When Great Economic News Is Actually Bad News

I Was Slapped in the Face With Very Good Economic News! For months now, I have been explaining how weak our overall economy is and why that portends much lower interest rates in the near future – no matter what the Fed does. I of course was just repeating what Jim Rickards, Jim Rogers, Stephanie […]Read More

Why Timing Interest Rate Locks Never Works

BORROWER REFUSES TO LOCK! We have a borrower who did not want to lock this week because “rates are on a downward trend.” He is totally correct about the trend, but utterly wrong about not locking. This is because it is impossible to time the market and because rates never move in a straight line […]Read More

Inflation Slows & Rates Drop AGAIN; WHY SO IMPORTANT?

Rates plummeted yesterday after Fed Chair Jerome Powell made some comments indicating that the Fed will start to slow its rate increases. Rumor has it that he got early notice of today’s delightfully tame inflation reports, and thus decided to back off on his “hawkish” efforts to keep pushing up rates. 10-YEAR TREASURY YIELDS FELL […]Read More

2023 Conforming Loan Limits Surge To Over $1 MILLION! Some Interesting Perspective

1994’s Limit Was $203,150 When I got into the mortgage business in 1994, the conforming loan limit was $203,150. Adjusting for inflation, that is about $408,000 today (almost exactly 2x the 1994 amount) The median house price in 1994 was about $130,000, while it is about $455,000 today (about 3.5x the 1994 number). Today’s maximum […]Read More

Fannie Mae Made Rates WAY LOWER for First-Time Homebuyers!

In mid-November, both Fannie Mae and Freddie Mac made homebuying ridiculously less expensive for many, if not most first-time homebuyers! And – I was remiss for not blogging about it sooner. 13 Factors That Impact Your Interest Rate! I often blog about the 13 Factors that impact someone’s mortgage rate – reminding readers that there […]Read More

Let’s Talk About The Great 2018 Housing Crash!

I remember 2018 all too well, as it was one of the worst years in the history of the housing market! Values crashed as much as 30% in some areas, and the entire U.S. economy was in a free fall. Oh wait… I don’t remember that because it never happened. It was just predicted over […]Read More

Which Mortgage Loans Are Assumable?

We are getting questions about Assumable Loans again, as there are a lot of sellers with very low-rate mortgages selling homes in our current high-rate environment. If those sellers could offer their low-rate mortgage along with the house, their house would no doubt be worth a lot more. Up until the 1980s, many loans were […]Read More

THE BIGGEST PROBLEM IN REAL ESTATE Right Now – And How To Overcome It!

BARRY HABIB HATES CNBC’S DIANA OLICK! Mr. Habib is one of the macro pundits I cite very often because he is correct so often. “Hate” may also be too strong of a word, as Mr. Habib is very professional, but he clearly has tremendous disdain for Ms. Olick – and this is why: Ms. Olick […]Read More

Buyer Was Furious: “When Is My First Mortgage Payment Due?”

Buyer Was Furious Because Her First Payment WAs Due One Month Sooner Than She Thought! We had a buyer who was very upset because her first payment came due a month sooner than she had expected. Her payment was large, and she had depleted most of her cash to close her purchase – so I […]Read More

Why I Hate “Points” Now More Than Ever (Permanent vs. Temporary Buydowns)

I just read a blog by a mortgage underwriter in which she was explaining how loan officers are stupid because they are not explaining the benefits of “Permanent Rate Buydowns” (vs. “Temporary Buydowns”) to listing agents. Ironically though, she may be the one who is lacking on the intelligence front. A “Permanent Buydown” is where […]Read More

Much Lower Interest Rates By March; Why & What It Means

On Thursday, CPI (inflation data) came in lower than expected – and we saw one of the largest one-day rate drops ever. I of course blogged about it here: THIS IS HUGE! Inflation & Rates PLUMMET. My biggest takeaway though wasn’t just that inflation and rates dropped; it was to point out how correct the […]Read More

THIS IS HUGE! Inflation & Rates PLUMMET!

Inflation Came In Cool – Exactly As Barry Habib And Jeff Snider Predicted! In 2021, I told a group of mortgage bankers at a lunch how and why rates were going to shoot past 7% in 2022 – and NONE of them believed me. Despite their pushback, I remained very confident in my position because […]Read More

The Effect of the Election on Interest Rates

Rates fell yesterday as soon as investors digested the likely results of the midterm elections. As I often repeat, rates fall when investors expect the economy to weaken or when they expect less inflation or even deflation. Conversely, inflation expectations and/or strong economic signals push rates up. So, yesterday, as it became clear that the […]Read More

How Interest Rates Impact Home Values (Not What You Think)

“Jay, How Naïve Are You?” That was the response I got from a past client last spring when I was noting how higher interest rates had not yet impacted home values. I made the further mistake of saying I was not sure how much higher rates would impact values too, in light of all the […]Read More

How To Read a “Loan Estimate” (LE); Where and How To Look

MORTGAGE RATES ARE IMPROVING AS I AM TYPING THIS BLOG – DESPITE THE FED’S RATE HIKE – showing once again that mortgage rates often do not move in unison with the short-term Fed Funds Rate (the rate the Fed increases). I recently blogged about the tricks lenders play when providing loan estimates to help lure […]Read More

The Fed Did NOT “Raise Rates 3/4% Yesterday” – Deflation/Lower Rates Coming Soon Part II

The Fed raised rates 75 basis points or 3/4% yesterday – so my rate quote at the bottom of this blog went from 6.0% yesterday to 6.75% today. FALSE!! THAT DID NOT HAPPEN! My rate quote today is the same rate as yesterday’s even though the Fed “raised rates 3/4%” yesterday. I typed the top […]Read More

3-2-1 Buydowns Are NOT “The New Option ARM,” “Impending Doom” or “Smoke & Mirrors”

That Time I Was Accused Of Fraud And Turned In To Regulators In the early 2000s, I got to know a roofing contractor really well. He was from Mexico and barely spoke English, but he and I became fast friends because he did such amazing work and I sent him dozens of referrals. So, when […]Read More

Is the Airbnb/Short-Term Rental Market Crashing?

My wife Heejin and I were looking at a property in Park City, Utah last year, and the agent explained to us how easy it would be to turn it into a short-term rental and how “everyone was doing it.” And – I thought to myself… “uh, oh… holy potential glut of short-term rentals, Batman!” […]Read More

SHOCKING: Huge Lender Exits Business; JVM Here To Stay; JVM Rate Drop Free-Fi®; Opting Out Too

Please Don’t Get Pummeled With Phone Calls (Opt Out) I blogged a few weeks ago about borrowers getting pummeled (literally) with phone calls after they apply for mortgages. This is because credit bureaus sell borrower info. Online lenders then buy that info as “leads” and go after those borrowers with reckless abandon. I bring this […]Read More

Discounts Ain’t Discounts; Confusopolies & Tricks Lenders Play

When I was in law school, I lived near a furniture store that continually ran a “going out of business sale” for three years straight – because it clearly worked. Consumers thought they were getting bargains – even though the business was just operating like any other business, and, amusingly, it continued to “go out […]Read More

It’s The Inventory, Stupid! (Why Values Are Not Crashing)

Before I explain who I am calling “stupid,” I want to touch on numerous comments I received in regard to Monday’s Blog: Why Everyone Needs A House As An Inflation Hedge Now More Than Ever. All of the comments reminded me that it is NOT just the house that is the inflation hedge, but it […]Read More

Why EVERYONE Needs A House as an Inflation Hedge Now More Than Ever!

I often blog about reasons to buy a property, as there are many: (1) avoid rising rents with a fixed housing payment; (2) tax advantages; (3) ability to do what you want with the home; (4) forced savings/retirement nest egg; (5) pride of ownership; and (6) inflation hedge. BUT – I don’t think I drive […]Read More

Why Would a Mortgage Bank BROKER Loans?

There Are Three Primary Channels In Which Consumers Can Garner Mortgage Loans Commercials banks and credit unions (they do commercial loans, offer checking & savings accounts, and do mortgage loans) Mortgage banks (they only underwrite and fund mortgage loans, and do nothing else) Brokers (they only “originate” loans, and then submit them to unaffiliated lenders) […]Read More

Lenders Pushing “Stated Income” & 100% Financing; Return of 2008?

A Few More Notes On Rates Dropping By March I got a bit of pushback from yesterday’s blog (Why I Am Convinced Rates Will FALL By March) and I wanted to touch on it quickly before hitting my main blog points today. The Fed Is No Longer Buying Mortgage-Backed Securities (MBS). Yes, the Fed is […]Read More

Why I Am Convinced Rates Will FALL By March

I have myriad acquaintances in the mortgage industry (mortgage bank CEOs even) who insist rates will continue to rise throughout 2023. They tell me I am crazy to think they will fall as early as March – with inflation surging and the Fed on the warpath. They further tell me that the Fed cannot get […]Read More

The Beauty of BUYDOWNS – To Lower Payments & Save Deals

In Friday’s blog, I explained why ARMs are NOT the solution for payment relief (because ARM rates are so close to 30-year rates) in today’s high-rate world. BUT – there is another solution for payment relief that is nothing short of awesome: TEMPORARY RATE BUYDOWNS, aka 3-2-1; 2-1; or 1-0.5 buydowns (NOTE: these are NOT […]Read More

Why ARM Rates Are So Close to 30-Year Rates

Apparently, in 2002, it was “Hot In Herre” – or at least it was according to Nelly. I, however, had no idea because I had never heard the song, and I probably wouldn’t have trusted Nelly’s assessment in any case, given his inability to spell. I bring that up though because yesterday’s rates hit 2002 […]Read More

Inflation RED HOT! Rates WAY UP! Relief On The Way?

Today’s inflation report (Consumer Price Index/CPI) came in much hotter than expected and rates shot through the roof in response. BUT – as Barry Habib (of MBS Highway fame) has been explaining again and again – this was expected – and should not be alarming. In addition, Mr. Habib carefully explains WHY future inflation reports […]Read More

Fed Chair Bernanke Wins Nobel Prize for Agreeing With Nobel Prize Committee

Dr. Prescribes Steroid And Heroin For My Son! In 2003, my son was not performing well at all – socially, academically, or athletically – so I took him to the doctor. The doctor had spent years doing research but had never actually practiced medicine – so I was a bit concerned when he prescribed steroids […]Read More

More Home Equity Line Info

Last week I wrote a blog asking If Home Equity Lines Were Still A Thing? I asked because Home Equity Line of Credit (HELOC) rates are so much higher, and I pointed out that HELOCs are still “a thing,” as borrowers use them to avoid dipping into jumbo loan amount territory. The blog turned out […]Read More

Credit Bureaus Sell Your Info, But You Can Stop Them (& Avoid Getting Pummeled)

Scariest Thing That Ever Happened To Me! We occasionally apply for mortgages with online lenders to see what their process is like, and holy smokes, is it terrifying! I applied once myself, and was stunned by how ridiculously aggressive they were with their follow-up calls, emails, bomb threats, kidnappings, and extortion demands… OK, OK… it […]Read More

The Housing Market Is Most Definitely NOT Frozen!

America’s housing market did not fully bottom out until 2012 – a full four years after the 2008 mortgage meltdown. But, here is what is interesting: even when the market was at its absolute slowest ever in 2012, there were still 8,000 transactions closing every month within about a 60+ mile radius from my office. […]Read More

Are Home Equity Lines (HELOCs) Still A Thing?

The Prime Rate today is 6.25% – a full 3% higher than where it was last year at this time. Prime Rate is the rate that commercial banks charge their most creditworthy customers, usually large corporations. It matters to us though because it is also the rate that most Home Equity Lines of Credit (HELOCs) […]Read More

Why Are Banks Not Paying Higher Rates for Deposits? Why Did Rates Plummet Today Too?

Why Interest Rates Are Rising Everywhere – Except Your Savings Account That was the headline from this recent WSJ article. Back in the 1980s, a general lack of savings in America was one of the many reasons why America was going to collapse, and we were all going to die… This was ostensibly because Japan […]Read More

Everything Lags…Making The Media & The Fed Wrong (AGAIN)

In 1992, the rock band R.E.M. released the annoying song, Everybody Hurts. And, sensitive Gen Xers everywhere played it loudly and proudly on their Sony Walkmans and boomboxes to prove just how sensitive they really were (and they were sensitive!). But, fortunately for us, Michael Stipe retired from R.E.M. so he could watch macro videos […]Read More

What Rent vs. Buy Analyses MISS! (Huge Esoteric Benefits Of Homeownership)

RISING RATES ALTER CALCULUS OF BUYING VS. RENTING The above headline is a link taken directly from the WSJ. I am blogging about it because rent vs. buy analyses are often ridiculously misleading and they miss so much! A typical rent vs. buy calculator like Freddie Mac’s will look at the total cost of renting […]Read More

Are Rates Really Over 7%? Not Really; Rates Up 2% Since August; Surveys Lag Market

Today’s average interest rate is 6.82% per Mortgage News Daily (about 1/2% higher than where they were last week). The average is up almost 2% from early August when it bottomed near 5% – amazingly. The average rate was in fact over 7% yesterday, but they plummeted today (and I will explain why below). The […]Read More

U.S. Dollar at Record Highs & Twitter Is Panicking! Why?

The U.S. dollar is again hitting record highs, and it is much stronger than it was even a few months ago when I last blogged about it: Why a Strong U.S. Dollar Is Terrifying! My favorite way to gauge the dollar’s strength is by watching the DXY Index. The chart at the bottom of this […]Read More

DEFLATION Coming Soon To A Theater Near You!

Stephanie Pomboy is the founder of a macro research firm called MacroMavens, and she was on this Wealthion Podcast recently, and it was so interesting I had to blog about it! I was fascinated by her insistence that we face DEFLATION as early as next year because everyone is talking about how entrenched INFLATION is […]Read More

The Fed Raised Rates And Something VERY UNUSUAL HAPPENED!

The Fed raised the Fed Funds Rate yesterday by 0.75% and long-term rates actually increased (a lot) after the announcement. This is very unusual for several reasons: The markets had long anticipated the 0.75% hike and had “priced it in” already. The Fed only controls short-term rates and not long-term (30-year fixed) rates, so long-term […]Read More

Where’s the Inventory Glut? A VW at 3% vs. A Porsche at 6%

I shamelessly stole my headline from Brian Stevens in his most recent The National Real Estate Post video. His point of course was that yes, rates are way up, but buyers in many markets can get way more house for their money in light of all the price reductions (something we are definitely seeing in […]Read More

Investors Dumping Inventory vs. Mortgage Rate Lockdowns!

BIG PROBLEMS AHEAD FOR REAL ESTATE INVESTORS! That was the title of this tweet from Nick Gerli, a real estate guru on YouTube. He said: “The 6-month US Treasury now yields…the same as Buying & Renting Out a House in America…Translation: Big Real Estate Investor selloff coming. Especially among Wall Street owners.” And, in response […]Read More

Rates at 2008 Levels! When Will Rates Fall?

Mortgage Rates Top 6% for the First Time Since the 2008 Financial Crisis The above is a WSJ headline for this article. Rates are also back to where they were … way back in June and somehow we survived July and August 😊 Rates shot up this week in response to higher than expected inflation […]Read More

Wedding Cash Gifts For Down Payments!

This is a short blog, but it is a great reminder for every agent working with or catering to newlyweds! Cash received for a wedding gift can be used towards a down payment – without any of the paper trail or gift letter hassles normally associated with down payment gifts. This is for conforming (Fannie/Freddie) […]Read More

Is Tech Taking Over Real Estate and Mortgages?

I have a very successful friend who owns a mortgage bank, and who still originates loans just to stay in the game. He spent six months pre-approving, educating and counseling a young millennial couple – only to see them leave for another lender offering an 1/8% lower rate after they got into contract. This was […]Read More

Provide Rental Comp Data to Appraisers (More Important Than You Realize)

We have had numerous deals almost die or come close to dying over the years – solely because our appraisers could not find adequate rental comp data. There are several reasons why we often need to support the full market rent in an appraisal, including: The borrowers often need every penny of the rent to […]Read More

Inflation Drives Interest Rates – Except When The Fed Gets Involved

As most people know, inflation drives interest rates because investors do not want to accept yields that are lower than the inflation rate because they will effectively be losing money if they do. If you loan somebody $1,000 for one year at 5%, and inflation is at 8%, at the end of the year, you […]Read More

I Witnessed A Death…

And have to talk about it. And OK – it was the death of a very successful local business, and my subject line is too “click-baity” I realize, but this blog is very timely and interesting, I promise. The business was the local Italian restaurant that I have been visiting frequently for over 25 years. […]Read More

The Fed’s Raising Rates 3/4%! OMG! CoreLogic Predicting 4% Home Appreciation Still!

The Fed let it be known yesterday that it will definitely raise the Fed Funds Rate by 0.75% on September 21st… and the market yawned. As Barry Habib reminded us this morning, everyone used to engage in a huge guessing game – in regard to what the Fed might do. And – if the Fed […]Read More

Why’s Inflation Higher in U.S.? Scary LinkedIn Indicator! I Missed Something HUGE!

Today’s blog is a “random show” – hitting a few (really interesting) topics briefly. SOMETHING HUGE I MISSED: RISING INCOMES! In my blog yesterday about putting rising housing payments in perspective, I missed one of the most important points: RISING INCOMES! Incomes have risen sharply since 2015, particularly in the tech world, greatly offsetting the […]Read More