All Forum Posts by: Chris Mason

Now that soft pulls include all 3 scores, all debts, payment histories and - critically - can feed into the AUS with accuracy, we've switched to soft pulls for preapprovals. But that's not normal. 

By 2027, preapproval should generally be a soft pull. But for now, it's a hard pull almost always. 

One of the biggest wholesale lenders (read: works through mortgage brokers, not with consumers directly) in the country came out with a super sexy one time close construction loan just last week with only 5% down (interest only payments during construction, optional one-time rate float down at end of construction without having to re-close/qualify, and for the GC 1st draw is AT closing meaning no need for the GC to rack up another $100k in credit card debt -- like I said, super sexy)... but min FICO score (for now) is 700. What's holding that back? 

 There's no limit. Since each one you sequentially buy will be a primary residence, even the Fannie Mae cap of 10 financed properties will not apply. I've had clients pick up a half dozen homes without ever putting more than 5% or 10% down or selling any of them.

 Thread is about mortgage rates, not the Fed rate. The fed influences mortgage rates, but does not set them. Case in point, the Fed just raised the Fed rate 0.25% today, and mortgage rates have fallen by about 0.2% on the exact same day. 

Barry Habib has won 3 crystal ball awards for his accurate real estate and mortgage forecasting. 

Here's him interviewing a billionaire bond trader (mortgage backed securities = bonds) on the subject.

Mr. Crystal Balls and Mr. Billionaire say that rates will be trending down throughout the year. And their reasons are very compelling and make sense. Rates are currently higher than they "should" be, because there's no perceived "servicing value" from collecting 3-5 years of payments on a mortgage originated today. If it's just going to be refinanced after 7 or 13 payments, why buy it? Why should a bank even want to do that? "Fine," says the banks and mortgage backed security market, "we'll do it, but we're going to jack your rates/fees up EXTRA to offset the lack of servicing value." So once rates drop juuuust enough that there's servicing value, it'll be a feedback cycle. 

Note that the above video is over a month old. So far, they've largely been vindicated. 

I purchased low 5 figures of $MBB yesterday. It's a mortgage backed security ETF. As rates go down, that goes up.

Here's how that's been going (obviously this is far from a get rich quick strategy, lololol). :)

 It's great when/if you can make it work. The income limit is the kicker. 

Gotta make greater than $X to qualify for a mortgage of the size required to buy a 2-4 unit.

But also gotta make less than $Y to be able to use the Home Possible program.

And if you use the rental income for one of the above, you have to use it for both, whatever is good for the goose is good for the gander. Same with bonus income and overtime. You can cherry pick which sources of income you use (base salary, rental income, bonuses, overtime), but whatever you pick, has to be used for all qualifying criteria.

If your loan officer told you about it, that likely means you're in that very narrow strip of overlap (the "Goldilocks zone," or the "sweet spot," whatever you want to call it). Most people, I'd say >90%, are not in that narrow strip - the soup is either too hot, or it's too cold, either way there's nothing there for Goldilocks. Which is also why it doesn't get much copy on podcasts, etc. If I go talk about it on a podcast, and 50 people call me for it, then I'm going to be disappointing at least 45 of them. 

The home possible income limits are by census tract, and available here --> https://sf.freddiemac.com/work... 

If you're reading this and want to see if the program might be a good fit, see if you're just a tad below that income limit, by like 1% to 25% (& if you're only 1% below, then don't get any pay raises after you're preapproved!). Then call a local mortgage broker or local mortgage banker, tell them your finances, and ask what your buying power is. Then go ask a realtor if duplexes or fourplexes, in that are, at that price point, actually exist. The moon, sun, AND the stars, may or may not align. Only way to find out is to go check.

In case you haven't, call your realtor before spending too much time on this. In my area, 19 in 20 contracts that cross my desk, the buyer is obligated by that contract to use a specific title/escrow company, regardless of fees. I have no idea what the norm is where you are looking.

More specific question would yield a more specific answer.

But basically the idea is to let older homeowners "age in place" by stripping the equity away, in exchange for them getting a monthly payment.

So let's say the balance was $100k, rate was 5%, and the elderly person is getting $2000/mo.

After that first month and payment, his new mortgage balance would go to $102,425. Starting with $100k, then they got paid $2k, and add ($102k * 5% / 12) to that for the monthly interest. 

Rinse and repeat until the person is dead, then the heirs have a limited amount of time to sort out what to do with the property. It may be underwater at that point. 

If the heirs can do so, they are better off just collectively paying grandpa $2k/mo (if that's what he needs to live). Since that doesn't involve compounding interest on an ever-increasing mortgage balance that will need to be paid off before heirs are paid out, it means their inheritance will be larger at the end of the day. The real world isn't that simple, and that's where estate planning lawyers come into play, among other things such as family therapy. Even some convoluted combination of group family therapy plus estate lawyers plus collectively paying grandma $2k/mo will almost certainly hurt the inheritance less than a reverse mortgage. 

 Local mortgage broker will likely have zero issues with giving you a "garbage in, garbage out" number based on whatever information you want to verbally state. And then, when you're serious, it'll obviously have to be... real... as well.

 Other direction, actually.

LLPA for investment property, used to be 3.375% for 20% down, and then 2.125% for 25% or more, all the way to 40% or 70% or anything% down, 2.125% was as low as you could get that hit.

Now it's still 2.125% for 25% down, but 1.625% for 30% down, and 1.125% for 40% down or more. 

On a refinance, that means you will continue to get rewarded for having more equity, as well, with 40% equity yielding better rates than 25% equity (as opposed to before, where after 25% equity it was all the same). 

Here's the current matrix, I don't have the older one saved anywhere, but had the old rental property hits memorized (note these hits are cumulative): https://singlefamily.fanniemae... 

There's also a new hit for >40% DTI. Most first time homebuyers will get smacked by that (ANY homebuyer who has ever asked "how can I increase my buying power?" will be getting slapped by it), but few real estate investors do.