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

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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!

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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!

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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?

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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!

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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?”

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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

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

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“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

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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

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

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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?

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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

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

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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

The Beauty of BUYDOWNS – To Lower Payments & Save Deals

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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

More Home Equity Line Info

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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

Are Home Equity Lines (HELOCs) Still A Thing?

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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

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

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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

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

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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!

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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

This Ain’t 2008 – Again

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I COULD ROTATE MY FOOT 270 DEGREES – SO NATURALLY, I PANICKED About 15 years ago, I turned my entire knee into butter while I was skiing at Squaw Valley (now Palisades Tahoe). I was skiing with a bunch of way-too-cautious boomers that day, so I escaped during lunch to do one fast run. Wanting […]Read More

The True Cost of “Low Rate” Commercial Bank Mortgages

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Some regional commercial banks are buying the jumbo loan market right now with very aggressive rates. BUT – they come with an enormous cost that most borrowers do not take into account. At one of the more prominent banks – that cost is a mandatory deposit equal to 15% of the mortgage! In other words, […]Read More

Housing As A “Nest Egg” – Why Homeowners Have Far Higher Net Worths

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The average net worth of Americans who own homes is $1.1 million. The average net worth of Americans who don’t own homes is about $96,000 – according to this Business Insider article. Do homeowners have high net worths because they came from wealth, or do they have high net worths because they bought homes? I […]Read More

Save Money With An 80-10-10 Loan

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Nervous Homebuyers Taking Advantage of More Inventory; Surge in Contracts

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We recently had a very nervous homebuyer (a single mom) come back to the market after sitting on the sidelines for about a year. This is despite the fact that higher rates reduced her buying power. She came back to the market because she saw the increase in inventory and the corresponding price reductions. She […]Read More

First-Time Homebuyer Tax Credit in 2022

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Household Formations EXCEED Home Completions (GREAT NEWS FOR NERVOUS HOMEBUYERS)

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The media loves to beat the “Housing Crash Coming Soon” drums! And that, unfortunately, is keeping all too many homebuyers on the sidelines – for no reason! As a result, I like to push back with our own data – or in this case, Barry Habib’s data (from MBS Highway). The biggest driver of housing […]Read More

Income Needed to Buy $450,000 and $1 Million Homes?

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Per a request from an agent, here are some estimates of the income necessary to buy a $1 million home in California and a $450,000 home in Texas. We used $1 million for California because that is close to the median home price in all too many towns and cities (and interestingly, it is much […]Read More

Cash Reserves After Closing – How Important Are They? Inflation…Or Not

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Four of our borrowers starved to death shortly after moving into their homes last year. This is because our poor borrowers had no money to buy food because most loan programs do not require any cash reserves in a buyer’s bank account after their loan closes. In other words, most loan programs allow borrowers to […]Read More

“Departing Residence” Rental Income – More Important Than Ever!

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“Housing Crash In Austin!” Somebody posted that on Twitter last week, citing climbing inventory, price reductions, and fewer buyers. That same day, however, Heejin and I had dinner with a very successful agent in Austin, and I asked him about the tweet.  This was his response:  “What, seriously?  Nobody told me.  All of my investor-clients […]Read More

Minimum Number of Tradelines & Why We Have To Pull Credit

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Buyers often come to us and say something like this: “I have a 780 credit score; I make $275,000 per year; and I want to put $500,000 down against a $1.5mm home – what is your best rate?” We can quote a rate, but more often than not, it won’t be accurate because there will […]Read More

Is Inflation “Over?” (and boy does it matter!)

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Inflation Is Here To Stay! (or not) After telling us that inflation was transitory or temporary for months in 2021, many if not most economists changed their tune and declared that inflation was here to stay. This is why the Fed changed course so quickly and aggressively this year, and it is largely why interest […]Read More

Rates Keep Falling & Will Fall More; Timing The Market

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Rates fell again primarily in response to negative economic data, including revised data that showed the economy shrunk more than we thought in Q1 along with more recession indicators and predictions. The 10 Year Treasury, which correlates closely to mortgage rates, hovered near 3.5% only a few weeks ago – but it is now under […]Read More

Why The Fed Desperately Wants to TANK the Housing Market!

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One of my favorite macro pundits, Alfonso Peccatiello (former $20 billion fund manager who goes by “Alf”) recently tweeted this: “The biggest group of consumers in the US owns houses, not stocks. And this is why taming the animal spirits in the housing market is paramount important for the Fed. And they will succeed…” He […]Read More

Huge Opportunity From High Rates!

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Grizzled Escrow Officer Sets Me Straight! While aimlessly wandering the hallways lamenting the industry slowdown, I ran into a very grizzled escrow officer who runs the title company next door. She is one of those utterly fearless women who has been around forever and has literally seen it all. She handled George Washington’s escrow when […]Read More

2nd Mortgage vs. HELOC (Home Equity Line); Which Is Better?

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Yesterday’s blog, 5 Reasons to Get a HELOC, was inspired by a question from my nephew – as he is a perfect candidate for a HELOC. He is in his early thirties – and he has a family to support, about a half-million in equity, a very low rate first mortgage, an excellent job, and […]Read More

5 Reasons to Put Less Money Down

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What If Rates Don’t Fall? WRAP-AROUND MORTGAGES

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“… I remember my first mortgage back in 1982, when my rate was 15%!” said every boomer ever… “… I remember my first mortgage back in 1982, when my rate was 10%!” said my law school professor… The above two comments are huge reminders that homes still sell in even the highest of interest rate […]Read More

Barry Speaks! Fed Disdain; Recession & Low Rates Coming; Housing Will Be Fine

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Barry Habib reminds us that it is inflation that is driving higher rates, but that it will peak in October and start to fall for two reasons: (1) today’s higher rates are destroying demand across the board (I again suggest watching the video for his full explanation); and (2) supply chains will be untangled and working by then, eliminating shortages.Read More

Why Housing Prices Will Double In 6 Years; No Bubble Here…Part 37

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Interestingly, Barry Habib (MBS Highway Founder), Ken McElroy (famous real estate investor), and some dude on Reddit all recently made the case for much higher housing prices – DESPITE HIGHER RATES. And all of them were responding to all of the housing bubble fears we see everywhere now on social media and in the press. […]Read More

If Property Won’t Appraise, Change Financing!

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We have a buyer who is willing to offer $450,000 for a property with 10% down. The problem is that, according to her agent, “the property will never appraise for more than $380,000, because there are no comparable sales anywhere above $380,000.” Read More

Why “Timing The Market” Never Works

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Dear Hedge Fund, Why are you still buying up houses in droves when the market is obviously going to crash? That was the letter I wrote to a hedge fund yesterday, and boy did I make them feel stupid… Or not, because I might not have actually written that letter. 😊 But here is my […]Read More

Is The Fed Trying to Tank The Housing Market – Or Just Slow It Down?

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Agents in many of the markets we work in are telling us that they are now finally seeing a slowdown in the market. One agent who lists high-end homes in the Bay Area told me that he “used to tell sellers to remodel their kitchens, update flooring, repaint walls, and spruce up landscaping before listing […]Read More

A Home Is Your Castle Against Rising Inflation

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My title is the exact headline from this recent WSJ column by economist Laurence Kotlikoff. The first line of his column was this: “Mortgage rates are up to 5%, and some fear a valuation bubble. Even so, it’s a good time to buy.” I have been beating the “houses-equal-inflation-hedge” dead horse for years now, but […]Read More

17 Day JUMBO Financing – With No Contingencies & Super Low Rates!

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I often blog about how jumbo rates are as much as 1% LOWER than conforming rates and explain why too. This recent blog is just one example. Our Jumbo Niche I obsess with jumbo financing not only because it offers astoundingly low rates, but also because it comprises as much as 75% of all financing […]Read More