I. A Cross-Collateralized Mortgage Is One That Is Collateralized By More Than One Property
Fannie Mae, Freddie Mac, FHA, and competitive jumbo lenders do not allow it, as it fosters foreclosure, payoff, and secondary-market issues.
Non-QM and bridge loan (buy-before-sell) lenders do, however, allow for cross-collateralization – and it is proving to be a very valuable tool!
If buyers, with very limited cash, own a home worth $800,000 with only a $150,000 mortgage, they could use a cross-collateralization bridge loan to buy a new home for $1 million – without selling their current home and with almost no money out of pocket.
This is a scenario we see often nowadays.
II. More 6% Mortgages Than 3% Mortgages! WOOHOO! (Bye-bye “lockdowns”)
This post on X ecstatically reminds us that there are finally more 6% mortgages than 3%.
This is great news because it signals the coming end of the dreaded “mortgage rate lockdown” effect – where sellers refuse to sell/move because they do not want to give up their low-rate mortgage.
This means more inventory and more transactions. It also means more refis, but that is only “woohoo” for lenders.
III. Rising Inventory Can Be A Very Good Thing!
The crash bros and the mainstream media love to try to scare us about surges in inventory.
But, HousingWire’s Logan Mohtashami reminds us that we’ve had numerous periods in history when inventory was rising – along with prices and the number of transactions.
Here is one of his many posts in which he reminds us that rising inventory is not only not the end of the world, but it can be a very good thing. Post-2008 simply warped everyone’s perspective.
One more reminder – today’s active listing level of 1.2 million homes is not even close to the 2-2.5 million-home average.
IV. Mortgage Rates Are Almost 1% Lower Than One Year Ago; The 10-Year Treasury Is Only 2/10% Lower
The average mortgage rate was 0.88% HIGHER one year ago today. But the 10-Year Treasury was only 2/10% higher.
Another indication that the spread between mortgage rates and Treasury Yields is tightening, and we still have 3/10% to go to get back to historical norms. (Yes, rates will likely continue to fall).
V. Can Canadians Get Mortgages In The U.S. – Even If They’re Bad At Hockey AND Have No U.S. Credit?
There are mortgages available to non-U.S. citizens, such as Canadians. If they have U.S. credit (many do), so much the better. But if they don’t, we can use a Canadian (or foreign) credit report, as well as “alternative credit” like utility and cell phone payment histories.
For income, we often just take advantage of DSCR loans that require only rental income. Down payment requirements range from 25% (the lowest) to 35%.
