, monthly payment, and closing costs.

Must be provided within three business days of your application for most mortgage loans.

Helps you compare loan offers from different lenders.

2. Truth in Lending Act (TILA) Disclosure

Explains the total cost of the loan, including the Annual Percentage Rate (APR), finance charges, and total payments over the loan term.

Applies to personal loans, auto loans, and credit cards, in addition to mortgages.

3. Closing Disclosure (CD) (For Mortgages Only)

Given at least three business days before closing on a mortgage.

Breaks down the final loan terms, payments, closing costs, and any changes from the Loan Estimate.

4. Good Faith Estimate (GFE) (For Some Loans Like Reverse Mortgages)

Lists expected closing costs and loan terms.

Used for certain government-backed loans, but replaced by the Loan Estimate for most mortgages.

5. Fair Credit Reporting Act (FCRA) Disclosure

I would like to notify you that your credit report was used to evaluate your loan application.

Includes your rights to dispute errors on your credit report.

6. Equal Credit Opportunity Act (ECOA) Disclosure

States that lenders cannot discriminate based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

If your application is denied, the lender must provide a reason.

7. Privacy Notice

Explains how your personal information is collected, shared, and protected by the lender.

Gives you the option to opt out of certain types of data sharing.

8. Right to Receive an Appraisal Disclosure (For Mortgages)

If your loan involves a home appraisal, this notice informs you that you are entitled to receive a copy of the appraisal report.

9. Servicing Disclosure Statement (For Mortgages)

Let you know whether the lender intends to service the loan or transfer it to another company after closing.

10. Homeownership Counseling Notice (For Certain Loans)

If required, this informs you that you may need to complete housing counseling before obtaining the loan.

Would you like more details on any specific disclosure?

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Using Rental income only to qualify for a mortgage on an investment property

didier@ddamortgage.com (Didier Malagies) — Mon, 17 Feb 2025 14:23:15 GMT

A rapid rescore is a service offered by lenders to quickly update your credit report with the latest information, potentially improving your credit score in a matter of days rather than waiting for the usual reporting cycle. Here’s how it works:

How Rapid Rescoring Works:

Correct Errors or Update Balances – If you've recently paid off debt, had incorrect information removed, or made other positive changes, a rapid rescore can update your credit report faster.

Lender Requests the Rescore – You can’t request a rapid rescore on your own; a lender must do it for you.

Credit Bureaus Update Your Report – The lender submits proof (such as a paid-off credit card statement) to the credit bureaus, which then updates your report within a few days.

When to Use Rapid Rescoring

You’re applying for a mortgage or other loan, and a higher score could qualify you for better rates.

You recently paid down high credit card balances.

Errors or outdated negative items were removed from your report.

Important Notes

A rapid rescore does not remove accurate negative information—it only updates legitimate changes.

It typically takes 3-7 days for results.

Some lenders offer it for free, while others may pass on a fee.

Would you like help finding lenders that offer rapid rescoring?

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Reverse purchase financing: The financing option no one is talking about

didier@ddamortgage.com (Didier Malagies) — Tue, 11 Feb 2025 23:19:02 GMT

Did you know that in 2022, both younger and older Baby Boomers made up the largest generation of American homebuyers

Yet staggeringly few are aware of its existence.

What is reverse purchase financing?

Very few are reaping the benefits, but they keep on coming

The times they are a-changin’

According to financial analysts, a “Silver Tsunami” is headed our way, beginning in 2024, as millions of homeowners aged 50 and older make the move to downsize as they inch closer to retirement.6

The bottom line

The reverse mortgage (HECM) for purchase program was designed to help older Americans buy a more suitable home in retirement, while still conserving cash and assets for future expenses.

And as an added bonus, the program can help real estate professionals turn more shoppers into buyers and close the gap on aging fence-sitters who are hesitant to begin the home buying process all over again in retirement, all while the U.S. stares down the barrel of a considerable economic downturn.

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Now offering 2nd mortgages on primary, secondary and investment properties

didier@ddamortgage.com (Didier Malagies) — Mon, 10 Feb 2025 14:34:47 GMT

How Rapid Rescoring Works:

Correct Errors or Update Balances – If you've recently paid off debt, had incorrect information removed, or made other positive changes, a rapid rescore can update your credit report faster.

Lender Requests the Rescore – You can’t request a rapid rescore on your own; a lender must do it for you.

Credit Bureaus Update Your Report – The lender submits proof (such as a paid-off credit card statement) to the credit bureaus, which then updates your report within a few days.

When to Use Rapid Rescoring

You’re applying for a mortgage or other loan, and a higher score could qualify you for better rates.

You recently paid down high credit card balances.

Errors or outdated negative items were removed from your report.

Important Notes

A rapid rescore does not remove accurate negative information—it only updates legitimate changes.

It typically takes 3-7 days for results.

Some lenders offer it for free, while others may pass on a fee.

Would you like help finding lenders that offer rapid rescoring?

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Family caregivers who support older relatives are on the rise due to aging-in-place preferences

didier@ddamortgage.com (Didier Malagies) — Thu, 06 Feb 2025 21:10:15 GMT

The number of family caregivers who support older relatives in either home-based or residential care settings increased by 32% between 2011 and 2022 — a sharp rise that can be attributed to an increase in the number of caregivers living with recipients. Researchers also say this could be partially tied to rising preferences for aging in place .

This is according to a joint study from the Johns Hopkins Bloomberg School of Public Health and the University of Michigan’s Institute for Social Research. Additional support came from the National Institute on Aging , a division of the National Institutes of Health (NIH).

The raw number increase went from 18.2 million in 2011 to 24.1 million in 2022. The study also found that the number of care hours provided by family and other unpaid caregivers increased by 50% during that time. The average number of weekly hours for such care stood at 21.4 in 2011, but it jumped to 31 in 2022, nine hours short of what is widely considered a full-time weekly work schedule.

The data for the study was sourced from the National Health and Aging Trends Study (NHATS) and the National Study of Caregiving (NSOC) from 2011 and 2022, according to information shared by Johns Hopkins about the methodology and findings .

“NHATS interviews a representative group of older adults enrolled in Medicare each year about their daily activities, while the NSOC gathers information annually on unpaid and family caregivers,” the institution explained. “The study included samples of older adults who received help with self-care, mobility, or household activities for health or functioning reasons, and the family or unpaid caregivers who assisted them.”

Roughly 12% of unpaid caregivers in 2022 were friends, neighbors or otherwise not directly associated with the family of the care recipient. The remainder said they were relatives . By 2022, caregivers were also more likely to be younger, better educated and male than the data indicated in 2011.

As aging in place has become more popular with older adults and their families, there could be a tendency to take the availability of family caregivers for granted without consideration to the impacts that caregiving has on their own professional prospects, the researchers said.

“With an increasing emphasis on value-based care and aging in place, there is often an assumption that family caregivers are available and have the capacity to provide needed support,” the study said. “The researchers recommend that policymakers develop strong support systems for family caregivers.”

There is more targeted support for family caregivers under certain situations including through Medicaid waivers, a Medicare hospice benefit and state-level paid family leave policies. But researchers “advocate for a cohesive national strategy to address caregivers’ financial, emotional, and physical challenges.”

Late last year, Johns Hopkins published another study suggesting that the integration of health, social services and community-based support systems must be improved to better accommodate the desires of older Americans to age in place in their homes.

In early 2024, researchers from Rutgers University found that home-based care is a leading outcome for older Americans who seek to age in place. The results of this academic work may shed light on broader considerations, leading more older Americans to seek out certain end-of-life care paths, particularly as the U.S. population grows older more quickly .

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Rapid rescores to increase your scores

didier@ddamortgage.com (Didier Malagies) — Mon, 03 Feb 2025 14:17:42 GMT

How Rapid Rescoring Works:

Correct Errors or Update Balances – If you've recently paid off debt, had incorrect information removed, or made other positive changes, a rapid rescore can update your credit report faster.

Lender Requests the Rescore – You can’t request a rapid rescore on your own; a lender must do it for you.

Credit Bureaus Update Your Report – The lender submits proof (such as a paid-off credit card statement) to the credit bureaus, which then updates your report within a few days.

When to Use Rapid Rescoring

You’re applying for a mortgage or other loan, and a higher score could qualify you for better rates.

You recently paid down high credit card balances.

Errors or outdated negative items were removed from your report.

Important Notes

A rapid rescore does not remove accurate negative information—it only updates legitimate changes.

It typically takes 3-7 days for results.

Some lenders offer it for free, while others may pass on a fee.

Would you like help finding lenders that offer rapid rescoring?

tune in and learn at https://www.ddamortgage.com/blog

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Habitat for Humanity sees success with aging in place program

didier@ddamortgage.com (Didier Malagies) — Wed, 22 Jan 2025 16:21:02 GMT

A dedicated aging in place (AIP) program offered by the Oswego County Habitat for Humanity (OCHFH) in New York says it is seeing success by incorporating family, community and local resources to ensure older homeowners can remain where they prefer.

“It’s been projected that, over the next 20 years, households led by individuals in their 80s will become the fastest growing age group , which provides stability within their communities,” said Samuel Raponi, OCHFH executive director.

Through the organization’s AIP program, Habitat collaborates with families, local organizations and other community members in an effort to provide homes that prioritize living for older adults, he said.

“This ultimately enhances their quality of life. We employ two different assessments in each case to ensure that the homeowners’ needs are clearly understood,” he added.

An initial assessment of the client’s living situation aims to assess each person’s daily living activities, which are scrutinized by a “health or human services professional,” the organization said. This includes how they manage regular tasks like cleaning, shopping, paying bills or interacting with their community. A second evaluation specifically assesses home repair needs, and how to make a dwelling more livable for the needs of an older person.

“These assessments enable OCHFH to provide modifications to their homes tailored to each homeowner’s specific lifestyle,” Raponi added. “Among the kinds of modifications we make are installing lever door handles, ramps, railings, grab bars, walk-in showers with a low threshold, and raised toilets to make homes more accessible for older adults.”

Other resources, including Meals on Wheels , may be seen as necessary to deploy depending on a person’s circumstances, and all combine into a living situation that is aimed at being more generally beneficial for someone seeking to age in their own home.

AIP is actively seeking more collaborative partners in the health care sector, owing to unique challenges visited upon older people who may not be able to adequately address their health needs.

“Low-income older adults face a higher risk of chronic diseases and disabilities due to limited access to primary care and a greater likelihood of living in substandard, deteriorating housing,” Raponi added.

A recent study from Carewell suggested that many older adults see aging in place as a financial necessity considering the costs of other kinds of living arrangements older people may choose. Nearly half of respondents (47%) characterized aging in place as both a preference and a financial necessity in tandem.

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Is it time to prequalify for a mortgage now

didier@ddamortgage.com (Didier Malagies) — Mon, 20 Jan 2025 15:02:30 GMT

1. Assess Your Financial Health

Credit Score: Check your credit score (usually 620 or higher is required, though higher scores get better rates).

Debt-to-Income Ratio (DTI): Calculate your monthly debt payments compared to your gross monthly income (lenders typically prefer a DTI below 43%).

Savings: Ensure you have enough for a down payment (typically 3-20%) and closing costs.

2. Gather Financial Information

Lenders will need the following:

Proof of income (pay stubs, tax returns, W-2s/1099s).

List of assets (savings, investments, retirement accounts).

Details of current debts (credit card balances, student loans, etc.).

3. Choose a Lender

Research different lenders, including banks, credit unions, and online lenders.

Compare prequalification options (many allow online applications).

4. Complete the Prequalification Process

Fill out the lender’s prequalification form (online, over the phone, or in person).

Provide basic details about your income, debts, and assets.

5. Review Prequalification Results

The lender will give you an estimate of the loan amount and potential interest rate.

Remember, prequalification is not a guarantee of approval and doesn’t involve a hard credit inquiry.

6. Follow Up with Preapproval

If you’re serious about buying, consider getting preapproved, which involves a more in-depth review and is stronger than prequalification.

Tips:

Use online calculators to estimate affordability before reaching out to lenders.

Avoid large purchases or opening new lines of credit during the prequalification and preapproval process.

Would you like details on specific lenders or tools to compare mortgage options?

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USA Today: If Social Security falters, reverse mortgages could be worth a look

didier@ddamortgage.com (Didier Malagies) — Mon, 13 Jan 2025 20:04:25 GMT

Many retirees have said they rely largely — and sometimes entirely — on Social Security benefits as their primary income stream in retirement . But in instances where these payments may not be enough to make ends meet, other options should be considered — and in the right situation, a reverse mortgage could be one such option.

That’s according to a column published this week by USA Today , which assessed reverse mortgages in tandem with options such as personal savings, a part-time job and other benefits programs.

“A reverse mortgage is a possibility for seniors with substantial equity in their homes,” the column stated. “It essentially enables you to borrow against your equity, and you aren’t required to make any payments while you’re still alive as long as you live in the house.”

The column is likely referencing the Home Equity Conversion Mortgage ( HECM ) program insured by the Federal Housing Administration (FHA). Loan proceeds are dependent on the amount of equity in the home and current interest rates, the column noted, and there are multiple disbursement options available, the column noted. The minimum age requirement of 62, a core tenet of the HECM program, was also mentioned.

“There are closing costs and other fees, and you’ll still be responsible for maintaining the property and paying the property taxes and homeowners insurance,” the column noted.

It characterized the loan as a “solid option” for those who have few other assets beyond their homes, adding that “it might not be the right move if you intend to pass the property on to your heirs someday. After you pass away or move out of the home, you or your estate will have to repay the loan. This will reduce how much your heirs receive.”

Recent survey data from Clever Real Estate highlighted some realities of relying on Social Security benefits in retirement. Roughly one in five respondents in the 1,000-person survey said they rely exclusively on Social Security benefits as their sole income stream in retirement, with nearly 30% saying they believed they would be able to rely on them.

Last year, data from Nationwide suggested that an increasing number of older investors believe that retiring at the age of 65 is no longer a realistic option . This is largely tied to higher levels of stress they’re feeling about the economy and the cost of living.

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Is it a good time to buy a home

didier@ddamortgage.com (Didier Malagies) — Mon, 13 Jan 2025 14:13:58 GMT

Deciding whether it’s a good time to buy a home amid higher interest rates depends on several factors. Here are some considerations to help you make an informed decision:

1. Your Financial Situation

Affordability: Higher interest rates generally lead to higher monthly mortgage payments, which could impact your ability to afford a home. If you have a stable income and can comfortably manage these higher payments, it might still be a good time to buy.

Down Payment & Savings: A larger down payment can reduce your loan size and help lower the impact of higher interest rates. If you have substantial savings, it could make sense to buy now, as you’ll likely have more equity and lower monthly payments.

2. Long-Term Investment

Housing Market Trends: If you plan to stay in the home for several years, you might benefit from the property appreciation over time, even with higher interest rates. Historically, real estate tends to appreciate in value over the long term, although this can vary by location.

Refinancing Opportunity: If interest rates eventually drop, you may be able to refinance your mortgage later at a lower rate, reducing your monthly payments.

3. Market Conditions

Home Prices: In some areas, home prices have been high due to increased demand, so you may still face elevated prices despite higher interest rates. It’s worth considering whether you’re willing to pay the current asking price for homes in your area.

Seller Motivation: In a high-rate environment, some sellers may be more willing to negotiate, especially if they’re facing longer time on the market. You might have more room to negotiate on price or terms.

4. Personal Goals

If owning a home is important to your personal goals and lifestyle, it might make sense to move forward, even if rates are high.

However, if your plans are more flexible and you can wait for a more favorable rate environment, it could be worth waiting.

5. Alternative Financing Options

Adjustable-Rate Mortgages (ARMs): Some buyers opt for ARMs, which start with lower rates that can adjust after a certain period. This might be a way to secure a lower initial rate, but you should be comfortable with the possibility of future rate increases.

Other Financing Programs: There are some government-backed programs (like FHA or VA loans) that may offer lower rates or down payment requirements, depending on your eligibility.

Conclusion:

It’s a mixed scenario. Higher interest rates generally make it more expensive to borrow, but if you’re financially prepared, plan to stay in the home long-term, and can find a property at a fair price, it could still be a good time to buy. On the other hand, if you’re concerned about affordability or want to wait for rates to decrease, it might make sense to hold off. Always consider speaking with a financial advisor or mortgage expert to get personalized advice based on your situation.

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Nearly half of retirees worry they’ll outlive their savings, while 25% are burdened by housing costs

didier@ddamortgage.com (Didier Malagies) — Thu, 09 Jan 2025 17:12:14 GMT

Forty-five percent of retirement-age survey respondents are concerned that they will outlive their savings while 25% spend nearly one-third of their monthly income on housing costs. This is according to new data released by Clever Real Estate .

The survey results show stark declines in overall financial sentiment based on responses from 1,000 retired Americans at least 62 years old, with a median age of 70. Forty-three percent of respondents said they would rather die sooner than outlive their savings out of concern for a decline in their quality of life.

But more than one in three (39%) said they have watched their standard of living fall in retirement , while roughly one-third (30%) said they have already “spent too much” of their retirement savings.

The survey cites the recommended amount of retirement savings at just over $600,000, but respondents said they have saved an average of about $308,000, barely half of this recommended amount. And 27% of respondents said they have no retirement savings at all.

Interestingly, nearly half of respondents (46%) said that the media paints an overly positive picture of what retirement is actually like. More than half (53%) said they actively prioritize retirement savings over “enjoying” their post-employment lives.

Just under half of respondents also admitted they didn’t begin saving for retirement until they were in their 40s, while nearly two-thirds (64%) expressed regrets about retirement.

Mortgage debt was not specified, but retirees said their debt obligations are largely elevated. About two-thirds of respondents said they’re carrying some kind of debt beyond their mortgage, and nearly one-third (31%) said they are more than $10,000 in debt.

Eighty percent of respondents also believe the government should be doing more to help retirees — a tall order considering the place of the Social Security program in gridlocked political conversations, particularly in a narrowly-divided Congress . At the same time, more than half of respondents (52%) feel that retirees rely too much on government programs like Social Security as opposed to their own savings.

In addition, 90% of respondents said that dedicated retirement communities are “overpriced and unaffordable for the average person,” while 72% of respondents said they could not afford a home in the current market

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Report suggests capital gains tax is discouraging older homeowners from downsizing

didier@ddamortgage.com (Didier Malagies) — Wed, 08 Jan 2025 21:43:52 GMT

While recent housing market reports and trends have shown that older homeowners are unwilling to sell their homes for a variety of reasons, one of them may be the expected requirement to pay capital gains taxes stemming from the post-pandemic explosion of home-price appreciation, according to a report from Business Insider.

While some homeowners are looking to cash in on the equity they’ve built up since the pandemic, these same increases in property values are driving up the number of home sales that the capital gains tax would be applied to.

The capital gains tax is a federal tax that is applied when the sale of a particular asset — including a home, personal items, or stocks and bonds held as investments — is sold “for more than [a seller’s] adjusted basis,” referring to the initial cost of the item being sold, according to the IRS .

Capital gains have applied to home sales with profits of more than $250,000 since 1997, when the median price of a U.S. single-family home was $124,800, according to data from the U.S. Department of Housing and Urban Development (HUD). The initial idea was for the targeted capital gains tax to apply to the most affluent homeowners.

But according to data released by the U.S. Census Bureau late last month, that same median price now sits at $402,600. And considering the run-up in home prices in the early 2020s, these thresholds are likely to many home sellers, not just affluent ones, particularly since the tax is not indexed to inflation .

“The share of home sales subject to the tax has more than doubled in the past few years. In 2023, 8% of US sellers made more than $500,000 in profit on the sale of their homes, the property data

firm CoreLogic found,” Business Insider reported based on April 2024 data . “That’s up from 1.3% in 2003 and 3% in 2019. If the threshold had been adjusted for inflation, the $250,000 cutoff for individual home sellers in 1997 dollars would be about twice as high — $496,000 — in 2024 dollars.”

Considering that the home is a central pillar of wealth for many Americans, including older homeowners, the concept of the tax biting into their finances is actively warding off some people from selling, according to CoreLogic chief economist Selma Hepp.

“What we know, anecdotally, is that people are feeling locked in,” Hepp told Business Insider. “There are a good share of people for whom this is the only source of wealth savings.”

Some homeowners are also in a challenging position because of high home prices in general. One 71-year old homeowner described the challenges of entering the market now, since the capital gains tax would lower his sale proceeds enough that it would be a challenge to find a new home.

“If we sell our house, pay the capital gains tax, with what we’re left over with we can’t find anything to buy that’s anywhere as nice as the home we’re in,” said David Levin, a resident of Manhattan Beach, California.

But many older homeowners have also given other reasons they’ve elected not to sell.

September, Clever Real Estate released survey data showing that more than half (54%) of baby boomers have no intention of ever selling their homes. Having a home that fits their lifestyle needs, and a desire to age in place , led the reasons cited.

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Eliminate your home sales contingency

didier@ddamortgage.com (Didier Malagies) — Mon, 06 Jan 2025 14:21:14 GMT

What if you had access to a solution that allows your clients to eliminate their home sales contingency? They could make non-contingent or cash offers on a new home, while also removing their current mortgage payment from qualification. This would enable them to tap into their homes equity for down payments, closing costs, or even debt payoff—all while giving them up to 6 months to sell their current home for top dollar.

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reverse purchase financing; The fnancing option no one is talking about

didier@ddamortgage.com (Didier Malagies) — Mon, 30 Dec 2024 16:29:09 GMT

With over 12,000 Americans turning 65 every day in 2024, this burgeoning market will undoubtedly continue to bring more buyers and sellers to the table over the next decade. ² However, these potential clients will also face challenges — namely market volatility, unpredictable interest rates and limited purchasing power due to increasing debt.

Yet staggeringly few are aware of its existence.

What is reverse purchase financing?

Established in 2009 by the Department of Housing and Urban Development (HUD), reverse purchase financing or “Home Equity Conversion Mortgage ( HECM ) for Purchase loan program” allows those aged 62 and older to purchase a new house or certain condos by combining a one-time investment of their funds (such as profits from the sale of their current home) with reverse mortgage loan proceeds to complete the purchase. They own the home with their name on the title, as with any mortgage, traditional or reverse.

The down payment percentage required on the loan is higher than with a traditional mortgage (usually 60% to 65% of the cost of the new home) ³ and the owner does build less equity — but unlike a traditional loan, the borrower is not at risk of owing more than the home is worth at the time of repayment when the home is sold due to its non-recourse feature.

In addition to improved cash flow throughout the life of the loan due to the optional repayment feature, ⁴ buyers also enjoy additional spending power with reverse purchase financing. They are able to maximize their cash investment on a new home and more comfortably afford an upscale home or a property in a more desirable location — whether it be closer to family or in a luxury housing development with additional amenities.

Very few are reaping the benefits, but they keep on coming

According to the Federal Housing Administration (FHA), there were only 2,063 HECM for Purchase loans endorsed in 2022 — that’s less than 1/10th of 1% of homes sold last year. ⁵ But even as professionals and consumers continue to leave the benefits of reverse purchase financing on the table when transacting, advancements to the now 15-year-old program continue.

“The lack of seller concessions may have been one of the biggest reasons that reverse purchase financing has not become more mainstream and widely promoted to and by the Baby Boomer generation,” said Rob Cooper, National Purchase and Builders Sales Leader for Longbridge Financial . “We in the industry are very hopeful that this will be an eye-opener, especially for real estate agents and builders to start recommending this product to clients more regularly.”

The times they are a-changin’

According to financial analysts, a “Silver Tsunami” is headed our way, beginning in 2024, as millions of homeowners aged 50 and older make the move to downsize as they inch closer to retirement. ⁶

The bottom line

The reverse mortgage (HECM) for purchase program was designed to help older Americans buy a more suitable home in retirement, while still conserving cash and assets for future expenses.

The reverse industry has been working hard for years to educate real estate agents, builders and loan officers on the advantages of reverse purchase financing, and Longbridge Financial, LLC is making strides in expanding educational efforts.

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Working with small businesses is a great way to go and realtor referrals are key

didier@ddamortgage.com (Didier Malagies) — Mon, 30 Dec 2024 14:41:30 GMT

Local Advocacy: Advocate for small businesses by supporting policies that benefit them, such as lower taxes or zoning laws that allow small businesses to thrive.

Volunteer or Participate: Get involved in local initiatives such as volunteering, community clean-ups, or fundraisers that small businesses might be involved with or organizing.

6. Promote Local Business Online

Social Media Sharing: Share small businesses’ posts on your social media accounts to help them reach more people. A post or shoutout can go a long way in raising awareness.

Create Online Reviews and Blogs: Write blog posts or create online content that showcases local businesses and their unique offerings.

7. Offer Financial or Operational Support

Funding Assistance: Help connect small businesses with resources for funding, whether through grants, small business loans, or crowdfunding platforms.

Help with Expansion: If you’re in a position to assist, help them expand by connecting them with potential investors, strategic partners, or other local entrepreneurs.

8. Join or Start a Business Network

Local Business Associations: Many communities have local business associations. Join them or help start one to bring together small business owners for networking, collaboration, and support.

Monthly Meetups: Organize informal meetups where business owners can exchange advice, discuss challenges, and share resources.

9. Mentorship

Become a Mentor: If you’ve experienced success in your own business or career, offer mentorship to budding small business owners, guiding them through the challenges of starting and growing a business.

Offer Workshops: Host free or affordable workshops to teach business skills like budgeting, marketing, and customer service.

10. Be a Consistent Customer

Loyalty Programs: Encourage loyalty by consistently returning to the same small businesses. Some businesses offer rewards or discounts for repeat customers.

Word-of-Mouth: Small businesses thrive on repeat business and referrals. Stay engaged and loyal to your local businesses, and they will likely offer the same in return.

By actively engaging with and supporting small businesses in your community, you help build a stronger, more resilient local economy. It’s a mutually beneficial relationship that leads to growth and prosperity for everyone involved.

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Having a difficult time qualifying, let me help structure your loan

didier@ddamortgage.com (Didier Malagies) — Mon, 23 Dec 2024 14:36:00 GMT

To structure your loan effectively and qualify for a mortgage, there are several steps you can take to improve your financial situation and increase the likelihood of approval. Here’s a comprehensive guide:

1. Check Your Credit Score

Why it matters: Your credit score plays a significant role in mortgage approval. Lenders typically prefer a score of 620 or higher, though higher scores (700+) are ideal for getting better rates.

How to improve: Pay off any outstanding debts, avoid late payments, and reduce your credit card balances. You can also check for errors on your credit report and dispute any inaccuracies.

2. Save for a Down Payment

Why it matters: A larger down payment reduces the lender's risk and can improve your chances of approval. It also helps you avoid private mortgage insurance (PMI) if you put down 20% or more.

How to improve: Aim for at least 20% if possible, but there are also options with lower down payments (e.g., 3%-5% for FHA, VA, or USDA loans).

3. Reduce Your Debt-to-Income Ratio (DTI)

Why it matters: Lenders want to ensure you can manage your monthly mortgage payments alongside other debts. A lower DTI means more of your income is available to cover the mortgage.

How to improve: Aim for a DTI ratio below 43%, though ideally closer to 36% or lower. You can reduce your DTI by paying off existing debts, such as credit cards or personal loans.

4. Provide Proof of Stable Income

Why it matters: Lenders want to ensure you have a steady source of income to make timely mortgage payments.

How to improve: Keep records of your income, including pay stubs, tax returns, and bank statements. If you're self-employed, prepare additional documentation, such as profit and loss statements.

5. Choose the Right Mortgage Type

Why it matters: Different types of loans have different requirements and benefits.

Conventional loans are good for borrowers with strong credit and a sizable down payment.

FHA loans are suitable for first-time buyers or those with lower credit scores and smaller down payments.

VA loans are available for veterans and active-duty service members with no down payment requirement.

USDA loans are ideal for rural or suburban homebuyers with low-to-moderate income.

How to improve: Research mortgage types to determine which best fits your financial situation.

6. Have a Healthy Savings Account

Why it matters: Lenders want to see that you can cover closing costs, maintenance, and emergencies after the mortgage is secured.

How to improve: Save at least 2-3 months’ worth of mortgage payments in your emergency fund.

7. Document Your Assets

Why it matters: Lenders will want to know that you have enough liquid assets to make the down payment and cover closing costs.

How to improve: Gather statements for your checking, savings, and investment accounts, and any other assets that could contribute to your mortgage approval.

8. Consider a Co-Signer

Why it matters: If your credit or income is not sufficient, having a co-signer with stronger financials may increase your chances of approval.

How to improve: Discuss with a family member or trusted individual who is willing to co-sign your loan.

9. Shop Around for Mortgage Lenders

Why it matters: Different lenders have different eligibility criteria, fees, and rates. Shopping around can help you find the best deal for your situation.

How to improve: Get quotes from at least three lenders and compare their terms, interest rates, and closing costs.

10. Be Prepared for the Mortgage Process

Why it matters: The mortgage approval process can be lengthy and requires thorough documentation. Being prepared will make the process smoother.

How to improve: Be proactive in providing any requested documents and respond promptly to lender inquiries.

By focusing on these key areas, you can improve your chances of qualifying for a mortgage with favorable terms. If you're unsure about any of these steps, consulting with a financial advisor or mortgage broker may also help clarify the best approach for your specific situation.

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Fed cuts rates by 25 bps, signals a slower pace ahead

didier@ddamortgage.com (Didier Malagies) — Fri, 20 Dec 2024 19:18:23 GMT

Older homeowners have an overwhelming preference to age in place , but these circumstances can also come with unique challenges. Feelings of isolation and loneliness rank highly among these issues, but a recent study suggests that aging in place with a pet can make a big difference.

The study, highlighted in Psychology Today , also noted that having pets in later life can come with its own set of unique challenges , according to Ann Toohey, one of the authors of the study who is based at the University of Calgary.

The study followed initial interviews conducted in 2015 by examining how owning a pet impacted the lives of older people aging in place in their homes. According to the study, several takeaways emerged, including that the companionship of a pet makes a difference in their owners’ lives. While the companionship provided is understandably different from what is offered by another person, it also came with other potential social benefits for the seniors who owned pets.

“As it happened, most of the people in this study were single,” the report in Psychology Today noted. “Having a dog, in particular, was a good way to get to know other people, so pets could also increase the size of participants’ social networks.”

Finding pet-friendly housing can be an issue, according to the respondents. While the subjects were committed to keeping their pets, the housing challenges that pets can present made for a unique challenge.

“Because people did not want to give up their pets, they sometimes had to accept housing that was less than ideal or even not safe due to other people in the home,” the report explained.

Pets can also have other impacts on an older person’s mental well being, the study found, particularly if an older pet owner endured certain health-related challenges.

“As people got older, they sometimes had difficult circumstances to deal with, such as serious issues with their own health,” the report said. “Caring for their pet provided meaning through these hard times, and a sense of things continuing to be the same, at least in some regards. In this way, the pet helped them to cope with the challenges.”

Toohey added that while the seniors profiled in the study were generally committed to keeping their pets, the potential housing challenges that pet ownership can present for some older people seeking housing need to be addressed.

There is a lot of potential for what she calls “companion animal relationships” to promote health in “many ways that are salient to aging.” These include spurring physical activity by walking a pet, companionship and potential involvement in pet-centric social activities with other pet owners. But certain challenges are also a factor, including the cost of pet supplies, a lack of affordable support if a pet owner becomes ill, and the need for veterinary care.

There are also housing-related challenges, which could include “the prevalence of no pet rules to size restrictions to extra fees,” she said.

In terms of housing policies tied to aging in place, these barriers could have the most impact, according to the report.

“Greater availability of seniors’ housing that allows pets would be very beneficial and would make it easier for people to age in place with their pet,” the report said. “This would benefit those who aren’t seniors too, as more pet-friendly housing would help a wide range of people.”

This is on top of other well-documented challenges older people can face when trying to age in place. These include the high cost of long-term care , a need to create more walkable communities and housing supply illus trates that impact prospective homebuyers of all ages.

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As seniors age in place, pets could encourage health and friendship

didier@ddamortgage.com (Didier Malagies) — Tue, 17 Dec 2024 16:18:58 GMT

“Because people did not want to give up their pets, they sometimes had to accept housing that was less than ideal or even not safe due to other people in the home,” the report explained.

Pets can also have other impacts on an older person’s mental well being, the study found, particularly if an older pet owner endured certain health-related challenges.

There are also housing-related challenges, which could include “the prevalence of no pet rules to size restrictions to extra fees,” she said.

In terms of housing policies tied to aging in place, these barriers could have the most impact, according to the report.

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What is happening when the condo questionnaire is not being all checked off

didier@ddamortgage.com (Didier Malagies) — Mon, 16 Dec 2024 13:50:59 GMT

A condo questionnaire is a critical document that lenders use during the mortgage approval process for condominium purchases. It provides detailed information about the condo complex's financial health, rules, regulations, and overall condition. Problems with the condo questionnaire can create delays or complications during the closing process. Here are some common issues that might cause problems:

1. Financial Health Concerns

High percentage of owner-occupancy: Many lenders require that at least 50% (or more) of the units in the complex be owner-occupied rather than rented. If a condo complex has too many renters, it could impact the lender’s willingness to approve a loan.

Reserve fund issues: Lenders typically want to see that the condo association has sufficient funds in its reserve account for future maintenance and emergencies. If the reserve fund is too low or non-existent, it raises concerns about the financial stability of the association, leading to potential loan rejection.

Delinquencies in condo fees: A high rate of delinquencies in the condo association fees can signal financial instability, which lenders may view as a risk. This can delay or halt the approval process.

2. Insurance Coverage Problems

Lack of adequate insurance: Lenders require that the condo association carries specific types of insurance, including property insurance and liability coverage. If the condo association's insurance policy doesn’t meet the lender's criteria, the loan may be delayed or denied.

Insufficient flood insurance: If the condo is in a flood zone, the association is required to have flood insurance. A deficiency in this area can cause significant issues with closing.

3. Pending or Recent Litigation

Ongoing lawsuits: If the condo association is involved in a lawsuit (e.g., against contractors, residents, or local authorities), it can be a red flag for lenders. Lawsuits can create financial and legal uncertainty, so lenders may hesitate to approve a loan until the matter is resolved.

History of litigation: Even if the condo association is not currently involved in litigation, a history of legal problems could still concern lenders and complicate the approval process.

4. Non-Compliance with Condominium Guidelines

Failure to meet FHA/VA guidelines: Some buyers are using FHA or VA loans, which have specific guidelines regarding condo developments. If the condo does not meet these criteria (for example, not having enough unit owners, or a commercial component taking up too much space), it can prevent the buyer from securing the loan.

Non-compliant rules or by-laws: If the condo association's rules or by-laws are outdated or do not comply with lender requirements (such as restrictions on renting out units), it can create issues.

5. Discrepancies or Incomplete Information

Incomplete or missing information: If the condo questionnaire is not fully completed or there is missing information about the financials or maintenance issues, lenders may hold up the approval process.

Incorrect or inconsistent data: Discrepancies between the information provided in the questionnaire and the condo association’s financial statements can raise red flags, requiring additional clarification or investigation.

6. Excessive Commercial Units or Mixed-Use Properties

High commercial occupancy: If a condo development has a high percentage of commercial space or mixed-use properties (residential and commercial), lenders might view this as risky. Lenders prefer predominantly residential complexes since they have a lower risk profile.

7. Special Assessments

Upcoming or recent special assessments: If the condo association has recently passed a special assessment (a fee charged to condo owners for unexpected repairs or improvements) or plans to do so in the near future, it can lead to concerns about the financial health of the complex and may affect the lender's decision to approve the loan.

8. Age of the Building

Older buildings with deferred maintenance: Lenders might be cautious about approving loans for condos in older buildings that have not been well-maintained. They may require detailed maintenance records or a building inspection to ensure that the property is in good condition.

Conclusion

Issues with the condo questionnaire that could cause problems during closing typically revolve around the financial stability, legal status, and physical condition of the condo association and its property. It's important for both the buyer and the seller to address these issues early in the process by working with the condo association to provide accurate, complete, and compliant documentation to the lender.

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Closing in December or January and how it could affect your property taxes

didier@ddamortgage.com (Didier Malagies) — Mon, 09 Dec 2024 13:58:36 GMT

Closing in December:

Tax Deduction for Current Year:

If you close in December, you may be able to deduct property taxes and mortgage interest on your current year’s tax return. This can reduce your taxable income and potentially lower your overall tax liability.

Pro-rated Taxes:

At closing, you’ll typically reimburse the seller for property taxes they’ve already paid for the portion of the year you’ll own the property. This means a smaller tax payment upfront, but you assume responsibility for the next year’s taxes sooner.

Year-End Benefits:

Closing before year-end allows you to claim homeowner tax benefits for the entire current year.

Potential Rush:

December closings can be rushed due to holidays and year-end demands on lenders, inspectors, and title companies.

Closing in January:

Tax Deduction Delayed:

By closing in January, deductions for property taxes and mortgage interest won’t be available until the next tax year. This delays potential tax benefits.

Budgeting Advantage:

You won’t owe property taxes until the next payment cycle. This could ease your initial cash flow needs.

Avoiding Holiday Rush:

January closings may be less hectic, allowing for smoother scheduling and fewer delays.

Aligning with Annual Financial Goals:

Closing at the start of a new year may align better with budgeting or investment planning.

Key Considerations:

State and Local Tax Timing: Check when property taxes are due in your area and whether payments are made in arrears (for the past year) or advance.

Tax Planning: Consider whether you need deductions this year or prefer them next year based on your financial situation.

Market Conditions: Interest rates and property prices may vary at year-end or beginning, which could influence your decision.

Consulting with your real estate agent, lender, and tax advisor will help you decide based on your specific financial and tax situation.

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How Reverse for Purchase can help baby boomer borrowers

didier@ddamortgage.com (Didier Malagies) — Tue, 03 Dec 2024 14:36:34 GMT

After spending their entire career in the “accumulation” phase of wealth building, retirees who then have to transition into the “decumulation” phase — spending down their assets with no additional employment income — is a source of stress for nearly half of American retirees. This is according to a study conducted by the Alliance for Lifetime Income .

The study used a targeted respondent pool of 2,516 people between the ages 45 and 75. The majority of respondents singled out inflation and the cost of living (82%) as the key issues impeding their retirement savings plans. Health care costs came in second at 70%.

But the decumulation phase is a clear source of anxiety for retirees, the results of the survey explained, since it involves acting in the opposite way about finances when compared to a disciplined savings plan that may have been in place for decades.

“Not having a clear plan for drawing-down savings and knowing how to generate income in retirement are major contributing factors to people’s anxiety,” the survey results explained. “Alarmingly, fewer than a third of respondents (32%) said they have a specific income plan in place for retirement. 41% said they don’t know how to stage withdrawals from their accounts, and fewer than half (49%) know how to handle required minimum distributions or minimize taxes, both essential pieces to sound retirement income planning.”

Three tasks emerged for respondents as nearly equally difficult or confusing when it comes to creating plans for retirement spending — prioritizing what to spend money on, determining how much must be set aside to cover health costs, and how to optimize a pattern of withdrawals from accounts.

Adding to the anxiety for many older Americans is the poor condition of the Social Security trust fund and the lack of political will from lawmakers to adequately address an expected 2035 shortfall in benefit payments.

“Over a third (37%) of consumers have already started claiming Social Security, with 67% saying they did so because they are disabled or needed income, while 28% started early withdrawals out of fear Social Security will not be available or their payments will be cut, or they will die before reaching full retirement age,” the survey results stated.

The decision to begin claiming these benefits is primarily based on personal judgment. Nearly three in four (73%) of respondents decided on their own to begin claims compared to only 9% who did so on the advice of a financial adviser.

Jean Statler, CEO of the Alliance for Lifetime Income, emphasized the emotional issues that could stem from realizing that a paycheck from work is no longer coming and being “left with a lump-sum of money that has to last for what could be 20, 30 or more years,” she said.

“If there’s just one thing you can do to prepare and lower your anxiety, it’s having a clear retirement income plan,” Statler said. “And the most important thing in that plan is having enough protected income between Social Security, annuities, or a pension, to cover your basics — those essential expenses you have to pay for like housing and food.”

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My prediction on interest rates in 2025

didier@ddamortgage.com (Didier Malagies) — Mon, 02 Dec 2024 14:09:30 GMT

Predicting interest rate movements in 2025 depends on various economic factors, including inflation, employment trends, central bank policies, and global financial conditions. Here's a general overview:

Key Factors Affecting Interest Rates:

Inflation:

Central banks like the Federal Reserve adjust interest rates to manage inflation. If inflation stays high, rates may remain elevated. If inflation moderates, there could be a case for lowering rates.

Economic Growth:

Strong economic growth might keep rates steady or higher, while signs of economic slowdown could lead to rate cuts to stimulate activity.

Central Bank Policy:

In 2023 and 2024, many central banks raised rates to combat inflation. By 2025, they might shift focus depending on how well inflation is controlled and economic growth sustains.

Labor Market:

A robust job market might delay rate cuts, while rising unemployment could prompt reductions.

Global Conditions:

Factors like geopolitical events, commodity prices, and trade dynamics will also play a role.

Expert Predictions:

Economists and financial analysts have varying opinions, often influenced by current data and expectations about future trends. Many anticipate that rates could stabilize or decrease by 2025 if inflation is tamed and the economy requires additional support.

If you'd like more up-to-date insights or analysis closer to 2025, let me know, and I can provide the latest expert views.

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Retirees are stressed about spending their savings, study finds

didier@ddamortgage.com (Didier Malagies) — Wed, 27 Nov 2024 16:40:43 GMT

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Mortgage rates remain elevated post-election

didier@ddamortgage.com (Didier Malagies) — Wed, 20 Nov 2024 14:28:45 GMT

The trend line for mortgage rates has been the same for several weeks, even as some of the uncertainty surrounding the 2024 election is fading. The cost of a home loan continues to move in a negative direction for U.S. consumers and housing professionals alike as the downward movement that started in August has been erased entirely.

At HousingWire’s Mortgage Rates Center on Tuesday, the average rate for 30-year conforming loans was 6.99%. That was up 4 basis points (bps) from a week ago and 75 bps higher than when rates bottomed out in late September. Meanwhile, the 15-year conforming loan rate — which had been as low as 5.57% less than two months ago — stood at 6.98% on Tuesday.

The pace of increases is moderating. “Mortgage rates are expected to be lower today as bond yields have been decreasing throughout the night and early morning, slightly dropping further following the recent softer housing starts data,” HousingWire Lead Analyst Logan Mohtashami wrote on Tuesday.

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Gen X homebuyers should prioritize aging in place: Boston Globe

didier@ddamortgage.com (Didier Malagies) — Mon, 18 Nov 2024 20:41:20 GMT

Homebuyers who are part of Generation X — primarily born between the mid 1960s and the early 1980s — should keep accessibility features in mind as they approach retirement, since Americans are increasingly looking to age in place in their own homes once their time in the workforce is complete.

This is according to a recent article at the Boston Globe that took a closer look at the kinds of homes that those currently in their mid-to-late 50s may want to prioritize as they look to the future.

Not only is it a good idea to think ahead for themselves, the article explains, but many members of Gen X are also a part of the so-called “sandwich generation” where they may be taking care of both their own children, and their parents simultaneously.

“So for those considering moving out of the homes where they raised their children, there are some key boxes to check to make living in their next house easiest for everyone,” the story said.

The biggest aspect to keep in mind is the one that could make the biggest accessibility difference, and that is keeping the house confined primarily to a single floor.

“In most of our remodeling, we use a design technique called Universal Design,” said Brian Harvey, owner of Boston-area business Harvey Home Modifications . “That essentially is a design that will serve anyone of any physical capability in the house.”

Keeping in mind what is not needed is also a useful exercise, he said, and ensuring that door frames are wide enough to accommodate wheelchairs could be beneficial for any current or future wheelchair users that do, or will, reside in the home.

Bathrooms are also a major focus, since they can often serve as common sites for falls or other accidents since slippery, wet surfaces can be easy to find.

“If the home you’re hoping to buy doesn’t have the accessibility you’re looking for, you’ll want to check with a contractor to see what kind of renovations are possible,” the story said.

One of the ways the reverse mortgage industry has aimed to position the potential value proposition for prospective borrowers is by the ability to use the loan proceeds to fund home modifications.

The U.S. Department of Housing and Urban Development (HUD) has also given attention to home modifications specifically for aging in place. This past summer, the department greenlit a new round of grant funding specifically to assist more older Americans with aging in place.

Reporting earlier this year by the Associated Press (AP) also tracked the increasing desire of older Americans to remain in their homes for longer, illustrating how they were increasingly “splurging” on home modifications to better fashion their living spaces for later life’s natural mobility limitations.

Home improvement retailers have also taken notice, with The Home Depot refreshing an in-house brand with accessibility in mind for things like grab bars and easier-to-use faucets. In 2021, Lowe’s established a single stop for items including wheelchair ramps and shower benches, the AP reported.

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What happens with lower appraised values on FHA, Conventional, and VA Mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 18 Nov 2024 14:45:11 GMT

When a property appraisal comes in lower than the agreed-upon purchase price, it can complicate financing for the buyer. Here's what typically happens for FHA, Conventional, and VA mortgages:

1. FHA Mortgages

Impact of a Low Appraisal: The loan amount is limited to the lower of the purchase price or the appraised value. A low appraisal means the buyer must:

Renegotiate the purchase price with the seller.

Pay the difference in cash.

Walk away if the contract allows it.

Required Repairs: FHA appraisals assess both value and property condition. If issues arise (e.g., safety concerns), the seller or buyer must make repairs before closing.

Appraisal Stays with the Property: FHA appraisals are tied to the property for 120 days. If a different FHA buyer comes along within that period, they inherit the appraisal value.

2. Conventional Mortgages

Impact of a Low Appraisal: Conventional loans also limit the loan amount to the appraised value. If the appraisal is low, the buyer must:

Negotiate a lower price with the seller.

Increase their down payment to cover the gap.

Cancel the deal if allowed by a financing contingency.

Appraisal Appeal or Second Appraisal: Buyers or lenders can challenge the appraisal or request another one if there’s evidence the appraisal was inaccurate.

More Flexibility: Conventional loans often have fewer property condition requirements than FHA or VA loans, so the appraisal focuses more on market value.

3. VA Mortgages

Impact of a Low Appraisal: VA loans use a Notice of Value (NOV) to determine the property’s worth. If the NOV is lower than the purchase price, options include:

Negotiating a price reduction with the seller.

Paying the difference in cash.

Requesting a "Reconsideration of Value" (ROV) through the VA if there’s a strong case for higher value.

VA Escape Clause: VA loans include a clause allowing buyers to walk away if the property appraises lower than the purchase price without forfeiting their earnest money deposit.

Minimum Property Requirements (MPRs): If the property doesn't meet VA MPRs, repairs are required before closing.

General Buyer Options in Case of a Low Appraisal:

Renegotiate Price: Sellers may agree to lower the price to match the appraisal.

Bring Extra Cash: Buyers can cover the gap out-of-pocket.

Challenge the Appraisal: Provide additional data to support a higher value.

Walk Away: Utilize financing or appraisal contingencies to exit the deal.

Would you like more details on how to handle a specific type of mortgage?

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Housing supply will be impacted as more Americans age in place

didier@ddamortgage.com (Didier Malagies) — Tue, 12 Nov 2024 19:29:06 GMT

There is likely to be a “modest” amount of excess home supply driven by demographic changes as older homeowners move out of their homes or die. But the aging U.S. population is not expected to be an outright source of change to home-price projections over the next 10 years, according to a newly updated report on homes owned by baby boomers .

“First, based purely on changing demographics, over the next decade there was projected to be a modest amount of excess supply of homes for sale as older homeowners age and die — around a quarter million units annually,” according to the report published by the Mortgage Bankers Association (MBA).

“Second, housing supply and demand shifts from changing demographics are slow moving and highly predictable, which suggests that there would not be measurable effects on house price growth from population aging and mortality.”

The report projects that over the next decade, there will be a “negative excess supply of homes for sale,” which will fuel a demographic mismatch between supply and demand during that time. Much of this is driven by the fact that baby boomers, as previously documented , are not selling their homes at the same levels as previous generations.

“Since 2015, there has been a sizable increase in the homeownership rate among those 70 and older,” the report said. “This, combined with a larger base of older Americans from the aging of the baby boomers, has led to a greater number of existing homes held onto longer.

“In contrast, pre-2015 homeownership patterns would have predicted that these homes would have been sold. So, older Americans are holding onto their homes longer, and there are more of them.”

This could serve to raise existing home supply in future years, but demand will continue to outpace supply in the here and now.

“The findings highlight the varying patterns for older Americans as shifting demographics, the pandemic, and overall buyer attitudes have impacted buying and selling decisions,” said Edward Seiler, executive director for the Research Institute for Housing America and associate vice president of housing economics for the MBA

“It is evident that older households are aging in place , leading to updated predictions that show that there will be no excess supply of homes to the markets from older Americans moving or dying over the next decade.

The report also projects that there will be “over 8 million homes supplied by older Americans as they age and die,” which will rise to roughly 9 million over the next decade. Of that total, “approximately 1 million will be due to the death of older Americans.”

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Small Business Emergency Bridge Loan

didier@ddamortgage.com (Didier Malagies) — Mon, 11 Nov 2024 13:53:37 GMT

ender's 1% Down Payment program is designed to make homeownership more accessible for eligible first-time buyers by lowering the upfront costs typically required for a mortgage. Here's a breakdown of how the program generally works:

How It Works

1% Down from the Borrower: The borrower contributes just 1% of the home purchase price as a down payment.

2% Contribution from Lender: Lender covers an additional 2% of the down payment, allowing the borrower to start with a total of 3% equity in the home.

Eligibility: Borrowers must meet certain income and credit score requirements. The program often targets lower-income buyers or those who qualify for special financial assistance.

Key Features and Benefits

Low Entry Barrier: The reduced down payment can make homeownership achievable sooner for first-time buyers or those with limited savings.

Conventional Loan: The loan is structured as a conventional mortgage, which may help borrowers avoid some of the restrictions associated with government-backed loans like FHA loans.

Potential Mortgage Insurance: Depending on the loan details, borrowers may need to pay private mortgage insurance (PMI) until they reach 20% equity.

Other Considerations

Interest Rates: Rates and terms are subject to typical mortgage rate changes, so it's advisable to check the current rate before applying.

Credit Requirements: There may be a minimum credit score requirement, though this is typically more flexible than for standard conventional loans.

The 1% Down program can be an excellent option for buyers looking to make homeownership more affordable.

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Will mortgage rates settle after the election ends and the Fed meets?

didier@ddamortgage.com (Didier Malagies) — Wed, 06 Nov 2024 17:06:16 GMT

It’s a big week for the U.S. economy as the 2024 election takes place and monetary policymakers are meeting to decide what to do next about interest rates.

For mortgage professionals who’ve been dealing with uncertainty of late, more clarity could soon emerge. Mortgage rates have been rising quickly in recent weeks, dashing hopes for growth across the purchase and refinance lending channels.

According to HousingWire’s Mortgage Rates Center , the average 30-year conforming rate stood at 6.88% on Tuesday. This figure has jumped 16 basis points (bps) over the past week , 26 bps in the past two weeks and 57 bps since Sept. 18, when the Federal Reserve cut benchmark rates by half a percentage point.

The average 15-year conforming rate, meanwhile, grew to 6.55% on Tuesday — up an eye-popping 27 bps in one week. Conditions aren’t expected to improve in the short term, according to HousingWire Lead Analyst Logan Mohtashami.

“Mortgage rates are heading higher unless the spreads are fantastic today,” he wrote Tuesday. “The election data will create some wild swings, but the ISM (Institute for Supply Management) service report was a big beat of estimates, which made yields higher this morning after the report was released.”

Some help is expected Thursday in the form of another Fed rate cut. According to the CME Group’s FedWatch tool , about 95% of interest rate traders believe the federal funds rate will be lowered by 25 bps. And there is a 77% chance of another 25-bps cut in December, which would bring the overnight rate to a range of 4.25% to 4.5%.

“Assuming a 25-basis point cut in November, the September FOMC projections imply one additional quarter-point cut in December,” Sam Williamson, senior economist at First American, said in a statement. “However, additional upside surprises on inflation or employment data could influence the Fed to consider taking the December cut off the table. In contrast, accelerated economic weakness or a rapid slowdown in inflation could prompt the Fed to take a more dovish approach to policy normalization.”

While Tuesday is Election Day, the results of the presidential race between Kamala Harris and Donald Trump may not be known immediately. The contest is expected to be extremely close and is likely to be decided by a handful of battleground states , including Arizona, Georgia, Michigan, North Carolina, Pennsylvania and Wisconsin.

The presidential race, along with control of the House of Representatives and the Senate, could also factor into interest rate movements in the short term.

Survey data released Tuesday by Redfin found that 38% of early voters factored housing affordability into their choice between Harris and Trump. About one-third of respondents believe that rates will decline during a Trump presidency, compared to one-quarter who think the same under Harris. And more respondents believe rates will rise under Harris (32%) versus Trump (28%).

ICE Mortgage Technology reported this week that lower interest rates during the third quarter led to higher levels of home equity lending. Home equity withdrawals across both second-lien mortgages and cash-out refinances reached a two-year high mark in Q3 2024.

But even with a collective $48 billion in originations for these two categories from July through September, ICE reported that U.S. homeowners are touching only 0.42% of their tappable equity — the amount they can borrower against while keeping a 20% equity stake in the home.

The 10-year average extraction rate is 0.92%. Second mortgages are 26% below their historic utilization rate, while cash-out refis are 69% below normal.

ICE noted that “elevated interest rates have been a deterrent to homeowner equity utilization in recent quarters, as 30-year mortgage rates climbed at times into the high 7% range, curtailing cash-out refinance activity, and the average introductory rate on second lien home equity lines of credit ( HELOCs ) rose above 9.5%.”

If Fed policymakers continue on their rate-cutting path, however, this could make home equity loan products “more affordable and more attractive,” ICE concluded.

“Since the Fed began its latest cycle of rate hikes, the monthly payment needed to withdraw $50K via a HELOC more than doubled, from as low as $167 per month back in March 2022 to $413 in January of this year,” Andy Walden, the company’s vice president of research and analysis, said in a statement.

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1% down with the lender giving you 2% down on a purchase

didier@ddamortgage.com (Didier Malagies) — Mon, 04 Nov 2024 14:25:09 GMT

How It Works

1% Down from the Borrower: The borrower contributes just 1% of the home purchase price as a down payment.

2% Contribution from Lender: Lender covers an additional 2% of the down payment, allowing the borrower to start with a total of 3% equity in the home.

Eligibility: Borrowers must meet certain income and credit score requirements. The program often targets lower-income buyers or those who qualify for special financial assistance.

Key Features and Benefits

Low Entry Barrier: The reduced down payment can make homeownership achievable sooner for first-time buyers or those with limited savings.

Conventional Loan: The loan is structured as a conventional mortgage, which may help borrowers avoid some of the restrictions associated with government-backed loans like FHA loans.

Potential Mortgage Insurance: Depending on the loan details, borrowers may need to pay private mortgage insurance (PMI) until they reach 20% equity.

Other Considerations

Interest Rates: Rates and terms are subject to typical mortgage rate changes, so it's advisable to check the current rate before applying.

Credit Requirements: There may be a minimum credit score requirement, though this is typically more flexible than for standard conventional loans.

The 1% Down program can be an excellent option for buyers looking to make homeownership more affordable.

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Only 16% of women are confident about their retirement prospects

didier@ddamortgage.com (Didier Malagies) — Tue, 29 Oct 2024 12:57:47 GMT

Roughly 16% of women workers are “very confident” that their retirement prospects will lead them to have a satisfactory lifestyle, illustrating that women remain at greater risk than men for achieving a sustainable retirement. This is according to a new survey-based report from the Transamerica Center for Retirement Studies.

“Women have made great strides in educational attainment and access to career opportunities in recent decades,” Catherine Collinson, president and CEO of the Transamerica Institute, said in a statement. “Yet, despite this progress, women are still at greater risk than men of not achieving a financially secure retirement.”

Longstanding challenges including a pay gap between men and women, as well as more time needed away from the workforce to adequately parent or provide care for a loved one. These still serve as hindrances for women’s lifetime earnings and retirement savings, Collinson added.

They can also impact “government and employer benefits,” challenges compounded by the fact that “women tend to live longer than men, so they have an even greater need to save for older age,” she added.

The top fear among women in or approaching retirement, according to 44% of all respondents, is that they will outlive their savings and investments. This was only narrowly edged out by concerns related to Social Security ’s solvency and ability to pay full benefits (43%), followed by declining health that would require long-term care (41%), an inability to meet the financial needs of their families (39%), and cognitive decline (37%).

Nearly 40% of respondents said they are currently serving or have previously served as caregivers during their working years. More than 80% said they needed to make “adjustments” to their work due to caregiving responsibilities.

Among primary financial priorities, saving for retirement is at the top of the list with 52% of respondents saying that it is the leading priority. But only 16% of women said they are “very confident” they’ll be able to retire with a comfortable lifestyle.

Roughly one in four women (26%) said they expect Social Security to serve as their primary form of income in retirement, but 77% are concerned that it will not be there for them when they’re ready to retire. Additionally, 78% of respondents said they are saving for retirement either at work and/or outside of work.

One of the ways to address this lack of security felt by women is for lawmakers to address their concerns, Collinson added.

“Policymakers can pave the way by addressing structural barriers and implementing reforms, employers can enhance their business practices and benefit offerings to be more inclusive of women’s needs, women can take charge by further engaging in financial planning , and men can lean in and do more as advocates and allies,” she said.

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You can purchase a home with no money down if your home has been severely damaged by the hurricane

didier@ddamortgage.com (Didier Malagies) — Mon, 28 Oct 2024 13:04:49 GMT

The FHA 203(h) program is a Federal Housing Administration (FHA) loan specifically designed to help people affected by natural disasters, like hurricanes, purchase or rebuild a home. It provides an accessible way for victims of federally declared disaster areas to find stable housing quickly by offering favorable terms compared to traditional mortgages. Here’s a breakdown of how it works and its benefits:

Key Features of the FHA 203(h) Loan

Eligibility Requirements:

You must be a homeowner or renter whose home was destroyed or severely damaged in a disaster within a federally declared disaster area.

Typically, you need to apply within one year of the disaster declaration.

Loan Coverage:

You can use the FHA 203(h) to purchase a new primary residence or rebuild an existing one if your previous home was destroyed.

It’s available for both single-family homes and approved condominiums.

Benefits of the FHA 203(h) Program:

No Down Payment Required: Unlike traditional FHA loans that require a 3.5% down payment, the 203(h) program allows qualified borrowers to finance 100% of the home’s cost, which can be helpful during times of financial stress.

Lower Credit Score Flexibility: FHA loans generally have flexible credit requirements, and the 203(h) is no exception. The credit standards might be more accommodating due to the circumstances, though some lenders may impose their own minimum scores.

Potential Waiver of Mortgage Insurance Premiums (MIP): Some lenders may waive upfront MIP payments under this program. However, it’s common for standard FHA loans to have monthly premiums.

Refinance Option: If your damaged home needs repairs and you want to keep it, you can combine the FHA 203(h) with a 203(k) loan to finance both the purchase and repair costs.

Loan Limits: The FHA 203(h) is subject to standard FHA loan limits, which vary by county and property type.

Documentation:

Lenders will require proof that you lived in the disaster area, typically through utility bills, lease agreements, or similar documents.

You’ll also need proof of disaster loss, such as insurance claims, FEMA assistance documentation, or other relevant records.

Steps to Apply

Contact Lenders Familiar with FHA 203(h) Loans: Not all lenders offer this program, so find one experienced with disaster recovery loans.

Gather Required Documentation: Make sure to have your identification, proof of residency in the disaster area, proof of loss, and any FEMA assistance documents.

Consider FHA 203(k) Combination: If you want to buy a damaged home and repair it, discuss combining with an FHA 203(k) for renovation financing.

Potential Drawbacks

While the program is beneficial, keep in mind that:

The loan amount is capped by FHA limits, which may not be enough in higher-cost areas.

Mortgage insurance premiums can increase monthly payments, even if the upfront premium is waived.

The FHA 203(h) can be a strong tool for those affected by natural disasters, providing quick access to housing and flexible financing terms at a time when resources might be limited.

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U.S. retirement preparedness is lacking: Morningstar

didier@ddamortgage.com (Didier Malagies) — Wed, 23 Oct 2024 17:04:34 GMT

A new study from Morningstar focused on U.S. retirement readiness illustrates that while there has been some improvement over time, general retirement preparedness is lacking.

Using data from the Federal Reserve ’s Survey of Consumer Finances, Morningstar researchers analyzed data from 3,442 households before projecting 1,000 possible “life paths” for each of them. The company used savings rates, withdrawal patterns, job turnover and health care expenses to reach its conclusions.

The authors previously published two separate papers on their findings earlier this year. The bottom line, they say, is that despite certain variations across generational cohorts and income classifications, preparedness is not where it needs to be.

One positive that emerged from the results is that younger generations appear to be taking retirement preparedness more seriously. The overall rate of preparation — derived from the researchers’ modeling — shows Gen X preparedness at 53% versus 56% for millennials and 63% for Gen Z .

But the averages are far more adversely impacted by income than age. The highest income brackets across all three generations hover between 86% to 89% readiness, but the lowest income brackets range between 14% to 34% — a more significant variation with the lowest figure belonging to Gen X.

“Traditional corporate pensions may have largely vanished, but their twin replacements of 401(k) and IRA plans appear to have filled the retirement-planning gap nicely — that is, for those who have means,” said John Rekenthaler, a vice president of research at Morningstar who summarized the findings.

But there is additional nuance to be found when taking into account that financial outcomes are not “binary,” Rekenthaler said.

“Managing a 99% retirement-funding ratio is a modest failure, if at all. In contrast, a 50% ratio is disastrous,” he explained. “Determining when a disappointing retirement outcome becomes life-altering is admittedly arbitrary, but the task should be attempted. I have set that mark at 80%, which I call the ‘floor’ ratio.”

On that basis, generational readiness improves to about 75% of Americans having a “recognizable retirement,” he said, although certain habits and spending may need to be curtailed to achieve it.

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You can now get a second mortgage on an Investment Property

didier@ddamortgage.com (Didier Malagies) — Mon, 21 Oct 2024 15:31:49 GMT

A second mortgage for an investment property is a loan taken against the equity in a property you already own, specifically one that is not your primary residence. It allows you to tap into the equity of the investment property to finance other expenses, like renovations, additional property purchases, or paying off higher-interest debt. Here are key points to consider:

1. Understanding Second Mortgages

Definition: A second mortgage is a loan that uses the equity in a property as collateral. It is subordinate to the first mortgage, meaning if you default, the first mortgage is paid off before the second mortgage.

Types: The two main types are home equity loans (lump-sum payments) and home equity lines of credit (HELOCs), which function like a credit line.

2. Why Consider a Second Mortgage on an Investment Property?

Leverage Equity: Utilize built-up equity to finance the purchase of another investment property or make improvements.

Lower Rates Compared to Other Loans: Interest rates on second mortgages can be lower than other loan types, such as personal loans or credit cards.

Interest Deductibility: Mortgage interest may be tax-deductible if the funds are used to buy, build, or substantially improve the investment property.

3. Challenges and Risks

Higher Interest Rates: Because investment properties carry more risk for lenders, second mortgage interest rates are often higher than for primary residences.

Stringent Qualification Requirements: Lenders typically require higher credit scores, a significant amount of equity, and lower debt-to-income ratios.

Risk of Foreclosure: If you cannot make the payments, you risk losing the property since it serves as collateral for the loan.

4. Qualifying for a Second Mortgage on an Investment Property

Equity Requirements: Most lenders require at least 20-30% equity in the property.

Credit Score: A credit score of 680 or higher is usually necessary, but some lenders may have stricter requirements.

Income Verification: Lenders will want to verify your income to ensure you can cover payments for both the first and second mortgages.

5. Alternatives to a Second Mortgage

Cash-Out Refinance: Replace your existing mortgage with a new, larger loan, using the extra funds for other investments.

Personal Loans: These may have higher interest rates but don't require using your property as collateral.

Private Lenders or Hard Money Loans: Typically easier to qualify for but come with higher interest rates and fees.

6. How to Use the Funds Wisely

Renovations: Improving the property can increase rental income and resale value.

Purchasing Additional Properties: Using the equity to buy another investment property can grow your portfolio.

Debt Consolidation: Pay off higher-interest debt to improve cash flow.

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NBC News highlights rising costs of elder care, aging in place

didier@ddamortgage.com (Didier Malagies) — Fri, 18 Oct 2024 15:37:38 GMT

A record number of Americans are set to reach age 65 this year, which has put more of a spotlight on the ballooning costs and the increasing desires for older Americans to age in place in their current homes.

The issue received attention earlier this week on NBC Nightly News with Lester Holt, a major network news broadcast that averaged nearly 6.5 million viewers during its 2023-2024 season, according to AdWeek .

As part of the broadcast’s ongoing series to highlight costs of living in an era of historically high inflation, reporter Christine Romans began the segment by highlighting an older couple. In 2018, the husband, Chuck Zimmer, was diagnosed with Alzheimer’s disease. His wife, Sharon, walked away from her job a year before turning 65 to care for him.

“Everything that we worked hard for is going back into his care,” Sharon Zimmer said.

The result was dwindling savings and a financial burden that has become increasingly common for Americans who have to make a choice between various and often cost-heavy options to care for loved ones.

The NBC Nightly News segment on rising elder care costs originally aired Oct. 15.

The consequences, the report said, could have an impact on the upcoming general election. Wisconsin , a key battleground state that both Kamala Harris and Donald Trump are heavily campaigning in, has roughly 580,000 unpaid family caregivers who spend more than $7,000 a year out of pocket to cover the associated costs with caring for older relatives.

This total is more than $10,000 if the loved one is afflicted with dementia, and it can soar to more than $240,000 over the final seven years of a patient’s life.

“If your loved one is diagnosed [at a] younger [age], they’re losing their retirement,” said Kelsey Flock, a dementia care specialist at the Aging & Disability Resource Center in La Crosse County, Wisconsin. “They’re losing their income [and] maybe losing the primary caregiver’s health insurance.”

Medicare covers medications for these people, but not congregate or in-home care, according to the report. In the case of the Zimmers, they spend about $1,440 per month for a private health aide who visits for three hours a day, three days a week. The costs have led them to downsize into an apartment in an effort to save more money.

“When the money’s gone, and he passes away, and I did the best I could — and I kept him home — I’m OK being broke,“ Sharon Zimmer said. “I’m OK [knowing] the state’s going to take care of you now, because I did the best I could.”

Recently, Democratic presidential nominee Harris proposed an expansion of Medicare to include in-home care coverage. The Trump campaign has said that eliminating taxes on Social Security would help lower costs for seniors and any caregivers they may need.

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Mortgage rates are back near 6.5%. Will they stay there?

didier@ddamortgage.com (Didier Malagies) — Thu, 17 Oct 2024 16:48:57 GMT

About a week after the Federal Reserve lowered benchmark interest rates for the first time since the start of the COVID-19 pandemic, mortgage rates reached their low point for 2024.

The news has not been so positive since then for U.S. consumers or the housing industry.

According to HousingWire’s Mortgage Rates Center, the average 30-year conforming rate bottomed out at 6.24% on Sept. 27. That was the lowest figure since February 2023. But after muddling along for another week, rates rose again and stood at 6.49% on Wednesday. The average 15-year conforming rate jumped even more sharply during this time, going from 5.58% to 6.02%.

It’s not an unexpected turn of events. Mortgage industry experts said that last month’s Fed cut of 50 basis points (bps) was already baked into loan pricing. And with the economy remaining resilient as job creation exceeds expectations , lenders are betting that Fed policy will not loosen quickly in the final two months of the year.

According to the CME Group’s FedWatch tool , interest rate traders say there is a 94% chance of a 25-bps cut next month. They’re also giving 86% odds of an additional 25-bps cut in December. But two small cuts, if they materialize, would still leave the federal funds rate at a range of 4.25% to 4.5%. And many market observers believe that is still far from the “neutral rate” needed to spur more demand for purchase loans and refinances.

Mortgage rates tend to move in tandem with Treasury yields, and HousingWire Lead Analyst Logan Mohtashami wrote last week that the 10-year yield has increased by 35 bps since the Fed’s decision to cut rates. This was the result of stronger-than-anticipated economic data, including a September jobs report that blew past expectations with 254,000 jobs created — well above the 12-month average.

“Mortgage rates had already reached the bottom of my 2024 forecast so the risk of rates going higher was a legitimate concern,” Mohtashami wrote . “As I have noted, once the 10-year yield gets below 3.80% we need to see weaker economic data for rates to drop and the opposite happened last week. This explains the rise in mortgage rates since the Fed cut rates.”

Some economic data supports the theory that the economy is cooling and could support lower interest rates. The Consumer Price Index (CPI) for September showed seasonally unadjusted inflation of 2.4% over the past year, which was higher than forecasted. And weekly unemployment claims for the week ending Oct. 5 jumped to 258,000, their highest level in more than a year.

Higher borrowing costs are already showing up in mortgage application data. The Mortgage Bankers Association reported Wednesday that applications took a 17% nosedive during the week ending Oct. 11. Refinances have been showing recent signs of life, but demand dropped by 26% during the week and the refi share of all applications fell below 50% for the first time in a month.

Melissa Cohn, regional vice president for William Raveis Mortgage, said that it’s not outside the realm of possibility for the Fed to stand pat in November with its current policy rate. For prospective homebuyers, she said, waiting may not be the best approach.

“You can’t just sit around and wait for rates to drop,” Cohn said in a statement. “You have buyers who say they’re waiting for rates to drop before they want to buy. Well, this is a wake-up call, saying that no, you better find a house you want to buy and then worry about rates secondly. […] You cannot wait for a rate that may never exist.”

Even with lower mortgage rates than a year ago, home-price appreciation continues to negatively impact affordability. Fannie Mae reported Tuesday that U.S. single-family home prices rose 5.9% during the year ending in third-quarter 2024. This was lower than the annualized growth rate of 6.4% in the second quarter, but the government-sponsored enterprise said that prospective buyers are likely weighing prices more heavily than interest rates or available inventory.

“In fact, consumers have told as much: In September, high home prices supplanted high mortgage rates as the top reason for our survey respondents’ overwhelming pessimism toward homebuying conditions,” Fannie chief economist Mark Palim said in a statement. “Overall, the strength of this latest home price reading confirms the ongoing challenges with tight supply; however, the index’s continued deceleration shows that we’re slowly moving toward a better balance between supply and demand.”

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What happens after the hurricane in order to close on your mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 14 Oct 2024 14:01:19 GMT

After a hurricane, the process of closing on a mortgage may be impacted due to potential damage to the property or delays caused by the storm's aftermath. Here are the next steps to take:

1. Assess Property Damage

Inspect the Property: The first step is to assess if the property sustained any damage during the hurricane. This can be done by the buyer, seller, or a licensed inspector. Some lenders may require a re-inspection before closing.

Appraisal Updates: If there is significant damage, the lender may need a new appraisal to determine the property's current value.

2. Review Insurance Requirements

Homeowners Insurance: Make sure the homeowners insurance policy is active and covers the damage caused by the hurricane. Lenders require insurance to protect their investment.

Flood Insurance: If the property is in a flood-prone area, lenders may require flood insurance before closing. Confirm that this coverage is in place.

3. Communicate with the Lender

Discuss the Situation: Contact the lender to discuss any necessary extensions or changes to the loan terms due to the hurricane. Some lenders may offer flexibility in the closing process.

Updated Paperwork: Additional documentation or updates may be required if the closing date changes.

4. Repair or Re-Negotiate

Repair the Damage: If there is damage, determine who will cover the cost. The seller may need to make repairs, or the buyer and seller can negotiate a new agreement.

Re-Negotiate the Purchase Agreement: If repairs cannot be made before closing, the buyer may ask for concessions, such as a price reduction or repair credits.

5. Schedule a Final Walk-Through

Verify Repairs: If any repairs were made, schedule a final walk-through to ensure everything is in order before closing.

Confirm the Property's Condition: Make sure the property is still in the condition agreed upon in the contract.

6. Reschedule the Closing

New Closing Date: Coordinate with all parties to set a new closing date if the original was delayed.

Complete Closing Paperwork: Sign all documents and finalize the loan as per the new schedule.

Staying in close contact with your lender, real estate agent, and insurance company throughout this process is essential for a smooth closing after a hurricane.

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Why are interest rates going up

didier@ddamortgage.com (Didier Malagies) — Mon, 07 Oct 2024 13:15:20 GMT

The Federal Reserve influences interest rates in the economy, but its actions may not always align with the actual rates individuals or businesses experience in the market. Even if the Fed cuts its benchmark interest rates, other factors can cause rates, such as mortgage rates or bond yields, to rise. Here are some key reasons why rates might go up despite Fed rate cuts:

1. Inflation Concerns:

If inflation expectations are rising, lenders demand higher interest rates to compensate for the loss of purchasing power. Even with a Fed cut, inflationary pressures may push long-term rates up as investors seek higher returns to protect against inflation.

2. Economic Outlook:

Markets may interpret a Fed rate cut as a signal of economic weakness. If investors are concerned about future growth or financial stability, they may sell bonds or other interest-rate-sensitive assets, causing yields (interest rates) to rise.

3. Bond Market Dynamics:

The Federal Reserve primarily controls short-term interest rates, but long-term rates (e.g., mortgage rates) are influenced by the bond market. If investors sell bonds due to concerns like inflation, higher deficits, or geopolitical risks, bond prices fall and yields (long-term rates) rise.

4. Supply and Demand for Credit:

If the demand for borrowing increases, banks may raise interest rates to balance supply and demand. Conversely, if banks perceive increased risk in lending (for example, during uncertain economic times), they might increase the rates they charge to mitigate potential losses.

5. Global Factors:

International economic conditions, such as rising global interest rates or capital outflows from the U.S. to other countries, can push up domestic interest rates. For example, if rates rise in other countries, U.S. rates might rise to remain competitive and attract investment.

6. Federal Reserve Policy Expectations:

If markets believe that the Fed’s rate cut is temporary or that future inflationary pressures will force the Fed to raise rates again soon, long-term rates might increase in anticipation of those future rate hikes.

While the Fed can reduce its benchmark rate, the overall interest rate environment is influenced by broader economic factors, market expectations, and global dynamics.

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80% of older adults can’t afford to age in place

didier@ddamortgage.com (Didier Malagies) — Thu, 03 Oct 2024 19:36:12 GMT

As many as 80% of the 60-and-older population are unable to afford either long-term care or basic necessities like food, reflecting the serious financial challenges faced by older Americans despite their overwhelming preferences for aging in place .

This is according to reporting by Phoenix-based National Public Radio (NPR) affiliate KJZZ, based on data from the National Council on Aging (NCOA) and researchers at the University of Massachusetts at Boston.

The analysis from the NCOA is titled “Increases in Older Americans’ Income and Household Assets Still Cannot Support Most During Financial Hardship.” According to the NPR report, it “looks at the financial state of older Americans by comparing the income, housing value, retirement and other savings of people 60 and older with the cost of of long-term care.”

It also made use of an online tool called the Elder Index , which illustrates the amount of money an older adult will need to live independently.

The 80% share translates to roughly 27 million households, according to the data. Part of this could be tied to a lack of true awareness regarding the costs of necessities in later life, as well as the limitations of a fixed income.

“I think the big issue is in terms of education,” Lauren Marinaro, a legal professional and board member of the National Academy of Elder Law Attorneys, told KJZZ. “And so if people kind of operate from the assumption that, [their] Medicare will take care of this, then they might not make certain plans [or] save for long-term care.”

Certain people are also dead set against the idea of moving into a nursing home or another congregate care setting. This might stem from thinking that they’ll never require such care, she added.

But many older Americans end up developing certain health complications. Data from NCOA puts the figure at nearly 70% of those 65 and older as having some kind of health issue that requires dedicated long-term care.

Americans may also be challenged by a negative shock to their wealth, often brought about by health issues that sap their savings and place them in financially precarious situations. This is according to Sheryl Keeme, executive director of Neighbors Who Care, an Arizona-based nonprofit that connects seniors with volunteers who help them remain in their homes.

“[E]ven though folks do prepare, unexpected health issues that they have not prepared for when they crop up [could] push them into a new category of needing assistance,” Keeme told the outlet.

Aging in place has a number of advantages, particularly as it relates to living costs when compared to dedicated care facilities. But recent data has emphasized the challenges that some can face pertaining to feelings of social isolation and loneliness , as well as the necessity for adequate planning to support longer-term aging-in-place goals.

More than half of baby boomers have expressed no desire to sell their homes . There is also information to suggest that homebuilders are increasingly ready and able to explore the big business potential for those seeking to renovate their homes and better accommodate their changes to mobility, vision and hearing.

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Purchase flood insurance even if not in a flood zone

didier@ddamortgage.com (Didier Malagies) — Mon, 30 Sep 2024 12:44:30 GMT

Purchasing flood insurance, even if you're not in a designated flood zone, can be a wise decision for several reasons:

1. Floods Can Happen Anywhere

Floods are not confined to high-risk zones. In fact, more than 20% of flood insurance claims come from properties outside of high-risk flood zones. Severe storms, hurricanes, or even rapid snowmelt can lead to flooding in areas considered low or moderate risk.

2. Climate Change and Unpredictability

Climate change is making weather patterns more unpredictable. Areas previously unaffected by floods may become vulnerable due to changing rainfall patterns or rising sea levels. This increased uncertainty makes flood insurance a useful safeguard.

3. Relatively Low Cost in Low-Risk Areas

Flood insurance is usually less expensive for homes outside high-risk flood zones, so purchasing a policy can provide significant protection at a reasonable cost. Compared to high-risk zones, where premiums can be higher, the cost-to-benefit ratio is often better in low-risk areas.

4. Homeowner’s Insurance Doesn't Cover Floods

Standard homeowner’s insurance policies do not cover flood damage. Without separate flood insurance, homeowners must bear the full cost of any flood-related damage, which can be substantial.

5. Federal Disaster Assistance Is Limited

Many people assume that in the event of a disaster, federal assistance will cover their losses. However, federal disaster aid is often in the form of low-interest loans, not grants, and must be repaid. Flood insurance offers more comprehensive coverage and quicker financial relief.

6. Increasing Property Value

Some homebuyers may prefer a property with existing flood insurance, even if it's in a low-risk zone. This could make your home more attractive if you decide to sell.

Purchasing flood insurance, even if you're not in a designated flood zone, provides financial protection and peace of mind, especially in the face of increasingly unpredictable weather patterns.

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Are these the lowest mortgage rates we’ll see in 2024?

didier@ddamortgage.com (Didier Malagies) — Tue, 24 Sep 2024 20:03:10 GMT

Have we seen the bottom in mortgage rates for 2024 after a crazy roller coaster ride so far this year? My 2024 forecast had a mortgage rate range of 7.25%-5.75%. To get to the lower end of this range, we needed to see two things: the labor market getting softer and the mortgage spreads improving. This is the double-whammy impact, and that’s what has happened.

However, it’s still September, and we have three months to go! Can my lowest range forecast be wrong?

Yes, here’s how and why.

10-year yield and mortgage rates

My 2024 forecast included:

A range for mortgage rates between 7.25%-5.75%
A range for the 10-year yield between 4.25%-3.21%

How rates get to the lower-end range of the forecast is critical. There are two variables: the labor data getting softer is the prime one and the second one is the spreads getting better. Again, the double whammy of lower yields and spreads. This is not about more Fed rate cuts , because the market has priced in a lot Fed rate cuts already, but they haven’t priced in a recession yet. People wonder why rates went up after the bigger than expected Fed rate cut, as shown in the chart below. I talked about this in this HousingWire Daily podcast .

With the 10-year yield at 3.74% as of Friday, we have some room left to reach the very bottom of the 2024 forecast before the year is out. However, this will need the labor and economic data to get much weaker. That’s the first variable — the second one is the spreads.

Mortgage spreads

The mortgage spread story has been positive in 2024, whereas it was negative in 2023. We have seen a big move, which has helped, and we still have some runway left to return to historical norms. This can help get mortgage rates down toward 5.75%. If we took the worst spreads from 2023 and incorporated those today, mortgage rates would be 0.68% higher. At the same time, we are far from average with the spreads, as we are still 0.85% higher today than the low levels of 2022 in the chart below.

Purchase application data

Purchase applications had another positive week, making the winning streak four weeks in a row — the longest of the year. Last week, purchase apps grew 5% weekly and fell 0.4% year over year. The slight decline year over year is the smallest decline since 2022. However, remember that last year at this time, mortgage rates were heading toward 8% , so the year-over-year comps will be easy to beat. That said, we have had a material change in data in the last 15 weeks.

This is what weekly purchase application data looked like with rising rates starting from the latter part of January:

14 negative prints
2 flat prints
2 positive prints

As you can see, this was shaping up to be a highly negative year with the weekly application data. Before late January when rates started to rise, we had about eight weeks of positive trending purchase apps, and then the rising rates zapped the data in a very negative curve.

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Fed cut rates, What happened?

didier@ddamortgage.com (Didier Malagies) — Mon, 23 Sep 2024 13:59:28 GMT

Followi

When the Federal Reserve (Fed) cuts interest rates, it is usually intended to stimulate economic activity. Here's what typically happens when the Fed lowers its benchmark interest rate:

1. Lower Borrowing Costs

For Consumers: Lower rates make borrowing cheaper for consumers, particularly for loans such as mortgages, car loans, and credit cards. This often leads to increased spending and investment by consumers, which can boost economic growth.

For Businesses: Companies can borrow at lower rates to invest in new projects, hire more workers, and expand operations. Lower borrowing costs can encourage business growth and investment.

2. Increased Consumer Spending

Lower interest rates reduce the cost of borrowing, encouraging consumers to finance purchases, especially of big-ticket items like homes and cars. This increased demand for goods and services can help boost the economy.

3. Encouraging Investments

Stock Market: Lower interest rates can make stocks more attractive compared to bonds or savings, as the yield on safer assets decreases. This can push stock prices higher, as investors seek higher returns from equities.

Business Investment: Lower borrowing costs can prompt businesses to expand by purchasing new equipment, hiring more employees, or pursuing new ventures, which in turn stimulates economic activity.

4. Weaker Currency

Lower interest rates can weaken the U.S. dollar in international markets because investors may seek higher returns in other currencies. A weaker dollar makes U.S. exports more competitive abroad, which can help boost domestic manufacturing and the economy.

5. Stimulates Inflation

When borrowing becomes cheaper, demand for goods and services can increase, leading to higher prices. The Fed typically lowers rates when inflation is low or economic growth is sluggish. If demand rises faster than supply, inflation may increase, which is one goal if the economy is too slow.

6. Lower Savings Returns

Savings accounts, certificates of deposit (CDs), and other fixed-income investments typically yield lower returns when rates are cut. This can push savers to spend more or invest in higher-risk assets like stocks to achieve better returns.

7. Boost the Housing Market

Lower interest rates make mortgages cheaper, potentially driving up home sales and home prices as more people can afford to buy homes.

8. Employment Growth

Lower borrowing costs for businesses may lead to more hiring, as companies can finance expansions or projects at a cheaper rate. This can reduce unemployment rates and increase overall wages over time.

9. Risk of Overheating

If the Fed cuts rates too aggressively, it could lead to excessive borrowing and spending, which might cause inflation to rise too quickly, creating the risk of an overheated economy.

Why the Fed Cuts Rates

The Fed typically lowers interest rates during periods of economic slowdown, recession, or low inflation to encourage economic activity. Conversely, it raises rates when inflation becomes a concern or when the economy is growing too quickly.

In summary, a Fed rate cut is meant to stimulate the economy by making borrowing cheaper, encouraging consumer and business spending, and promoting investment. However, it can also carry risks, such as inflation and asset bubbles.

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Why did mortgage rates go up after the Fed cut Rates?

didier@ddamortgage.com (Didier Malagies) — Fri, 20 Sep 2024 15:43:57 GMT

The Federal Reserve cut rates on Wednesday and mortgage rates went up! What happened? The answer lies in the bond market.

The 10-year yield and 30-year mortgage rates have been in a slow dance since 1971 and trended together. The bond market isn’t old and slow like the Fed — it moves very quickly, and for months it has been sending the 10-year yield (and mortgage rates) lower in anticipation of a series of Fed rate cuts, not just one or two.

As I’ve said for several months on the HousingWire Daily podcast, the key to understanding mortgage rates is to focus on the labor and economic data—not rate cuts. The 10-year got as low as 3.60% yesterday, but then housing starts data came out. Housing starts beat estimates, and the single-family permits data shows that they are growing again. The 10-year yield was already higher before the Fed announcement ,

The growth of housing permits is a good sign for economic expansion, and falling mortgage rates since June have helped push this data line. We would not have this conversation if mortgage rates were still in the range of 7.50%- 8% today. The bond market got ahead of the Fed, pushing bond yields and mortgage rates lower—which has already made a difference .

So what now? Today’s jobless claims data came in better than expected, sending yields higher again, which looks perfectly normal. The bond market is so far ahead of the Fed that it can sit and watch to see how the economic data trends. If housing starts, industrial production, and jobless claims were worse than expected, we would have a different discussion today. However, that’s not the case — the economic data, even retail sales this week, came in as a beat.

So, if you’re confused about why rates went up, remember that the bond market gets ahead of the Fed. And listen to the podcast — we’ve been discussing this for months. The labor market has been softer with the data’s internals since the end of 2023, and the Fed is only now worried about a risk to labor. This means they need to play catch up to the market pricing. The 10-year yield is currently at 3.74%, up from yesterday’s lows and slightly higher from the close. For mortgage rates to go lower , we need to see three things:

1. Mortgage spreads getting better
2. Economic and labor data getting softer
3. The Fed getting more dovish with their statements, showing a willingness to do more to help the economy stay out of recession

Until then, the last 24 hours make a lot of sense to me, given the economic data and where the bond market was trading before the housing starts data came out.

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Aging in place could become ‘big business’ for homebuilders

didier@ddamortgage.com (Didier Malagies) — Thu, 12 Sep 2024 17:26:52 GMT

By this point, the information should be second nature: Aging in place is an increasingly common desire among homeowners who want to save money, avoid costly assisted-living facilities, stay connected to their communities or all of the above.

As the preference grows, one group — homebuilders — is uniquely positioned to address these desires and profit from them. This is according to an article published by Kiplinger , which took a closer look at the dynamics associated with the cost of living, and the kinds of renovations needed needed to facilitate aging in place versus another arrangement.

“The cost of nursing home care is soaring: $9,000 per month, on average,” the column stated, citing data from Genworth Financial . “In big cities, where everything costs more, that figure is $13,000. Persistent staffing shortages are a major cost driver. Staying in an assisted-living facility averages $5,500 per month, or $7,000 in high-cost metros.”

In-home care, meanwhile, can vary significantly between $3,500 to $7,000 per month. Staying at home is often not a cost-free option, since it often requires renovations to a home to make it more accessible for people likely to experience some kind of mobility issues as they age.

But renovations can also be grander. They can include the addition of an entire room to the first floor of a multistory home, bathroom renovations that could require the replacement of a tub or shower with a more accessible alternative, or the addition of a wheelchair ramp leading to the front door.

Builders are more actively thinking about how to efficiently serve these prospective clients. Some people are more forward-thinking about what life will look like, even if they’re not in the senior demographic just yet.

“More Realtors are reporting younger clients who say they want a ’feet-first house,’ a place where they can live for the rest of their lives,” the article explained. “One example of thinking ahead: Some builders are stacking closets on upper and lower floors, to create the space for a future elevator, if one is needed. Builders and contractors that are interested can be certified as an Aging in Place Specialist by the National Association of Home Builders (NAHB).”

Financing these improvements can be an obstacle too. The article cites a reverse mortgage as a potential financing vehicle for older homeowners, since the debt doesn’t need to be satisfied until the home is sold.

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54% of baby boomers say they’ll never sell their homes

didier@ddamortgage.com (Didier Malagies) — Wed, 11 Sep 2024 13:31:33 GMT

In a traditional sense, the term “silver tsunami” refers to pent-up housing stock that older homeowners will eventually choose to sell, which would have the effect of flooding the market with new inventory. But if prior suppositions about this trend being overblown failed to convince people, new data might make things clearer.

More than half (54%) of baby boomers have no intention of ever selling their homes, according to new survey data from Clever Real Estate. This cohort expects to remain in their homes for the rest of their lives, based on responses from 1,100 people born between 1946 and 1964.

“There’s a wide variety of reasons homeowners made this decision,” the survey results explained. “About half say their current home fits their lifestyle needs (52%) or they prefer to age in place (47%).

“The low housing expenses that come with a fully paid-off mortgage are also keeping 40% of boomer homeowners in place. Owning their house outright may also be a factor for 37% of boomer homeowners who have considered leaving their homes as an inheritance.”

This also suggests that nearly 40% of baby boomers not only never plan to sell, but they also intend to pass their current home to family, barring heirs who elect to sell a property.

Money does not appear to be an overwhelming driver in this decision, the results suggest. Nearly one-quarter of respondents (22%) said their emotional attachment to the home is the key reason they wish to stay put, while roughly one in five (19%) said they don’t want to give up ties to their community or the friendships they’ve built.

But affordability plays a role too, with 25% of respondents saying they simply cannot afford to move to a new home. Another 16% said that staying put is the easiest option considering the cost of an assisted-living facility.

“Still, almost all boomer homeowners (90%) have concerns about homeownership as they age, primarily based on growing expenses,” the results stated. “The cost of maintenance and upkeep tops the list (59%), while being able to physically take care of these tasks isn’t far behind (55%). About half (49%) worry about property tax increases, while 42% are concerned about rising utility costs.”

As evidenced in a state like Louisiana , property tax hikes also appear to be pushing more older homeowners to consider a product like a reverse mortgage . About 30% of the group surveyed by Clever plans to sell their home in the next five to 10 years, which means that some of this inventory may not hit the market until the mid-2030s.

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Can mortgage rates go even lower?

didier@ddamortgage.com (Didier Malagies) — Tue, 10 Sep 2024 13:16:33 GMT

Mortgage rates have made almost a 2% move lower from the highs of 2023. Now that the jobs week data is in, the question is: can mortgage rates go even lower? The answer is yes, but we will need more economic weakness, better spreads and a more dovish Fed. While the Fed can be old and slow, the bond market, thankfully, is doing a lot of the heavy lifting and has already priced in a lot of Fed easing policy.

Let’s take a look at 2024 and see how much lower we can go.

10-year yield and mortgage rates

My 2024 forecast included:

A range for mortgage rates between 7.25%-5.75%
The 10-year yield between 4.25%-3.21%

Considering my forecast, we are getting closer to the downside limits on mortgage rates. This is happening as the spreads are better and the labor market is getting softer. However, to take the 10-year yield toward 3.21% and possibly see rates below 5.75%, we will need two things:

1. The economic data needs to weaken, especially the labor market data. I wrote about the recent jobs report and talked about jobs week here . Weaker labor data can push the 10-year yield lower as the bond market will tell the Fed they’re behind the curve. Once the Fed starts cutting rates more aggressively and sounding more dovish, this will give a more straightforward path for yields to fall. However, this requires more labor and economic weakness as the Fed is stubborn about rate cuts — which is why we have had zero up to today.

2. A stock market correction at this point in the cycle can trigger a flight to safety, meaning that money can go into bonds if people sell stocks because they believe that corporate profits are about to get hit due to an economic recession.

The bond market has shown the ability to break below the bottom line of 3.80%, as three of the four jobs reports last week were negative. However, we will need to see more economic weakness for this to continue.

Mortgage spreads

Another way for mortgage rates to drop to the lowest level of the forecast or below is to improve mortgage spreads. Because the 10-year yield has already fallen so much, spread improvement must do some of the heavy lifting to reach 5.75% or below.

Mortgage spreads were a negative storyline in 2023, as the collapse of Silicon Valley Bank and the resulting banking crisis pushed them to new cycle highs. We haven’t had any banking crisis events this year, and the Federal Reserve is starting its rate-cut cycle soon. Over time, with more rate cuts, the spreads should improve, which can push mortgage rates lower without assistance from a falling 10-year yield.

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Pros and Cons of an FHA Mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 09 Sep 2024 13:22:19 GMT

High Interest Rates: A Challenge for Homebuyers

With today’s elevated interest rates, buying a home can feel daunting. Even a small difference in the mortgage rate can significantly impact monthly payments, making homeownership less affordable for many. First-time buyers, in particular, are often the hardest hit by these rates. But what if there was a way to ease into a home loan with lower initial payments, making the process less stressful? Enter the 2/1 Buydown, a unique solution for homebuyers seeking lower rates without compromising on their dream home.

First-Time Homebuyers: 2/1 Buydown Offers Relief at the Wholesale Lender's Expense

The 2/1 Buydown program allows first-time homebuyers to purchase a home with a reduced interest rate for the first two years of their mortgage. Imagine you secure a home loan with an interest rate of 6.375%. With the 2/1 Buydown, your interest rate will be 4.375% for the first year and 5.375% for the second year. After the two-year period, your rate adjusts to 6.375% for the remainder of the loan. This gives you the benefit of lower monthly payments upfront, allowing you to ease into homeownership without feeling the immediate financial pressure of higher interest rates.

No Need for Seller Negotiation: Wholesale Lender Covers the Buydown

Traditionally, buyers would need to negotiate with the seller to cover the cost of the interest rate difference during the first two years of a 2/1 Buydown. This could make the buying process more complicated and potentially hinder the deal. However, in this updated version of the 2/1 Buydown, the wholesale lender now covers the cost of the interest difference for the first two years. That means you don’t have to worry about negotiating this aspect of the deal with the seller. The lender takes care of it, making your home purchase smoother and more affordable.

Benefit from Lower Rates with the Potential to Refinance

With mortgage rates elevated over the past two years, the 2/1 Buydown offers a great opportunity to secure a lower rate in the short term. This can give you financial breathing room as you get settled into your home, and with the likelihood of refinancing down the road, you might not even reach the point where your rate adjusts to its full amount. Many homeowners take advantage of refinancing when rates drop, potentially securing a more favorable long-term rate before their original 6.375% rate kicks in. This flexibility makes the 2/1 Buydown an even more attractive option.

At DDA Mortgage, we’re always focused on bringing you innovative products that make your home purchase adventure more affordable and enjoyable.

Ready to explore the 2/1 Buydown option for your home loan? Contact Didier at DDA Mortgage today!

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Mortgage affordability improves in August, boosting refi incentive: ICE

didier@ddamortgage.com (Didier Malagies) — Thu, 05 Sep 2024 15:11:06 GMT

Declining mortgage rates in August provided some relief for U.S. homebuyers and made it the most affordable month since February.

Of the 2.5 million “in-the-money“ mortgage holders as of Aug. 22, more than 60% took out their mortgages in the past two years, including 850,000 in 2023 and 560,000 this year. The average highly qualified candidate who took out a mortgage within the past two years could save $264 per month by refinancing at today’s prevailing rate, according to the newest Mortgage Monitor report released Wednesday by Intercontinental Exchange (ICE).

While purchase mortgage demand has recently seen a couple of its best weeks since mid-March, the rise was muted compared to early 2023 and 2024 when rates fell to similar levels.

“When it comes to affordability, as always, context is important: it still takes 10 percentage points more of the median income to buy the average house than it has on average over the last 30 years,” Andy Walden, vice president of research and analysis at ICE, said in the report.

”Our own ICE Market Trends data shows that prospective homebuyers are also facing record high down payments and credit scores among recent purchase mortgages,” he added. ”Affordability is still very much a challenge and that is likely to continue for the foreseeable future, but August’s improvement is certainly welcome progress.”

The average down payment on mortgaged home purchases hit a record $91,600 in July, up from $84,300 at the same time last year, ICE reported. This figure is up from $51,100 in July 2019, before the post-pandemic surge in home prices.

With mortgage rates dipping below 6.5% in the first week of August, the number of highly qualified refinance candidates more than doubled from just a few weeks earlier.

As of Aug. 22, about 2.5 million borrowers were in the money for a refinance. Of this group, 900,000 were considered highly qualified, meaning they held at least 20% equity in their homes, had credit scores of at least 720 and could save at least 75 basis points through a refinance.

These borrowers were quick to pounce on the downtick in rates. They pushed refinance-related rate locks to their highest levels in more than two years, up about 150% in a two-week period.

Rate-and-term refis drove roughly half of the refi activity amid falling rates, while cash-out activity increased only marginally.

Growing inventory and continuing soft demand led home prices to cool further in July, ICE reported, bringing the annual appreciation rate down to 3.6% in July compared to 4.1% in June.

On a seasonally adjusted basis, prices rose by 0.19% from June to July, equivalent to a seasonally adjusted annualized rate of 2.3%. ICE suggests potential further slowing in the annual growth rate over the next few months.

If the current pace of seasonally adjusted gains were to continue, it would result in annual home price growth cooling to a range of 3% to 3.5% over the next couple of months. Growth is likely to catch a modest tailwind in the fourth quarter due to softer data from late 2023.

“That said, purchase applications and rate locks will be worth watching closely in coming weeks to see how borrowers react to the modest improvement in rates and home affordability we’ve seen in recent weeks,” according to the report.

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Gen X makes progress with retirement savings: Fidelity

didier@ddamortgage.com (Didier Malagies) — Tue, 03 Sep 2024 17:02:17 GMT

R etirement savers experienced their third consecutive quarter of growth in Q2 2024, with Gen X savers showing strong gains in individual retirement arrangements (IRAs), a sign of progress considering that cohort’s prior struggles with saving for life after work.

This is according to a report released by Fidelity Investments , based on 401(k) and 403(b) data derived from 26,100 corporate defined contribution plans and roughly 32 million total participants as of June 30, 2024.

“Average account balances rose for the third straight quarter to reach the third-highest average on record,” the report said. “Average 401(k) and 403(b) balances increased 13% and 12%, respectively, since Q2 of last year. Total savings rates remained fairly flat from last quarter but are still up slightly from a year ago.”

401(k) balances for women also rose 13.2% over levels from Q2 2023, compared to a 12.5% increase for men in the same period. Gen Z women saw a stark increase of 51% year over year.

Average balances are naturally higher for older generations. For baby boomers , the average retirement savings balance stood at $242,000 in Q2, followed by Gen X ($182,000), millennials ($62,000) and Gen Z ($12,000).

“Fidelity’s analysis indicates that Millennials and Gen Z workers are more likely to have all their savings in a target date fund, while less than 15% of Boomers have a loan outstanding,” the report said.

Much has been said about Gen X’s struggles with establishing retirement savings, but the report indicates that the cohort is steadily working at building up a retirement nest egg.

“Gen X made strong gains with their retirement savings,” the report said. “Gen X had a 30% increase in total IRA contributions over the last year, with current contributions the highest they’ve been in the last five years.”

The report operates off of Pew Research Center ’s definitions of the various generations: baby boomers are those born between 1946-1964, Gen X were born between 1965-1980, Millennials between 1981-1996 and Gen Z between 1997-2012.

A study conducted earlier this year by Allianz Life found that 62% of Gen Xers “feel confident about being able to financially support all the things they want to do in life,” compared with 82% of baby boomers and 77% of millennials. But more than half of Gen X respondents (55%) also said they “wish that they would have saved more money for retirement,” a feeling that is more severe among Hispanic (63%) and Black (56%) members of the cohort.

But despite those challenges, and perhaps in an indication of forward thinking, the generation also demonstrates interest now about finding housing that is suitable for aging in place .

Gen X members are already taking proactive steps by thinking “about where they will live in their 70s, 80s and even 90s,” according to reporting earlier this year by the New York Times based on 2021 data from the

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2/1 Buydown where the lender pays the difference in interest over the 2 years

didier@ddamortgage.com (Didier Malagies) — Tue, 03 Sep 2024 13:05:57 GMT

High Interest Rates: A Challenge for Homebuyers

First-Time Homebuyers: 2/1 Buydown Offers Relief at the Wholesale Lender's Expense

No Need for Seller Negotiation: Wholesale Lender Covers the Buydown

Benefit from Lower Rates with the Potential to Refinance

At DDA Mortgage, we’re always focused on bringing you innovative products that make your home purchase adventure more affordable and enjoyable.

Ready to explore the 2/1 Buydown option for your home loan? Contact Didier at DDA Mortgage today!

�� Call: (727) 784-5555

�� Email: didier@ddamortgage.com

Didier Malagies NMLS# 212566
DDA Mortgage NMLS# 324329

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Buying with a twist: Reverse Mortgages for senior buyers

didier@ddamortgage.com (Didier Malagies) — Tue, 20 Aug 2024 20:38:01 GMT

In my work, I talk with many seniors. Many are reluctant to leave their homes even when those homes are no longer suitable for their needs. Sometimes, the concern is emotional, but more often than not, it’s financial. What happens if they sell their current home but can’t cover the costs of a new place, especially in a market characterized by record-high home prices?

Many seniors aren’t aware of a sensible financial tool that could ease their worry and help them thrive during their golden years: the home equity conversion mortgage, also called a reverse mortgage . Or, if they are aware of this option, they may view it with skepticism based on longstanding misconceptions. This is a shame because the lack of accurate and current information prevents seniors from considering all their options. Over the years, I’ve made it my mission to educate consumers, real estate professionals, and financial planners so that more seniors can get the advice they need to make intelligent and informed decisions.

The truth is that many financially savvy seniors use home equity conversion mortgages as part of a broader financial planning strategy to enhance their cash flow and minimize withdrawals from investment portfolios.

My client, Barbara (a pseudonym used for privacy), offers a good case study. After her husband passed away, she realized she was living in “too much house” and wanted to move closer to her grandkids. She was prepared to sell, but the proceeds would not be enough to cover a cash purchase near her family. Although she and her husband had spent a lifetime building up a retirement fund, she was understandably nervous about making those funds last. At the suggestion of her financial advisor, we walked through her options to purchase a new home:

Pay cash for a new home by pulling a lump sum out of her retirement income to supplement the proceeds from her home sale , which might result in a larger tax bill from the distribution and would certainly cut down the time those assets would serve her during her lifetime.

Take out a traditional mortgage requiring a monthly payment of principal and interest , which would increase the amount of her monthly retirement distribution, again potentially resulting in a higher tax bill and most definitely decreasing the life of her retirement funds.

Use a reverse mortgage with her purchase loan to boost her purchasing power without requiring principal and interest payments during her lifetime.

By supplementing the net income from selling her existing home with a reverse mortgage for purchase, Barbara improved her purchasing power by almost 40%. Still, she also avoided pulling any additional money from her retirement funds and eliminated a monthly mortgage payment at the same time. She used her most significant asset, her home, to help ensure she would thrive throughout her retirement. Like Barbara, I recommend consulting a financial or tax advisor as part of the borrowing process.

Despite the outdated misconceptions around these highly regulated mortgage products, they are an innovative financial tool when used wisely in an overall financial plan. We owe it to our seniors and their advisors to ensure that current and accurate information is available and easy to understand. When homeowners are armed with knowledge, understand the benefits and the potential risks, and know the right questions to ask, they can make the best decisions for their longstanding health and financial wellness

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What happens after the rates really do come down

didier@ddamortgage.com (Didier Malagies) — Mon, 19 Aug 2024 13:06:30 GMT

We know when the interest rates drop the following will happen

1. refinancing to a lower rate

2. consolidating debt into one lower payment

3. First-time home buyers will be coming out to buy

4. There will be downsizing of homes with the lower rates

5. There will be upsizing on homes with the lower rates

18 to 29-year-olds still living at home will be buying. With all that great news that also means there will be a lot more printing of money which will cause everything to go up in price, Things will be more expensive with Trillions more being printed

Time will tell and but a flurry of activity will take place when the interest rates do really drop down to the levels of 2020

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Nearly half of Us Adults say that retiring at age 65 is "unrealistic"

didier@ddamortgage.com (Didier Malagies) — Wed, 14 Aug 2024 15:12:03 GMT

As many as half of surveyed U.S. adults said that retiring at age 65 is “unrealistic,” instead saying that age 74 is a more attainable goal to reach full retirement. This is according to a survey conducted by Equitable , a financial services provider.

“Equitable’s survey revealed that nearly half of consumers (47%) believe it is unrealistic for them to retire before or at the traditional retirement age of 65,” the re s ults said. “Instead, they expect to retire nearly a decade later at an average age of 74. The top three challenges/obstacles cited were increasing living expenses (68%), fear of not having enough money saved (66%), and a lack of guaranteed income for retirement (39%). This reality contrasts sharply with the 18% of respondents who want to continue working past the age of 65.”

General uncertainty and the persistence of higher costs stemming from inflation have destabilized workers’ confidence in a more traditional retirement timeline, according to Equitable President Nick Lane.

“This [uncertainty] is having a profound impact on Americans’ retirement confidence, causing many to feel they will need to work well beyond age 65 to save enough — not out of choice, but rather necessity,” Lane said. “While everyone has a different financial situation and vision for retirement, a financial professional can help develop a plan that keeps you on track. The ultimate goal is to retire on your own timetable, when it makes sense personally and professionally.”

The survey also found that if given a choice, 64% of respondents would prefer to have a “consistent and guaranteed paycheck” in retirement versus needing to determine how much to withdraw from their retirement accounts. This, the results noted, was largely consistent among the age groups surveyed: millennials expressed the most interest (70%) followed by Gen X (65%), Gen Z (62%) and baby boomers (59%).

But the fact that baby boomers appear less interested in this than younger generations was particularly noteworthy, given that generation’s proximity to retirement.

“This perhaps can be attributed to the fact that most baby boomers, given their stage of life, are more likely to already have access to reliable sources of retirement income — such as payments from Social Security or a traditional pension,” the results said. “Whereas younger generations face more uncertainty in these areas and will likely need greater support to ensure they don’t outlive their savings in the future.”

Policies that encourage automatic enrollment in retirement plans have made a notable difference in adding to cumulative retirement savings, but converting that savings into retirement income is often overlooked, Lane said.

“With the disappearance of traditional pension plans, the burden has shifted to individuals — especially younger generations — to seek the education, guidance and solutions to ensure their savings last throughout retirement,” he explained.

The survey was conducted with 1,000 U.S. adults aged 18 or older, with the total survey population representative of U.S. demographic data, the company said. Participation was anonymous, and the survey was conducted from May 22 to June 1, 2024.

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When are the rates really going to come down

didier@ddamortgage.com (Didier Malagies) — Mon, 12 Aug 2024 13:16:40 GMT

The Government is printing 1 trillion every 100 days, we are over 35 trillion in debt today, and we are spending 1/3 of the debt is interest payments of total revenue coming in, next year it will have 1/2.

so I feel the probability of rates coming down is great at some point down the road.

You can see the 10-year has come down from 5% to 3.81%, which is significant and the market is telling you that something isn't right

We have over 1.2 trillion in credit card debt, the time will come when refinancing will make sense, and downsizing or upsizing will make sense as well

I think when this happens the refinances will be incredible and also more homes will be on the market with active buyers. Definitely will be a game-changer

Refinancing and purchases are great now with the opportunity to refinance them down the road. I think prices will escalate again when this happens

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Seniors seem more receptive to roommates as they tackle housing costs

didier@ddamortgage.com (Didier Malagies) — Thu, 08 Aug 2024 14:22:44 GMT

Older Americans who seek out younger roommates to stay on top of high housing costs is not a new concept, but there is evidence to suggest that the trend is growing more popular. This is according to a recent podcast episode hosted by Boston-based NPR affiliate WBUR.

Jennifer Molinsky, director of the Housing an Aging Society Program at Harvard University ‘s Joint Center for Housing Studies (JCHS), described how the idea of baby boomers seeking out roommates could be gaining favor among an older populace that is challenged to make ends meet with housing while living on a fixed income.

“Among older adults, it’s just under a million people are living with unrelated other folks and without any other family,” Molinsky said. “And that’s under 2% of the older adult population. About half of those are people living with other older adults, and about 38% are older adults who are living with younger people, and the rest are some more complicated relationships.”

But the data suggests growth in these living arrangements, she explained.

“The numbers have grown,” Molinsky said. “That’s doubled since 2006 as the older population has grown, and it’s edging up in the percentile as well. […] I think there’s a number of reasons. Housing costs are rising all across the age [and] income spectrums, frankly, moving up into middle-income folks having a harder time paying for housing. The older population is growing. We’ve got the leading edge of the baby boomers on the cusp of turning 80.”

On top of that, the U.S. population is growing older more quickly. The 80-and-over population is expected to double over the next 20 years, Molinsky said, and with that growth also comes the recognition of certain realities that seniors face.

“We’re recognizing both the dangers of social isolation and also the need for older adults — especially when they reach their late seventies, eighties and beyond — to have some more help around the house. So I think all these reasons are combining to make this model particularly attractive.”

Of the 56 million older U.S. adults, roughly 15 million live alone, Molinsky said. Many of these people are also mismatched to their homes, meaning that the homes are far larger than they need or they are unable to properly maintain them.

“Over 11 million of those households have homes that are two or more bedrooms,” she said. “So there’s a great deal of potential. And of course, we don’t know the uses to which those bedrooms are being put, guest rooms and all that. But I think it just shows that there’s a big potential. Most older adults do live in single family homes. Most single family homes have more than one bedroom.”

The reverse mortgage industry also plays a part in this trend. In 2018, Finance of America (FOA) entered into a partnership with senior homesharing platform Silvernest, which occurred in conjunction with a rebranding initiative to address housing and cohabitation needs for seniors.

“This is the market opportunity: Helping older homeowners use their homes’ ‘superpower’ to achieve their financial goals, whether by tapping home equity via AAG or [FOA], securing the Finance of America Home Improvement Loan or generating additional income by home sharing with Silvernest,” FOA CEO Graham Fleming said during a 2023 company earnings call .

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The financial markets are freaking out. That should be good for mortgage

didier@ddamortgage.com (Didier Malagies) — Tue, 06 Aug 2024 13:14:28 GMT

Fears of a recession in the U.S. sent shockwaves through financial markets around the world on Monday. The Dow-Jones dropped 1,000 points by 10:30 a.m. Eastern time, the NASDAQ lost up to 6% of its value and Japanese stocks suffered their biggest crash since 1987, with the Nikkei 225 stock index dropping 12.4%.

The turbulence should benefit the U.S. mortgage market , which has already seen big interest rate declines in the past week following a Fed meeting that teased forthcoming cuts to benchmark interest rates, along with a much weaker-than-expected jobs report .

“Bond yields have made a huge move lower and have made a big move up; it’s market madness on Monday, the 10-year yield is only down a few basis points as of this second,” HousingWire Lead Analyst Logan Mohtashami said at 10:32 a.m. EST. “ Mortgage pricing should be lower today, but the close of today with the 10-year yield is key because short term bonds are very overbought.”

Several loan officers and mortgage executives told Housingwire that they’ve been quoting even lower prices on Monday though they’re also having to fight for loans that were locked in their pipeline at higher prices.

As of 11:08 a.m. EST, the 10-year Treasury yield hit 3.76%, the lowest reading since June 2023, while the two-year Treasury yield moved to 3.88%, which is generally a sign of recession.

Analysts at Keefe Bruyette and Woods (KBW) on Monday said that weak employment data drove market concerns about credit and fueled an interest rate rally. Mortgage spreads tightened at the same time, taking the Fannie Mae current coupon to 5.05%.

“If long-rates remains stable, this suggests that the 30-yr Freddie Mac fixed rate mortgage should fall from 6.73% last Thursday to ~6.3% next week. The market also sharply increased expectations for Fed rates, pricing in ~4.6 25 bp cuts by year-end, including a strong likelihood of a 50 bp cut in September,” the analysts said.

“Fed funds futures now imply the Fed Funds rate could be 200 bp lower by July 2025. This backdrop should favor the mortgage universe broadly as (likely) improvement in purchase activity should benefit originators/title insurers. … We also reiterate our OP on the mortgage insurers (ESNT is highlighted here) as we expect credit to stay strong unless home prices fall sharply, which we do not anticipate.”

Analysts at Bank of America said the markets view U.S. recession risk as rising and are projecting more than 100 bps of rate cuts before year’s end.

“Incoming data have raised concerns that the US economy has hit an air pocket,” they said. “Financial markets are now pricing in more than 100bp in rate cuts by year-end and significant probability of a 50bp cut in September. Markets even began discussing whether the Fed needs to deliver intermeeting cuts. A rate cut in September is now a virtual lock, but we do not think the economy needs aggressive, recession-sized cuts.”

Loan originators and mortgage executives told HousingWire on Friday that they were locking borrowers in the high 5% range on government loans and in the mid-6% range on conventional mortgages.

Last week ‘s sharp mortgage rate decline, which saw most LOs improve pricing between 20 and 60 basis points, resulted in a surge in rate locks, originators said.

“For example, I locked one loan today that would have cost the borrower 1.213 points on Monday versus 0.375 today. This loan amount happens to be $610,000, and the cost of the rate went from costing $7,400 to costing $3,200 today,” said California-based Shannon Hoff of American Pacific Mortgage. “The average mortgage loan amount in the U.S. is $405,000, and saving an extra 80 basis points could equate to $150 to $250 a month, depending on the overall scenario. This is huge for borrowers.”

According to Hoff, borrowers best positioned to take advantage of these rates are those who have purchased or taken a cash-out refinance over the past 12 to 18 months. In addition, some borrowers are looking to buy now or have been prequalified this past year.

“They can take advantage of a lower payment or even qualifying for a higher purchase price if the DTI was a key factor in the preapproval,” she said.

Flàvia Furlan Nunes contributed to this report.

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Not in a Flood Zone, recommend getting Flood Insurance

didier@ddamortgage.com (Didier Malagies) — Mon, 05 Aug 2024 13:23:38 GMT

Whether to get flood insurance outside of a designated flood zone depends on various factors, including your location, property value, risk tolerance, and financial situation. Here are some points to consider:

Flood Risk Outside of Flood Zones: Even if you're not in a high-risk flood zone, flooding can still occur due to factors like heavy rainfall, clogged storm drains, or infrastructure failures. FEMA reports that over 20% of flood insurance claims come from properties outside of high-risk areas.

Cost of Insurance: Flood insurance is generally less expensive for properties outside of high-risk flood zones. Weighing the cost of the policy against the potential financial impact of flood damage is crucial.

Home Value and Investment: Consider the value of your home and personal belongings. If a flood could result in significant financial loss, insurance might be a prudent investment.

Climate and Weather Patterns: Changing weather patterns and increased frequency of extreme weather events can lead to unexpected flooding, even in areas not historically prone to it.

Peace of Mind: Flood insurance can provide peace of mind, knowing you're protected against a potentially devastating event.

In summary, while it's not mandatory outside high-risk zones, getting flood insurance can be a wise precautionary measure depending on your circumstances. It’s advisable to consult with an insurance agent who can provide more specific information based on your location and property.

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It can be a ‘trap’ to carry mortgage debt into retirement: USA Today

didier@ddamortgage.com (Didier Malagies) — Tue, 30 Jul 2024 19:33:39 GMT

As the numbers of seniors carrying mortgage debt in retirement has increased, so too has the potential financial burden of a regular monthly mortgage payment. Increases in inflation and the cost of living can overwhelm those living on a fixed income, according to an article published this week in USA Today .

“Retirement researchers warn that mortgage debt in retirement can be a trap,” the article explained.

According to data from the Survey of Consumer Finances maintained by the Federal Reserve , the share of Americans ages 75 and older who have mortgage debt has risen from 5% in 1995 to 25% in 2022.

The amount that these same homeowners owe on their mortgages has also risen considerably, going from a median of $14,000 to $102,000 in the same period of time.

An increase in home values has generally put older homeowners on better financial footing overall, but if most of one’s net worth is tied up in the illiquid asset of home equity, then the presence of a regular mortgage payment may not make older homeowners feel like they’re better off.

A 2023 study published by the Michigan Retirement and Disability Research Center at the University of Michigan, which was cited by USA Today, found that a “typical” retiree often does not have the financial resources or assets to adequately cover their mortgage debt.

“Researchers found that retirees with larger mortgages face greater financial peril. Households with more mortgage debt tend to postpone retirement and to spend less money once retired,” the outlet said. “They also tend to sell their homes sooner than retirees with smaller mortgages or no mortgage.”

A number of reasons have been offered by experts for these changes. Homebuyers as a cohort are getting older, with 2023 data from the National Association of Realtors (NAR) showing that the typical first-time buyer last year was 35, while the average repeat buyer was 58. Baby boomers may be more comfortable taking on mortgage debt in later life when compared to their older counterparts.

As far as potential solutions go, one suggestion is the common route of downsizing — selling an existing home and using the sale proceeds to move into something smaller. But USA Today also mentions the possibility of using a reverse mortgage.

“It’s a loan that allows a homeowner to tap into equity, with the home as collateral,” the outlet said. “The loan generally becomes due when the owner dies, moves or sells.”

The research from the University of Michigan “begs the question, what about reverse mortgages, and why aren’t they a reasonable part of the solution?” J. Mark Iwry, a nonresident senior fellow at the Brookings Institution, told USA Today.

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Different ways to pay off your mortgage earlier

didier@ddamortgage.com (Didier Malagies) — Mon, 29 Jul 2024 13:17:17 GMT

Paying off your mortgage earlier can save you money on interest and give you financial freedom sooner. Here are some strategies to help you achieve this goal:

1. Make Extra Payments

Biweekly Payments: Instead of making one monthly payment, make half of your mortgage payment every two weeks. This results in 26 half-payments or 13 full payments each year, effectively making an extra payment annually.

Extra Monthly Payments: Add extra money to your monthly mortgage payment. Even a small amount can significantly reduce the loan term and interest paid.

Lump-Sum Payments: Apply any windfalls, such as tax refunds, bonuses, or inheritance, directly to your mortgage principal.

2. Refinance to a Shorter Term

Refinancing your mortgage to a shorter term, such as 15 years instead of 30, can save you on interest and help you pay off your mortgage faster. However, this typically means higher monthly payments, so ensure it fits within your budget.

3. Round Up Your Payments

Round up your mortgage payments to the nearest hundred dollars. For instance, if your monthly payment is $965, round it up to $1000. The extra amount will go towards the principal.

4. Apply Raises and Bonuses

Whenever you receive a raise or bonus, consider allocating a portion or all of it towards your mortgage. This can accelerate your payoff without affecting your current budget.

5. Reduce Other Debts

Pay off high-interest debts first (like credit cards). This will free up more money to put towards your mortgage.

6. Cut Unnecessary Expenses

Review your budget for areas where you can cut back. Redirect the savings towards your mortgage payments.

7. Use a Mortgage Calculator

Use online mortgage calculators to see the impact of extra payments. This can help you plan and stay motivated by showing how much time and money you can save.

8. Stay Consistent

Commit to making extra payments regularly. Consistency is key to reducing your mortgage term significantly.

Important Considerations:

Check Your Loan Terms: Ensure there are no prepayment penalties or restrictions on making extra payments.

Emergency Fund: Maintain an emergency fund before making significant extra payments to avoid financial strain.

Consult a Financial Advisor: It’s wise to discuss your plans with a financial advisor to ensure you’re making the best decisions for your financial situation.

By employing these strategies, you can pay off your mortgage earlier and achieve financial freedom sooner.

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Fannie Mae economists expect two rate cuts in 2024, moderating home prices in 2025

didier@ddamortgage.com (Didier Malagies) — Wed, 24 Jul 2024 17:20:05 GMT

Home price growth in the second quarter was stronger than previously anticipated, but economists at Fannie Mae believe it will likely moderate soon, closing 2024 and 2025 at annualized rates of 6.1% and 3%, respectively.

Even with more listings of homes available for sale compared to a year ago, existing-home sales fell in June . Fannie Mae economists said that increased supply and affordability constrained demand should result in moderating prices. Home prices were up 3% on a non-seasonally adjusted basis in the second quarter.

Credit: Fannie Mae

The company’s Economic and Strategic Research (ESR) Group noted that many large metro areas in the Sun Belt now have inventory levels that match or even exceed for-sale inventories of 2019, prior to the COVID-19 pandemic, which has caused Fannie Mae to downwardly revise its forecasts for housing starts and new-home sales . But the ESR Group also revised its existing-home sales forecast upward.

Credit: Fannie Mae

Fannie Mae said Tuesday it expects the Consumer Price Index to end 2024 at 2.9% and for the Federal Reserve to cut benchmark interest rates in September and December.

“The housing market continues to wait for affordability to improve, even as the supply of new and existing homes for sale slowly rises,” Doug Duncan , Fannie Mae’s chief economist, said in the report. “The slight decline in mortgage rates of late, following data pointing to gradually slowing economic growth, has not been enough to overcome the significant affordability constraints imposed on would-be homebuyers. As such, despite more homes being listed for sale, actual home sales have not picked up.”

Duncan noted that home price deceleration will vary by region and depend heavily on supply. Strong new construction levels in the Sun Belt will ease prices in these markets while inventory remains tight in much of the Northeast and the Midwest, he said.

Credit Fannie Mae

“In aggregate, we expect these varied market conditions to lead to a slight decline in total new home sales nationally for the full-year 2024, but a slight increase in existing homes sales.”

Combined, the ESR Group expects total home sales to be 4.81 million in 2024, essentially unchanged from the prior month’s forecast.

Fannie now forecasts the 30-year fixed rate mortgage rate to average 6.8% in 2024 and 6.4% in 2025. The company upgraded its expectation for 2024 purchase origination volumes by $14 billion from last month’s forecast, although it downgraded its expectation for refinance volume in 2024 by $26 billion relative to last month’s forecast of $346 billion.

Fannie also forecasts refi volumes to grow to $563 billion in 2025 as home prices continue to rise and mortgage rates fall.

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Is it accurate the credit scores that you are pulling

didier@ddamortgage.com (Didier Malagies) — Mon, 22 Jul 2024 13:11:48 GMT

Why is it that when you pull your credit scores it is usually not the same as when you have one pulled for a mortgage?

Credit Karma is a great source but the scores are usually not spot on the value is that when you make payments or make changes the scores will change and a great tool to monitor the scores. Also, when you look at Discover or what you have with your bank again not the same as when pulling for a mortgage. The great news is that you have an idea of where your scores are and can work with that moving forward.

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Half of older Americans are rethinking their retirement status: survey

didier@ddamortgage.com (Didier Malagies) — Thu, 18 Jul 2024 13:16:40 GMT

Survey data released Wednesday by F&G Annuities & Life Inc. shows that economic realities and other considerations are driving Americans to either delay or come out of retirement .

F&G’s newly released Retirement Reconsidered survey , which was conducted in May across a sample of 2,048 respondents ages 50 and older, found that 51% of this cohort are thinking of reentering the workforce or pushing back their retirement plans.

Despite some recent economic headwinds in the form of stock market growth and ebbing inflation , the majority of pre-retirees surveyed report feelings of anxiety. Sixty-eight percent of the respondents who have yet to retire say they have already pushed back their plans or are considering it, up from 64% last year.

This trend is even more pronounced among Generation X respondents (ages 50-59), with 71% of this group having already delayed or thinking of delaying their retirement date, up from 65% last year. Half of the Gen X cohort said that if they came out of retirement, they would be more likely to work in a different industry.

“As Gen Xers near retirement, our study shows that their worries are heightened,” John Currier, president of F&G, said in a statement. “Having the right advice and financial tools can help alleviate these concerns, including engaging with a financial professional and considering products like fixed indexed annuities (FIAs) and registered index-linked annuities (RILAs) that can provide a mix of upside potential and downside protection.”

Inflation was the most common reason for a potential or actual change of course, cited by 49% of pre-retirees and 44% of retirees.

“This remains a challenging macroeconomic environment to navigate for those close to or in retirement,” said Chris Blunt, CEO of F&G. “As our survey shows, Americans are still reconsidering what retirement means to them, and that may look different from previous generations.

“We believe taking a proactive approach in financial planning can help mitigate some of the economic risks, allowing people to focus on their own personalized roadmap of how and when to retire.”

Notably, however, economic factors are not the only issues at play. One-third of respondents who have delayed or are thinking of delaying retirement said they’re doing so “because they love what they do for work.” Among those who have already retired, 45% said they would consider changing course because “they enjoy the challenge from working.”

Seven in 10 individuals who have changed course or are contemplating it have sought advice. But spouses were the most common source of advice among this group and only 16% discussed their plans with a professional financial adviser.

Reverse mortgage professionals may also need to be part of the conversation. In May, Finance of America executive Steve Resch told HousingWire ‘s Reverse Mortgage Daily that financial planners are becoming more receptive to the concept of reverse mortgages. One reason for that is the need to manage long-term care expenses for their clients — costs that can be influenced by inflation.

“The clients are very hesitant to pay for an insurance solution, which can be very expensive — we could be talking $10,000 to $15,000 per year for an insurance solution,” Resch said.

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Mortgage rates move lower on cooling inflation, narrowing spreads

didier@ddamortgage.com (Didier Malagies) — Wed, 17 Jul 2024 14:03:57 GMT

Favorable economic trends are helping mortgage rates continue the downward trend they’ve been on for the past few months.

That data comes on the heels of cooling inflation numbers. Last week, the Consumer Price Index (CPI) showed that prices for goods and services declined by 0.1% from May to June. They rose 3% on an annualized basis, the slowest rate of growth in more than three years.

More good news for the housing and mortgage industries arrived Monday through remarks delivered by Federal Reserve Chair Jerome Powell. At an event in Washington, D.C., Powell indicated that policymakers would not wait for inflation to reach 2% before making cuts to benchmark rates. The federal funds rate has been in a target range of 5.25% to 5.5% since July 2023.

“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said, according to reporting by CNBC .

According to the CME Group‘s FedWatch tool , analysts believe there is a 93% chance that rates will remain unchanged after the Fed’s meeting at the end of July. But 100% of analysts have penciled in a cut in September.

HousingWire Lead Analyst Logan Mohtashami believes that mortgage rates could fall to 6% if the 10-year Treasury yield continues to recede. The spread between the 10-year yield and the 30-year rate narrowed to 2.62% last week, down from a recent peak of 3.1% in June 2023.

Mohtashami said that mortgage rates would be 0.48% higher today if the highest levels of spreads from last year were incorporated today. The shrinking spreads are correlating with a rise in purchase mortgage applications.

“The last time we saw 12 weeks of positive trending purchase app growth was when mortgage rates reached 6%,“ Mohtashami wrote Saturday. “Purchase apps have been positive for four out of the last five weeks and mortgage rates aren’t even near 6%. Now, context is critical because we are working from the lowest bar ever, so it doesn’t take much to move the needle higher with purchase apps, as the last five weeks have shown.“

With mortgage rates stubbornly remaining above 7% for all of 2024, home-price growth has cooled and supply has increased in many areas of the country.

According to data released Tuesday by First American , U.S. home prices grew by 5.6% year over year in June. It marked the sixth straight month that the annualized appreciation rate has slowed.

Anaheim, California, led the way among the metro areas analyzed by First American with 10.2% price growth compared to June 2023. Miami (8.9%), Pittsburgh (6.5%), Las Vegas (6.4%) and San Diego (6.2%) each exceeded the national average rate of appreciation.

“Elevated mortgage rates continue to keep homeowners rate locked-in, while reducing affordability for potential first-time home buyers,” Mark Fleming, chief economist for First American, said in a statement. “The resulting pullback in demand coincided with an uptick in supply, which is cooling price growth. However, housing remains fundamentally undersupplied nationally, which will keep a floor on how low house price appreciation can fall.”

Data from Altos Research shows that the supply of single-family homes for sale shrank slightly last week to 651,000. That figure is up 38.5% year over year but is still 32% below the pre-pandemic figure of July 2019. Altos also noted that the share of listings with a price cut has grown to 38.3%.

“If we get lucky and mortgage rates ease from here on out for the rest of the year, then one place we’ll measure a rebound in demand will be fewer price cuts,“ Mike Simonsen, president of Altos Research, wrote on Monday. “When you list your home, if you don’t get the offers, you cut your price. But when a few more offers are made by newly affordably mortgages for buyers, then this stat will plateau and even tick down.“

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What do you need to know about portability and homestead

didier@ddamortgage.com (Didier Malagies) — Mon, 15 Jul 2024 13:03:07 GMT

The concepts of real estate portability and homestead are key aspects of property tax laws in some jurisdictions, notably in states like Florida. Here's an overview of each:

Real Estate Portability

Real estate portability, particularly in the context of Florida, refers to the ability of homeowners to transfer some or all of their accrued property tax benefits from one home to another within the state. This concept is part of Florida's Save Our Homes (SOH) benefit.

Key Points:

Save Our Homes Cap: Limits the annual increase in the assessed value of homestead property to 3% or the rate of inflation, whichever is lower.

Portability: Allows homeowners to transfer the SOH benefit to a new homestead property, potentially reducing the new property's assessed value and, consequently, the property tax.

Eligibility: To be eligible, the homeowner must establish a new homestead within three years of abandoning the previous homestead.

Homestead Exemption

A homestead exemption is a legal provision that helps shield a portion of a home's value from property taxes. This can lead to significant property tax savings for homeowners.

Key Points:

Exemption Amount: In Florida, the standard homestead exemption allows homeowners to exempt up to $50,000 of their home's assessed value from property taxes. The first $25,000 applies to all property taxes, and the second $25,000 applies to non-school taxes.

Primary Residence: The property must be the primary residence of the homeowner to qualify.

Additional Benefits: Certain individuals, such as seniors, veterans, or individuals with disabilities, may be eligible for additional exemptions.

Interaction Between Portability and Homestead Exemption

When a homeowner sells their current homestead and purchases a new one, they can transfer their Save Our Homes benefit to the new property. This process involves calculating the differential between the market value and the assessed value of the old homestead and applying a similar benefit to the new homestead's assessed value.

Example Scenario

Current Home: A homeowner's current home has a market value of $300,000 and an assessed value of $200,000 due to the Save Our Homes cap.

New Home: The homeowner purchases a new home for $400,000.

Portability: The homeowner can transfer the $100,000 SOH benefit (the difference between market and assessed value) to the new home, reducing its assessed value to $300,000 ($400,000 - $100,000).

Application Process

To apply for portability and the homestead exemption:

File Homestead Exemption: File a homestead exemption application with the local property appraiser's office.

File Portability Application: File a separate portability application to transfer the SOH benefit.

Conclusion

Understanding the rules and benefits of real estate portability and the homestead exemption can lead to significant property tax savings. It's important to check with local property appraiser offices for specific requirements and deadlines.

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More than 25% of retired investors are paying down mortgage, credit card debt

didier@ddamortgage.com (Didier Malagies) — Wed, 10 Jul 2024 13:06:20 GMT

Over a quarter (26%) of retired investors continue to pay off their mortgage, and precisely one-quarter of the cohort are continuing to pay down credit card debt, according to a new survey from the Nationwide Retirement Institute .

The U.S. retirement population is getting older at a faster rate and are also confronted with inflation as an impediment to making ends meet. According to the survey, 22% of older investors are concerned about their ability to afford typical monthly bills.

“The picture of life after retirement has changed for many people as economic stressors continue to weigh on retired investors,” said Mike Morrone, VP of Nationwide’s annuity business development division. “Now is the time for advisors and financial professionals to check in with their clients and help them remain calm, nimble and informed in the face of continued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement.”

Economic constraints have also caused this cohort to pull back on some of the things they wanted to do in retirement, including leisure travel. 39% of surveyed retired investors said they were spending less on entertainment, while 34% also reported pulling back on things like leisure trips or vacations.

More than one-in-five retired investors (22%) are also withdrawing more from their retirement accounts, accelerating “decumulation” following the end of a career.

But such investors are also taking further action to shore up their retirement stability. Sixty-three percent of surveyed investors have some kind of strategy in place to protect against market risk, up from 54% one year ago.

More retired investors are also proactively initiating conversations with trusted advisors and loved ones about legacy planning, including for long-term care, funeral expenses and financial details of their estate with those they plan on naming as heirs.

Financial advisors are also factoring into these plans more, according to the results.

“Advisors are recognizing and acknowledging investors’ desire to avoid making the wrong moves in retirement,” Morrone added. “They can help clients feel more confident about their retirement plans by understanding their goals and anxieties, and helping them protect their savings and plan for income they won’t outlive by reinforcing the value of different retirement solutions and products, like annuities.”

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Experts share tips for beginning to age in place

didier@ddamortgage.com (Didier Malagies) — Mon, 08 Jul 2024 21:18:50 GMT

As those in or near retirement continue to proclaim a preference for aging in place , there may be challenges for people who aren’t sure about how or when they should get started on making plans. A series of home healthcare, renovation and senior care experts offer tips on ways to begin in a column published by U.S. News & World Report .

For reverse mortgage clients looking to use their loan proceeds to fund the goal of aging in place, home renovations and other preparations may be requested from the reverse mortgage loan officer due to the high-touch nature of reverse mortgage origination. LOs often occupy a place of trust among their borrower clients.

For facilitating the goal of aging in place, planning ahead is key. One expert explained that it should start as soon as possible.

“Making small changes now can help you avoid scrambling to make big changes later on when you have limited capacity,” according to James Bowdler, a home healthcare professional.

Connecting with a specialized geriatric care manager can also allow a fuller assessment of potential hazards for aging in place that can be rectified with a retrofit or renovation of some kind, added Texas -based senior care expert Stacey Eisenberg to the outlet.

What was normal for a home with children or younger adults could prove to be hazards in later life, particularly as greater mobility challenges come from more advanced age. Widening doorways, removing clutter (including rugs, which could cause tripping) and improving the lighting in a home can be difference-makers according to architect Diana Melichar.

“Seniors typically have less mobility and physical agility, and their senses can be diminished,” she said in the column.

Another potential hazard is the presence of stairs, particularly if a main bedroom or other living space is located on a second floor, she added.

“Adding a primary bedroom suite to the first floor of your home is ideal,” she said. “If that’s not possible, then adding a chairlift or elevator is a second choice.”

Other elements that could aid the goal of aging in place include replacing door knobs with lever handles, which are easier to operate for people who have or may develop arthritis. Bathrooms are a common target for renovations since it can be easy to slip and injure yourself if you have limited mobility; nonstick mats and additional rails and handles can help mitigate some of this risk.

Smart home technology is also an increasingly common tool for outfitting a home for aging in place. In addition to digital assistants and speakers that are voice-operated , motion sensors that can automatically activate lights and internet-enabled appliances that can allow a user to monitor activation states can assist aging-in-place goals, certain experts say.

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What is the process in getting a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 08 Jul 2024 14:09:44 GMT

I like to see what is available for you by getting your age and the approximate value of your home. Once we have that and go over what you may have available, we encourage you to get take the Gov't class which costs about $190. You have a 3rd party that goes over all the details of a Reverse Mortgage making sure you understand everything and it makes sense.

When that is complete, I will meet with you at your home and go through all the documentation that is required to be signed I also ask that you have a family member there as well, and if no one is close by then a phone call to be with us during our time together. I find it best that your family is involved so that they know all about the Reverse Mortgage as well and also to take the class with you online that you are required to take. I gather all of your documents and scan them for the lender, it may require several visits on my part but I am here to help. We also have to get an FHA appraisal on the home which we have to order and you must pay for. While the loan is being processed the title work is ordered and insurance is being taken care of. Once we have our clear to close we schedule the closing which can be at the title or your home. Always like your family to be there or on the phone as well.

I look forward to helping you or just answering any questions you may have on the Reverse Mortgage.

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What happens after closing on your home with all the junk mail

didier@ddamortgage.com (Didier Malagies) — Mon, 01 Jul 2024 13:04:17 GMT

After closing on a mortgage, many new homeowners notice a significant increase in the amount of unsolicited mail, often referred to as "junk mail." Here's why this happens and what you can expect:

Why You Receive More Junk Mail

Public Records: When you close on a mortgage, the transaction becomes a matter of public record. Companies that sell products and services related to homeownership often purchase these public records to target new homeowners.

Credit Inquiries: Mortgage lenders typically make a hard inquiry on your credit report when you apply for a mortgage. Credit reporting agencies may sell information about these inquiries to marketers.

Service Providers: Various service providers (such as insurance companies, home security firms, and maintenance services) use information from public records and credit inquiries to market their products to new homeowners.

Types of Junk Mail You Might Receive

Mortgage Protection Insurance: Offers for insurance to cover your mortgage payments in case of death, disability, or job loss.

Homeowner's Insurance: Solicitations from insurance companies offering to insure your new home.

Home Improvement Services: Flyers and brochures from contractors, landscapers, and other home improvement service providers.

Security Systems: Offers for home security systems and monitoring services.

Financial Services: Credit card offers, refinancing options, and other financial products targeting new homeowners.

Address Change Services: Notifications and advertisements from companies offering services related to your change of address.

Managing Junk Mail

Opt-Out Services: You can use services like the Direct Marketing Association's Mail Preference Service (DMAchoice) to reduce unsolicited mail.

Credit Reporting Agencies: Opt out of pre-approved credit offers through the official website OptOutPrescreen.com or by calling 1-888-5-OPT-OUT.

Public Records: Some counties and states offer ways to opt-out or restrict the sharing of your public records for marketing purposes. Check with your local county clerk's office for options.

Return to Sender: Mark unwanted mail "Return to Sender" and send it back. This might not always be effective, but it can sometimes help reduce future mail from the same sender.

Shredding: Be sure to shred any junk mail that contains personal information to protect yourself from identity theft.

While it can be frustrating to receive a lot of junk mail after closing on a mortgage, taking these steps can help reduce the volume and manage the influx of unsolicited offers.

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Mortgage rates hold steady as market signals remain mixed

didier@ddamortgage.com (Didier Malagies) — Wed, 26 Jun 2024 13:16:26 GMT

Mortgage rates have leveled off in the past week, according to data on HousingWire‘s Mortgage Rates Center . The average 30-year rate for conforming loans sat at 7.08% on Tuesday, unchanged from one week ago, while the 15-year rate rose 1 basis point to 6.63% during the week.

There has been considerable downward movement in rates over the past few months after the 30-year rate peaked at 7.58% in early May. This has been sparked by a recent decline in the 10-year Treasury yield, a narrowing of the spread between the 30-year rate and the 10-year yield, and consistency from the Federal Reserve on the policy front.

HousingWire Lead Analyst Logan Mohtashami indicated that he does not expect much short-term movement in rates. He pointed to recent comments from Fed Governor Michelle Bowman, who does not anticipate any cuts this year to benchmark rates.

Bowman is not the only policymaker who shares this view. Last week, 11 of 19 Fed officials predicted one cut or fewer in 2024, a dramatic change from the 10 of 19 officials who anticipated three cuts in March.

Mohtashami noted that the new-home sales report to be released Wednesday, as well as the Personal Consumption Expenditures (PCE) inflation report that comes out Friday, could influence rates this week.

Last week, Mohtashami wrote that mortgage application data is signaling increased demand. Purchase loan applications, in particular, saw positive growth during consecutive weeks for the first time since mid-March. But applications remain down since the start of the year, Mohtashami noted.

“This suggests that we’re not experiencing real mortgage demand growth at high rates and the fluctuations we see in the data are merely rebounds from low levels,“ he wrote.

Mike Simonsen, president of Altos Research , wrote earlier this week that “higher for longer” mortgage rates have taken a toll on home sales. Altos reported that 67,000 new contracts for single-family home transactions were started during the past week, down 2.7% from the prior week and 3.3% than the same time last year.

“The takeaway from the pending sales data is that any growth in sales volume we might have seen early in the year is gone,“ Simonsen wrote. “This is a function of mortgage rates staying in the 7s. There’s just no incentive for buyers to jump now. Unless and until mortgage rates drop, we’re in this holding pattern.“

But Altos data also shows that a large share of homes (36.9%) include cuts to the original list price, a sign that inventory is rising and sellers are having a more difficult time locating a buyer. Simonsen noted that markets on Florida’s Gulf Coast, as well as pandemic-era boomtowns in the West such as Austin, Phoenix and Denver, have seen price cuts become more common of late.

“You have elements like property taxes and insurance costs that are way up, so you have a lot more sellers,“ Simonsen wrote.

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Home equity conversion mortgage (HECM) in Retirement

didier@ddamortgage.com (Didier Malagies) — Tue, 25 Jun 2024 21:08:15 GMT

Payoff a Mortgage

Eliminatinga mortgage in retirement increases cashflow

Stand-by credit line

A retirement strategy where the homeowner uses the credit line as a bucket to draw from during bear markets.

Long term care protection

Set up credit line and let it grow untouched, to use only if needed

Emergency back-up

Set up a credit line to use only as needed

Tenure payments

Tax-free lifetime income stream, thereby reducing the need to make withdrawals from tax portfolios

Hecm for Purchase

Use the Hecm to purchase a new home and invest the difference for retirement

Divorce settlement

Use the Hecm to buy out a spouse's portion of the home without selling or withdrawing funds from portfolio

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Do you have enough insurance coverage on your home with all the appreciation

didier@ddamortgage.com (Didier Malagies) — Mon, 24 Jun 2024 12:40:28 GMT

How long has it been since you have lived in your home? what did you pay for it back then and what is the value today after all of the home appreciation.

Maybe it is time to call your insurance agent and ensure you have replacement coverage.

Our home has been our wealth over the years and I think it is important to make sure you are well covered.

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VA Interested in smart home tech to enable the veterans to age in place

didier@ddamortgage.com (Didier Malagies) — Fri, 21 Jun 2024 16:47:42 GMT

The U.S. Department of Veterans Affairs (VA) is seeking to provide more support to military veterans who want to age in place in their current homes. This includes exploration of the smart-home technology sector, according to reporting at the Federal News Network.

Smart home tech, including wearable devices like smart watches, could help flag instances when an older veteran living independently is having some kind of medical emergency. But Joseph Ronzio, the VA’s deputy chief health technology officer, added that the department wants to ensure that veterans are involved in who has access to their data.

“Everyone nowadays has some smartness in their home, whether it’s a speaker, whether it’s light switches, whether it’s different types of lights or other physical devices — cameras, motion detectors that leave a digital service,” Ronzio explained at the Advanced Technology Academic Research Center (ATARC)’s DevSecOps Summit during a panel moderated by the Federal News Network.

“Most of the time we’re not able to access that digital footprint because it’s kept in a cloud service or a cloud system, and that’s masking to us what’s going on,” he said. “We’ve been able to implement some technologies that have actually been able to unmask it, and then evaluate what is the best kind of [health impact] and then start detecting where there’s problems.”

Technology-focused personnel at the VA view the situation in personal terms. Chief health technology officer Craig Luigart, himself a disabled veteran, feels his smart watch has saved him “multiple times,” according to Ronzio. It has alerted his family members when he has had a medical emergency, and the department is aware of the aging-in-place applications these tools can offer.

“As we look more and more towards our veteran population who are aging in place and look at the need for skilled nursing beds and skilled nursing facilities over the long haul, or nursing homes, there’s definitely a need for this capability to be refined and developed,” Ronzio explained.

The VA already helps to provide home modifications with an eye toward increasing accessibility for later-life challenges. It is now providing senior veterans with certain smart-home tech to better enable their aging in place, Ronzio explained.

“We are providing those sensors and those technologies,” he said. ”Now we just have to peel the onion on this and start building better algorithms to detect and share that data with caregivers — whether that’s a spouse, whether that’s a child, whether it’s a loved one, whether it’s a friend of the family.”

Recently, technology is taking up more of the conversation around aging in place, particularly as smart-home technology has become more prevalent through U.S. tech giants like Amazon , Apple and Google , and as more seniors continue to prefer aging in place.

Recent surveys conducted in 2023 and 2024 by U.S. News & World Report found that 93% of respondents view aging in place as an “important goal.” The respondents also listed specific technologies as most helpful toward an aging-in-place goal.

These were focused primarily on medical- or health-related mobile apps; service-related apps like food and grocery delivery; wearable medical or health trackers; assistive smart-home technologies like Google Home or Amazon Alexa devices; hearing assistance devices; and medical alert systems and devices like LifeAlert.

Research data from 2023 also found that for seniors who may be on the fence about remaining in their homes, smart tech tools could help ease such concerns.

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Gen X has regrets about retirement savings, study suggest

didier@ddamortgage.com (Didier Malagies) — Thu, 20 Jun 2024 13:03:19 GMT

Members of Generation X are more concerned about their post-retirement ability to support the lifestyles they’ve grown accustomed to when compared with other generations — including baby boomers and millennials — according to the results of a recent survey conducted by Allianz Life .

In the company’s 2024 Annual Retirement Study, respondents indicated that 62% of Gen Xers “feel confident about being able to financially support all the things they want to do in life,” compared with 82% of baby boomers and 77% of millennials. But more than half of Gen X respondents (55%) also said they “wish that they would have saved more money for retirement,” a feeling that is more severe among Hispanic (63%) and Black (56%) members of the cohort.

“Gen Xers are reaching crunch time for retirement planning. For Gen Xers, retirement is no longer this far off idea. That can feel stressful, but by preparing now, they can create a strategy that will help them seek their ideal retirement,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said in the report. “The good news is that it is never too late to prepare for retirement. You can wish you started sooner, but you’ll never wish that you waited longer.”

The most common action that the cohort is taking toward their long-term financial goals is in paying down debt (64%), building up an emergency fund (58%) and aiming to make choices that result in a material credit-score improvement (55%).

But high costs are also keeping many Gen Xers from saving more for retirement. They say that “expenses for day-to-day necessities (61%), credit card debt (40%) and housing debt (39%)” are the key culprits keeping them from saving more.

“Saving more overall is foundational to retirement,” Lavigne added. “However, Gen X may need to take this a step further and remember that a retirement strategy isn’t just about one big final number in the bank. Once you retire, you are going to need to draw from those assets for income.

”A sound retirement income strategy will help use your assets efficiently and include contingencies for risks that can cause you to spend down savings faster than anticipated. You need to ensure the money lasts.”

Despite the difference a long-term plan can make, few Gen Xers employ one, the study found. Only 35% of Gen X respondents said they use the services of a financial professional, compared to 46% of millennials and more than half of baby boomers. But Gen Xers are also thinking more about retirement than they have before, the results found.

“Nearly two in three (63%) say one of their top three goals in the next five years is to save enough and make plans to live a comfortable retirement,” the report stated. “This increased from 56% in 2023. Gen Xers who are Asian/Asian Americans (68%) were more likely to say this than white (61%), Hispanic (61%), and Black/African American Gen X respondents (55%).”

Older members of Gen X are increasingly approaching retirement age. Most researchers agree that the generation begins around the mid-1960s, and those born in 1965 will turn 59 in 2024.

While most members of the cohort are too young to qualify for a Home Equity Conversion Mortgage (HECM) through the Federal Housing Administration (FHA), several leading reverse mortgage lenders offer proprietary reverse mortgages that allow the eligible borrowing age to be as young as 55 in some states.

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25 Ways to use a HECM

didier@ddamortgage.com (Didier Malagies) — Wed, 19 Jun 2024 17:20:03 GMT

Payoff your forward mortgage to eliminate your monthly mortgage payment
Remodel your home
Maintain a line of credit for health emergencies and surprises
Help cover monthly expenses and hold on to the other assets while their value continues to grow
Help cover monthly expenses and avoid selling assets at depressed values,
Help pay for health insurance during the early retirement years until Medicare eligibility at 65
Help pay your Medicare Part B and Part D costs
Combine life tenure payments with social security and income generated by assets to replace your salary and continue a monthly routine of paying bills from new income.
Pay for your children's or grandchildren's college or professional education.
Maintain a "standby" cash reserves to get you through the ups and downs of investment markets and provide more flexibility.
Combine proceeds with the sale of your current home to buy a new home without monthly mortgage payments.
Help pay for long-term health care needs.
Fill the gap in a retirement plan caused by lower than expected returns on your assets.
Help pay for a retirement plan, estate plan or a will.
Help pay for short-term-in-home care or physical therapy following an accident or medical episode.
Convert a room or basement to a living facility for an aging parent, relative or caregiver.
Set up transportation arrangements for when you are no longer comfortable driving.
Create a set aside to pay real estate taxes and property insurance.
Delay collecting social security benefit until it maxes out at age 70.
Eliminate credit card debt and avoid building new credit debt.
Help cover expenses between jobs without utilizing other saved assets.
Help cover expenses and avoid capital gains tax consequences of selling off other assets.
Purchase health-related technology that enables you to live at home alone.
Pay of an Uber or Lyft account so you have the mobility and access to appointments and social activities.
Help your adult children through the family emergencies.

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PMI is different for FHA, Va, and Conventional

didier@ddamortgage.com (Didier Malagies) — Mon, 17 Jun 2024 12:44:18 GMT

VA Mortgages have no monthly PMI, they have a funding fee that goes on top of the loan and it varies from a first-time VA buyer to a second-time user if there is a certain percentage of disability then no funding fee.

With an FHA Mortgage, there is an upfront funding fee of 1.75% and a .55 factor for monthly PMI.

Now for Conventional Mortgages, there is no upfront funding fee only a monthly PMI and that depends on your credit scores and down payment on your home.

With an excellent credit score, the monthly PMI factor can be at .1 and up

It is good to know because your interest rate is predicated on your credit score and also the PMI can be a factor as well on Conventional loans.

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Are you at Least 62? What if you could buy your next home with no monthly mortgage payments

didier@ddamortgage.com (Didier Malagies) — Thu, 13 Jun 2024 20:36:20 GMT

Consider a FHA mortgage program known as the home equity conversion mortgage.

Available to those 62 and better

No monthly mortgage payment

Minimal income and credit requirements

No employment verification

Not personally liable for the debt(including heirs)

FHA-insured

Homeowners remain solely on title

Closing costs may be financed into Mortgage

If you dream about a new home with modern design, amenities, and low maintenance, then you owe it to yourself to learn about a powerful alternative to using traditional financing or paying cash to purchase your next home.

The Home Equity Conversion Mortgage for purchase, or H4P for short, allows you to potentially double your purchasing power and significantly reduce your out-of-pocket expenses

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Nearly one quarter of retirement age adults are still working

didier@ddamortgage.com (Didier Malagies) — Tue, 11 Jun 2024 17:22:00 GMT

A myriad of positive and negative developments in the lives of older adults — including higher living costs, inflation , longer life expectancies and higher education levels — have led to a rise in the number of retirement-aged adults remaining in the U.S. workforce according to new government data analyzed by LendingTree .

The analysis was based on U.S. Census Bureau Household Pulse Survey data, according to LendingTree.

Twenty-two percent of adults aged 65 and older are continuing to work, with nearly a quarter of the cohort choosing self-employment as their means of staving off retirement. While the overall national percentage of older adult workers has declined by a half-percent over the past two years, certain areas of the country have marked a notable increase in the figure, most especially in the state of New Jersey.

Of the 22% of older adults still working, “almost one in four (24.2%) are self-employed — nearly three times higher than among working Americans 25 to 39 (8.1%),” the results found. “Meanwhile, half (50.5%) of the older working population is employed by private companies and 10.3% by the government.”

The share of New Jersey seniors now reporting that they continue to work is sharp, rising more than 66% from the March 2022 figure to settle at 33.8% as of March 2024. Delaware and Indiana are the two states that immediately followed in the rankings, rising by 37.4% and 32.2%, respectively.

In terms of declines, the highest was observed in Iowa, dropping 36.5% from a total share of 27.1% in 2022 to 17.1% in 2024. West Virginia (34.3%) and Kansas (34.0%) saw the next biggest reductions, the data found.

The overall share of those reporting themselves as “retired” also declined, according to the findings.

“Across all Americans, the share of U.S. adults who reported being retired decreased from 16.8% in March 2022 to 16.2% in March 2024,” the results said. “Overall, the retiree percentage declined in 30 states, led by New Jersey (23.0%), North Dakota (22.9%) and Connecticut (19.9%). However, Vermont, Alaska and Maine saw the biggest increases in the percentage of retirees, at 22.6%, 13.9% and 10.7%, respectively.”

The findings are driven by the financial realities faced by the cohort according to Matt Schultz, chief credit analyst at LendingTree.

“These increases could be a concerning sign that more and more older Americans are finding themselves needing extra income in their so-called golden years,” Schultz said. “Inflation could be taking a major toll on the assumptions that these people made about what they’d need to get by in retirement.”

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Loan limits for FHA, Conventional and VA Mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 10 Jun 2024 13:00:03 GMT

For Conventional loans, limits are now at $766,550 before entering Jumbo territory. You can buy a home for $806,842 putting 5% down and still be Conventional.

Now for FHA the loan limit is $498,257. you can buy a home for $516,328 putting 3.5% down now

A VA mortgage can go up to $2,000,000 with no money down.

100% financing up to $2,000,000

With the cost of everything going up, it is nice to see the Government increasing the loan limits to accommodate the higher price

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Gallup survey shows deep discomfort among Americans about retirement

didier@ddamortgage.com (Didier Malagies) — Thu, 06 Jun 2024 12:44:57 GMT

Only 15 percent of U.S. adults believe the nation will be able to adequately care for its aging population , and nearly three-quarters (73%) of adults under the age of 65 are concerned that the Medicare program may not exist by the time they are able to qualify for it. This is according to survey results released this week by Gallup .

In conjunction with health care nonprofit West Health , the organizations released their 2024 Survey on Aging in America report based on data compiled from both traditional mail and web-based surveys from Nov. 13, 2023 to Jan. 8, 2024.

Concerns about the solvency of the Medicare program are growing. Nearly three-quarters of survey respondents are worried that Medicare will not be there for them when they are able to qualify for it, up from 67% in 2022. This share rose most acutely among those ages 50 to 64, according to the survey results.

But concerns over Medicare pale in comparison to the level of concern related to the Social Security program, with 80% of respondents under 62 and 86% of people ages 40 to 49 afraid it will not exist by the time they can begin taking benefits.

“Threats to Medicare and Social Security loom large, and people are worried policymakers won’t do enough to protect and strengthen them,” Timothy Lash, president of West Health, said in the report. “These safety net programs are part of the fabric of aging that millions of older Americans rely upon, so any potential disruption or question mark around them is cause for alarm and deserving of greater attention and action from policymakers.”

Despite population trends showing that the U.S. is growing older at a faster rate , most respondents do not feel that the U.S. government is prioritizing policy issues that impact care for the elderly.

“When asked in the survey how much the government prioritizes issues affecting older Americans, 74% say ‘not very much’ or ‘not at all,’” the results explained. “This sentiment is felt by 80% of those 65 and older. Over half (57%) of Americans report they are either ‘somewhat more likely’ (37%) or ‘much more likely’ (20%) to support a candidate for public office that makes issues affecting older Americans a top priority.”

Such a sentiment increases with the age of the respondent and is highest (77%) among those ages 65 or older, the results showed.

A vast majority of respondents also said that the U.S. will not be able to adequately care for its aging population. This sentiment is compounded by 2018 U.S. Census Bureau data showing that Americans ages 65 and older will outnumber those under the age of 18 for the first time in 2034 (77 million to 76.5 million). This would mark the first such occurrence in U.S. history and impacts nearly one-quarter of the country’s total population.

The full survey included a sample of 5,149 adults from all 50 U.S. states and the District of Columbia. Panelists who are 65 or older “were oversampled to increase the stability of results for this segment of the population,” Gallup explained. Qualitative interviews followed up the initial responses over a few weeks in March.

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Like U.S. population, the workforce is aging faster

didier@ddamortgage.com (Didier Malagies) — Mon, 03 Jun 2024 17:16:37 GMT

The share of older workers in the U.S. has grown significantly since the turn of the century, with 29.5% of workers in 2023 at least 65 years old, compared to 23% in 2000, according to a new report from the Employee Benefit Research Institute (EBRI).

This occurred as labor force participation by older Americans between the ages of 55 and 64 has surpassed pre-pandemic levels, while the rate of those 65 and older did not change, the data suggested.

“The movement of the Baby Boom generation out of the age groups younger than 65 has made the composition of the older workforce even older,” Craig Copeland, director of wealth benefits research at EBRI, said in the report. “At the same time, the older workforce is becoming more diverse, as a smaller share of White Americans comprise the ages 55 or older population.

“These are important considerations for employers to understand, as older workers and a more diverse workforce calls for additional or new answers to the optimal design of employee benefit plans,” he added.

Key findings of the full report include that the labor force participation rates of men ages 60 to 64 increased in 2022 and 2023 while falling among those ages 75 and older. Similar increases among women between the ages of 55 to 59 and 70 to 74 were also observed at that time, but they decreased for women in the 60-64 bracket in 2023.

“After rising to its highest point since 2001, in 2022, the male share of the labor force ages 55 or older decreased in 2023,” according to the report. “The female share of the labor force ages 55 or older has generally fallen since 2010, though it did increase slightly in 2023. Despite this, females ages 55 or older are still a higher share of the labor force than they were in the late 1990s.”

Despite the increases in 2022 and 2023, labor force participation among those ages 70 to 74 did not quite reach the pre-pandemic threshold observed in 2019, the research explained. But it did surpass pre-pandemic levels last year among the 55-64 group.

“In contrast, the labor force participation rate of those ages 75 or older in 2023 stayed at its 2021 level, below its 2019 level, while the labor force participation rate of those ages 65-69 decreased in 2023 to below its 2022 and 2019 levels,” the report explained.

Among demographic cohorts, Hispanic Americans had the highest rate of labor force participation across all older age groups when compared with Black and white Americans, despite having among the lowest such participation rate in 2000.

White Americans apparently switched places with Hispanic Americans during that time. They now occupy “some of the lowest rates compared with Hispanic and Black Americans by 2023,” the research stated.

The data used in the report was sourced from the U.S. Census Bureau ’s Current Population Survey , which is jointly sponsored by the U.S. Bureau of Labor Statistics .

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DSCR loan using rental income only to qualify

didier@ddamortgage.com (Didier Malagies) — Mon, 03 Jun 2024 12:48:47 GMT

A residential DSCR (Debt Service Coverage Ratio) loan is a type of mortgage typically used for investment properties, where the approval and terms of the loan are based on the property’s income rather than the borrower’s personal income. The DSCR is a measure of a property's ability to generate enough income to cover its debt obligations. Here's a more detailed explanation:

Key Points of a Residential DSCR Loan:

Debt Service Coverage Ratio (DSCR):

The DSCR is calculated by dividing the property's net operating income (NOI) by its total debt service (e.g., mortgage payments, property taxes, insurance).

A DSCR of 1 means the property generates just enough income to cover its debt payments. A DSCR greater than 1 means the property generates more income than needed for debt payments, indicating a safer investment for lenders. A DSCR below 1 suggests the property does not generate enough income to cover its debt, posing a higher risk to lenders.

Property Income-Based Qualification:

Unlike traditional mortgages that rely heavily on the borrower's personal income, credit score, and employment history, DSCR loans focus on the income produced by the investment property itself.

Lenders assess the property's ability to generate rental income that can cover the mortgage payments and other associated costs.

Suitable for Investors:

These loans are particularly attractive to real estate investors who might own multiple properties and have complex personal financial situations.

They enable investors to expand their portfolios by leveraging the income generated from existing properties to secure additional financing.

Loan Terms and Conditions:

Interest rates and terms can vary depending on the lender, the property's DSCR, and the overall risk assessment.

Typically, properties with higher DSCRs might qualify for better loan terms and lower interest rates, reflecting the lower risk.

Documentation:

Lenders usually require detailed financial statements of the property, including rental income, operating expenses, and maintenance costs.

They may also require appraisals and market rent analysis to validate the property's income potential.

Benefits of a DSCR Loan:

Flexibility: Investors can secure financing based on the property’s performance rather than personal financial strength.

Scalability: Easier for investors to expand their real estate portfolios.

Streamlined Process: Potentially less cumbersome in terms of personal financial documentation required.

Potential Drawbacks:

Higher Interest Rates: Since the focus is on the property’s income, the perceived risk might lead to slightly higher interest rates compared to conventional loans.

Property Dependency: The viability of the loan is heavily dependent on the property's income performance, making thorough due diligence crucial.

In summary, residential DSCR loans are a specialized financing option designed for real estate investors, allowing them to leverage the income generated by their investment properties to obtain new loans. This type of loan can be particularly beneficial for expanding a real estate portfolio without being constrained by personal income limitations.

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Older Americans are ‘splurging’ on home modifications to support aging in place

didier@ddamortgage.com (Didier Malagies) — Tue, 28 May 2024 16:27:23 GMT

The data is clear: Older adults, when contemplating future living arrangements, would prefer to remain in their homes as long as feasibly possible. But for those who own homes with features or layouts that may not be conducive to aging in place, some are taking proactive measures — and spending a lot of money — to make their home suitable.

This is according to a story published this month by the The Associated Press , which examines steps that some older homeowners are taking to ensure they can remain in their homes, as opposed to relocating to a dedicated care facility or another living arrangement.

One profiled couple in California hired an interior designer for $20,000, and spent another $95,000 on home modifications designed to more easily accommodate natural limitations to mobility that come from aging.

“She had the kitchen aisles widened to accommodate a wheelchair in case she or her husband ever need one,” the story explained. “The bathroom now has a walk-in steam shower and an electronic toilet seat that cleans the user when activated.”

When asked about the reason for making these investments, the wife described their desire to maintain the comfort, familiarity and pride in the home they’ve lived in together rather than giving them up.

While aging in place is a common choice, economic and mortgage market realities are also making it difficult to relocate even if someone may want to. Between elevated interest rates and the resulting “lock-in” effect , home prices and limited inventory levels are also making relocations challenging for baby boomers and older members of Generation X .

“Despite feeling tied down, a subset of these older adults have enough extra cash to splurge on upgrades designed to keep their homes both enjoyable and accessible as they age,” the story said. “The demand for inconspicuous safety bars, lower sinks, residential elevators and other amenities has given home improvement chains, contractors, designers and architects a noticeable lift.”

Some of the chains reporting increased renovation and modification activity include The Home Depot and Lowe’s, two of the largest home improvement retailers in the U.S. The Home Depot is refreshing an in-house brand with accessibility in mind for things like grab bars and easier-to-use faucets. Meanwhile, in 2021, Lowe’s established a single stop for items including wheelchair ramps and shower benches, the story explained.

Customers looking for products and tools to enhance their home’s accessibility seek “bathrooms that exude beauty and elegance, with essential accessibility features seamlessly integrated,” according to Lowe’s trend and style director Monica Reese, who spoke with the AP.

The need for such renovations will only become more pressing as time goes on, due both to demographic trends and a suitability for aging in place that can be lacking in existing-home inventory.

“According to a 2023 analysis of the 2011 American Housing Survey by the Joint Center for Housing Studies (JCHS) of Harvard University, less than 4% of U.S. homes combine single-floor living with no-step entry, and halls and doorways wide enough for wheelchairs,” the story said.

Additionally, the Harvard study found that “20% of survey respondents age 80 and above with incomes below $30,000 reported accessibility challenges, compared to 11% for those with incomes of $75,000 or more.”

This means that renovations of existing homes are likely to become more necessary as time goes on. But there is also a need to address accessibility challenges in affordable housing for older people, which will require a public policy solution, according to Jennifer Molinsky, director of the JCHS Housing an Aging Society Program.

“[T]here’s a lot of disparity,” she said. “There are people, through no fault of their own or for systemic reasons, who may not have the money to modify.”

Reverse mortgage companies in the past have engaged in renovation partnerships, and they have advertised home modifications to facilitate aging in place as a potential use case for loan proceeds.

In a 2019 interview with RMD, Molinsky said that home equity could have a place in funding some of these necessary modifications. It could play a role in alleviating the increasing prevalence of aging-associated financial burdens for senior homeowners.

“I don’t think we know enough [yet] about where society is going, but it is true that fewer people have pensions,” Molinsky said in 2019. “So, I think there’s a good reason to think that home equity becomes an important source of money for people who don’t have those pensions or haven’t been able to save up in their 401K or IRA.”

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5 years self-employed only needs 1 year return for a Conventional Mortgage

didier@ddamortgage.com (Didier Malagies) — Tue, 28 May 2024 12:40:12 GMT

I learned a hard lesson on a loan last year, I had a borrower that was self-employed for the last 2 years but another company was self-employed for 3 years. I took that loan as a non-QM with a higher rate. The borrower had another broker run it and required only 1 year's return and he qualified which lost me the deal. He would not have qualified for the 2 year's returns. A hard lesson learned and always have the loan run to see if you get just one year's return.

Having one Year's return makes it less complicated less documentation and fewer questions

Simplification is the best route to take and exploring all options

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Why equity-tapping challenges may make reverse mortgages ‘inevitable’

didier@ddamortgage.com (Didier Malagies) — Wed, 22 May 2024 13:46:12 GMT

Tapping into home equity , particularly for people in or near retirement , can be challenging — especially for those who may have a pressing need.

Traditional equity-tapping methods — such as selling the home or taking out a home equity loan — could present lifestyle challenges, which is where alternative options like reverse mortgages can come into play. But these products also come with their own challenges, according to a column published recently by The New York Times .

Older homeowners may contemplate the traditional methods, but depending on the person, they may be out of the question, according to financial columnist Ron Lieber.

“Your home may be just the way you like it, because you built it that way or spent decades fixing it up,” the column explained. “If you’re attached to local doctors or a house of worship, it is difficult to cut ties and move away. Clearing out years of belongings is a total pain. And an appropriate and affordable new place — no steps, minimal maintenance — may simply not exist wherever you want to be.”

Interest rates also further complicate matters if the homeowner has a more beneficial mortgage rate than is available today. And many seniors who hope to leave their home to an heir may find other challenges tied to the idea of selling.

“That brings us to reverse mortgages,” Lieber wrote. “With this product, eligible people 62 and older can extract equity in a variety of ways, say through a lump sum. Interest accrues in the background, and the balance of the reverse mortgage goes up instead of down, the way a normal mortgage would. You generally pay off the mortgage when the home is no longer your principal residence.”

But most people “reject reverse mortgages,” according to the column.

“Lenders have rarely underwritten more than 100,000 federally insured ones in any fiscal year, and that hasn’t happened since 2009,” Lieber wrote. “Many older people remember scandals involving the products, when borrowers felt misled and surviving spouses or heirs could not keep the homes. New federal protections helped clean things up.”

Considering the demographic realities, however, it may not be possible to avoid products like them.

“[R]everse mortgages or something like them seem inevitable in a nation where individuals are entirely responsible for their own retirement savings,” the column explained. “One good test for their utility is this: Do any financial advisers who pledge to act only in the best interest of their clients help members of their own family borrow in this way?”

One financial planner — Jeremy Eppley of Owings Mills, Maryland — shared the story about why he recommended the product to a client. His aunt owns her home free and clear, but inflation has encroached on her fixed income in retirement. A reverse mortgage helped improve the quality of her life, Eppley told the Times.

“I’d never heard of her going on vacation,” he said. “She could live a little.”

Other companies are engineering alternatives for tapping home equity, like shared equity investment products or sale leasebacks. But the core issue of the way that retirement financing is structured in the U.S. may necessitate a broader adoption of home equity-tapping tools, the column said.

“With home equity, we may have tipped too far into seeing homes as totems of a financial life well and conservatively lived,” Lieber wrote. “Homes are trophies, sure. But their equity is also a tool. Absent any radically improved government safety net, people without much savings are going to need more ways to extract it.”

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Why use a Mortgage Broker

didier@ddamortgage.com (Didier Malagies) — Mon, 20 May 2024 13:19:21 GMT

Mortgage brokers are intermediaries between borrowers and lenders, offering assistance in finding and securing mortgage loans. Here's what they typically provide:

Access to Multiple Lenders: Mortgage brokers work with a variety of lenders, including banks, credit unions, and private lenders. This allows them to offer borrowers a range of options to suit their needs.

Expertise and Guidance: Brokers have in-depth knowledge of the mortgage market, including various loan products, interest rates, and qualification requirements. They can provide personalized advice based on your financial situation and goals.

Loan Comparison and Selection: Brokers analyze your financial profile and help you identify mortgage options that align with your needs and preferences. They can compare loan terms, interest rates, and fees from different lenders to find the most suitable option for you.

Application Assistance: Brokers assist with the mortgage application process, helping you gather necessary documentation and complete paperwork accurately and efficiently.

Negotiation: Brokers negotiate with lenders on your behalf to secure favorable terms, including interest rates, loan terms, and closing costs.

Streamlined Process: Working with a broker can streamline the mortgage process, saving you time and effort by handling much of the legwork involved in securing a loan.

Continued Support: Even after your mortgage is approved, brokers can provide ongoing support and assistance, answering questions and addressing any concerns that may arise.

Overall, mortgage brokers offer a valuable service by simplifying the mortgage process, providing expertise, and helping borrowers find the best possible loan options for their individual circumstances.

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U.S. mortgage holders post record levels of home equity: ICE

didier@ddamortgage.com (Didier Malagies) — Wed, 15 May 2024 16:55:43 GMT

U.S. home prices continued to climb in March as a persistent shortage of homes for sale helped to buoy the housing market, according to the Intercontinental Exchange (ICE) Home Price Index.

And while prospective homebuyers cope with the challenges of rising housing unaffordability, existing homeowners are reaping the benefits of historically strong price gains. Nationwide equity on mortgaged homes soared to a record $16.9 trillion in the first quarter of 2024, with $11 trillion available for leverage while maintaining a 20% equity cushion — also an all-time high.

The ICE index showed that home prices increased by a seasonally adjusted 0.42% month over month in March, marking the third consecutive month of above-average price gains, although this was a slight pullback from February’s 0.58% increase. On an annual basis, home price growth eased slightly in March to 5.6%, below the upwardly revised gain of 6% in February.

“The recent trend of rising interest rates has dampened homebuyer demand and allowed the inventory of homes for sale to improve,” Andy Walden, ICE’s vice president of enterprise research strategy, said in a statement.

“We’re still very much in a hole from an inventory perspective, but that deficit has fallen from 50% a year ago to 38% in March. Today, with 3.3 months of supply, inventory is still historically low and indicative of a seller’s market. This is helping to keep home price growth resilient even though

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What you need to know about FHA203k

didier@ddamortgage.com (Didier Malagies) — Mon, 13 May 2024 15:06:24 GMT

There are two main types of FHA 203(k) loans:

Standard 203(k) Loan: This is for more extensive renovations and repairs, including structural changes and repairs that exceed $35,000. The loan amount is based on the projected value of the property after the renovations.

Limited 203(k) Loan: This is for less extensive renovations and repairs, typically costing less than $35,000. It's often used for cosmetic improvements, such as updating kitchens or bathrooms.

Some key points about FHA 203(k) loans:

They require a down payment of at least 3.5%.

The property being renovated must be a primary residence.

Borrowers must work with an FHA-approved 203(k) consultant.

There are specific eligibility requirements and guidelines for the types of renovations and repairs that can be financed.

Overall, FHA 203(k) loans can be a helpful option for buyers and homeowners looking to finance home improvements, but it's essential to understand the requirements and limitations of the program before applying.

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First-time home buyers need to know that this is available

didier@ddamortgage.com (Didier Malagies) — Thu, 09 May 2024 22:39:47 GMT

One program that is available for first-time home buyers is where you can put 1% down and the lender will give you the other 2% towards a down payment. A total of a 3% down on your home. If you bought a 300,000 home you would put 3,000 down and if you got the seller to pay 3% of closing costs, you just bought a home for $3,000. What would it cost to move into another rental? First, Last, and deposit?

Now for the next program. depending on where you live, you could get up to $5,250 for a down payment or closing costs. That is huge and with the seller paying closing costs, Now you can see how the opportunities of getting into a home

No liens, second mortgages, or anything. This is a great opportunity not to have to do down payment assistance with a second lien against your home

with certain restrictions

there are no restrictions with the 1% down or up to $5,250 towards down payment or closing costs

Please let me know how I can help you

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Did you know there are 3 types of FHA Mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 06 May 2024 00:32:03 GMT

1. Regular FHA where you can put down 3.5% have lower credit scores, higher income debt ratios

2. FHA203k - Mortgage you can do with an added feature of having Home improvements where you buy a home and get things done like a new roof, air conditioning, etc ., and have it all in one.

3. I am going to catch you on this one, did you know that Reverse Mortgage is an FHA?

So really 3 different types of vehicles that can get you into a home or get home improvements included in the financing or a Reverse Mortgage for the elderly that has no mortgage payment and help subsidize your retirement.

The Government did an incredible job looking at the various ways to help buyers get into a home.

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Fed holds rates steady for the sixth straight time

didier@ddamortgage.com (Didier Malagies) — Thu, 02 May 2024 16:02:45 GMT

The Federal Reserve ’s Federal Open Markets Committee (FOMC) maintained its short-term policy interest rate steady at a range of 5.25% to 5.5% for a sixth consecutive meeting on Wednesday.

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,“ the FOMC said in a statement. “In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.“

During their last meeting in March , policymakers indicated that they still envisioned three interest rate cuts in 2024. But with inflation remaining sticky and unemployment staying below 4%, these expectations are becoming less likely.

Recent economic data hasn’t given the Fed confidence that inflation will continue to decline. Strong inflation data in the first quarter, coupled with a robust labor market , have postponed expectations for the first Fed rate cut. In April, Fed Chairman Jerome Powell, speaking at the Washington Forum , made it clear that rate cuts were not imminent due to the strength of the economy.

The economy has maintained surprising momentum despite the current level of short-term rates. With the unemployment rate below 4%, companies are steadily adding workers and real wage growth is observable as inflation eases. Although upward movements in inflation are noteworthy, considerable progress toward the Fed’s 2% target has been made.

“It’s unlikely that the next policy rate move will be a hike,” Powell told journalists on Wednesday during the FOMC’s press conference. “In order to hike the rates, we would need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time. That’s not what we are seeing at the moment.”

While Powell emphasized the unlikelihood of future rate hikes, he also remained vague about the Fed’s future interest rate trajectory.

“We didn’t see progress in the first quarter. It appears that it will take longer for us to reach that point of confidence,” Powell said. “I don’t know how long it will take. … My personal forecast is that we will begin to see progress on inflation this year. I don’t know that it will be enough to cut rates; we will have to let the data lead us on that.”

In a new development, the Fed announced an easing of its quantitative tightening policy. Starting in June, the rate-setting body will lower the roll-off rate of its Treasury securities from $60 billion to $25 billion per month. This means that while the Fed will not begin selling Treasurys in June, it will allow fewer of them to mature. It will not alter its roll-off rate for mortgage-backed securities (MBS), which will remain at $35 billion per month, according to Xander Snyder, senior commercial real estate economist at First American.

“The FOMC did not change the ongoing passive roll-off of its MBS holdings but did note that any prepayments beyond the continuing $35 billion cap would be reinvested in Treasuries,” Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, said in a statement. “We expect mortgage rates to drop later this year, but not as far or as fast as we previously had predicted.”

In addition, Powell reiterated the Fed’s commitment to carrying forward the Basel III endgame regulations in a way that’s faithful to Basel and also comparable to what the jurisdictions in other nations are doing.

Since the March FOMC meeting, Freddie Mac’s average 30-year fixed mortgage rate has increased from 6.74% to 7.17%. Before the next FOMC meeting on June 12, two additional inflation readings are expected.

“While it’s a possibility, I don’t think that we’ll see much change in mortgage rates following this Fed meeting, because the Fed has been willing to let the data lead at this stage in the cycle,” Realtor.com chief economist Danielle Hale said in a statement. “In order to see mortgage rates drop more significantly, the Fed will need to see more evidence that inflation is slowing.”

For homebuyers and sellers, this suggests that housing affordability will remain a top consideration, possibly driving home purchases in affordable markets, predominantly in the Midwest and South, according to Hale.

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Inflation and Mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 29 Apr 2024 12:52:03 GMT

Depending on where you live there is an opportunity in certain areas that you can get $2,500 towards the closing costs. You also get a lower rate and monthly PMI. Programs open up to you where there is down payment assistance and also the 1% down program available.

The Gov't is printing 1 trillion every 100 days, and the costs of everything are out of control. The time will come when they will be printing a trillion every 30 days. Credit cards, car loans, and student loans are at unprecedented levels

is it time to refinance your home to save money and then do another refinance as a rate term when the pivot happens at some point in the future

the cost of everything is going up and not stopping and you will see inflation continue to gain ground once again. Time to put the house in order with a refinance to consolidate debt.

A phone call or an email away to go over your present situation and see what makes sense with the present home values

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Retiring at age 65 is no longer feasible, older investors say

didier@ddamortgage.com (Didier Malagies) — Mon, 22 Apr 2024 21:24:47 GMT

Retirement at 65 has been a longstanding norm for U.S. workers, but older investors believe that not only is such an outcome unfeasible, but they’re likely to face more challenging retirements than their parents or grandparents.

This is according to recently released survey results from Nationwide , with a respondent pool that included 518 financial advisers and professionals, as well as 2,346 investors ages 18 and older with investable assets of $10,000 or more. The survey follows other ongoing research into the baby boomer generation as it approaches “ Peak 65 .”

The investors included a subset of 391 “pre-retirees“ between the ages of 55 and 65 who are not retired, along with subsets of 346 single women and 726 married women, Nationwide explained of its methodology.

Seven in 10 of the pre-retiree investors said that the norm of retirement at age 65 “doesn’t apply to them,” while 67% of this cohort also believe that their own retirement challenges will outweigh those of preceding generations.

Stress is changing the perceptions of retired life, especially for those who are closest to retirement, the results suggest.

“Four in 10 (41%) pre-retirees said they would continue working in retirement to supplement their income out of necessity, and more than a quarter (27%) plan to live frugally to fund their retirement goals,” the results explained. “What’s more, pre-retirees say their plans to retire have changed over the last 12 months, with 22% expecting to retire later than planned.”

Eric Henderson, president of Nationwide Annuity , said that previous generations who observed a “smooth transition” into retired life do not appear to be translating to the current generation making the same move.

“Today’s investors are having a tougher time picturing that for themselves as they grapple with inflation and concerns about running out of money in retirement,” Henderson said in a statement.

The result is that more pre-retirees are changing their spending habits and aiming to live more inexpensively. Forty-two percent of the surveyed pre-retiree cohort agreed with the idea that managing day-to-day expenses has grown more challenging due to rising costs of living, while 27% attributed inflation as the key reason they are saving less for retirement today.

Fifty-seven percent of respondents said that inflation “poses the most immediate challenge to their retirement portfolio over the next 12 months,” while 41% said they were avoiding unnecessary expenses like vacations and leisure shopping.

Confidence in the U.S. Social Security program has also fallen, the survey found.

“Lack of confidence in the viability of Social Security upon retirement (38%) is a significant factor influencing pre-retirees to rethink or redefine their retirement planning strategies,” the results explained. “Over two-fifths (43%) are not counting on Social Security benefits as much as previously expected, and more than a quarter (27%) expect to receive less in benefits than previously anticipated.”

The survey was conducted by The Harris Poll on behalf of Nationwide in January 2024.

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Opportunities for First Time Home Buyers

didier@ddamortgage.com (Didier Malagies) — Mon, 22 Apr 2024 13:00:44 GMT

I am seeing more and more first-time home buyers coming out now and this is information you need to know. Yes, home prices are higher and rates as well. But if you have these programs available and the payment is affordable then the probability of refinancing down the road is in your favor and if inflation continues to go up so will home prices.

Maybe it is the right time to buy a home now?

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The mortgage rate pendulum swings yet again

didier@ddamortgage.com (Didier Malagies) — Thu, 18 Apr 2024 14:02:28 GMT

Expect 2024 to be mildly better than 2023 with mortgage rates falling in the second half of the year, housing experts opined in their forecasts at the end of the year.

Cuts to the Federal funds rate (and subsequently to mortgage rates) are imminent, traders enthused after December’s meeting of the Federal Open Market Committee in which committee members predicted three rate cuts in 2024. Some experts forecasted as many as six rate cuts in the year based on this news.

Rate cuts are still coming, just not in March , traders and market experts reasoned more recently as the economy continued to run hot.

And now on the heels of reports of stronger than expected jobs growth and stickier than anticipated inflation , the market’s shift from optimism to pessimism over rate cuts is complete. Some even expect rate hikes before rate cuts.

The pessimism is visible in mortgage rates. Freddie Mac‘s weekly Primary Mortgage Market Survey is climbing back towards 7%. HousingWire’s Mortgage Rate Center , which relies on data from Polly, is already above 7.2%. Rates were as low as 6.91% for Polly and 6.64% for Freddie as recently as February. On Tuesday, they reached 7.50% on Mortgage News Daily, a high for this year.

Mortgage rates hold major power in the housing industry; most importantly, high rates exacerbate the current affordability crisis by walloping the buying power of would-be buyers and discouraging some would-be sellers – those with low, fixed-rate mortgages – from listing their homes, a drain on available inventories.

All this leaves housing professionals once again fighting for their share of shrinking pies – as we have observed with recently released mortgage data and RealTrends Verified’s brokerage data , as well as deeper dives on the brokerage landscapes in Jacksonville and San Diego .

It is unsurprising, then, that real estate stocks have suffered since the FOMC’s March meeting and the recent job and inflation reports. That includes the nation’s top homebuilders (DR Horton and Lennar), mortgage originators (United Wholesale Mortgage and Rocket Mortgage), brokerages (Anywhere and Compass) and residential search portals (Zillow and CoStar, which owns Homes.com).

There are other dynamics at play for some of these companies, however.

The brokerages are also contending with the rule changes included in a proposed settlement by the National Association of Realtors; some investors also believe those rule changes advantage CoStar at the expense of Zillow .

UWM, meanwhile, is contending with a scathing investigative report by a hedge-fund-affiliated news organization whose hedge fund shorted UWM and went long on Rocket; it is also dealing with pending litigation . UWM denies the allegations made in the report.

High mortgage rates, fewer mortgage applications and fewer home sales are unfortunately not the only effects housing professionals could see from a more prolonged high-rate environment. There are also spillover effects from other industries, especially office real estate.

Regional banks – which traditionally have been major residential mortgage originators – went big on commercial real estate loans as larger banks scaled back in this area in recent years. That increased their exposure to downtown office towers, which have seen an exodus of tenants and a bottoming out of appraised values just as a record $2.2 trillion in commercial real estate debt comes due over the next few years.

That ties up capital that could otherwise flow to residential mortgages and in some cases stresses banks like New York Community Bank, parent of Flagstar Bank — the 7th-largest bank originator of residential mortgages, 5th-largest sub-servicer of mortgage loans and the 2nd-largest mortgage warehouse lender in the country.

Homebuilders, too, feel the effects of prolonged high rates. Although homebuilder confidence is still up significantly since last fall, new housing starts are slowing . The dim prospects for homebuyers have turned some investors to the nascent build-to-rent sector , essentially a bet that high rates are here to stay for long enough that would-be buyers are now would-be renters.

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Caregiving experts say aging in place will be ‘a challenge for generations’

didier@ddamortgage.com (Didier Malagies) — Mon, 15 Apr 2024 18:26:58 GMT

Experts from the University of Texas at Austin and the University of Georgia are weighing in on recent federal attention that senior caregivers have received after President Joe Biden highlighted these issues in his State of the Union address last month. The experts say that adequately serving seniors who prefer to age in place will be a “challenge for generations.”

Jacqueline Angel, the Wilbur J. Cohen professor of health and social policy at UT’s LBJ School of Public Affairs; and Toni P. Miles, the pope scholar in residence at the Rosalynn Carter Institute for Caregivers and professor emerita at UGA, co-authored an article that was published in the Waco Tribune-Herald that attempts to address these challenges and the need for more attention and resources.

“In high-income countries, a smaller number of families can assume [the caregiving] burden, and in the United States it is increasingly relegated to either the federal or state governments through Social Security, Medicare and Medicaid,” the pair wrote. “In the future, the government will be forced to play an even greater role in the care of dependent citizens. Individuals who are not fully independent will need the intervention and support of several formal and informal sources of support.”

The pair pointed out that attention paid to these issues in one of the highest-profile political speeches of the year helps underscore the need for “high-quality, affordable community-based care services to support family caregivers.” Most people do not understand that the Medicare program does not cover long-term care, and the pair contends that many in need of it are not prepared for its high costs .

“It provides only a short period of care after discharge from the hospital,” the article reads. “This is far short of what would be needed for an impaired elder to remain at home. The national average cost of a semi-private room in a long-stay home is $105,000 a year, according to a 2023 Genworth Cost of Care Survey .”

Because care burdens often fall on family members — particularly for seniors who overwhelmingly prefer to age in place — the pair contends that a “multifaceted approach is necessary and must involve all levels of government, as well as private and charitable organizations.”

Reverse mortgage professionals and retirement advisers have contended that older Americans could help fulfill some of their long-term care needs by using the proceeds from a reverse mortgage.

“[A couple I previously profiled] considered a Home Equity Conversion Mortgage (HECM), also called a reverse mortgage, which can provide: 1. Additional cash income to pay for things like LTC premiums or other costs, and 2. Additional liquidity later in life if you pay interest on your HECM,” retirement adviser wrote Jerry Golden in a column published by Kiplinger, a personal finance website.

This option helped the couple discover that their retirements could go further than they originally thought.

“You might […] find that your retirement plan can pay for more than it could just a few years ago,” Golden said, referencing the couple’s use of a HECM product.

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What is going on with the mortgage rates

didier@ddamortgage.com (Didier Malagies) — Mon, 15 Apr 2024 13:18:37 GMT

Rates are moving up now and several factors could be contributing to it, the 1 trillion dollars that the gov't is printing every 100 days could be inflationary. so what I see happening is there will have to be an event that happens to drop rates like we experienced in 2020. We will be paying 1.6 trillion in interest expense annually starting at the end of this year and are said to grow to 3 trillion annually next year. I say rates will have to come down in order for the Gov't to pay the interest expense, kicking the can down the road so to speak. We will have an opportunity to refinance the higher rate we have on our home and also refinance all the credit card debt, installment loans, car loans, and even student loan debt. The probability is great sometime down the road. Continue to watch the videos and when rates do make a significant drop will let my viewers know. Then it comes down to what is the cost vs the savings on a refinance. Opportunities will come just the timing not sure about.

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Gen X is already looking for housing appropriate for aging in place

didier@ddamortgage.com (Didier Malagies) — Wed, 10 Apr 2024 12:47:59 GMT

Baby boomers are exhibiting an overwhelming desire to age in place in their own homes, but their children — largely members of Generation X — are also making their desires felt by seeking out homes that can accommodate their needs as they get older, according to a recent report from the New York Times.

Citing 2021 data from the Harvard University Joint Center for Housing Studies that showed 88% of adults 65 and older are aging in place, many members of the following generation — primarily born between the mid-1960s and early-1980s — are already taking proactive steps to by thinking “about where they will live in their 70s, 80s and even 90s,” the Times reported.

Homebuilders are observing a rise in demand for homes that can accommodate natural aging from Gen X buyers. David O’Reilly, CEO of Howard Hughes Holdings which constructs planned communities, describes the market being “at the cusp,” saying that the demand appears to be coinciding with more members of Gen X nearing a time where they will become “empty nesters.”

“That’s normally the tipping point,” O’Reilly told the Times.

Gen X buyers are also more likely to have more financial means and control over their potential options, and are keeping access to necessary later-life services in mind when choosing where to live as they get older, the story explained.

“In new developments, [Gen X buyers] are seeking access to health and wellness amenities, like hiking trails and tennis courts, as well as opting for home features like showers instead of bathtubs, for instance, and asking for the latest gadgets to help them as they age,” the reporting said.

A report released last week by the National Association of Realtors (NAR) said that Gen X homebuyers have a median income of $126,900, and are still years away from retirement. That additional working time will allow them to amass further wealth according to Jessica Lautz, deputy chief economist and vice president of research at NAR.

Members of Gen X are also benefiting from the pandemic and post-pandemic run-up in home prices, carrying significantly more home equity than their millennial counterparts and dwarfing millennial homeownership rates 72% to 55% as of 2023.

One analyst said that Gen X buyers are motivated to act now for aging-appropriate housing due to the state of the housing market.

“If they are shopping for homes, given the tightness of the market and remote work, I do believe you see more Gen X-ers seeing a home purchase as a home for the rest of their lives,” said Cristian deRitis, deputy chief economist at Moody’s Analytics to the Times.

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What do you need to know about VA Mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 08 Apr 2024 12:52:48 GMT

VA mortgages, also known as VA loans, are home loans offered to veterans, active-duty service members, and, in some cases, eligible surviving spouses. Here's what you need to know about VA mortgages:

Eligibility: VA loans are available to active-duty military personnel, veterans, reservists, National Guard members, and some surviving spouses. Eligibility requirements may vary based on the length and nature of service.

No Down Payment: One of the most significant benefits of VA loans is that they typically do not require a down payment, allowing eligible borrowers to purchase a home with 100% financing.

Funding Fee: While VA loans do not require mortgage insurance, they do require a funding fee. This fee can be rolled into the loan amount and varies depending on factors such as the down payment amount and whether the borrower has used the VA loan benefit before.

No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require private mortgage insurance, which can save borrowers money on their monthly mortgage payments.

Competitive Interest Rates: VA loans often offer competitive interest rates compared to conventional loans, making them an attractive option for eligible borrowers.

Flexible Credit Requirements: VA loans typically have more flexible credit requirements compared to conventional loans, making them accessible to borrowers with less-than-perfect credit.

Loan Limits: VA loans do have loan limits, which vary by county and are set by the Department of Veterans Affairs. Borrowers can still use a VA loan for a home purchase that exceeds the county loan limit, but they may need to make a down payment for the portion of the purchase price that exceeds the limit.

Assumption: VA loans are assumable, which means that if a borrower sells their home, the buyer can take over the VA loan if they are also eligible for VA loan benefits. This can be an attractive feature when selling a home.

Refinancing Options: VA loans offer various refinancing options, including the Interest Rate Reduction Refinance Loan (IRRRL), also known as the VA streamline refinance, which allows borrowers to refinance their existing VA loan to obtain a lower interest rate with minimal paperwork and no appraisal in most cases.

Property Requirements: VA loans have specific property requirements, including minimum property standards to ensure the home is safe, sanitary, and structurally sound.

Preapproval Process: Borrowers interested in obtaining a VA loan should begin by obtaining a Certificate of Eligibility (COE) from the Department of Veterans Affairs. Lenders may also require additional documentation for loan approval.

Overall, VA loans can be an excellent option for eligible veterans, active-duty service members, and their families to achieve homeownership with favorable terms and benefits.

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Majority of older homeowners plan to stay in their home as they age: Redfin

didier@ddamortgage.com (Didier Malagies) — Wed, 03 Apr 2024 15:29:59 GMT

Older Americans who own their home are financially incentivized to stay put, which is likely to worsen the ongoing inventory shortage, two Redfin studies found.

In one recent survey , Redfin found that over three-quarters (78%) of older American homeowners (ages 60 and up) are planning to stay in their current home as they age. Meanwhile, about one in five baby boomers (19%) are considering moving into a community with older people or have already done so. Smaller shares of baby boomers are considering moving in with an adult child, moving to an assisted-living facility or moving in with friends.

The inertia of baby boomers is making it harder for young Americans to find a family home, according to a Redfin analysis. In fact, empty-nest baby boomers own 28% of three-bedroom homes in the U.S., while millennials with kids own just 14%. Furthermore, nearly 80% of boomers own the home they live in, compared to 55% of millennials.

Additionally, 54% of boomers carry no mortgage, and for those who do have a mortgage, nearly all of them have a much lower interest rate than they would if they sold and bought a new home today.

According to the April 2024 Mortgage Monitor report from Intercontinental Exchange (ICE), homeowners who took out mortgages with near-record-low rates in 2020 and 2021 face much higher monthly payments even if they move to an equivalently priced home. A “lateral move” of this type would cost 60% more per month, ICE reported.

There are now 517,000 single family homes on the market, up by 26% from a year ago, according to data from Altos Research . Inventory has been expanding steadily for 20 weeks in a row but still remains at historically low levels. Mike Simonsen, founder and president of Altos Research, forecasts that there will be 700,000 homes on the market by August or September of this year, the most homes available since 2019.

“Older Americans are aging in place because it makes financial sense, but also because it’s human nature to avoid thinking about challenging scenarios such as needing help as you get older,” Redfin chief economist Daryl Fairweather, said in a statement. “In reality, many homeowners and renters will need to move somewhere that better meets their needs as they age, like a senior-living community or a one-story home in an accessible neighborhood.

“But the government isn’t prioritizing building housing for seniors, which is further encouraging older Americans to stay put, exacerbating the inventory shortage. Politicians should focus on expanding housing stock that meets the needs of older Americans, which could help with housing affordability and availability for all.”

In certain states like California or Texas, tax systems make it advantageous for people to stay in their homes as they age. Medical and technological advancements have also made it increasingly easy for people to stay in their home as they get older.

More than half (51%) of baby boomers who don’t plan to move say that they like their home and see no reason to move, according to Redfin’s survey. The real estate brokerage conducted this survey in February 2024, collecting 838 responses from baby boomers (ages 60 to 78) and 62 responses from members of the Silent Generation (ages 79 and older).

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Getting an FHA203k or a Conventional Renovation Loan

didier@ddamortgage.com (Didier Malagies) — Mon, 01 Apr 2024 13:09:07 GMT

With More homes going on the market, people losing jobs and the cost of everything going up, when a home comes on the market it may need a

New Roof, A/c, floors, kitchen, and or bathroom. With an FHA 203k or a Conventional renovation loan, you can have that done when buying the home.

An opportunity to include that in the mortgage so you do not have to do the out-of-pocket expense. Maybe the home will not pass inspections and this way you can buy your home and get the work completed.

You must have a licensed contractor who is insured and bonded, the first thing is to get them approved with the lender. Then when the appraiser goes to appraise the home they have your contractor's bid looking at the after-value. At closing the seller gets their funds and the lender has the escrowed funds ready to pay the contractor once the work is done.

Rates are usually a .25% higher and there are a few more fees with inspections to check and make sure the work is completed.

Let me know how I can help you

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Are reverse mortgages the most underutilized retirement tool?

didier@ddamortgage.com (Didier Malagies) — Mon, 25 Mar 2024 13:45:44 GMT

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.

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What different types of mortgages are available

didier@ddamortgage.com (Didier Malagies) — Mon, 25 Mar 2024 13:01:18 GMT

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

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Refinancing your mortgage using the blended rate

didier@ddamortgage.com (Didier Malagies) — Mon, 18 Mar 2024 13:56:18 GMT

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

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Dividing a house in divorce can be costly and emotional

didier@ddamortgage.com (Didier Malagies) — Thu, 14 Mar 2024 13:06:13 GMT

If a couple decides to dissolve their marriage, something that is often described as a “third character” in the proceedings is the couples’ home.

Finding a way to divide a home can be financially and emotionally fraught. And it often takes on more significance than other items due to the home typically being a couple’s most valuable asset — and because of the complex emotions often intertwined with it.

This is according to reporting at The New York Times , which discussed the mechanism of splitting a home with 88 different people who have experienced it.

“For some, holding onto the property became a point of pride — proof that they could make it on their own,” the story states. “For others, shedding the space where a life fell apart felt like a metamorphosis.

“Sometimes, the house became the center of a protracted dispute, a cudgel to exact revenge. Some blamed the house itself — maybe one that was too expensive or needed too much work — for the collapse of a fragile union.”

Among a series of profiled people who shared the stories of dividing their home in a divorce, one was 69-year-old Ryder Sollmann Wyatt, who engaged in what is often referred to as a “gray divorce.”

In 2020, long after she and her family moved into an 18th-century farmhouse that had been purchased by her grandfather some 80 years earlier, her husband suggested selling the estate to dissolve shared assets.

“But Ms. Wyatt, who, as a child, had lived in a cottage on the property with her parents until she was 12, could not imagine a world without the family farm,” the story read.

Eventually, her husband let her keep the house and collected half of the remaining marital assets. This kept the dispute out of court and highlights the emotional weight that can come from a longer marriage.

Gray divorce has become increasingly common over the past 30 years. According to 2017 data compiled by the Pew Research Center , the rates of gray divorce have doubled since 1990. The reverse mortgage industry has taken notice, seeing seniors engaging in divorce as a potential path for business.

When asked about divorce as a potential vehicle for reverse mortgage business in 2019, Christina Harmes Hika — now of Amerifund Home Loans — described how it could be useful in dividing up different assets.

“I have helped clients structure their reverse mortgage as part of the divorce settlement so one can stay in the home and the other can get off of the existing mortgage and move on with their share of equity,” Harmes Hika said in 2019 .

“Many times, it’s one spouse that is looking into a reverse so they can stay in the house and give their departing spouse their share of the equity, and they already have a figure they need to get as part of the settlement.”

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Reverse Mortgage Expert says women face unique retirement challenges: CNBC

didier@ddamortgage.com (Didier Malagies) — Tue, 12 Mar 2024 12:52:17 GMT

Women face a series of challenges that add up to make retirement prospects “pretty bleak,” including issues such as gender pay inequality, longer life spans and a lack of savings based on U.S. Census Bureau data.

But Cindy Hounsell, founder and president of the Women’s Institute for a Secure Retirement, said during an event hosted by CNBC that there are ways to adequately prepare.

“The typical woman earns a lower salary than men: about 82 cents for every dollar, according to the Pew Research Center,” CNBC stated in its account of the event. “That gender wage gap, which has hardly improved in two decades, makes it harder to save for the future.”

On top of this, a woman’s savings generally needs to go further than a man’s since a woman who retires at age 65 lives an average of 21 years longer — or nearly three years longer than men who retire at the same time — according to data from the Employee Benefits Security Administration.

This often leads to women needing to make more difficult lifestyle concessions in later life, according to Marianela Collado, a certified financial planner and CEO of a financial advisory firm in Florida.

Caregiving responsibilities also often fall on the shoulders of women, which could further compound the issues they face, based on data shared from the National Institute on Retirement Security.

But there are proactive measures that can be taken.

“For example, if women think they’re underpaid, they can sit down with their managers at work, inquire about opportunities for growth and find avenues for higher earning potential,” Collado explained during the event. “Show managers where you add value and try to get fair compensation, she added.”

Auditing personal spending and taking advantage of employer offerings, such as a 401(k) match, could also make a difference for women saving for retirement, she added.

According to 2023 reverse mortgage use trends based on Federal Housing Administration (FHA) data, single women were the biggest demographic served by the Home Equity Conversion Mortgage (HECM) program in fiscal year 2023. They comprised 39.4% of all borrowers, while single men comprised only 20.8% of borrowers. About 35% of loans served multiple borrowers, likely in the form of married couples or cohabitating family members.

Single women also outnumbered single men among reverse mortgage clients in 2022, based on similar data from one year earlier.

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Strong jobs report suggests rate cuts won’t come ‘til summer

didier@ddamortgage.com (Didier Malagies) — Mon, 11 Mar 2024 13:54:12 GMT

Though all signs point to a cooling labor market overall, the economy picked up another 275,000 jobs in February. The jobs report on Friday is unlikely to convince the Fed that rate cuts are necessary when the Federal Open Markets Committee meets later this month, economists said.

Jobs increased by 275,000 in February, up from a revised rate of 229,000 in January, according to data released by the Bureau of Labor Statistics on Friday. February’s reading exceeded the average monthly gain of 230,000 over the prior 12 months.

The national unemployment rate ticked up for the first time in four months to 3.9%, its highest level since January 2022, but still below the full employment rate of 4%. The number of unemployed Americans also rose to 6.5 million.

“While unemployment is still low, the leverage held by workers is weakening,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Job seekers are taking longer to find work, and the number of job switchers has declined.”

Job gains occurred mainly in health care, government, food services, social assistance, transportation and warehousing. Meanwhile, retail trade, mining, quarrying, oil and gas extraction, manufacturing, wholesale trade, information, and financial activities posted fewer jobs in February.

During his semiannual monetary policy testimony on Wednesday and Thursday, Federal Reserve Chair Jerome Powell reiterated that the Fed sees no urgency to cut rates just yet. Powell stressed that the Fed needs more assurance that inflation is on a sustainable path toward its target before making any moves.

Average hourly earnings for private-sector employees grew by 0.1% month over month to $34.57 and were up 4.3% from a year ago. In February, employment continued to trend up in construction, adding 23,000 jobs month over month. Job openings were essentially unchanged at 8.9 million at a rate of 5.4%, down from 10.4 million the prior year. Meanwhile, job quits remained steady at 3.4 million while the rate shrank to 2.1%.

The jobs report contains two conflicting implications for the housing market, according to Sturtevant.

On the one hand, the rising uncertainty among businesses and workers caused by high-interest rates could also make home shoppers wearier about making big financial decisions. On the other hand, a cooling job market could give the Federal Reserve the signal it needs to cut interest rates sooner rather than later.

“It is still likely to be summer before the first Fed rate cut,” Sturtevant said. “However, the economic data we’re seeing now could cause the market to react, anticipating future Fed action, which could lower borrowing rates, including mortgage rates. Lower rates this spring could give housing market demand a boost.”

Lawrence Yun, the chief economist at the National Association of Realtors, said the economy is clearly slowing and the housing crisis grows more acute each month.

“The short-term timing of purchase is dependent upon mortgage rates and inventory availability,” he said. “Home sales recorded the lowest activity in 2023 in nearly 30 years. Note that there are 158 million payroll jobs today compared to 117 million when home sales were similarly low. It implies sizable potential real estate demand on the sidelines, ready to pounce once short-term conditions move favorably.

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Purchasing a home with 1% down

didier@ddamortgage.com (Didier Malagies) — Mon, 11 Mar 2024 13:38:15 GMT

First-time homebuyers put down 1%, and the lender gives you 2% towards the down payment, no strings, and no liens. You have 3% down and now work on getting the seller to pay closing costs of up to 3%.

Working on a loan right now where the purchase price is $238,000, the 1% down is $2,380 the lender is giving $4,760 and the seller is paying 6,000 of closing costs. so the remaining closing costs are 2,000.

The total out-of-pocket for the buyer is 4,380 for this home

How much does it cost to rent after paying first, last, and deposit?

You must be below the median income and a first-time homebuyer

Pretty exciting to put $2,380 for the down payment and $2,000 for closing costs to finally own a home. No second liens just one mortgage at 97%

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First-time homebuyers made up a record share of agency purchase loans in 2023

didier@ddamortgage.com (Didier Malagies) — Mon, 04 Mar 2024 20:38:47 GMT

First-time homebuyers made up 55% of agency purchase mortgages in 2023, according to Intercontinental Exchange (ICE) eMBS data, the highest such share in the 10 years ICE has been tracking the metric.

A record 47% of government-sponsored enterprise (GSE) purchase loans in 2023 came from first-time homebuyers, a number that’s been trending gradually higher throughout the past decade.

“Since 1995, only two quarters have seen fewer than one million first lien mortgages originated,” Andy Walden, vice president of enterprise research at ICE.

“The first was Q1 2023, and Q4 the second. Looking back, last year’s market was dominated by purchase lending, with loans to buy homes making up 82% of a historically low number of originations. While it remains a tough market for prospective purchasers, our eMBS agency securities database revealed that first-time homebuyers actually made up 55% of all agency purchase mortgages last year. That’s the highest share in the 10 years we’ve been tracking the metric.”

Counter to that trend, the first-time homebuyer share of Ginnie Mae purchase loan issuance pulled back in recent years as they have relied heavily on GSE mortgages.

“The market in which these folks purchased their first home was one of record house prices, ballooning down payments , rising rates and elevated debt-to-income ratios (DTIs). Given record exposure to first-time homebuyer loans, it’ll be worth watching the performance of this cohort very closely moving forward, particularly for those invested in 2023 agency MBS,” said Walden.

First-time homebuyers averaged higher front-end DTIs for all products, but particularly for conventional mortgages, where the DTI for first-time homebuyers at 31.2% is more than 4 percentage points higher than for repeat buyers in recent months.

Back-end DTIs vary less between first-time and repeat buyers, as first-time homebuyers who spend more of their income on housing spend less on other debt, according to ICE market trends data.

Interest rates and origination trends

While purchase lending will continue to dominate 2024 originations , a 19% month-over-month jump in refi activity on improved rates highlighted the potential for a rebound in refinance lending if rates move lower, ICE noted.

In January, ICE’s conforming 30-year fixed mortgage rate lock index showed rates averaging 6.6%. Mortgage rates have averaged close to the 7% mark as of Feb. 29 following a series of positive economic data.

In turn, rate/term refis , which have effectively been nonexistent for some time, made up 24% of all refinance activity to mark a two-year high.

“We noted last month that if industry rate projections hold firm, we could see a mini-surge of refi activity around the 2023 vintage by the end of 2024,” Walden continued.

“Even the relatively slight rate pullbacks of December and January spurred a growing number of homeowners to refinance. Demand is clearly there when rates cross certain thresholds and, if current rate forecasts hold true, we expect that demand to increase throughout the year.”

When it comes to retaining the business of refinancing homeowners, the industry has a lot of ground to make up.

Servicers retained just one of every five such borrowers in Q4 2024, a 17-year low. Non-bank servicers did a better job, retaining a little over one in four refinancing borrowers, while bank lenders retained only one in 10.

“Providing an exemplary servicing experience is critical to reversing this trend, as is effectively identifying and engaging with customers likely to refinance. And when they have the opportunity to serve that customer, lenders need to be sure the front-end of the process is smooth as well,” Walden noted.

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Do you need a Bridge loan for a commercial project or a residential flip

didier@ddamortgage.com (Didier Malagies) — Mon, 04 Mar 2024 14:11:47 GMT

Bridge loan to acquire, renovate, and stabilize a multifamily investment property. When the rents are under the market and the units are outdated. This program allows you to acquire a property below market value and make cosmetic upgrades to increase rents.

how about capitalizing the fit-up of retail/office investment property?

We also have flip-fix loans for residential.

6 to 24 months

loan amounts from $250k to 20 Million

Interest only

1 to 3-week closing times

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Cyberattack at loanDepot affects 17M individuals, with up to $17M in expenses

didier@ddamortgage.com (Didier Malagies) — Wed, 28 Feb 2024 14:52:18 GMT

An update on loanDepot’s January cyberattack shows that a higher number of individuals were affected than previously disclosed, while tens of millions of dollars in additional expenses will be added to the company’s first-quarter earnings results.

On Tuesday morning, the top 15 U.S. mortgage lender announced that it will notify 16.9 million individuals whose sensitive personal information was impacted by the cyber incident. loanDepot will offer credit monitoring and identity protection services at no cost to them, per filings with the Securities and Exchange Commission (SEC).

The number of individuals affected exceeds the 16.6 million who were informed on Jan. 22.

According to the company, the cyberattack will add approximately $12 million to $17 million in expenses to its first-quarter earnings, the net of expected insurance coverage. The company stated, however, that the incident will not have a material impact on its overall financial conditions for the entire year.

loanDepot has yet to announce a release date for its fourth-quarter 2023 earnings.

California-based loanDepot informed the wider public of the cyberattack that brought its systems down on Jan. 8 , adding that the date of the earliest event was Jan. 4. The company began restoring its systems on Jan. 18. On Tuesday, it reported that the cyberattack has been contained.

The incident may have involved “name, address, email address, financial account numbers, social security number, phone number, and date of birth,” of customers, according to a notice of data breach sent to the Office of the Maine Attorney General.

Ransomware gang AlphV/BlackCat later claimed it was behind the cyberattack.

Customers filed several class-action lawsuits following the cyberattack, claiming they were “placed in an imminent and continuing risk of harm from fraud, identity theft, and related harm caused by the data breach.” loanDepot is accused of negligence, breach of contract and unjust enrichment, among other allegations.

The company, which does not comment on pending litigation, wrote to the SEC that it cannot “presently quantify” the expenses related to the lawsuits, but it “does not expect that the cybersecurity incident will have a material impact on its overall financial condition or on its ongoing results of operations.”

Several mortgage companies have recently been the target of cyberattacks, including Mr. Cooper Group , First American and Fidelity National Financial Inc. , the parent of servicer LoanCare.

Mortgage executives told HousingWire that these attacks have put the industry in “alert mode.” They don’t have a clear answer for why the mortgage sector, mainly servicers, has sustained so many attacks of late. Still, they acknowledge that they keep a vast amount of customer data and some players may be vulnerable amid a shrinking market.

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Is a Reverse Mortgage Tabboo

didier@ddamortgage.com (Didier Malagies) — Mon, 26 Feb 2024 14:05:37 GMT

Do you not tell anyone that you have one? Are there others in similar situations

Spouse and has passed on, only fixed income such as social security. Are food costs going up along with Medical? It is time to get a HECM - a line of credit to help you in your later years of life, Have your children be involved and everyone learn how a Reverse Mortgage works. People have 401k's. there is equity in your home. what happens if you lose that opportunity and home prices go down? You don't have to rely on family members to help you when you have all the resources in your home.

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Many homeowners don’t understand how their escrow account works

didier@ddamortgage.com (Didier Malagies) — Mon, 19 Feb 2024 15:15:58 GMT

Among homeowners who have a mortgage escrow account, only 52% fully understand how the account works, according to survey results released Thursday by property tax services provider LERETA.

More than 80% of survey respondents said they know what an escrow account is and its primary purpose — to pay property taxes and other expenses, such as homeowners insurance , flood insurance and mortgage insurance premiums.

But at a time when mortgage escrow expenses across the nation are likely to experience substantial increases due to higher home prices, as well as higher property tax and insurance rates, only half of respondents indicated they “completely understand how their escrow account works.”

The survey, conducted in February, included the responses of more than 1,000 people who have purchased or refinanced a home in the past four years and have an escrow account.

“The findings reinforce what our associates are hearing every day at our tax service call centers,” John Walsh, CEO of LERETA, said in a statement. “In 2023, 60% of the calls were related to escrow accounts, specifically shortages due to rising property taxes or insurance costs.”

Property taxes across the country are expected to rise due to surging home-price appreciation over the past few years. The average U.S. home price has jumped 29% since the start of the COVID-19 pandemic in 2020, according to Zillow data, which suggests the likelihood of double-digit tax increases for many homeowners.

In addition, homeowners insurance premiums at the national level jumped 21% during the year ending in May 2023, according to insurance marketplace Policygenius.

These findings are supported by the LERETA survey, which found that 57% of respondents have experienced an increase in property taxes, while 38% have seen costs for homeowners insurance rise.

Escrow accounts also frequently handle mortgage insurance payments as conventional loan borrowers with less than 20% equity in their homes are required to have mortgage insurance.

Federal Housing Administration (FHA) borrowers must pay mortgage insurance for the life of their loan regardless of equity levels. About 80% of all U.S. mortgage holders have an escrow account, LERETA reported.

The LERETA survey also found 36% of respondents with a fixed-rate mortgage believe their monthly payment cannot change, even though it can. And 28% are either “somewhat aware” or “not aware” that changes in escrow accounts can affect monthly payments.

At the national level, homeowners insurance costs jumped by 35% in the two years ending in May 2023, according to Policygenius, led by Florida with a hike of 68%. Large insurance carriers are pulling out of some states entirely and the growing lack of competition is expected to increase the cost of coverage.

“Many will be financially challenged, and some homeowners will need help to make these payments and keep their homes,” Walsh said. “Our goal is to help mortgage companies increase communications and educational outreach to customers about escrow accounts to help address this looming problem.”

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DSCR - using rental income to qualify for an investment property

didier@ddamortgage.com (Didier Malagies) — Mon, 19 Feb 2024 14:08:32 GMT

DSCR (Debt Service Coverage Ratio): DSCR is a financial ratio that measures a company's ability to meet its debt obligations. In the context of loans, it typically refers to the ratio of a property's net operating income to its debt obligations, including mortgage payments. A higher DSCR indicates a better ability to cover debt payments.

Non-Qualified Mortgage (Non-QM): Non-QM loans are mortgages that do not meet the standards set by government-sponsored enterprises like Fannie Mae and Freddie Mac. These loans are considered riskier and may have features that deviate from the traditional qualified mortgage criteria, such as interest-only payments or higher debt-to-income ratios.

Combining these concepts, a "dscr loan nonqm" might refer to a non-qualified mortgage where the lender considers the Debt Service Coverage Ratio as a key factor in determining the borrower's eligibility. This type of loan may be suitable for borrowers who don't meet the traditional mortgage criteria but can demonstrate a strong ability to cover debt payments based on the property's income.

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FAR expert urges consideration of the home when planning for retirement

didier@ddamortgage.com (Didier Malagies) — Mon, 12 Feb 2024 20:54:57 GMT

When creating retirement plans, people often consider their investments and other financial assets when determining the future course to take, but they rarely consider what is often their most valuable asset: their home.

This is according to Steve Resch, vice president of retirement strategies at Finance of America Reverse (FAR), in a new column published by The Street.

“[C]omparing the potential for return on investment (ROI) on home ownership to a surprisingly similar and well-accepted investment vehicle, the 401(k), illuminates the less-explored investment potential inherent in a home purchase,” Resch said.

While costs associated with homeownership tend to dwarf expenses that are often associated with other kinds of investments, the necessity for having a roof over one’s head also makes the home a more invaluable asset that should be maintained, Resch explained. This requires the separation of the home’s value from its cost, and treating it as both “an investment asset as well as a necessary expenditure makes sense,” he said.

Steve Resch

There are also some notable similarities between the home as an asset and a 401(k) retirement account, he explained. Both assets “are long-term investments,” and while “an individual may work for multiple employers or purchase several homes throughout their lifetimes, they will likely pay into each investment for 30 years or more.”

They also both have “systematic contribution options,” including payroll deductions for a 401(k) account and monthly mortgage payments for a home.

Financial advisers would be wise to consider these similarities, and “holding a home to the same performance standards normally applied to a 401k can help illuminate why looking at a home as an investment not only makes sense, but offers an opportunity that would be foolish for any financial advisor to overlook,” Resch said.

Homes and 401(k) accounts alike also offer their own tax benefits, and while a 401(k) is designed to serve as an instrument to generate cash flow, home equity could also serve such a purpose if an eligible homeowner considered a reverse mortgage, he explained.

“The standard protocol for accessing equity has been to sell the property,” Resch said. “However, while selling a home does offer access to cash, it also could exact multiple tolls on the seller, including the costs and emotional impact of the sale and moving.”

Resch has explained in the past why reverse mortgages can be used as retirement planning tools.

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Using 12 months business bank statements to qualify for a mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 12 Feb 2024 14:08:03 GMT

12-month business bank statement loans" typically refer to a type of loan program where a borrower's income is determined based on their business bank statements rather than traditional income documentation such as tax returns or pay stubs. This type of loan is often categorized as a Non-Qualified Mortgage (Non-QM) because it doesn't meet the criteria set by the Qualified Mortgage (QM) rule.

In these types of loans, lenders may look at the business bank statements for the past 12 months to assess the borrower's income and ability to repay the loan. This can be advantageous for self-employed individuals or business owners who may have fluctuating income or non-traditional income sources.

Keep in mind that non-QM loans often come with higher interest rates and may have different qualifying criteria compared to traditional mortgages. Additionally, lenders offering these types of loans may have specific requirements and underwriting guidelines, so it's essential to carefully review the terms and conditions.

If you are considering a 12-month business bank statement loan, it's advisable to consult with a mortgage professional or a loan officer who specializes in non-QM loans. They can provide detailed information about the loan programs available to you, guide you through the application process, and help you understand the terms and conditions associated with these types of loans.

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Experts offer tips for aging in place and compare costs to assisted living: CNBC

didier@ddamortgage.com (Didier Malagies) — Thu, 08 Feb 2024 17:10:20 GMT

The data is clear: aging in place is a clear preference for many older Americans making plans for how their later years will play out. But a lot of people approaching these ages may not know the best ways they can make their homes more accommodating for natural changes that come with aging, according to a new story at CNBC.

“People might say, ‘I want to age in place as the default plan, because that’s what I’m already doing,’” Carol Chiang, CEO of personalized aging-in-place consulting company Evolving Homes , told the outlet. “But they’re not really considering, ‘Well, what does that mean?’”

There are three general client types Chiang’s company serves, she explained. These include those who have some kind of urgent need, likely stemming from a recent medical issue or injury; those suffering from a cognitive or neurodegenerative condition; and more proactive adults who are planning out their later years in advance.

A certified financial planner (CFP) who enlisted Chiang’s services falls into the proactive camp, she told CNBC.

“She made us think through what an aging-friendly bathroom would look like,” CFP Carolyn McClanahan said. “People are usually remodeling their homes every 10, 15, 20 years. So making certain — especially when you hit your 50s and 60s — that you remodel it […] does make it easier as you get older to stay home.”

Costs for renovation projects can vary based on factors such as location, job size and condition of the home. While the investment can be steep in terms of upfront cost, it is also largely a one-time investment that can help make the rest of a resident’s time in a home easier, according to Curt Kiriu, president of CK Independent Living Builders in Mililani, Hawaii .

“At a very, very basic level, thinking about a remodel, you should be planning for at least $70,000,” Chiang said, adding that certain jobs can come in at less than half that. But when compared to the $108,000 annual median cost of a private room in a nursing home, according to data from Genworth , remodeling can be more compelling.

A recent study by researchers at Rutgers University in New Jersey found that home-based care is a leading outcome for older Americans.

Another recent study found that 55% of surveyed baby boomers plan to remain in their existing homes as they age, but less than one-quarter of those surveyed have any plans to renovate their homes to more safely and easily accommodate natural changes that come with aging.

Only 24% of baby boomers are preparing their homes for aging, and even fewer are adding other safety features, according to the latter study by home improvement services company Leaf Home and market research firm Morning Consult .

Roughly 75% of boomer respondents report that they “have never added safety or accessibility features in their homes,” while 81% of the cohort report planning to leave an inheritance of some kind when they pass away, the study found.

Is it time to put a Reverse Mortgage to work for you today?

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Retired couples might need $400,000 in savings to cover medical expenses , Maybe time to think about a Reverse Mortgage

didier@ddamortgage.com (Didier Malagies) — Tue, 06 Feb 2024 13:57:17 GMT

R etired couples who are Medicare beneficiaries could need as much as $413,000 saved to cover medical expenses in the latter stages of life, an increase over the previous year’s estimate of $383,000. This is according to new findings from the Employee Benefit Research Institute (EBRI).

The figure is the “predicted savings target for Medicare beneficiaries to cover premiums, deductibles, and prescription drugs in retirement,” EBRI explained.

The estimates break down differently for single men, women and couples who are part of Medicare supplemental insurance plans, and the figures aim to offer retirees “a 90% chance of meeting their health care spending needs in retirement.”

For single men, the savings figure is $184,000. For single women, the estimated figure is $217,000, while couples in supplemental insurance plans would need an estimated $351,000.

“Health care costs in retirement can be considerable and may not necessarily be a salient issue for workers,” said Jake Spiegel, research associate for health and wealth benefits Research at EBRI. “To project how much Medicare beneficiaries may need to save to have a reasonable chance of meeting their health care spending requirements in retirement, EBRI built a simulation model allowing for uncertainty due to mortality and rates of return on assets in retirement.”

The model takes recent changes to Medicare Part D into account, enacted as part of the 2022 Inflation Reduction Act passed by Congress and signed into law by President Joe Biden.

The EBRI model “tests varying assumptions about Medicare Advantage and [supplemental insurance] plans that Medicare beneficiaries may purchase,” Spiegel explained. “The output of this updated simulation model is the basis of this new report.”

The $413,000 estimate is an “extreme case,” the results explain. A couple would need to have “particularly high prescription drug expenditures” for that savings figure to adequately have a 90% chance of meeting health care spending needs during retirement.

The study also found that those enrolled in Medicare Advantage plans — private plans that “provide all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage” and that are separate from supplemental plans — have “generally lower savings targets” than those not enrolled in such plans.

“The results from EBRI’s projection model indicate that basic health care costs incurred by Medicare beneficiaries are high,” Spiegel added. “While the savings targets tend to be lower for Medicare Advantage enrollees relative to Medigap enrollees, there are important limitations to take into account.”

A recent survey found that nearly 25% of adults have no retirement plan besides Social Security , a benefit program that accounts for many older Americans’ primary source of cash flow in retirement. Social Security benefits rose in 2024 by 3.4%, but seniors continue to express concern over their ability to make ends meet.

Time to think about a Reverse Mortgage

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Buying a home when it is still in probate

didier@ddamortgage.com (Didier Malagies) — Mon, 05 Feb 2024 13:57:07 GMT

Why list a home when it is in probate?

Anything can happen during probate, it is hard to lock in an interest rate and notify the landlord if you are a renter giving a 30-day notice. They never seem to work out on schedule which is why it makes it difficult for all parties.

When you are told that it is almost done, like my present client who has been waiting now for 2 months. Life goes on hold and at the mercy of the judge to sign off and not find anything else that may be a problem. I believe it is better to wait until after probate and with how quickly we can do a mortgage in 2 weeks wait until the title is clear.

The market has changed since 2020 and 2021, with clear titles, and contract close.

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Aging in place through home-based care is a leading outcome for seniors

didier@ddamortgage.com (Didier Malagies) — Wed, 31 Jan 2024 13:19:08 GMT

While individual needs and health issues will primarily dictate how a person spends their final years, a new study shows that home-based care is a leading outcome for older Americans. This conclusion comes from a new study by researchers at Rutgers University in New Jersey . Hospice News first reported the findings.

“The aim of this study was to determine the trajectories for place of care in each quarter during the last three years of life among Medicare beneficiaries and the factors associated with these trajectories,” the researchers explained. “A retrospective cohort was assembled from Medicare beneficiaries who died in 2018, and a 10% random sample of the cohort was analyzed.”

The final results were ultimately sorted into three predominant “clusters,” they explained, including home care, skilled home care and institutional care. The far-and-away preference for the sample was in some type of home-based care, according to the findings.

“Nationally, over half (59%) of Medicare beneficiaries were in the home cluster, one-quarter (27%) were in the skilled home care cluster, and the rest (14%) were in the institutional cluster,” the researchers said. “There were large variations by state in the use of services during the last three years of life.”

Home care without a skilled nursing element was most frequent among Medicare beneficiaries in Alaska (81.5%), Puerto Rico (81.4%), Hawaii (72.9%), Arizona (69.2%) and Oregon (68.9%). They were least frequent among beneficiaries from Massachusetts (47.1%), Louisiana (47.8%), Rhode Island (48.3%), and Connecticut (48.6%).

“Our findings are similar to those reported in a recent prospective cohort study using a representative sample from the National Health and Aging Trends Study (NHATS), which also found that 58% of NHATS participants remained at home and 17% transitioned to or died in an institutional setting,” the Rutgers study found. “Our findings are also consistent with the recent downward trend of deaths in acute care hospitals and upward trend of deaths in home and community settings.”

Still, while the primary preference appears to be aging at home, more information is required to fully understand these preferences, the researchers concluded.

“While the majority of older adults spent their final years at home with minimal use of skilled home care or institutional care until the final months of life, 40% had major health service needs,” they said. “Extended use of skilled home care or institutional care was more frequent among older adults living with multiple chronic conditions, including dementia.”

Future research that aims to understand “the health care systems and policy factors that influence place of care trajectories” could help advance refinement of the care experience, health of the population and associated care costs, they added.

Aging-in-place preferences among older Americans are well documented , and the drivers of these preferences have also been subjects of recent discussion. Long-term care is also an increasingly large priority for older Americans.

The reverse mortgage industry often aims to position its product offerings as conducive to the goals of aging in place. The results of the Rutgers study may shed light on the broader considerations that lead older Americans to seek out certain end-of-life care paths, particularly as the U.S. population grows older more quickly .

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Mortgage rates poised to drop to 5.5% in 2024: Bloomberg

didier@ddamortgage.com (Didier Malagies) — Tue, 30 Jan 2024 18:07:18 GMT

Most economists forecast mortgage rates to decline in 2024, stoking optimism about the housing market.

According to the newest Bloomberg Markets Live Pulse Survey (MLIV Pulse), the rate on the 30-year fixed mortgage will fall to 5.5% by the end of this year. Most forecasts call for rates to bounce within the 6% to 7% range in 2024, marking the first annualized decline after three straight years of gains.

In 2023, elevated mortgage rates froze sales of existing homes , which slid to their lowest pace since 1995. In 2023, only 4.09 million existing homes were sold, according to the National Association of Realtors . High borrowing costs simultaneously pushed rate-sensitive buyers to the sidelines while handcuffing current homeowners to their historically low mortgage rates. High rates further exacerbated the national inventory shortage and contributed to the surge in home prices .

Federal Reserve officials anticipate at least three rate cuts in 2024, according to projections from their December meeting. The Federal Open Market Committee (FOMC) meets again on Tuesday and Wednesday.

On Monday, meanwhile, 97.9% of investors were anticipating the benchmark interest rate to remain the same after the FOMC meeting, according to the CME Group’s FedWatch tool. But 48.6% of investors have priced in a cut of at least a quarter point in March. On the bright side, new listings rose 2.2% compared with a year earlier, according to Redfin data for the four weeks ending Jan. 21.

“The worst is over for the housing market, but a full recovery will be slow in coming,” Mark Zandi, chief economist at Moody’s Analytics, told Bloomberg. “Mortgage rates should continue to trend lower this year.”

With the U.S. economy looking more encouraging in 2024, 57% of the respondents to the Bloomberg MLIV Pulse survey perceive real estate as a more attractive investment than it was last year. About 10% of the respondents think that a decline to a 6% rate for a 30-year fixed mortgage could help grow single-family housing inventory, while 39% feel that a 5% rate would be preferred.

The MLIV Pulse survey is conducted weekly among Bloomberg terminal and online readers. Last week, the survey focused on U.S. consumers and included 236 respondents.

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A list of things to know about when buying a condo

didier@ddamortgage.com (Didier Malagies) — Mon, 29 Jan 2024 14:18:19 GMT

Find out if you have a dog and what is the weight they accept. I just had a deal fall through due to the dog weighing 40 pounds and the weight allowed was 25 pounds. If they have an engineering report done review it. Are they going to charge an assessment? or association fees going up? You need to do your homework. If the budget has more than 10% reserves that is good, you can see how the board is handling the money. Also, the questionnaire asks how the delinquents are doing, which is really important. If people are not paying then who has to make up for that?

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do you need a little extra income to qualify for that mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 22 Jan 2024 14:04:29 GMT

If you are over 59 1/2 and have a retirement account, you can use monthly distributions to qualify for a mortgage. You must have 36 months of payments in order to use the income. If you need 500 a month and if you calculate out 36 months that is 18,000 in your retirement account and you have that or more then you can use that as income. It's a great way to help give you the added income to get the mortgage you are looking for.

Maybe the pension, social security, or salary is not getting you there. Thinking outside of the box and using the assets you have to help qualify you for more house

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Mortgage rates dip to 6.6% to mark the lowest level since May 2023

didier@ddamortgage.com (Didier Malagies) — Fri, 19 Jan 2024 15:21:56 GMT

Mortgage rates continued their descent this week to mark their lowest level since May 2023, welcome news for homebuyers who have been waiting on the sidelines for rates to drop.

The 30-year fixed-rate mortgage averaged 6.6% as of Jan. 11, a decrease from last week’s 6.66%, according to Freddie Mac ‘s Primary Mortgage Market Survey released on Thursday.

The 15-year fixed-rate mortgage averaged 5.76% this week, down from 5.87% the prior week.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate on conventional loans at 6.709% on Thursday, up from 6.66% recorded at the same time last week.

“This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability. However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale,” said Sam Khater, Freddie Mac’s chief economist.

Housing starts declined 9% in 2023, an indication that homebuyers looking to purchase a new construction home may continue to struggle with the lack of inventory this year.

With mortgage rates continuing their downward trend last week with softer inflation readings – the so-called core consumer price index that excludes volatile food and energy prices – pulling them lower, mortgage demand was up in the week ending Jan. 12 compared to a week earlier.

“Mortgage applications jumped more than 10% as a result, with solid increases for both refinances and home purchases. The continuing decline in mortgage rates is promising for households looking to buy a home in the coming months,” said Bob Broeksmit, Mortgage Bankers Association’s (MBA’s) president and CEO.

Purchase apps increased by 9% from one week earlier on a seasonally adjusted basis, and refis were up 11% in the same period.

This week, December’s retail sales report showed strong consumer spending even after adjusting for holiday spending and inflation as policy makers mull rate cuts.

Eyes on the Fed’s rate cut timeline

After the Federal Reserve began its restrictive monetary policy in March 2022, officials anticipated at least three rate cuts in 2024 at their December meeting. The Fed next meets on Jan. 30-31.

According to projections from central bank officials, rates would be slashed to a median 4.6% by the end of 2024 from the current federal funds rate range of 5.25%-5.5%.

More than 57% of investors have priced in at least a quarter-point cut in March, according to the CME Group’s FedWatch tool. That is down from 67% last week and roughly 71% about a month ago.

Fed Governor Christopher Waller advocated moving carefully with lowering interest rates while acknowledging that cuts are likely this year.

“When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully,” Waller said in prepared remarks at the Brookings Institution on Tuesday.

“In many previous cycles … the FOMC cut rates reactively and did so quickly and often by large amounts. This cycle, however, … I see no reason to move as quickly or cut as rapidly as in the past,” he added.

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Housing Market More homeowners might be ready to sell despite the lock-in effect: Redfin

didier@ddamortgage.com (Didier Malagies) — Mon, 15 Jan 2024 21:01:45 GMT

Despite the still-challenging rate environment, some homeowners might opt to bite the bullet and give up their low rate to move, according to a Redfin study.

Nationwide, the share of homeowners with relatively low rates has fallen modestly from a record high of 92.8% in mid-2022. In the third quarter of 2023, 88.5% of U.S. homeowners with mortgages had an interest rate below 6%.

To conduct this study , Redfin analyzed data from the Federal Housing Finance Agency ’s National Mortgage Database as of the third quarter of 2023.

Many homeowners choose to sell because of major life events, such as a marriage, a new child, a new job, or a divorce. Others simply want to move to a different house or city. Another reason explaining why the share of homeowners with relatively low rates has dipped is that some homeowners have a rate above 6%. For repeat buyers and first-time buyers who entered the market in 2022, the average mortgage rate was above 6%. As rates are currently declining, it makes sense for them to get a new mortgage.

The lock-in effect is still real but listings are starting to tick up

Declining mortgage rates appear to have helped the inventory situation somewhat. The 30-year fixed-rate mortgage averaged 6.66% as of Jan. 11, down from a peak of roughly 8% in October.

“Sellers have started coming out of the woodwork because that’s typical for January and because mortgage rates have dropped,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a statement. “They’re also coming to terms with the fact that rates aren’t going back down to 3% any time soon, which makes it easier to pull the trigger on selling. But a lot of sellers are worried about finding their next house because even though listings are rising, there’s still a housing shortage. That’s part of the reason so many sellers remain on the sidelines.”

Of course, there’s a group of homeowners who are sitting on enough equity to justify selling their home and taking a higher mortgage. As prices soared during the pandemic, many homeowners made a big profit on their purchase. Taking a new mortgage now can make even more sense if the homeowners wish to downsize or move to a more affordable area. As of the third quarter of 2023, 88.5% of mortgaged U.S. homeowners have a rate below 6%, 78.7% below 5%, 59.4% below 4%, and 22.6% below 3%.

Affordability remains an issue even if mortgage rates started to trend down

For the four weeks ending January 7, 2023, the monthly payment on a median-priced U.S. home with an average mortgage rate of 6.62% cost $2,399. While that figure is down $325 from the all-time high in 2022, it’s still up 7.4% from a year ago. Overall, both mortgage rates and home prices are higher than they were last year.

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Is it time to think about a Reverse Mortgage to help supplement Retirement income

didier@ddamortgage.com (Didier Malagies) — Mon, 15 Jan 2024 15:16:57 GMT

10,000 people a day are turning 65 years old, some have social security, pension, or 401k. I see a lot with just Social security

Is it time to think about using your equity in your home to help supplement your income? Wouldn't be great to have access to an equity line and all you have to pay is the property taxes and insurance on the home.

Need a new A/C, Roof, or whatever home repair no need to use a credit card

Need supplemental income to help pay your monthly expenses?

Need a new car?

How about home health care when it comes to that time?

A Reverse Mortgage can help in many ways for your retirement years

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Reverse mortgages could be a long-term care option

didier@ddamortgage.com (Didier Malagies) — Wed, 10 Jan 2024 16:54:24 GMT

Among the numerous issues that retirement preparation can present to those near the end of their careers, long-term care (LTC) provides an increasingly common discussion point. One potential product that could assist in paying for LTC and its insurance could be a reverse mortgage, according to personal finance publication Kiplinger .

LTC is already an expensive prospect and is projected to become a more common necessity as the U.S. population grows older in the coming years. Insurers currently offer few affordable options for those in the economic middle , according to Kiplinger.

“Admittedly, it’s easy to see that most people will require some sort of long-term care later in life,” writes retirement advisor Jerry Golden. “Figuring out specifically who will need it is the tricky part.”

This is where a reverse mortgage could become a viable option for certain retirees, he explained.

This option helped the couple discover that their retirements could go further than they originally thought.

“You might […] find that your retirement plan can pay for more than it could just a few years ago,” Golden said, referencing their use of a HECM product.

Reverse mortgage professionals have seen LTC as a viable vehicle for spreading the word about the product for some time.

In the past, RMD has profiled industry professionals who obtained LTC certifications to further inform their clients about retirement options, which also helped expand the understanding of the retirement ecosystem and the benefit programs current retirees can access.

“[The class helped me to] have a better understanding of Medicaid, not just what it covers but the different qualifications,” said former industry professional Steven Sless in an interview with RMD in 2020. “We talked a lot about protecting assets to qualify for Medicaid, and what I learned was that Medicare and Medicaid do help to fund long-term care, but oftentimes that long-term care is in a nursing home.”

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Older Americans could become their children’s ‘biggest expense’ in coming years, says aging advocate

didier@ddamortgage.com (Didier Malagies) — Mon, 08 Jan 2024 20:44:05 GMT

The seniors who are often the parents of Generation X and Generation Y ( millennials ) could become a pronounced expense for their kids in the coming years, but adult children also want to see their parents successfully age in place.

This is according to a commentary from Sarita Mohanty, president and CEO of elder financial advocacy organization The SCAN Foundation in a commentary published by Fortune.

There will be 16 million “middle-income” seniors in the U.S. by 2033, Mohanty said, citing a 2022 study from the National Opinion Research Center (NORC) at the University of Chicago.

“As NORC’s research summary explains: ‘Many will struggle to pay for the health, personal care, and housing services they need. […] Even with home equity , nearly 40% will not be able to afford assisted living,’” she cited.

These kinds of expenses have only become more burdensome over time, Mohanty said.

“In 2002, adults over 65 spent $48,000 (adjusted for inflation) a year on average, according to data from the Bureau of Labor Statistics,” she wrote. “Today, the average is $58,000, a more than 20% increase. The average rent and medical costs for those in assisted living currently stand at $65,000 a year .”

The far and away preference for both U.S. seniors and their children is for the seniors to age in place in their own homes, Mohanty said. Citing a survey from Today’s Homeowner, 89% of Americans at or over the age of 55 want to remain in their homes.

But a late 2023 survey by CNBC found that nearly 60% of Americans feel they are not on track to retire comfortably, Mohanty pointed out, and that lack of assurance in their own retirement security means the younger generations are often unprepared to assume any support position for their parents.

“Something has to give,” she said. “If you’re in the sandwich generation – Gen X and older millennials – and want to share in the responsibility for their parents’ retirement, you should begin by thinking of your parents’ retirement plans in the context of your own.”

In December, the U.S. Department of Housing and Urban Development (HUD) announced a $40 million notice of funding opportunity to connect seniors in affordable housing with resources that could help them age in place.

The reverse mortgage industry often describes its product as a vehicle that can help older Americans remain in their homes since a core requirement of any reverse mortgage is for the borrower to remain in the property as their primary residence.

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With the recent drop in interest rates should I lock in my interest rate on my purchase

didier@ddamortgage.com (Didier Malagies) — Mon, 08 Jan 2024 17:15:14 GMT

As you can see every day the market is insane without reason. We Have just dropped big time with rates over the last month. When you are buying it is a snapshot in time with rates. You are closing in 30 to 45 days, anything can happen in that time frame If you are comfortable with the mortgage payment then it is good to lock in. You are looking for the opportunity when the Gov't pivots and rates drop down to really save money not by a.25 of a percent but 2 to 3% lower which is huge. Don't get priced out and have rates jump up in your 30 to 45-day close, be safe and take the time to shop your insurance, etc.,

What can make rates drop?

rolling over 7 trillion of the debt this year

another pandemic

possible wars in many areas,

loss of jobs

all sorts of things can happen that can change everything suddenly

Be comfortable with the payment so that you can eventually reap major savings when rates drop

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Home equity could make a difference for long-term care funding

didier@ddamortgage.com (Didier Malagies) — Thu, 04 Jan 2024 14:22:57 GMT

As the U.S. population grows older with each passing year, looking for new and novel ways to fund long-term care for the aging population could include home equity. A reverse mortgage can certainly play into this, but another growing dynamic is the divide between higher- and lower-income homeowners.

This is according to “ Housing America’s Older Adults 2023 ,” the latest edition of a report published by Harvard University ’s Joint Center for Housing Studies (JCHS) in December.

As the gap between high- and low-income homeowners widens, the equity they’ve built up in their homes could make a difference in the equation. But unlike higher-income seniors, lower-income homeowners are more likely to maintain an existing forward mortgage on their property, which could make a Federal Housing Administration (FHA)-backed Home Equity Conversion Mortgage (HECM) more attractive.

“Even though HECMs were established specifically to ensure that older adults can convert their equity to cash as they age, they are less common than other products designed for accessing equity,” the report reads. “According to data from the U.S. Department of Housing and Urban Development (HUD), only about 64,500 HECMs were originated in FY2022.”

The situation worsened the following year, as HECM endorsements dropped roughly 50% in 2023 compared to data from the prior year according to FHA’s 2023 Annual Report to Congress.

Research conducted by both Chris Mayer and Ohio State University (OSU) researcher Stephanie Moulton suggested that “tighter underwriting standards and borrowing limits established in the wake of the Great Recession, combined with the exit of several major lenders from the reverse mortgage market, served to reduce originations from earlier levels,” the report said.

A lack of both “awareness and understanding of HECMs” alongside seniors’ aversion to tapping home equity or their desire to hold it in reserve to protect against a severe financial shock may also suppress demand, the explanation stated.

Lower-income seniors may also find it challenging to use reverse mortgages when attempting to access home equity, and these challenges can be compounded by other factors.

“[I]ndividuals who have faced a lifetime of barriers to accessing a quality education, a well-paying job, meaningful healthcare, and stable housing will have fewer financial resources to draw on as they age,” the report said. “The public and private sectors are both crucial to ensuring that the nation’s most vulnerable older adults are able to age with dignity in their homes and communities.”

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Happy New Year and when does it make sense to refinance your mortgage

didier@ddamortgage.com (Didier Malagies) — Tue, 02 Jan 2024 14:19:41 GMT

If you have purchased your home in the last 2 years maybe it is time to see this year when it makes sense to refinance your mortgage

for those with a low interest rate already is it time to consolidate credit card debt, installment loans, student loans, etc.,

I believe this is the year to get the house in order, with the uncertainty in the market and so many variables going on

could be the time to lower the monthly payments

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Cyber attacks at Title Companies

didier@ddamortgage.com (Didier Malagies) — Tue, 26 Dec 2023 14:36:29 GMT

I have had several closings where the title company has been cyberattacked and shut down for days. I had a closing last week and still shut down and another title company the month before shut down.

These are national companies and that means this affects us all in every state.

If you read housingwire.com you can see the fines they are paying. I have loans to close this last week of the month and are they going to be up and running to make it happen? Crazy times we are living in. Nothing you can do to choose the title co that will not get affected, several years ago a small local title co got hit as well and they lost their data.

So I see more of this happening in 2024

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Senior-held home equity rises in Q3 to over $13 trillion

didier@ddamortgage.com (Didier Malagies) — Tue, 19 Dec 2023 20:02:58 GMT

Senior-held home equity rose for the second consecutive quarter in Q3 2023, after reductions observed in Q4 2022 and Q1 2023.

Senior housing wealth grew by an estimated $178.4 billion in Q3 to a record of $13.08 trillion according to the Reverse Mortgage Market Index (RMMI), the latest such release from the National Reverse Mortgage Lenders Association (NRMLA) and data analytics firm RiskSpan.

The RMMI increased in Q3 to 457.36 from 444.16 in Q2, the highest level the index has ever reached since it began publication in the year 2000, NRMLA said in an update to members distributed on Thursday.

Once more, home price appreciation fueled the rise in senior-held equity levels. Seniors’ home values grew to a record high of $15.3 trillion, but were offset by an estimated $2.3 trillion in senior-held mortgage debt.

In a statement accompanying the data in an alert to association members, NRMLA President Steve Irwin cited recent data indicating the challenges that will face seniors’ housing and retirement in the years to come.

Nearly a third of the senior cohort spends as much as 30% of their income on housing costs, qualifying them as “cost-burdened” according to data from the Joint Center for Housing Studies (JCHS) at Harvard University.

“[JCHS] forecasted that the United States is ill-prepared to provide adequate housing and supportive services to the 17 million households that will be headed by a person aged 80 and over by the year 2040,” Irwin said.

“That same report noted that homeowners who leveraged their home equity may be better prepared to cover the costs of care to help them age in place,” he added.

The RMMI increased precipitously between 2011 and 2021. When it endured a decline in 2011, the collective figure sat at roughly $3 trillion while in Q3 2021, the RMMI index rose by four percent , topping $10 trillion for the first time. The index grew by 3.98% in Q4 2021 and 4.91% during Q1 2022 — when it first topped $11 trillion. In Q2 2022, the RMMI grew by 4.10% to $11.5 trillion.

After starting 2023 with a reduction , the RMMI quickly settled into a pattern of increases once more in Q2 2023.

The collective senior housing wealth figure reached a threshold of over $9 trillion for the first time in July 2021 , and $8 trillion for the first time in April 2021. It had previously topped $7 trillion for the first time in March 2019 .

Is a Reverse Mortgage a consideration to help supplement Retirement?

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2024 prediction on interest rates

didier@ddamortgage.com (Didier Malagies) — Mon, 18 Dec 2023 15:33:16 GMT

Thank you for 37 years of letting me have the opportunity to serve you.

This is not a job but a wonderful opportunity to meet new people and develop new relationships

Wishing everyone a Great Holiday and for my prediction for 2024

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Younger generations are better prepared for retirement, with a catch

didier@ddamortgage.com (Didier Malagies) — Wed, 13 Dec 2023 17:17:27 GMT

Baby boomers’ retirement readiness is a regular source of discussion among reverse mortgage professionals, and a new report from Vanguard claims that generation is generally less well-prepared for retirement than Gen Xers and millennials.

That fact, however, is not so cut-and-dry.

Taking a deeper look at the data and speaking to certain financial advisors on the topic, Fortune determined that at least part of the reason for this is because there are certain regulatory and practice advantages that younger generations have had that baby boomers simply did not have access to.

“[T]he better retirement readiness was a result of decades of new regulations that made it easier for millennials to save for retirement, especially when compared to when boomers entered the workforce roughly 40 years ago,” the column explained.

Home equity, which is a large component of many baby boomers’ wealth, was also not factored into the study, Fortune said.

“Vanguard measured the percentage of pre-retirement income and savings of households at different income levels needed to retire comfortably and how far from that target they actually were,” the column explained. “In all but the lowest quartile of households, boomers are projected to be less prepared than younger generations.”

Only a “small slice” of age groups within each studied demographic were measured since gauging the readiness of the complete generational age ranges would’ve been too onerous, according to a Vanguard representative. However, within the studied age ranges there is another caveat.

“Within the study Vanguard’s researchers looked only at financial holdings, such as stocks, cash, and bonds, and didn’t include housing, which can be a significant source of an individual’s net worth that can be tapped for retirement,” the column explained.

Researchers also found that retirement plans are simply more robust than they were while baby boomers were either entering or in the prime of their careers.

“In 1978, Congress passed legislation to create the modern-day 401(k) retirement accounts into which some employers match contributions,” the column explained. “Previously, many employers paid pensions to retired workers. But as employees lived longer, changed jobs more frequently, and unions lost power, companies became less enthused about shelling out money for ex-employees to enjoy retirement.”

Recent pushes toward automatic 401(k) enrollments have also been a game-changer according to Steve Azoury, an independent financial planner from Troy, Michigan.

“The procrastinator who says, ‘I’ll get to it later on’ and never gets to it—he’s automatically enrolled,” Azoury told Fortune. “And then when he starts seeing statements with his name on it and his accounts are growing, he gets very excited.”

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Now you can buy a Duplex, Triplex, Quad with 5% down on an owner occupied

didier@ddamortgage.com (Didier Malagies) — Mon, 11 Dec 2023 13:47:52 GMT

You could only buy an owner-occupied duplex, tri, or quad with FHA, now you can buy it with a Conventional loan with 5% down.

Think about having a home where you can live in one unit and rent the others out to help make the mortgage payment

You can also use the rental income to qualify up to the mortgage payment to offset the debt.

Think of first-time home buyers going with 3.5% or 5% down on their first home. How many investors wish they could have done that on their first home?

I believe at some point rates will come down and a lot of opportunities will present themselves in 2024. Remember 45% of Adult children still live at home and what a way to start off with rental income, write-offs and so many more benefits of homeownership

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Adult child-turned-caregiver offers tips for aging in place

didier@ddamortgage.com (Didier Malagies) — Wed, 06 Dec 2023 19:14:48 GMT

Aging in place is the dominant preference among a raft of options aging seniors may have for later life. Particularly after the COVID-19 pandemic where congregate care settings emerged as sources of infection among seniors, recent data has shown that older Americans far and away prefer to remain in their own homes.

But ensuring that home is fashioned so that a person can age comfortably for the years ahead, sometimes, requires concerted effort. That’s why one adult child-turned-caregiver has offered a series of tips to help facilitate aging in place, which reverse mortgage professionals could find useful for a client seeking ways to apply their loan proceeds.

The National Poll on Healthy Aging conducted by the University of Michigan finds that 88% of surveyed adults between the ages of 50 and 80 applied a high importance level to living in their homes for as long as possible, according to the column published by NextAvenue .

“When my parents, in their late 70s, became ill with several chronic and terminal health ailments, my sisters and I worked to support them and honor their wishes to age in their home,” said Lisa Samalonis, the author of the piece. “Like many adult children and family friends new to this process, we were unaware of everything we did not know about the complexity of safely aging in place and the available resources.”

First up on the list for her and her siblings was minimizing in-home hazards, to make the home easier to traverse for their parents as they aged, which comes with natural impairments to walking and stepping.

“For example, we improved lighting, reduced clutter, and eliminated scatter rugs that did not have rubber backing,” she said of fashioning her parents’ home for aging in place. “For more tips, see the National Council on Aging‘s resource guide to minimize falls.”

Researching certain U.S. healthcare providers to find which can more readily support older populations can also have benefits if or when health complications occur, she said.

“Physicians from the same hospital system can more easily review digital records, and there isn’t a need for duplicate tests,” she explained. “This can save time and money and streamline the hospital discharge protocol.”

There is also value in being a present, vocal and polite advocate for the person under a loved one’s care, which can also translate into “assisting loved ones in entering their health portals and following up on test results, additional appointments and billing questions,” she said.

Other resources may be beneficial to seek out in the future to facilitate aging in place, and Samalonis includes a link to an eldercare locator offered by the U.S. government’s Administration for Community Living (ACL) that could help in situations that may call for it.

Other, more intangible elements come with being an adult caregiver. Compassion and recognition of an older adult’s circumstance can allow a caregiver to react and respond compassionately, while also preparing for a natural conclusion.

“A time comes when there is nothing left to do but hold their hand and sit beside them to honor their experience and their life,” Samalonis said. “Looking back, I know we carried out their desire to age in place the best we could, which is comforting even though I miss them dearly.”

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Mortgage loan limits increasing January 1, 2024

didier@ddamortgage.com (Didier Malagies) — Mon, 04 Dec 2023 14:10:08 GMT

Conforming loan limits going to $766,550 FHA loan limits going to $498,257

HECM going to $1.1 million

That will allow you to get more home without having to go to Jumbo pricing

when rates come down it will be a great opportunity to consolidate debt and have the ability at the larger loan amounts.

With home prices continually increasing there is more opportunity to get the home now with Conventional financing that can have easier qualifying, and possible appraisal waiver as well.

Many benefits to going Conventional vs Jumbo financing.

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FHA’s HECM loan limit rises above $1.1 million in 2024

didier@ddamortgage.com (Didier Malagies) — Mon, 04 Dec 2023 13:47:57 GMT

The lending limit for federally-backed reverse mortgages is increasing for the eighth consecutive year in a row to $1,149,825 in 2024.

The Federal Housing Administration (FHA) announced on Tuesday via Mortgagee Letter (ML) 2023-22 a maximum claim amount of $1,149,825 in 2024. That’s up $60,525 from the $1,089,300 limit for Home Equity Conversion Mortgages (HECMs) in 2023. The increase is roughly half of the $118,500 increase from one year ago.

HUD calculates this figure at 150% of the conforming loan limits on mortgages backed by Fannie Mae and Freddie Mac . The Federal Housing Finance Agency (FHFA) also on Tuesday announced that conforming limits will increase to $766,550 in 2024.

The annual FHFA announcement is a “sneak peek” at the limits for the HECM program in the new year, but both figures publish almost simultaneously.

FHFA’s third quarter 2023 Housing Price Index (HPI) report, also published on Tuesday , saw home prices increase by an average of 5.5% between the third quarters of 2022 and 2023. This growth rate is much lower than the rate seen during the same period last year (12.3%).

“The increase in the Home Equity Conversion Mortgage Maximum Claim Amount for 2024, as mandated by statute, tracks to the increases in FHA’s 2024 forward mortgage loan limits,” said FHA Commissioner Julia Gordon when reached by RMD.

Industry reaction

National Reverse Mortgage Lenders Association (NRMLA) President Steve Irwin offered a positive reaction to the news.

“I am pleased to see the HECM lending limit increase for calendar year 2024,” Irwin told RMD. “Given the continued, though somewhat moderated, home-price appreciation across the U.S., this increase will expand the accessibility of the FHA-insured HECM program for older homeowners who may need to access their home equity to augment their retirement finances.”

The FHA typically aligns the new HECM limit with the new conforming loan limits, which reflect changes in annual home prices as required by the Housing and Economic Recovery Act of 2008 (HERA).

The limit handed down by the U.S. Department of Housing and Urban Development (HUD) for federally-backed reverse mortgages in 2023 was $1,089,300, which matched the FHFA’s high-cost limit and pushed the HECM lending limit over $1 million for the first time.

Continuing the trend from recent years as noted in the FHA’s Annual Report to Congress, the reverse mortgage portion of the Mutual Mortgage Insurance (MMI) Fund reached positive territory once again, though slower HPA compared to 2022 depressed the HECM book’s performance somewhat in a development the agency had telegraphed the year prior.

Prior increases

For several years, the reverse mortgage lending limit remained stagnant, before rising in 2017 from $625,500 to $636,150. Since then, increases in the HECM lending limit have closely tracked those of conforming loan limits.

The new loan limit will take effect for loans with case numbers assigned on or after Jan. 1, 2024, through Dec. 31, 2024.

The release of the new HECM lending limits came on the same day as the release of Mortgagee Letter 2023-21 , which specified new forward mortgage loan limits. FHA’s nationwide forward mortgage limit “floor” and “ceiling” for a one-unit property in 2024 are $498,257 and $1,149,825, respectively.

Editor’s note: This story was updated with a statement from FHA Commissioner Julia Gordon

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FHA loan limit increases to $498,257 in 2024

didier@ddamortgage.com (Didier Malagies) — Wed, 29 Nov 2023 14:56:21 GMT

The Federal Housing Administration (FHA) is increasing the “floor” and “ceiling” FHA loan limits in 2024 to $498,257 and $1,149,825, respectively, the FHA announced Tuesday.

The new FHA loan limits apply to forward mortgages for a one-unit property and take effect on Jan. 1, according to the publication of FHA Mortgagee Letter (ML) 2023-21 . In 2023, those figures were $472,030 and $1,089,300, respectively.

The new FHA loan limits mark increases of $26,227 for the floor and $60,525 for the ceiling, respectively.

FHA Commissioner Julia Gordon said that these changes in the loan limits will further empower homebuyers in a high-price environment.

“The statutory loan limit increases announced today reflect the continued rise in home prices seen throughout most of the nation in 2023,” Gordon said. “The increases to FHA’s loan limits will enable homebuyers to use FHA’s low-down-payment financing to access homeownership at a time when a lack of affordability threatens to shut well-qualified borrowers out of the market.”

While home-price appreciation slowed in 2023, it still pushed home prices higher nationally, according to the Federal Housing Finance Agency (FHFA)’s third quarter 2023 Housing Price Index (HPI) report, also published on Tuesday .

Home prices increased by an average of 5.5% between the third quarters of 2022 and 2023, according to the FHFA report. This growth rate is much lower than the rate seen during the same period last year (12.3%).

“[FHA] calculates forward mortgage limits based on the median house prices in accordance with the National Housing Act,” the FHA explained. “FHA’s Single Family forward mortgage limits are set by Metropolitan Statistical Area (MSA) and county and are published periodically.”

As of Tuesday afternoon, individual county limits on FHA’s database are not yet updated.

The FHA national low-cost area mortgage limits are 65% of the national conforming limit of $766,550 for a one-unit property. The high-cost area mortgage limits are 150% of the national conforming limit, according to FHA.

There are some exceptions. Mortgage limits for special areas, including the states and territories of Alaska, Hawaii, Guam and the U.S. Virgin Islands account for higher construction costs. The ceiling rate for these areas is $1,724,725 for a one-unit property in 2024.

FHA also announced the national lending limit for government-backed reverse mortgages, known as the Home Equity Conversion Mortgage (HECM) program , on Tuesday. HECM loan limits were increased for the eighth consecutive year in a row to $1,149,825 in 2024 .

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FHFA conforming loan limits increase to $766,550 in 2024

didier@ddamortgage.com (Didier Malagies) — Tue, 28 Nov 2023 21:30:57 GMT

The baseline conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac in 2024 will be $766,550, up 5.5% compared to the current limit of $726,200 , the Federal Housing Finance Agency (FHFA) announced Tuesday

Conforming loan limits are increasing at a slower pace, mirroring home prices, overall.

That’s because the FHFA’s conforming loan limit increase is based on a formula related to home-price data in the third quarter of each year. The regulator compares home prices year over year and adjusts the limit by the corresponding amount.

In 2022, the housing market was a little hotter than this year due to lower mortgage rates, pushing home prices up. Ultimately, the FHFA announced a 12.21% increase in loan limits for 2023. Moreover, for the first time, the federal government backed mortgages north of $1 million.

However, home prices increased 5.56% on average between the third quarters of 2022 and 2023. This is why the baseline conforming loan limit is going up in 2024 by the same percentage, the FHFA said in a statement.

The conforming loan limit increase will help buyers more easily finance one-unit homes at the higher end of the price scale. These loans would normally end at the jumbo market , which is dominated by banks . However, depositaries will be challenged by increased capital requirements in the coming years.

New conforming limits also reignite further debate about whether the government should be backing mortgages as high as $1 million.

For areas in which 115% of the local median home value exceeds the baseline conforming loan limit value, HERA establishes the ceiling at 150% of the baseline limit. Ultimately, the new ceiling loan limit for one-unit properties will be $1,149,825.

In addition, special statutory provisions establish different loan limits for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.

Over the past seven years, the baseline loan limit for Fannie and Freddie-backed mortgages has risen by $342,450.

Before the FHFA announcement, multiple nonbank lenders raised conforming limits on agency-eligible mortgages. Amid fierce competition in a shrinking mortgage market , companies are pressured to launch new initiatives to attract wholesale brokers and land more purchase business.

But lenders have been slower to raise limits this year, though, compared with a year ago. In 2022 , as rates surged and borrowers dropped out of the market, lenders raised conventional loan limits in early September — well ahead of the November FHFA announcement

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Early retirement withdrawals accelerate, but baby boomers save the most

didier@ddamortgage.com (Didier Malagies) — Mon, 27 Nov 2023 19:28:15 GMT

Retirement account balances decreased only slightly in the third quarter of 2023, but account withdrawals and loans are inching up as the ongoing effects of inflation continue to impact workers across demographics. This is according to Fidelity Investments’ Q3 2023 retirement analysis .

While retirement savings behaviors continue to remain strong — an “encouraging” sign, Fidelity said — the rise in withdrawals and loans continues to show that Americans are borrowing from their retirement accounts now to stem the tide of higher prices and overall living costs, the analysis found.

“Americans have become accustomed to riding the economic waves of the past several years, and this quarter is no different,” Kevin Barry, president of workplace investing at Fidelity, said in a statement. “They are learning how to stay afloat in very challenging financial conditions — including having enough money set aside should an emergency arise.”

Barry is “pleased” to see retirement savers “stay the course with steady savings rates and continu[ing] commitment to their futures” despite these challenges.

Workers in the baby boomer demographic — or those born between 1946 and 1964 — continue to save for retirement at the highest levels compared with other surveyed generations. Fidelity has a suggested savings rate of 15%; baby boomers, on average, best that rate by nearly two percentage points (16.7%).

However, hardship withdrawals from retirement accounts are on the rise across the board.

Fidelity found that 2.3% of workers took a hardship withdrawal in Q3 2023, an increase over the 1.8% of workers who took such a withdrawal a year ago. Respondents cited “avoiding foreclosure/eviction” and “medical expenses,” respectively, for why they were tapping their retirement savings.

“In Q3, 2.8% of participants took a loan from their 401(k), which is flat from Q2 and up from 2.4% in Q3 2022,” the analysis showed. “The percentage of workers with a loan outstanding has increased slightly to 17.6%, up from 17.2% last quarter and 16.8% in Q3 2022.”

Another recent survey from Charles Schwab found that older Americans are the most reluctant to seek out personalized financial advice, though a majority of baby boomer respondents in that survey (62%) still indicated it was something they would pursue.

The positive response rate increases for each successive generation: 75% for Generation X; 78% for millennials; and 83% for Generation Z.

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What you need to know about condos when getting a mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 27 Nov 2023 13:52:48 GMT

What is a limited review and what does it mean?

25% down for owner occ and 30% for second homes and investment properties

What is required? A condo Questionnaire

The underwriters review and them check for assessments coming due? Delinquencies, etc.,

A full review is where the budget is required and the number one item is reserves. Do they have 10% reserves

Condos have experienced higher insurance premiums on the master policy and are there repairs needing to be done

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Baby boomers are the least likely cohort to seek financial advice: study

didier@ddamortgage.com (Didier Malagies) — Tue, 21 Nov 2023 14:52:56 GMT

Professionals offering personalized financial advice have emerged as a key reverse mortgage industry referral partnership. Still, a new study illustrates that older Americans are the most reticent to seek it out according to a new study conducted by Charles Schwab.

Operating from a data set consisting of 1,000 401(k) plan recipients between the ages of 21 and 70, only 62% of baby boomers indicated they would like personalized investment advice for their retirement accounts. The positive response rate increases for each successive generation: 75% for Generation X; 78% for millennials; and 83% for Generation Z.

A majority of baby boomers (52%) also said that their financial situation requires personalized financial advice. Still, again baby boomers came in last when compared to other generations’ answers, outdone by Gen Xers and millennials (56%) as well as Gen Zers (62%).

However, when measuring each generation’s top preferred source of financial advice, baby boomers far and away preferred a financial advisor (44%). Top choices of other generations include getting advice through a 401(k) plan for Gen Xers (38%) and millennials (41%), and family and friends for Gen Zers (52%).

All surveyed generations scored above 90% when asked if they would likely follow financial advice from a human professional. When asked about advice that could come from an artificial intelligence (AI) source, baby boomers scored the lowest in terms of confidence in any financial advice from a non-human source.

At a recent roundtable discussion among reverse mortgage originators at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting and Expo in Nashville, C2 Reverse’s Scott Harmes described the utility of an existing financial planner relationship with a prospective reverse mortgage borrower.

Harmes always asks a new client about whether or not they have a financial advisor, and shifts the conversation based on the response, he explained.

“There’s no wrong answer,” he said. “Because if it’s ‘no,’ [I ask] if I can refer [them] one. I have about a half-dozen financial advisors I work with on a regular basis, so then I’m bringing them business.”

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Review your monthly mortgage statement now to see if there is any changes

didier@ddamortgage.com (Didier Malagies) — Mon, 20 Nov 2023 14:19:16 GMT

Review your statement to see if your property taxes jumped up, especially the homeowners insurance.

I reviewed mine before doing this video and my insurance went up from 1900 to 2700 a year. I am going to shop it and see if I can do better.

Do you have a monthly PMI? cab you get rid of that now with values going up?

It is important to make sure your escrows are reviewed.

Last year my servicer on my mortgage took the escrow each month and paid down the mortgage, when they did their review I had my escrows go up to make up for what they did.

Next year when I do refinances when rates come down, It shocks me to on who forgot to File for HOmestead, I have seen insurance double and no one paid attention. So, with the costs of everything skyrocketing please take a few minutes and review your monthly mortgage statement

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Check on property taxes if the property sold last year or is an estate sale

didier@ddamortgage.com (Didier Malagies) — Wed, 15 Nov 2023 15:09:08 GMT

When purchasing a home now are you looking at the property tax bill the seller just received? or are you looking at 2022?

If you go under contract on a home now, how long have the sellers owned it? was it a flip, did they live in it for years

I have a couple of homes that were purchased last year and the 2022 tax bill showed much less than the 2023 tax bill issued last week. You must always look at the home's last sale. If the sellers have lived in the home for years then the property taxes are at what they paid for it. Also, did the home become an estate sale where the homestead was taken off

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Workers expect defined contributions to carry them through retirement, but anxiety remains

didier@ddamortgage.com (Didier Malagies) — Tue, 07 Nov 2023 17:35:34 GMT

Defined contribution plans like 401(k)’s are seen as a critical retirement financing vehicle, but many employees feel they still won’t have enough money to last a full retirement

Workers broadly expect their defined contribution retirement plans, such as 401(k)s, to be their primary source of cash when they retire. However, many workers maintain a high level of anxiety about having enough cash to last a full retirement, according to new data from human resources company Buck .

“While many employees (79%) are satisfied with their retirement benefits, they don’t necessarily believe their savings will prove adequate and 76% have increased concerns about their capacity to save for retirement given the unstable economy,” the findings read. “More than a third (35%) of employees cited the rising cost of living expenses as the top impediment to saving, followed by personal debt (20%) and family obligations (11%).”

There is also a disconnect between the competitiveness of retirement packages offered by employers between dedicated human resources professionals and workers, with 91% of HR professionals believing their companies are competitive with such benefits while 61% of employees believe “they could find a better package with a different employer.”

“With rising inflation, it’s not surprising that employees are concerned about their ability to save for retirement and this, in turn, is reflected in the perceived value of employer-sponsored retirement plans,” said Tonya Manning, U.S. wealth practice leader and chief wealth actuary at Buck. “[Defined contribution] plans have evolved to become the primary retirement savings vehicle for Americans, and for plan sponsors, the challenge is how to help participants reach their savings goals.”

Employees also remain far more focused on their immediate financial needs as opposed to thinking ahead to retirement, as more than half (53%) of employees preferred a $500 pay increase over a $500 increase being applied to retirement plan contributions.

Workers also report that despite legislative changes to retirement plans in the U.S., many have not noticed any discernible change to their own retirement plans over the past two years. But employers do have plans in motion, according to the survey.

“[Fifty-seven percent] of employers offer, or plan to offer, matching retirement contributions for student loan payments, a provision included in the recent SECURE 2.0 legislation,” the results explained. “This would be a popular move as 57% of employees would like to see this enhancement.”

In terms of survey methodology, Buck “commissioned an independent research firm to survey benefits-eligible employees and HR and benefits professionals who administer retirement plans, allowing for a comparison of similarities and differences between employee and employer responses,” the results said.

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Mortgage interest rates

didier@ddamortgage.com (Didier Malagies) — Mon, 06 Nov 2023 14:09:47 GMT

Rates have been steadily increasing and now seem to have been coming down. Take advantage of locking in your rate - for now, this seems like a bit of a break but with all the money printing, it could take off

Long term down the road you will refinance and save a lot of money. Concentrate on getting a home for the payment is comfortable and the time will come when you will refinance and save huge.

costs of everything seem to be going up and getting the opportunity to refinance will come in at the right time.

Bottom line is rates have gone up insanely since 2021, just be comfortable with your payment today

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Retirees shouldn’t count on working longer as a ‘strategy,’ data suggests

didier@ddamortgage.com (Didier Malagies) — Wed, 01 Nov 2023 20:57:46 GMT

A chief concern among American workers right now is living longer than their financial resources, and one way seniors try to avoid that is by working longer.

However, data from multiple sources helps illustrate why a plan like that could present unforeseen challenges in later life. This is according to data from Gallup , the Employee Benefit Research Institute (EBRI) and Prudential Financial presented in a story published by CNBC.

Gallup data from mid-2022 indicates that the traditional retirement age is not often the actual retirement age for many Americans. There has been a relatively consistent gap of about five years between the expected and average actual retirement ages, and actual retirement age primarily tends to be sooner than the expected age.

EBRI’s 2023 Retirement Confidence Survey indicated that roughly 46% of retirees reported that they had left work earlier than they may have previously planned, which has been consistent with similar data tracked over the past 20 years: the figure has hovered between forty and fifty percent during that time.

“I think a lot of people who aren’t on track [for retirement] — maybe they’re in their late 40s or early 50s — say, ‘I want to retire at 65 but I’ll work to 70,’” said David Blanchett, certified financial planner and head of retirement research at PGIM , the asset management division of Prudential Financial to CNBC. “But they probably won’t make it to 70.”

While delaying retirement by even a few years can have what is described as a “dramatic” positive impact on retirement security by allowing a retiree to avoid living off of savings or other assets, retiring earlier than one may have anticipated could have the opposite impact, Blanchett said.

EBRI data also indicates that as many as a third of surveyed workers expect to work at least until age 70 or later, if they plan on retiring at all. But early retirements when they happen are often influenced by unforeseen problems that could include health developments or disabilities.

Thirty-five percent of EBRI respondents who said they retired before they planned “did so because of a hardship like a health problem or disability,” the CNBC story said. “Another 31% did so due to changes at their company.”

Job losses can also have dramatic effects on older workers, with 56% of workers at or over the age of 50 reporting that they were laid off before they were ready to retire according to 2018 data from the Urban Institute .

Using a Hecm to help supplement your income maybe helpful for your retirement years, learn more about how to use your equity in your home as another revenue source

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Down payment assistance - the good and the bad

didier@ddamortgage.com (Didier Malagies) — Mon, 30 Oct 2023 13:05:28 GMT

up to 5% of the purchase price can be used for the downpayment assistance program

there are forgivable and nonforgivable loans, which one do you want?

rates are typically higher but it helps if you have no funds whatsoever.

What happens when rates come down, are values up, the same, or down, and how does that affect your refinance when the time comes? Lot to consider when getting the downpayment assistance

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Home maintenance spending could upend retirement budgets: study

didier@ddamortgage.com (Didier Malagies) — Fri, 27 Oct 2023 15:41:22 GMT

More homeowners are turning to home equity lending — especially home equity lines of credit (HELOCs) — to pay for home renovations instead of buying another home.

However, home maintenance projects undertaken in retirement can be a significant drain on cash reserves and upend retirement budgets, according to a study published in September by T. Rowe Price Insights .

Some variation in spending during retirement is expected and even beneficial. This is especially true if a retiree has planned for a vacation or a dream purchase of some kind, writes study author Sudipto Banerjee, VP of retirement thought leadership at T. Rowe Price.

But when the spending is unexpected, that’s where budgeting problems enter the picture, the analysis found. For this study, larger shares of spending variation came from this category, which included home maintenance costs.

The study found that 30.5% of spending volatility was driven by nondiscretionary spending and 13.5% came from discretionary spending. Within those categories, 25.1% of nondiscretionary spending volatility was driven by home-related costs, while health and transportation accounted for only 5.3% and 3%, respectively.

“[I]f volatility arises from unplanned increases in nondiscretionary or essential spending, then it could become a true liquidity event and a cause of concern,” Banerjee said. “In our study, a larger share of the variation in total spending for retirees was due to changes in nondiscretionary or essential spending.”

Let me know if I can help you with a HECM

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Meet the homeowners giving up 4% mortgages and opting for cash-out refis For low FICO score borrowers who need a lump sum of cash, cash-out refis can be a

didier@ddamortgage.com (Didier Malagies) — Wed, 25 Oct 2023 17:55:25 GMT

In late August, when mortgage rates were well over 7% and beginning their climb toward 8%, Jeff Anderson had a client do what few other homeowners are willing to do: She gave up her 4% mortgage rate.

You’re probably thinking, “Uh, why on earth would she do that?”

The client wanted to pay off $30,000 in consumer debt, handle home improvement projects and help her daughter start college, said Anderson, a longtime mortgage advisor in Southern California. By doing a cash-out refi, she landed a $340,000 FHA loan and locked in a 6.9% mortgage rate.

“At closing, my client will get $10,000 of cash up-front. We are paying off her current mortgage balance of $280,000 while maintaining more than $200,000 in home equity,” said Anderson, who runs the mortgage broker shop Rancho Capital Home Loans . “She would be saving $550 a month and lower[ing] her debt ratio to slightly below 50% from the current 57%. There is no shortage of cash for her right now.”

A cash-out refi replaces the homeowner’s current mortgage with a new, larger loan under different terms from the original loan. In return, a borrower receives the cash difference between the new amount borrowed and the old mortgage balance.

When mortgage rates were at historical lows during 2020 and 2021 , a record number of homeowners tapped their equity through cash-out refis and still managed to secure low rates on the new mortgage. In 2021, more than $1.2 trillion in cash-out refis were executed.

But since the cost of borrowing has skyrocketed due to the Fed rate hikes , there are far fewer homeowners willing to give up their sub 4% mortgage and refinance into a mortgage that’s at least 300 basis points higher.

Even though about 30% of mortgage applications are for refinancings, nearly 90% of current mortgage originations today are purchase loans.

But for some low FICO borrowers who need a lump sum of cash, a cash-out refinance can be a sensible option, thanks to their accrued home equity. (The average tappable home equity for homeowners was slightly over $200,000 in August 2023, up from $126,606 in August 2020, according to data from Intercontinental Exchange .)

Of the overall equity withdrawals, home equity line of credit ( HELOC ) took up more than half (52%) of the share in Q2, with cash-out refis accounting for the rest. But, the profile of cash-out borrowers made up roughly 90% of all refis during that period, ICE noted.

The average cash-out borrower looking to refinance had a balance of about $165,000 in August, well down from where it’s been over the past couple of years, Andy Walden, ICE’s vice president of enterprise research, said in an interview.

“They (cash-out refi borrowers) are not not giving up a record low interest rate on a significantly large balance, so they’re okay and are willing to give up that low rate that they have right now. About $100,000 on average is what they’ve been borrowing in recent months. They can get that equity withdrawal at a slightly better interest rate than what you could withdraw equity on a HELOC,” said Walden.

Cash-out refis are not a fit for every borrower.

There are alternative ways to tap into home equity without doing a cash-out refi. Home equity loans and HELOCs allow the borrower to borrow against the home equity without having to give up the existing mortgage. They are second mortgages, which means borrowers take them out in addition to their current mortgage.

The cash-out refi option works best for low credit score borrowers with at least 20% equity in the home to qualify, said John Ortega, a loan originator at Mutual of Omaha Mortgage .

Generally, borrowers need a debt-to-income (DTI) ratio of 40% to 50% or less and could qualify for a cash-out refi with a credit score of 620. Credit scores for FHA loan borrowers could go down even lower.

Some borrowers are handcuffed from negotiating a HELOC — the product typically requires a higher credit score — or other type of secondary lending, and are often left with no other option but to refinance.

For the clients that choose to get a cash-out refinance mortgage, Ortega shows how much they could save per month and potentially put the extra cash into paying off the mortgage sooner.

“When you start to do the consolidation of all this debt, their credit scores will improve rather quickly and put them in a much better position for the future. That’s what it’s really about, it’s not living in the right now. It’s living in what’s going to happen down the road,” Ortega said.

The cash-out refi market is still tiny relative to purchase lending, but every opportunity to help a client is precious.

“It’s a tough gig. A lot of borrowers are reluctant to give up their low mortgage rates,” Ortega said. “But if I can free up their cash flow, the mortgage rate is higher but they have extra money to work with, put it back to the mortgage and get out of debt sooner.”

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You can't make this stuff up - Mortgage story

didier@ddamortgage.com (Didier Malagies) — Tue, 24 Oct 2023 13:11:49 GMT

Beautiful loan, 800 credit scores, 38 years on the job, huge 401k, everything going on

1 week before closing - the lender denies the loan because the listing agent is blackballed from ever going there.

This is for real, I had to flip the loan to another lender and relock interest rates. close in 6 business days, go and do photos of the home, meet the borrower on several occasions to get additional documents from a different underwriter, and finally close. listen in for 5 minutes and wrap your head around this one

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Emergency savings shortages contribute to poor retirement security: Fidelity

didier@ddamortgage.com (Didier Malagies) — Fri, 20 Oct 2023 14:59:20 GMT

With many Americans pinched by stubbornly high inflation in the economy, more Americans are turning to early withdrawals from retirement accounts to make ends meet — which could have consequences by the time retirement actually comes.

This is according to a study by Fidelity Investments .

“The percentage of plan participants taking an early withdrawal from a retirement plan has increased over the past five years,” the study found. “While 2020 was a unique year, as participants sought penalty-free distributions allowed under the CARES Act, since then, in-service distributions, plan loans, and hardship withdrawals are all on the rise. In fact, more than three times as many participants took a hardship withdrawal in 2023 than did in 2018.”

The fact that such withdrawals are increasing absent the penalty-free option granted by COVID-19 relief legislation punctuates the pressure felt by U.S. workers in these inflation-fueled times, the report explained.

This reality presents challenging implications for the U.S. retirement system, which was recently ranked at about the middle of the road in a global analysis of international retirement systems.

“Unexpected expenses can derail budgets, short-term financial goals, and even saving for retirement if employees don’t have savings available,” the report stated. “In fact, employees who lack emergency savings are more likely to withdraw money from their retirement accounts (e.g. 401K) to cover expenses, as it may be the only source of savings they have.”

While the report makes mention of challenges people may have with emergency expenses of $1,000, the Consumer Financial Protection Bureau (CFPB) has largely been focused on a much smaller figure: $400. In 2019, the Bureau launched a new initiative called “Start Small, Save Up” designed to better prepare Americans for the endurance of unexpected expenses via an emergency fund, as well as the necessity of saving money for the future.

But Fidelity says that employers should encourage their workers to establish an emergency fund of $1,000.

“Not all employees are in a position to accumulate emergency savings,” the study said. “Employees should start with establishing a monthly or weekly savings goal and avoid accumulating high-interest debt.”

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What you need to know about Condos when getting a mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 16 Oct 2023 12:53:34 GMT

Putting down 25% on a primary and 30% down on second and Investment properties is called a limited review. When you put less down then there is a full review if the project is not already approved.

You need to see the approved budget. if the reserves are less than 10%, no deal

also reviewed the insurance policy and the sinkhole coverage was 10% when it needs to be 5%. It is important to do your homework before paying for home inspections and appraisals, the condo review team really does its job in the end, and better to be prepared beforehand. If you need me to review your budget let me know

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23 million young adults are still living a thome

didier@ddamortgage.com (Didier Malagies) — Mon, 09 Oct 2023 14:08:55 GMT

45% of young adults are still living at home. 23 million is the number today.

Everything changed, in 2020/21 it was all cash buyers or conventional. 2023 FHA and VA are back in and the seller is more negotiable to

paying closing costs.

The change from 2020 to 2023 is higher rates and no inventory.

Now what will happen in 2024? Everything in life is a snapshot in time. Changes happen, there is a spring, summer, fall, and winter, and the tied comes in and goes out.

What is today will be different tomorrow rates will come down again and these young adults will have the opportunity to own

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22% of Americans didn’t contribute to retirement savings in past year:

didier@ddamortgage.com (Didier Malagies) — Tue, 03 Oct 2023 13:18:42 GMT

Nearly a quarter of American workers haven’t contributed anything to their retirement accounts over the past year, according to a recent Bankrate survey .

“Twenty-two percent of American workers said they weren’t making retirement contributions in 2023 or 2022,” the survey found.

Additionally, 25% of survey respondents say they’ve put more into retirement savings since August 2022; 36% say their contributions remain the same; and 17% are contributing less.

Millennials are more likely to report that they contributed more to their retirement accounts over the past year (31%), while only 18% of baby boomers responded similarly.

More than half of respondents (56%) felt they were behind where they should be when it comes to meeting their retirement savings goals, with 37% of respondents saying they are “significantly” behind.

“Retirement savings goals seem to be slipping through Americans’ fingers,” said Bankrate Senior Economic Analyst Mark Hamrick. “Armed with information and financial resources, they can turn this around and gain a firmer grasp.”

While inflation is a likely culprit depressing the savings activity of many, its grip is loosening since wage growth is outpacing the rate of inflation, Hamrick added.

“At the same time, the job market remains tight, and the unemployment rate is still historically low, providing ample opportunity for income,” he said. “Not tomorrow, but now, is the time to prioritize retirement savings for those who are employed or expect to be soon working.”

While financial experts have long cited having at least $1 million as a benchmark for a comfortable retirement, 32% of survey respondents said they need more than that to achieve adequate retirement savings.

Beyond that, one-quarter (25%) of respondents also revealed that they don’t know how much they need to save for a “comfortable” retirement, the survey revealed.

“Baby boomer workers, who are either close to retirement age or are already old enough to retire, are the most likely generation to not know how much they need to retire,” the results showed.

Twenty-nine percent of baby boomers responded as such, compared with 25% of Gen X workers, 24% of millennials and 22% of Gen Zers.

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What income/debt ratios on Conventional, FHA and VA

didier@ddamortgage.com (Didier Malagies) — Mon, 02 Oct 2023 13:07:25 GMT

Conventional will allow up to 50% income-debt ratio, FHA is up to 55% and Va has gotten approvals for up to 59.5% income/debt ratio.

you take the monthly mortgage payments, plus car payments, student loan payment and credit card payments and divide that into your gross monthly income.

Conventional allows up to 50%, FHA up to 55%, and Va can get approvals up to 59%

Every loan is run through Du/LP and that is the decision maker based on all the variables of income, credit, funds available, etc,

Conventional and FHA are at about the same payment if you are putting down the min down payment for each.

Good information to have when purchasing a home

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Just 1 in 10 seniors investigate reverse mortgages if they cannot afford senior care

didier@ddamortgage.com (Didier Malagies) — Mon, 25 Sep 2023 22:42:41 GMT

n a study conducted with a sample of 1,000 older adults across all 50 states, only 11% of respondents revealed that they would actively investigate reverse mortgage product options if it became clear that their assets and savings would not be enough to cover later life care. Nearly 50% of respondents also said they were not financially prepared for such costs after retirement.

The study , conducted by caregiver supply marketplace Carewell, showed that tapping home equity through a reverse mortgage to cover such care costs are generally far down the list of considerations.

According to the study, the leading consideration is the use of Medicaid or other government-sponsored assistance at 57%; looking for senior assistance programs (48%); relying on family or friends for assistance (43%); selling a home or property (41%); or moving to a more affordable area (40%).

While having a slight advantage over reverse mortgages, seeking out long-term care insurance saw only a marginally higher response rate (15%); followed by exploring senior housing or alternative caregiving arrangements (23%); and selling off assets or belongings (36%).

In terms of seniors’ reported top fears regarding the financial aspects of senior care, the dominant fear for 64% of respondents is having insufficient retirement savings to cover care needs. That fear only slightly edged out the fears related to the high costs of medical and long-term care (63%); followed by fear of outliving existing financial resources (43%); and becoming a burden on loved ones (36%).

The study determined that the most expensive states for senior care are Alaska and Massachusetts, respectively. The cost of living in Alaska is roughly 30% higher than the U.S. national average, but “the state’s average income to cost of care ratio was the worst in the nation, emphasizing the challenges seniors and their families face in affording necessary care,” the study results said.

Massachusetts and Maine were the second and third most expensive states based on income-to-cost ratio rankings, while the least expensive states for senior care are Alabama and Texas due to the “abundant care options and comparatively lower costs” found in those states.

The study’s methodology was to collect state-level cost data for six varying types of senior care, along with 2021 median income data for people aged 65 and over, and combine that with cost of living data.

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With Rates in the 7% range does it make sense to purchase or refinance?

didier@ddamortgage.com (Didier Malagies) — Mon, 25 Sep 2023 14:47:33 GMT

Yes, rates are in the 7% range, does it make sense to purchase or refinance?

Purchase - are you comfortable with the payment? the probability is that you will be able to refinance down the road

on a Refinance - does it make sense to pay off credit cards, student loans, car and save money?

Does it make sense to get a Hecm to help supplement income yes it does if you are on a fixed budget and we continue to have prices go up.

It is about having a home to live in that is affordable or a refinance to help consolidate debt.

This is just a snapshot in time, and we will have opportunities down the road to refinance again and save lots of money

so the answer is yes on purchasing or refinancing if you are comfortable with the payment for now,

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Survey finds nearly 25% of adults have no retirement plan besides Social Security

didier@ddamortgage.com (Didier Malagies) — Tue, 19 Sep 2023 13:08:44 GMT

A survey of over 1,000 U.S. adults conducted by GOBankingRates found that if not for the presence of the Social Security program, nearly one in four adults would not have any retirement plan at all.

“While nearly as many people could leave their benefits on the table and still retire in style, 50% of the population will need their monthly check to cover more than half or even all their expenses after they stop working,” the results of the survey explained.

Specifically, 23% of respondents plan to rely exclusively on their Social Security benefit payments, while 28% expect those benefits to cover more than half of their spending in later life. Another 28% of respondents added they expect Social Security to cover “less than half” of their retirement spending, a generally more realistic expectation. One in five respondents said they will not rely on Social Security at all.

“The Social Security Administration (SSA) reports that benefits account for a healthy 30% of recipient income overall,” the results said. “But 37% of men and 42% of women count on their monthly checks for half their income or more, representing a dangerous overreliance on benefits.”

The new year is fast approaching, and 2024 could prove to be pivotal in the wider American retirement ecosystem. According to data from the U.S. Census Bureau, the U.S. will reach “peak 65” next year . Roughly 4.4 million Americans will reach the age of 65 in 2024 — a figure that comes out to roughly 12,000 people per day.

By 2030, all members of the baby boomer generation will have reached the age of 65, which also means that by the beginning of 2028, the entire generation’s homeowners in the U.S. will qualify for a Home Equity Conversion Mortgage (HECM).

Too much reliance on Social Security presents a problem absent legislative action to shore up the diminishing Social Security Trust Fund.

“This year, trustees for Social Security and Medicare calculate that Social Security will be able to pay 100% of scheduled benefits until 2033,” said columnist Anne Stanley in a recent column examining the aging of America’s population. “Without additional funding, benefits would fall after that. The Hospital Insurance Trust Fund, the main fund for Medicare, is expected to pay 100% of benefits until 2031.”

Disagreements over how to continue funding Social Security are one of the many issues that lawmakers disagree about. Questions about top-line U.S. government spending — which includes entitlement programs like Social Security — are one of the issues that could potentially lead to a government shutdown either at the end of September or, if a continuing resolution (CR) is passed, by the end of the year.

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Is it time to supplement your retirement income with a Hecm

didier@ddamortgage.com (Didier Malagies) — Mon, 18 Sep 2023 14:01:00 GMT

Whether or not a Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a good idea depends on your specific financial situation, goals, and needs. Here are some factors to consider when determining if a reverse mortgage is suitable for you:

Age and Eligibility:

HECMs are typically available to individuals aged 62 and older who own their home outright or have a low mortgage balance. The older you are, the more funds you can potentially receive from the reverse mortgage.

Financial Needs and Goals:

Evaluate your financial needs and goals. Are you looking to supplement your income, cover healthcare costs, or fund home improvements? A reverse mortgage can provide a lump sum, monthly payments, or a line of credit to meet these needs.

Homeownership Plans:

Consider how long you plan to stay in your home. If you plan to move in the near future, a reverse mortgage may not be the best option as the loan becomes due when you no longer live in the home.

Costs and Fees:

Be aware of the costs associated with a reverse mortgage, including origination fees, mortgage insurance premiums, closing costs, and interest. These costs can impact the overall value of the loan.

Impact on Heirs:

Understand how a reverse mortgage may affect your heirs' ability to inherit or keep the home. The loan balance becomes due upon the borrower's death, and the heirs may need to repay the loan or sell the home to settle the debt.

Alternative Options:

Explore other financial alternatives, such as downsizing, selling your home, or exploring traditional loan options, to determine if they better suit your needs and financial goals.

Counseling:

It is a requirement to undergo counseling with a HUD-approved counselor before obtaining a reverse mortgage. The counselor can help you understand the terms, costs, and implications of a reverse mortgage.

Financial Stability:

Consider your overall financial stability and ability to meet ongoing obligations, including property taxes, homeowners insurance, and home maintenance.

It's crucial to carefully weigh the pros and cons, seek advice from financial professionals, and thoroughly understand the terms and conditions of a reverse mortgage before making a decision. Consulting with a financial advisor or housing counselor who specializes in reverse mortgages can provide valuable insights and guidance based on your specific circumstances.

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Why tapping home equity should be considered for retirement planning:

didier@ddamortgage.com (Didier Malagies) — Tue, 12 Sep 2023 19:05:06 GMT

Tapping home equity as a component of retirement planning — by either downsizing or using a reverse mortgage — has a generally bad reputation, but that should not be the case. This is according to retirement columnist Mark Miller in a new piece published by Morningstar .

“Half of all households face the risk of a declining standard of living in retirement owing to inadequate savings, the decline of traditional pensions, and lower Social Security replacement rates,” Miller wrote. “But the majority of older Americans are homeowners—and most of these households have more home equity than financial assets.”

Miller acknowledges the role that reverse mortgages play in the predominant reputation. While reverse mortgages can have their benefits, there are other alternative options for home equity tapping that are not as widely discussed, he said.

“Households with inadequate savings stand to benefit most from tapping housing wealth, but everyone faces longevity risk—that is, the risk that you’ll outlive your savings and potentially need to lower your standard of living late in life,” he said. “Longevity risk has been a hot topic lately in the wake of the recent bout of high inflation. But inflation is always a risk to the long haul of a retirement plan.”

Housing wealth can generally serve as a hedge against inflation, especially in housing markets where values have risen and are likely to continue to rise in the months ahead. It can also assist in funding long-term care, an increasingly costly proposition for any older person not prepared to weather such costs.

With that, Miller lays out two potential options for leveraging home equity: the first is to sell the property and move — generally the most widely-used option — but the idea of borrowing against your home should not be dismissed out of hand if the occupant of a particular home does not want to move out.

“If you don’t want to move, another option is to borrow against your home equity,” he said. “Conventional mortgages and home equity lines of credit are one possibility, but the amounts you borrow must be repaid with regular monthly payments. That brings us to the reverse mortgage loan.”

Home Equity Conversion Mortgage (HECM) products are “not very popular with retirees,” Miller said, an assertion based on HECM volume data indicating just 64,437 in FY 2022. Miller also mentions his own misgivings about reverse mortgages.

“As a financial product, I don’t love reverse mortgages,” he said. “In a more perfect world, we would support the income needs of seniors through higher Social Security benefits and lower healthcare costs. Reverse loans can be difficult to understand, and they do come with high fees and some risks that have generated a lot of deserved bad press over the years.”

But like other product observers have noted, the evolving regulatory landscape governing the HECM program in particular has helped to ease some of those concerns, he said.

“Federal regulation of reverse loans has been tightened in recent years to reduce these risks,” he wrote. “And if you just don’t want to move out of your home and need the income, it is possible to use a reverse loan safely.”

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What changes are going on with FHA

didier@ddamortgage.com (Didier Malagies) — Mon, 11 Sep 2023 14:43:57 GMT

When a borrower is turned down by FHA, a warning flag goes out and stays in the connection for 6 months as well as the appraisal. FHA is now waiving that where it will not be put into the FHA Connection so the next Lender will not know. I feel it is important for them to know and to explain what you did differently to get the loan in the status of being approved. The other lender should know if there was a problem the first go around and then it gives you the opportunity as the second lender to show what changes you made to make it into an approvable FHA loan. The appraisal still stays with the home for 6 months regardless of who purchases the home afterward

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With rates at a 22-year high, the $3,000 monthly mortgage payment becomes the norm

didier@ddamortgage.com (Didier Malagies) — Thu, 07 Sep 2023 18:54:19 GMT

In the face of spiking interest rates and historically high home prices , $3,000 monthly mortgage payments are common in today’s housing market.

According to Black Knight’s mortgage monitor report, the average principal and interest payment among borrowers purchasing a home using a 30-year fixed-rate loan hit its highest point ever in July at $2,306. That’s before taxes and insurance are factored in (an average of $550 a month). It’s up 60% over the past two years.

“Just two years ago, only 18% of homebuyers were facing that level of payment; as of the end of July that share had grown to 51%,” remarked Black Knight Vice President of enterprise research Andy Walden.

“Beyond that, nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief,” he added.

Beyond purchase affordability, rising interest rates prevent mortgage holders to tab into their home equity

In the second quarter of 2023, mortgage holders tapped $39B in equity through cash-out refis as well as home equity loans and lines of credit. It was up modestly from the first quarter of 2023 but just half the volume of the first quarter in 2022 ($79B), before rates began to rise.

Between 2010 and 2021, mortgage holders withdrew an average 0.92% of available tappable equity each quarter. That share fell to just 0.4% over the past three quarters, researchers found. Overall, it resulted in a roughly 55% decline in equity withdrawals

In other words, since rates began to climb in early 2022, nearly $200 billion in equity that might have otherwise been withdrawn and injected into the broader economy has remained untapped, according to Black Knight.

Tappable equity levels remain elevated, Walden noted.

HELOC rates have risen along with Fed rate hikes, with the average HELOC offering now above 8.5% for the first time in the 15+ years Black Knight has been tracking that data.

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Reverse mortgage lines of credit could benefit from higher rates: retirement expert

didier@ddamortgage.com (Didier Malagies) — Wed, 06 Sep 2023 15:53:12 GMT

Reverse mortgage borrowers who are taking advantage of the product’s standby line of credit feature could actually see a benefit from higher interest rates, since they often have a growth rate tied to interest rates in the case of the Home Equity Conversion Mortgage (HECM) this is according to Steve Resch, VP of retirement strategies at Finance of America Reverse (FAR) in a new column published by ThinkAdvisor.

The Federal Housing Administration (FHA) ties a growth rate to mortgage interest rates on HECM credit lines, Resch explained.

“With higher rates, the available line of credit grows faster,” Resch told the publication.

Steve Resch

This is a different result compared with clients who have other kinds of home equity loans, who are seeing available cash proceeds drop, Resch says. With a HECM, available cash that can be borrowed is increasing at a rate described as “faster than expected.”

“Say a client has $100,000 available in a line of credit with an interest rate of 3%,” Resch said. “Then, at the end of year one, using simple interest, the available line of credit would be $103,000. If the interest rates were 7%, the line of credit at the end of year one would be $107,000.”

Since interest rates used in the HECM program have increased from around 3% to around 7% since 2021, the growth rate for a reverse mortgage credit line is roughly four percentage points higher than a client may have originally expected, Resch pointed out.

This also helps solidify for Resch the importance of setting up a reverse mortgage credit line relatively early in the process.

“The formula for loan amounts is based on the age of the youngest borrower, the home value and current interest rates,” Resch told ThinkAdvisor. “While age is easy to calculate, we have no idea what home values will be like in 10 or 20 years, nor what interest rates will be. For a client who doesn’t need a reverse mortgage today, the growing line of credit option is great to put in place sooner rather than later, to allow the available line to compound over time.”

While the rate of growth is not itself an interest rate, it behaves similarly to one, Resch said.

“For example, a $100,000 line of credit, with a current interest rate of 7%, if not drawn, would grow to about $285,000 in 15 years, regardless of what has happened to the home value after the loan has been put in place,” he said.

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Should I consolidate my student loans into a refinance

didier@ddamortgage.com (Didier Malagies) — Tue, 05 Sep 2023 13:50:31 GMT

Advantages:

Lower Interest Rate: Mortgage interest rates are typically lower than the rates on unsecured student loans, especially if you have a good credit score and a favorable financial situation. Refinancing can lead to substantial interest savings over the life of your loans.
Tax Deductibility: In some cases, mortgage interest may be tax-deductible, whereas student loan interest deductions may have income limits. Consult a tax professional to determine your eligibility for these deductions.
Extended Repayment Term: Refinancing your student loans into your mortgage can potentially extend the repayment term, reducing your monthly payments. This can provide immediate relief to your budget.
Simplified Finances: Managing one monthly mortgage payment can be simpler than multiple student loan payments, making it easier to budget.

Risks and Considerations:

Secured Debt: When you consolidate student loans into your mortgage, you are essentially converting unsecured debt (student loans) into secured debt (your home). If you can't make your mortgage payments, your home is at risk of foreclosure.
Extended Repayment Term: While extending the loan term can lower monthly payments, it can also result in paying more interest over the life of the loan. Ensure you understand the long-term financial implications.
Loss of Federal Benefits: Federal student loans come with various protections, such as income-driven repayment plans, deferment, and forbearance options, which may be lost when you refinance them into a private mortgage.
Interest Rate Risks: If you refinance your student loans into a variable-rate mortgage, your interest rate may increase over time, potentially leading to higher overall costs.
Qualification Requirements: Mortgage refinancing may require meeting certain credit and income criteria. Ensure you qualify before pursuing this option.
Closing Costs: Refinancing typically involves closing costs, which can be several thousand dollars. Be prepared for these expenses.

Before consolidating student loans into a home refinance, carefully evaluate your financial situation, goals, and the terms of the mortgage. Consider working with a financial advisor to make an informed decision. It's essential to weigh the potential benefits against the risks and fully understand the long-term consequences of this financial move.

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Changing the retirement mindset can be a big hurdle, but a HECM might help

didier@ddamortgage.com (Didier Malagies) — Tue, 29 Aug 2023 13:13:46 GMT

In addition to the demonstrated aversion that many seniors appear to have toward tapping their home’s equity according to recent data , another major hurdle that may not be as often discussed is the need for a senior to change their whole mindset in retirement from being a money saver to a sustainable spender, according to Shelley Giordano, director of enterprise integration at Mutual of Omaha Mortgage .

Coming off of data she recently presented at the National Reverse Mortgage Lenders Association (NRMLA) Southern Regional Meeting in Austin last month, Giordano explores why there continues to be reticence among seniors for tapping home equity and said that cracking the code often requires empathy for the person who could be assisted with something like a reverse mortgage.

That empathy includes understanding the big ask of reorienting the person’s financial identity in retirement.

Going from a saver to a spender

Something that may not be discussed enough in terms of the borrower experience is the need to change a mindset from one of saving — where a person sees their retirement account balances climb over a period that could span decades — to one of sustainable spending, where the balances steadily decrease over time.

Shelley Giordano

“My brother is 18 months younger than me and he has a pension,” Giordano said. “When I ask him about retirement, he has zero stress. I have a 401K account, and so the idea of going from being a saver for the last 30 years and watching my accounts go up in value [during that whole time], and then day one retiring becoming a spender, it gives me angina, just the thought of it.”

There appears to be a belief in some that people will be “happy” making such a reorientation of their mindsets in later life, and Giordano just doesn’t see how that could be the case.

“I think that this idea that you’re going to save on your taxes when you’re employed and invest in your 401K, and then you’re going to reach retirement, and be in a lower tax bracket, that’s the whole point of the 401K,” Giordano said. “Then, [the assumption goes that] you pay taxes on a lower amount, maybe or maybe not, nobody knows. After that, you’re going to be happy spending down every month. People are not happy about doing that.”

A behavioral scientist explained to Giordano that becoming accustomed to rising account balances before they abruptly begin falling in retirement can be very disruptive to a person’s thinking.

Reverse mortgage as a hedge against the shock

There’s one potential way that industry professionals could potentially position the reverse mortgage value proposition, as going from a saver to a spender challenges seniors, Giordano said, based on the work done by academic financial planners like Wade Pfau and Barry Sacks.

“[They] recommend in retirement that you have your inflexible, non-discretionary expenses covered with [cash flow] that is coming in every month, no matter what it is,” Giordano explained. “So for most people, that will just be social security and maybe their [required minimum distributions], but you got that covered. And then after that, your retirement should be dynamic.”

Based on this work, if the economy has been favorable and the retiree has made money with their other assets, spending can be permissible. But if the retiree’s assets failed to make them money, then big discretionary purchases like a vacation or a car should be avoided.

“You have some control over your discretionary expenses,” Giordano said. “And that’s how a reverse mortgage can fit into that.”

If someone takes out a reverse mortgage, they can reduce their inflexible expenses by eliminating an existing forward mortgage payment, which in turn frees up more money for discretionary spending.

“Barry Sacks will actually go to the length of saying that the effect on your other assets of having access to cash flow and having more control makes the cost of setting up a reverse mortgage almost negligible,”

Giordano explained. “Because the effect on everything else can be so positive. That’s a different message than what we’ve used over the years, which is ‘if you’re desperate for cash flow, set up a reverse mortgage,’ and those might not be the best people for a reverse mortgage.”

Giordano said that the argument can be made that more people in the proverbial “middle” — who have other assets in need of protection — would be the ideal client for a reverse mortgage.

“But that’s a difficult message to get out there.

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Should I purchase or refinance with these higher rates

didier@ddamortgage.com (Didier Malagies) — Mon, 28 Aug 2023 13:13:15 GMT

Whether it makes sense to refinance or purchase with higher interest rates depends on several factors, including your individual financial situation and the specific terms of the loan or mortgage you're considering. Here are some factors to consider:

Current Interest Rates : If the interest rates are significantly higher than what is currently available in the market, it might not be the best time to refinance or make a purchase. However, if rates are only slightly higher, other factors might outweigh the impact of the interest rate.
Loan Term : Consider the length of the loan. If you're looking at a short-term loan, the impact of a higher interest rate might be less significant compared to a long-term loan.
Loan Amount : The amount of the loan also matters. A higher loan amount with a higher interest rate can result in significantly higher overall interest costs.
Monthly Payment : Even with a higher interest rate, if the monthly payment fits comfortably within your budget and financial goals, it might still be a reasonable option.
Other Financial Goals : If you have other financial goals, such as paying down high-interest debt or building an emergency fund, it might be wiser to prioritize those before refinancing or making a new purchase.
Credit Score : Your credit score plays a role in the interest rate you're offered. If your credit score has improved since you last borrowed, you might still get a competitive rate despite a slightly higher market rate.
Future Rate Predictions : Consider whether interest rates are expected to rise further in the future. If rates are expected to increase, locking in a slightly higher rate now might still be beneficial in the long run.
Closing Costs : When refinancing, consider the closing costs associated with the new loan. If the closing costs are substantial, they might offset the potential benefits of a lower interest rate.
Duration of Ownership : If you're purchasing a property, consider how long you plan to own it. If you're planning to sell or refinance again in the near future, the impact of the higher interest rate might be less significant.
Tax Implications : Depending on your location and the laws in your area, there might be tax benefits associated with mortgage interest payments. This could potentially mitigate the impact of a higher interest rate.
Market Conditions : Economic conditions and housing market trends can also influence the decision. If property values are expected to increase, it might make sense to proceed even with slightly higher rates.

It's important to run the numbers and consider all these factors before making a decision. You could use online calculators to estimate the total cost of the loan at different interest rates and terms. Additionally, consulting with a financial advisor or mortgage professional can provide personalized guidance based on your specific situation.

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Survey suggests reverse mortgage misconceptions remain rampant

didier@ddamortgage.com (Didier Malagies) — Thu, 24 Aug 2023 16:22:40 GMT

Nearly three-quarters (74%) of respondents in a Mutual of Omaha survey report that they have little or no knowledge about reverse mortgages, with others revealing misconceptions about how exactly they work.

The survey, conducted by the Mutual of Omaha insurance company and published by Mutual of Omaha Mortgage, recently served as the basis of a presentation at the National Reverse Mortgage Lenders Association (NRMLA) Southern Regional Meeting in Austin, Tex.

But some of the misconceptions cited in the report may be unexpected among industry professionals, even if many have likely been heard by educators and originators before. The survey was conducted with 400 respondents at or over the age of 60 between April 13-25, with respondents “asked to describe their current financial needs and to rate their knowledge of reverse mortgages,” the results said of the methodology.

“Those who said they had knowledge of reverse mortgages were asked what having a reverse mortgage would mean to them and what need would be best met by having a reverse mortgage.”

People just don’t know about the product

Education has been a longstanding priority of the reverse mortgage industry, and the survey data reveals that the industry still has a long way to go when it comes to keeping people informed about the product category. Beyond that, only 2% of respondents reported that they actually had an active reverse mortgage, a figure that roughly mirrors the product category’s adoption rate in comparison to the forward mortgage market.

The mechanics of the loan are also not well-understood, the results revealed.

“Forty percent wrongly believe taking out a reverse mortgage would mean their heirs won’t inherit their home, and 22% wrongly believe they would no longer own their homes,” they said.

The Home Equity Conversion Mortgage (HECM) program has come a long way since it was passed by the 100th U.S. Congress and signed into law by President Ronald Reagan. A steady stream of product safeguards and consumer protections have been rolled out on a regular basis during that time, with many such rules passed via Mortgagee Letter slated to be codified in an upcoming revision to HUD’s Single Family 4000.1 Handbook.

Still, respondents were cautious in longer-form responses, the results said.

“I still believe reverse mortgages relieve homeowners of some of their rights,” one respondent explained. Another said that they didn’t like the idea that they could not “leave the house to heirs.”

Another had a wholly different conception of the loan’s repayment structure.

“Based on what I’ve heard, my monthly mortgage payments would be paid by someone else, I would continue to be able to live in the home. They would own the home if I died; the home would no longer be mine,” this respondent said.

The four persistent myths

The survey zeroed in on several prevailing myths that continue to persist about reverse mortgages, most of which should prove very familiar to reverse mortgage educators and loan originators in particular.

The most predominant one is that the “bank gets the house,” when in reality the heirs have the option of paying back the loan to keep the home or sell it to satisfy the debt. There is also a myth that heirs are “left with the debt,” but heirs remain free to sell the home to satisfy the loan, and pocket the remaining sale proceeds. A reverse mortgage debt cannot exceed 95% of the home’s value.

Another myth is that a borrower would have to “leave the home before [they’re] finished using it,” but it would take a maturity event — such as a borrower becoming delinquent on property taxes, homeowner’s insurance or maintenance of the property — to displace a borrower. Even then, the survey results point out there is a technical end date for the loan.

“[T]echnically a reverse mortgage has an end date — the 150th birthday of the youngest borrower. So, it’s doubtful anyone will ever have to worry about this being a factor,” the survey said.

There is also a myth about monthly payments on a reverse mortgage being required, a curious misconception considering that many reverse mortgage advertising campaigns — even ones that in the past have garnered regulatory scrutiny — have made a lack of required monthly payments a centerpiece of the pitch.

“Unlike a traditional mortgage, a reverse mortgage doesn’t require any monthly payments, which means the house will not by foreclosed on due to missed payments,” the survey results said. “The only requirements for the homeowner are to pay the taxes, insurance and HOA fees and to maintain the condition of the property, just like any mortgage.”

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What happens after you close on your mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 21 Aug 2023 13:06:58 GMT

you get a month off of not making a mortgage payment, close in August your first payment is October

File for your homestead in the weeks after closing

Do you have portability, did you own a home and sold to buy a new one?

set up to do your mortgage payments online

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Generation X retirement prospects challenged by student loan debt

didier@ddamortgage.com (Didier Malagies) — Mon, 21 Aug 2023 12:40:04 GMT

The oldest members of Generation X — the cohort most experts define as having been born between 1965 and 1980 — will soon be confronted with financial challenges that could have notable impact on their ability to save for retirement: the resumption of student loan payments. As pandemic-era interest and payment relief is set to expire this coming fall, which makes future planning more challenging, according to a report from the New York Times.

“As of the first quarter of this year, members of Generation X held about a quarter of the nation’s outstanding $1.6 trillion in student loan debt — to the tune of nearly $49,000 per borrower, according to TransUnion, the credit reporting bureau,” the Times reported.

The challenges are far from isolated to individual members of Gen X, according to experts interviewed by the Times.

“In general, we’ve seen clients focusing more on savings and not focusing on those student loans, ”said Trent Graham, a financial counselor at GreenPath Financial Wellness to the Times. “They really didn’t have a plan to address those student loans.”

Graham described that many Gen X student loan borrowers were “surprised” by how much the debt could grow, as such loans have generally continued to accrue interest even when placed in forbearance or deferment, though deferment of subsidized loans do not accrue additional interest as noted by the Times. However, pandemic-era pauses also paused interest accruals — an unusually high level of relief for such loans — in addition to suspending required monthly payments.

A big impact of student loan debt is that borrowers of such loans are less likely to save anything for retirement, according to Matt Rutledge, an associate professor of the practice of economics at Boston College.

“It’s the presence of any loan at all; if you have a loan, you probably think of yourself as not having the bandwidth to think about retirement yet,” he said, noting that 65 million members of Generation X will see an outsized impact even as they reach the peak of their earnings potential.

“For people who have been carrying these loans for multiple decades, they probably didn’t save much to begin with, so you really are taking away some of their best saving years,” Rutledge added.

Generation X is already very debt-burdened. According to data from LendingTree cited by the Times, the Generation X cohort has the most debt in terms of both mortgage and non-mortgage obligations, averaging to a level of roughly $167,000 per borrower.

The oldest members of Generation X will all turn 58 by the end of 2023. This means that the cohort is five years away from qualifying for a Home Equity Conversion Mortgage (HECM), but certain older members of the generation already qualify for certain proprietary reverse mortgage loans with a minimum qualifying age of 55.

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About 12,000 people per day will turn 65 in 2024, but many retirees aren’t ready

didier@ddamortgage.com (Didier Malagies) — Thu, 17 Aug 2023 13:35:21 GMT

The reverse mortgage industry has long discussed the demographic trends that are on its side when it comes to appealing to new potential borrowers, and next year could stand as a proving ground for such an argument.

According to population projections by the U.S. Census Bureau, 4.4 million Americans will reach the age of 65 in 2024 — a figure that comes out to roughly 12,000 people per day. By 2030, all members of the baby boomer generation will have reached the age of 65, which also means that by the beginning of 2028, the entire generation’s homeowners in the U.S. will qualify for a Home Equity Conversion Mortgage (HECM).

The trend is called “peak 65,” and the “graying” of the U.S. population will have notable impacts on the U.S. economy. But as life expectancies have largely improved over the past century, longevity risk also becomes an issue that U.S. retirees will need to keep in mind according to financial news editor Anne Stanley in a new column at Investor’s Business Daily.

“Retirement for boomers is different than it was for their parents in the so-called Silent Generation. Life expectancy has improved, and today’s 65-year-old can expect to live at least another 20 years,” the column says. “About 80% of households with older adults — or 47 million such households — are struggling today with money. And they risk falling into economic insecurity as they age, the National Council on Aging says.”

The longstanding retirement paradigm is ill-equipped to handle these new realities according to Jason Fichtner, chief economist at the Bipartisan Policy Center.

“With the U.S. experiencing the greatest retirement surge in its history, the country’s public and private-sector retirement systems have become obsolete,” Fichtner told Investor’s Business Daily. “The old metaphor of the three-legged stool of retirement planning — employer pensions, personal savings and Social Security — no longer holds.”

While there are challenges, there are also new opportunities, the column points out. Where 65 was at one time considered an “absolute” retirement age, that idea no longer applies as older workers — either through a desire or necessity — are working for longer periods of time.

But traditional retirement principles also need to evolve, Stanley says, due to the well-documented solvency issues with the U.S. Social Security system.

“This year, trustees for Social Security and Medicare calculate that Social Security will be able to pay 100% of scheduled benefits until 2033,” the column said. “Without additional funding, benefits would fall after that. The Hospital Insurance Trust Fund, the main fund for Medicare, is expected to pay 100% of benefits until 2031.”

There are a number of potential strategies that retirees can employ to react to the modern retirement landscape, the column says, including the incorporation of annuities and a greater role for investment activity. Taking recent changes to tax laws can also have a beneficial effect on a retirement plan.

But, as many in the reverse mortgage industry would say, consideration of home equity could make a difference in retirement for certain people, as well, especially when considering the high levels of housing wealth maintained by baby boomers.

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More Americans are taking money out of retirement accounts early

didier@ddamortgage.com (Didier Malagies) — Tue, 15 Aug 2023 15:13:29 GMT

As Americans grapple with the persistence of historic inflation, people increasingly turn to their retirement accounts — mostly 401K accounts — to make ends meet.

According to a survey conducted by Bank of America, the rates of both borrowing from 401K accounts and so-called “hardship withdrawals” have increased notably in the second quarter of 2023. The rate of plan participants borrowing from their accounts has increased from 1.9% to 2.5%, while hardship withdrawals inched up commensurately from 0.4% to 0.52% from Q4 2022.

“These key metrics, in part, signal participant confidence and sentiment,” BofA said alongside the results. “Notably, more participants took loans and hardship distributions compared to last quarter, and compared to this time last year, although average amounts taken per participant were fairly consistent. At the same time, average contribution amounts declined compared to last quarter.”

Hardship withdrawals saw the starkest spike. In Q2, 15,950 participants took such a withdrawal, a 12% increase over totals seen in Q1 and a 36% increase year over year. The average hardship amount in Q2 stood at $5,050, relatively flat compared to Q1 but slightly reduced from the $5,400 figure seen in Q2 2022.

Still, there were also positive developments. The number of participants with a loan in default decreased, and plan contributions continue to inch upward. Health savings contributions from such accounts also increased in Q2.

Average account balances have also risen, from $75,050 at the end of 2022 to $82,300 at the end of Q2 2023. In Q2, more participants increased their plan contribution rates, with participants seeing a 10.2% increase versus a 2.2% decrease. This was primarily led by members of the millennial generation and Generation Z.

The report is sourced from BofA’s internal monitoring of its retirement plan participants’ behavior in its recordkeeping of clients’ employee benefits programs, according to the company. This comprises more than four million total participants with positive account balances as of the end of June, 2023.

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Is it time for your kids in their 20's living at home to prepare for their own

didier@ddamortgage.com (Didier Malagies) — Tue, 15 Aug 2023 14:10:16 GMT

Financial Stability : Before purchasing a home, it's important for your kids to have a stable source of income and a good credit score. They should also have a handle on their existing debts and expenses.
Long-Term Plans : Are your kids planning to settle in the area for an extended period? Buying a home can make more sense if they intend to stay in the same location for several years. If they're uncertain about their future plans, renting might be a better option.
Market Conditions : The state of the real estate market plays a significant role. If property prices are high and interest rates are also high, it might be more challenging to find an affordable option. In a buyer's market, where prices are lower and there's less competition, it could be a more favorable time to buy.
Down Payment and Closing Costs : Your kids will need to save for a down payment, which typically ranges from 3% to 20% of the home's purchase price. They should also consider closing costs, which can add several thousand dollars to the total cost of the home.
Monthly Expenses : Owning a home comes with additional costs beyond the mortgage payment, such as property taxes, homeowner's insurance, utilities, and maintenance. It's important to budget for these expenses.
Investment vs. Renting : Buying a home can be seen as an investment, as it offers the potential for appreciation over time. However, it also comes with responsibilities and costs. Renting provides more flexibility and less financial commitment.
Job Stability : If your kids are early in their careers, they might want to consider their job stability. Buying a home ties them to a specific location, which could be problematic if they need to relocate for work.
Debt Management : If your kids have significant student loan debt or other debts, it might be wise to focus on paying down those debts before taking on a mortgage.
Personal Readiness : Being a homeowner requires a level of responsibility and commitment. Your kids should assess if they're ready for the maintenance, repairs, and overall responsibilities that come with owning a home.
Financial Planning : It's important for your kids to consult with financial advisors and real estate professionals to assess their readiness and explore available options.

Ultimately, the decision to buy a home should be based on careful consideration of all these factors. There's no universal "right" time to buy a home—it's a personal decision that should align with your kids' individual circumstances, goals, and financial capabilities

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How there could be unforeseen ‘pitfalls’ in retirement downsizing

didier@ddamortgage.com (Didier Malagies) — Tue, 08 Aug 2023 20:37:18 GMT

Older homeowners who have larger homes may see downsizing into a smaller, more manageable home as a viable path to greater comfort, and potentially even partial financing of life in retirement. However, downsizing is not always smooth sailing for retirees when considering inflated housing costs, fees associated with moving and storage, mortgage rates and even the emotional toll such a move could take.

This is according to a new column by syndicated financial columnist Andrew Lisa in GOBankingRates, and distributed by Yahoo Finance.

One of the reasons that downsizing could be burdensome is due to the explosion of home price appreciation over the past several years, and exacerbated by the COVID-19 coronavirus pandemic. While an appreciation rate of 5-6% per year was considered “normal,” the column said, the pandemic created a new, more expensive normal for home prices.

“According to Freddie Mac, prices rose by 11.3% in 2020, 17.8% in 2021 and 6.7% in 2022,” the column said. “It’s good to sell when prices are high, but retirees looking to downsize will then have to buy in an under-inventoried housing market with a median sale price of $416,100, according to the St. Louis Fed.”

Mortgage rates also factor into the affordability and feasibility of downsizing, with rates hovering around levels that have not previously been seen since 2002, the column explained. On top of that, the new level of home prices could also come with a burdensome tax bill.

“Profits of up to $250,000 for individuals and $500,000 for joint filers are exempt from capital gains taxes,” the column said. “Those are fairly easy thresholds to meet in a normal housing market, but today’s downsizers are selling near the market’s peak, and if they breach those limits, they could owe as much as 20% on the profit.”

Beyond that are the fees associated with entering and completing a real estate transaction, which Rocket Homes previously estimated to be around 10% of the home’s sale price. With today’s median sale price of $416,100, that comes out to more than $40,000 just in transaction costs for the seller.

Moving and storage costs can also be burdensome, but the column also encourages consideration of the emotional costs of selling a home, especially if the potential seller has a significant emotional attachment to the property.

Specifically for seniors, many have seen their home values rise significantly in the past few years. According to data from the National Reverse Mortgage Lenders Association (NRMLA) and data analytics firm RiskSpan, senior-held home equity levels stand at $11.62 trillion as of the end of Q1 2023.

While those levels have fallen over the past two quarters, senior-held home equity and home price appreciation have seen historic gains in recent years. The same senior-held equity measurement in 2011 stood at roughly $3 trillion , while ten years later it topped $10 trillion for the first time.

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Learn about the new technology when processing your mortgage

didier@ddamortgage.com (Didier Malagies) — Mon, 07 Aug 2023 13:37:28 GMT

We use a system called Arive, it will update the realtors and the borrower on status of file from beginning to end so you always know where you are at automatically. When we take a loan , within days it is submitted to underwriting, no time at all and we du/lp approve loans that day we get the contract so we know where we stand from day 1. I also attend my closings to make sure all is done and enjoy being with you at the end.

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When an older client is rejected for a mortgage, seek alternatives: financial planner

didier@ddamortgage.com (Didier Malagies) — Fri, 04 Aug 2023 14:14:50 GMT

Research suggests that older clients seeking mortgage financing are rejected for loans at higher levels than their younger counterparts, which could be due to several different factors including mortality risk, the appraisal of a current home and a lack of employment income. This is according to Adam Van Deusen, a certified financial planner in a new column at The Street.

Citing studies from institutions including the Federal Reserve Bank of Philadelphia and the Urban Institute , “applicants for all types of mortgages found a rejection rate of 18.7% for those aged 75 or older in 2020, compared to 15.4% for those between 65 and 74 and 12.1% for those younger than 65,” he said.

This is despite the fact that on average, older Americans have higher levels of wealth than their younger counterparts. But lenders could be looking beyond current asset levels when making an approval decision, he explained.

“To start, the Fed study found that more than half of the rejections of older applicants were due to ‘insufficient collateral,’ perhaps because lenders appraised the homes for less than the applicants had thought,” he wrote.

A perception of higher mortality risk could also be playing a role in a decision to deny a loan, he said.

“[T]he death of the borrower could lead to the loan being paid off early (a form of reinvestment risk for the lender, as in the case of borrower’s death, the lender might not be able to re-lend the proceeds at a similar or higher rate), or the property could end up in foreclosure, which could cost the bank legal fees to recover (at least a portion of) the amount left on the mortgage,” Van Deusen wrote.

Lenders may also look sideways at an applicant’s income if it does not come from traditional sources, like a paycheck.

“[A] retiree might find that their lack of regular income from employment could reduce the chances of being approved for a loan (as lenders prefer to see regular income from a job, even if the borrower has wealth in retirement accounts that could also be used to repay the loan),” he wrote. “And, in the current elevated interest rate environment that has raised the cost of borrowing (and the income needed to support payments), older borrowers might find it even harder to be approved for mortgages.”

One way that financial advisors can help senior borrowers get over these potential hurdles is by suggesting loan products most appropriate for a client’s needs, which could include a reverse mortgage, Van Deusen wrote.

“[F]or retired clients, this could mean creating ‘new’ sources of income (e.g., by starting regular distributions from retirement accounts), paying down other debt to reduce their debt-to-income ratio or — for those with home equity — considering a reverse mortgage if a traditional cash-out refinance isn’t viable,” he said.

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Is your loan not going anywhere in the process, maybe time to get a second opinion

didier@ddamortgage.com (Didier Malagies) — Tue, 01 Aug 2023 13:20:48 GMT

Are you in underwriting and no one is getting back to you on the status of your loan? Do they keep asking you for more information and nothing seems to be moving forward? Maybe it is time to get a second opinion on your status. I am closing on a loan today where the borrower originally went to their bank and 2 months later nothing happened.

We closed them in 30 days after assessing the situation. The loan they applied for was never going to get approved. We switched loan programs and paid off debt to qualify.

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Inflation’s ‘scars’ ravage retirement expectations: report

didier@ddamortgage.com (Didier Malagies) — Thu, 27 Jul 2023 23:26:45 GMT

The ravages of high inflation are scarring the retirement perceptions of Americans across the country, as high living costs are pushing the expectations for both current earnings and the expected level of needed retirement savings to new levels, according to reporting at CNBC.

According to a recent survey by Bankrate conducted in June with 2,500 adults, Americans say they would need to earn $233,000 on average, but in order to feel “rich” they need to be earning as much as $483,000 per year on average.

For retirement savings, a recent survey from Northwestern Mutual shows that Americans think they need to have as much as $1.27 million in the bank to retire comfortably, an increase from $1.25 million recorded just one year prior. That survey featured a respondent pool of 2,700 adults.

“Inflation is the main reason why Americans feel like they need to earn so much more than they already are just to feel comfortable,” said Sarah Foster, analyst at Bankrate to CNBC.

The higher levels of inflation are naturally fueling the expectation that prices will grow more exorbitant in the future, Foster said, which she attributes to the “scars high inflation may leave on their wallets,” according to the reporting.

To keep the expectations and realities of retirement grounded, there are two general tips that Foster shares: take “small steps” and keep investment activity consistent, and live within your means.

Other recent Bankrate research found that the number one regret expressed in the realm of finance is not saving enough for retirement.

“[T]aking time out of the market may result in substantial losses, according to Foster, who found investors in their 20s who take a three-year break from investing may lose almost $200,000 in earnings, assuming $200 per month in contributions and an 8% annual return,” CNBC’s report said.

Foster’s advice is to simply not give up, even if the act of saving for retirement is strenuous.

“Take small steps, and don’t put so much pressure on yourself to max out your 401K,” Foster told CNBC.

As someone’s income may go up, it may be tempting to increase spending, but this is an urge that should be avoided according to Alap Patel, a Chicago-based wealth management advisor for Northwestern Mutual who spoke with CNBC.

“Working with a financial planner to better define what that means for you is very important,” Patel told the outlet.

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Why now is the time to maximize retirement benefits: financial planner

didier@ddamortgage.com (Didier Malagies) — Tue, 25 Jul 2023 13:55:23 GMT

The United States already has one of the highest ages in the world for collecting full retirement benefits from government-sponsored plans. But as other nations grapple with how to manage financial resources for populations increasingly getting older on average, it’s fair to ask how resilient an American retirement plan will be should the U.S. follow suit and raise the retirement age further.

This is according to David Weinstock, a certified financial planner, in a column published this week by Kiplinger.

Earlier this year, France raised its retirement age from 62 to 64, sparking national protests and demonstrations across the country. Part of the vitriol — besides coming from a population that generally looks down on any reform of its sécurité sociale system — came from the way it was implemented, as French President Emmanuel Macron circumvented his nation’s parliament to implement the change.

As a result, that has some stateside retirement observers looking at the United States and asking, “what if?”

“It’s well known the U.S. is facing a retirement crisis, with baby boomers and millennials headed into their golden years facing potential cutbacks in Social Security benefits,” Weinstock wrote. “Social Security trustees project the fund to run out by 2033 — and then pay only 77% of benefits currently projected, unless changes are made.”

While that isn’t indicative of actual action on the topic, Weinstock advocates for people to make plans now in order to reinforce their retirement benefits later, and to potentially protect for future changes.

“Many experts might say the best approach is to just wait it out — don’t start taking benefits until the age when you’re entitled to collect 100% of your benefits (currently that’s 67 years old for anyone born after 1960),” he wrote. “That’s certainly a good idea if you can literally afford to do so. But for those who can’t or don’t want to wait, there are other planning options.”

Weinstock shared three general tips for people to bolster their retirement security: bolster savings outside of Social Security; work for a longer period of time; and consider applying for spousal Social Security benefits when reaching full retirement age.

These tips could be helpful, but they are also general in nature, Weinstock wrote.

“The permutations are almost endless when it comes to ways you can maximize the highest possible retirement income,” he said. “It’s certainly a best practice to consult with a financial adviser in order to make the right decisions based on your specific situation.”

Financial planners have often recommended waiting until age 70 to take Social Security benefits, and some professionals have positioned the use of a reverse mortgage — and home equity more generally — in the interim as a tool to assist with that wait.

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What you need to know about FHA Mortgages

didier@ddamortgage.com (Didier Malagies) — Mon, 24 Jul 2023 13:40:35 GMT

Mortgage Insurance: FHA loans require borrowers to pay an upfront mortgage insurance premium (MIP) at closing and an annual MIP as part of their monthly mortgage payments. The mortgage insurance protects the lender in case the borrower defaults on the loan.
Credit Score Requirements: One of the benefits of FHA loans is that they are more lenient with credit score requirements compared to conventional loans. While specific lenders may have their own credit score requirements, borrowers with credit scores as low as 580 may be eligible for an FHA loan. However, a lower credit score may require a larger down payment.
Down Payment: FHA loans generally require a minimum down payment of 3.5% of the home's purchase price. This down payment requirement is lower than the standard 20% down payment required for many conventional loans.
Loan Limits: FHA loan limits vary by location and are influenced by the median home prices in the area. These limits dictate the maximum amount that the FHA will insure for a mortgage in a particular region.
Property Requirements: FHA loans have specific property standards that the home must meet to be eligible for financing. These requirements aim to ensure that the property is safe and habitable for the borrower.
Debt-to-Income Ratio: Lenders typically look at a borrower's debt-to-income (DTI) ratio to determine eligibility. FHA loans may be more flexible with DTI requirements, allowing a higher ratio compared to some conventional loans.
Primary Residence: FHA loans are intended for primary residences and are not suitable for investment properties or second homes.
Streamline Refinance: FHA offers a streamline refinance option, which allows current FHA borrowers to refinance their existing FHA loan with minimal documentation and underwriting.

It's essential to note that lending guidelines and regulations can change over time, so it's a good idea to consult with a mortgage lender or broker to get the most up-to-date information and determine if an FHA loan is the right option for your specific circumstances.

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Nearly 80% of Americans don’t want the retirement age raised: survey

didier@ddamortgage.com (Didier Malagies) — Fri, 21 Jul 2023 16:02:56 GMT

The American Social Security program continues to be a flashpoint for many voters, and politicians who are determined to bring its trust fund into solvency through cuts or raising the retirement age could run into serious opposition from voters, according to a recent Quinnipiac University national poll.

That poll found that 78% of surveyed Americans do not want to see the full retirement age raised from 67 to 70, according to recent reporting at Yahoo Finance.

The survey itself , released at the end of March, additionally contextualized the question by asking if respondents would support raising the retirement age if it means that the program’s benefits would last longer. Only 30% of respondents answered affirmatively while 62% answered negatively.

Concerns about retirement are also front-of-mind for many Americans determining what their lives will look like after ending their careers, according to the results.

“Nearly 7 in 10 Americans (68%) say they are either very concerned (33%) or somewhat concerned (35%) that they will not have enough money to live comfortably during retirement, while roughly 3 in 10 Americans (31%) say they are not so concerned (16%) or not concerned at all (15%),” the survey results said.

Osman Kilic, a Quinnipiac professor of finance and business, told Yahoo Finance that the survey results reflect concern among older and younger Americans alike.

“When it comes to the golden years, Americans young, old and in-between share the same worry,” Kilic told the outlet. “There’s a cloud of doubt hanging over the quality of life they’ll have when they retire, especially among those between 35 and 64 years of age.”

Political indecisiveness on the subject of the Social Security program continues to plague politicians in Washington, D.C. Proposals designed to address the program’s solvency have been met either with opposition or silence.

In March, it was reported by Semafor that a bipartisan group led by two U.S. senators — Angus King (I) and Bill Cassidy (R) — was reportedly considering a plan that would gradually raise the retirement age under the Social Security program to 70 in order to keep the trust fund solvent.

The backlash in King’s home state of Maine to the reporting was swift, with its largest union condemning any proposal that would raise the retirement age. Sen. Cassidy later said in a letter to the editor at the Bangor Daily News that the plan he and Sen. King were working on never included a proposal to raise the retirement age.

As the program will likely be further strained in the coming years by the rising average age of the American population, rampant economic inflation is continuing to play havoc with Americans’ finances and could likely see the next Social Security cost of living adjustment reduced in 2024 according to data from the Senior Citizens League .

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Retirement outlook is ‘alarming’ for Generation X: Report

didier@ddamortgage.com (Didier Malagies) — Tue, 18 Jul 2023 13:12:17 GMT

Generation X was the first generation to enter the labor market after a shift from pension plans to defined benefit plans. And now this generation, which includes those born between 1965 and 1980 — is preparing to enter retirement with generally poor standing on savings, according to a report by the National Institute on Retirement Security (NIRS).

“When looking at median retirement savings levels for Generation X, the bottom half of earners have only a few thousand dollars saved for retirement, and the typical household has only $40,000 in retirement savings,” NIRS said in an announcement . “Retirement savings for Generation X is highly concentrated among the highest earners, while Blacks and Hispanics have substantially lower savings and access to retirement plans as compared to whites.”

The report examines retirement readiness measures, including sponsorship, take-up rates, and rates of participation in employer-sponsored retirement plans.

“Gen Xers are fast approaching retirement age, but the data indicate that the vast majority are not even close to having enough savings to retire,” said Dan Doonan, NIRS executive director. “This really isn’t surprising given the terrible retirement hand that has been dealt to the latchkey generation. Most Gen Xers don’t have a pension plan, they’ve lived through multiple economic crises, wages aren’t keeping up with inflation, and costs are rising. The American Dream of retirement is going to be a nightmare for too many Gen Xers.”

As of December 2020, Gen X represents roughly 20% of the total U.S. population, according to the report. Its co-author, Tyler Bond, research director at NIRS, attributes the lack of readiness to low participation levels in employer-sponsored retirement plans.

“As a result, a large share of Generation X has virtually nothing saved for retirement, and most who are saving are not close to savings targets that will enable them to retire with their current standard of living,” Bond said. “Accruing savings takes time, and Social Security alone won’t provide enough retirement income. So it’s critically important that we change course quickly. The status quo means we are looking at elder poverty for many Gen Xers and pressure on their families for support.”

While much of the reverse mortgage industry’s posture caters to baby boomers, Gen X is experiencing increasing levels of access to reverse mortgage products. While the cohort examined in the report will not qualify for a Home Equity Conversion Mortgage (HECM) until 2027, certain proprietary products can serve borrowers as young as 55 in some states.

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How to handle medical collections when buying a home

didier@ddamortgage.com (Didier Malagies) — Mon, 17 Jul 2023 13:14:04 GMT

Removal of collection account: When you pay off a medical collection, the collection agency may update the account status to "paid" or "settled" on your credit report. In some cases, they may even remove the collection entirely from your credit report. This can have a positive impact on your credit score because a paid or removed collection is generally viewed more favorably than an unpaid collection.
Scoring models may vary: Different credit scoring models, such as FICO Score and VantageScore, treat paid collections differently. For instance, FICO Score versions 9 and newer do not consider paid medical collections when calculating scores, whereas older versions do. VantageScore models generally exclude all paid collections, regardless of the type. However, it's important to note that lenders might still consider paid collections during their evaluation process, even if they are not factored into the credit score.
Late payment history: Paying off a medical collection does not erase the fact that it was previously delinquent. Late payments associated with the collection account could still have a negative impact on your credit score, even if the collection itself is resolved. However, as time passes, the impact of the late payment history diminishes, and your credit score can gradually improve.
Credit utilization: Paying off medical collections may indirectly affect your credit utilization ratio. When you pay off a collection, it reduces your outstanding debt, which can lower your overall credit utilization if you have other credit accounts. Maintaining a low credit utilization ratio (the percentage of available credit you're using) is generally beneficial for your credit score.
Credit report duration: The impact of a paid medical collection on your credit score lessens over time. Credit scoring models typically place more weight on recent information, so as the collection ages, its influence on your score diminishes. However, the collection will remain on your credit report for a certain period, usually seven years from the date of delinquency, even if it's paid.

Overall, paying off medical collections is generally a positive step as it demonstrates responsibility and a willingness to resolve outstanding debts. While it may not entirely eliminate the impact of the collection on your credit score, it can help improve your overall creditworthiness. It's always a good idea to monitor your credit report regularly, address any errors or discrepancies, and establish healthy credit habits to maintain or improve your credit standing.

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Seniors delay retirement, use savings to benefit grandchildren:

didier@ddamortgage.com (Didier Malagies) — Fri, 14 Jul 2023 15:54:24 GMT

A new survey conducted by the Society of Actuaries (SOA) shows that 66% of baby boomers between the ages of 58 and 76 have had their retirement savings goals impacted by their desire to save and assist grandchildren with going to college.

About 66% of baby boomer respondents also reported that they are actively saving in order to help fund their grandchildren’s college education. More than half of all respondents (58%) between the ages of 25 and 80 — who are of working age or retired — reported that they have delayed retirement moderately or significantly due to these financial goals.

In addition, 41% of retirement and college savers have used funds previously earmarked for retirement to pay for a relative’s college education, knowingly incurring tax penalty risks for early withdrawals.

“The challenge of prioritizing different savings goals, including college for family members, has led to families making difficult choices, such as delaying retirement plans,” said R. Dale Hall, managing director of research at the SOA Research Institute. “This consumer survey helps identify the underlying challenges individuals and couples face in balancing multiple financial goals, such as funding college education, providing for unexpected financial needs and planning for a secure retirement.”

Respondents also reported saving to assist other family and/or friends with their financial goals in addition to juggling their own financial interests. Other savings goals respondents are working toward include an emergency fund (92%), travel (87%) or the purchase of a home (68%).

“The survey finds that two-thirds (63%) of respondents have had their ability to save for another’s college education impacted by having to save for retirement at the same time,” the results state. “As a result, 40% of all respondents will or have had to take out loans and 16% will or have had to borrow from family or friends to help pay for someone else’s college. Furthermore, 39% of all respondents work longer hours and 26% have taken on additional jobs in response to the dual saving goals.”

The survey was conducted with 1,000 U.S.-based respondents, working or retired, who regularly save for retirement and are currently saving at least $500 a year for a relative’s and/or friend’s college education.

“Results were weighted to be nationally representative of those regularly saving for retirement and someone else’s college education (by age/gender, region, race and ethnicity),” the study results state. “The survey was fielded June 6–14, 2023.”

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Building your kid's credit after high school and building to buy a home

didier@ddamortgage.com (Didier Malagies) — Mon, 10 Jul 2023 13:55:32 GMT

Educate them about credit: Teach your kids about credit, including the importance of responsible credit management, how credit scores work, and the impact of credit on their financial future. Ensure they understand the responsibilities and potential pitfalls of using credit.

Add them as an authorized user: Consider adding your child as an authorized user on one of your credit cards. As authorized users, they can benefit from the positive payment history associated with that account. However, make sure you monitor their spending and set clear guidelines to avoid misuse.

Encourage responsible credit behavior: Encourage your kids to develop responsible credit habits by making small purchases and paying off the balance in full each month. This will help them establish a positive credit history and demonstrate their ability to manage credit responsibly.

Co-sign a loan: If your child needs to take out a loan, you can co-sign the loan to increase their chances of approval and potentially secure a lower interest rate. However, remember that co-signing makes you equally responsible for the debt, so be cautious and ensure your child is committed to repaying the loan.

Help them open a secured credit card: A secured credit card is a good option for those with limited credit history. Your child can open a secured credit card by making a cash deposit that acts as collateral. By using the card responsibly and making timely payments, they can build credit over time.

Monitor their credit: Regularly monitor your child's credit report to ensure there are no errors or fraudulent activities. Encourage them to review their credit report annually as well.

Promote financial responsibility: Emphasize the importance of financial responsibility, such as maintaining a budget, paying bills on time, and avoiding excessive debt. These habits will contribute to their overall financial health and improve their creditworthiness.

Remember, building credit takes time, and it's crucial to start early. Encourage your kids to be patient and diligent in managing their credit. By following these steps, they can establish a solid credit foundation, increasing their chances of qualifying for a mortgage when the time comes to buy a home.

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An aging population will challenge the U.S. economy: PBS

didier@ddamortgage.com (Didier Malagies) — Wed, 05 Jul 2023 13:46:53 GMT

The impacts of an aging population that is growing older at a faster rate will likely have serious economic implications on the United States, according to experts and reporting from the Public Broadcasting Service (PBS) NewsHour program.

“As the share of older Americans continues to rise, the need for benefits and assistance from Medicare and Social Security will grow,” the report explained. “And, at the same time, an aging workforce could cause worker shortages in the years to come.”

At least when it comes to the potential impacts on the workforce, the U.S. could have an advantage to positively impact that attribute according to Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former chief economist for the Congressional Budget Office.

“I mean, it is absolutely true that we are on track for slower labor force growth, about half the pace of growth than in previous decades, recent decades,” she said on the program. “But we are also a country that is greatly valued by immigrants. There are immigrants from all over the world who desperately want to come to the United States. So we have a very simple way of boosting our population growth, if that becomes a priority for us.”

A lot of the advancing age in the U.S. comes from the baby boomer generation according to Philip Bump, a national columnist for the Washington Post and author of “The Aftermath: The Last Days of the Baby Boom and the Future of Power in America.”

“[T]his is also a continuation of the pattern that we saw originating with the Baby Boom, back in the 1940s,” Bump said. “So, you have this big cluster of people all in the same age group that are reaching age milestones together. And when you think about the year in which there were the most births was 1957, you add 65 to that, the retirement age, and you get 2022.”

The trend is also placing additional strain on entitlement programs including Social Security and Medicare, Edelman said.

“[T]he challenge here is that, largely because of our aging population, but also because of increases in health care costs, we have very significant increases in benefits on the horizon,” she said. “But we haven’t planned for those with increases in taxes.”

Absent action at the national level, some states are taking action based on these population trends. In Washington state, a law is set to go into effect next week that will begin collecting a long-term care payroll tax to help fund a long-term care program.

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What changes on rates and fees for second homes

didier@ddamortgage.com (Didier Malagies) — Mon, 03 Jul 2023 17:49:10 GMT

Increased risk: Lenders perceive financing a second home as riskier because borrowers are more likely to default on payments for a second property compared to their primary residence. In times of financial difficulty, people are more inclined to prioritize their primary residence over a secondary property.

Less owner occupancy: Second homes are often used as vacation homes or rental properties, which means they may be unoccupied for long periods. Lenders consider this increased risk because vacant properties can be more susceptible to damage, maintenance issues, or depreciation.

Higher loan-to-value ratio (LTV): Lenders typically require a larger down payment for second homes, which can result in a higher loan-to-value ratio. A higher LTV indicates a riskier investment for the lender, as there is less equity in the property and a higher chance of loss in the event of foreclosure.

Different tax implications: Mortgage interest on primary residences can be tax-deductible up to certain limits, which reduces the overall cost for homeowners. However, the tax benefits for mortgage interest on second homes are often more limited or nonexistent. This reduces the overall financial advantage of a lower interest rate.

Market conditions and demand: Interest rates are also influenced by supply and demand dynamics in the lending market. If there is a higher demand for mortgages on second homes, lenders may increase interest rates to compensate for the perceived risk and manage their loan portfolio.

It's worth noting that interest rates can vary based on individual financial circumstances, creditworthiness, and the specific lender's policies. Therefore, it's essential to shop around and compare rates from different lenders to find the best available option for financing a second home.

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Expected retirement age, average savings have increased, study shows

didier@ddamortgage.com (Didier Malagies) — Thu, 29 Jun 2023 13:22:19 GMT

The average retirement savings in the U.S. has increased by 3% to $89,300 for 2023, up from $86,869 in 2022, according to the 2023 Planning and Progress study conducted by Northwestern Mutual. However, the expected retirement age has also risen sharply year over year, climbing from 62.6 in 2022 to 65 years in 2023.

“Americans’ magic number for retirement readiness continues to rise,” said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility. That is a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed.”

Some interesting trends have emerged from the data, Gokhale said, including “a big disparity between what they think they’ll need to retire and what they’ve saved to date.”

When looking at the age groups specifically, the study shows that the average person in their 50s expects to need $1.56 million saved for a comfortable retirement, the highest figure cited by participants. Those in their 60s say they need $968,000 to retire comfortably, and respondents in their 70s expect to need $936,000, according to the data.

That figure increases substantially for those with higher net worths, who expect to need as much as $3 million to retire comfortably.

In terms of confidence in retirement preparedness, Gen Z is the most confident generation, with 65% saying they expect to be financially prepared for retirement. Millennials are next at 54%, followed by baby boomers who are not yet retired at 52%.

Generation X is the least confident, with only 45% expecting to be ready for retirement when the time comes.

“These retirement readiness feelings impact how long people expect to work,” the survey results say. “Boomers plan to work the longest (71) while Gen Z expects to retire more than a decade earlier (60). Millennials and Gen Xers plan to work to age 63 and 65, respectively. Overall, Americans on average plan to work until the age of 65, up from 64 last year and 62.6 in 2021.”

The study also found that people who “identify as disciplined financial planners knock two years off their retirement age,” believing it will be 63. Informal or non-planners, meanwhile, believe their retirement age will be 67, an addition of two years.

“One of the greatest gifts that financial planning provides is time,” said Gokhale. “Planning and discipline can unlock four years of life in retirement, and professional help is there for everyone regardless of where they are on their financial journey.”

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DataRetirement More seniors, concerned about recession, move to sell homes: survey

didier@ddamortgage.com (Didier Malagies) — Wed, 28 Jun 2023 13:34:17 GMT

Roughly one-in-eight members of the baby boomer generation have taken action on the potential of an impending recession by selling their homes, aiming to lock in a higher home value while they still can. This is according to a recently-released survey of U.S. seniors aged 59 and older conducted by Retirement Living.

Nearly 20% of respondents said that they rely entirely on Social Security benefits to provide cash flow in retirement, while the overwhelming majority of respondents — 70% — felt uncertain about whether their retirement savings were sufficient to last the rest of their lives.

“While the average retirement savings of our participants came out to a little over $680,000, the majority said they’d feel more secure if they had around $1.2 million in the bank,” the results said.

Despite concerns about financial longevity, most respondents expected their retirement savings to last roughly 13 years.

“This might explain the growing notion that many Americans feel they may need to work longer to save enough for retirement,” the results said. “The good news is that, so far, the economy is proving surprisingly resilient despite economic challenges, as consumers continue to shop in retail stores, dine at restaurants, and buy cars.”

There was a generally wide variety of responses that respondents had to the idea of a potential recession. Nearly half (47%) of those surveyed said that they were decreasing their spending in response to economic volatility, while 30% said they would increase their savings. And 26% of respondents each said they would invest in “safe” assets, and that they would continue to work full-time.

Between 20-25% of respondents said they would apply for part-time jobs; build an emergency fund; or diversify their investments.

A clear majority of respondents said they don’t have enough money saved, but only a small percentage of the total respondent pool has entertained the idea of tapping home equity to fund retirement, according to the results.

“More than one-quarter of baby boomers shared that the economy’s increasing unpredictability has led them to discuss their plans with a professional,” the results said. “Nearly 75% said they hadn’t saved as much for retirement as they would like, and 5% have even taken equity from their homes to fund their retirement.”

The survey included 758 respondents at or over the age of 59. Of the 758 respondents, 277 were already retired, 445 respondents identified as female, and 309 identified as male. Two identified as nonbinary, and two chose not to disclose that information.