All Forum Posts by: Zach Wain

Our Mortgage Company has partnered with a local Non Profit that specializes in affordable housing, and their new Down Payment Assistance/My community second mortgage is now available. If you are a first time buyer in Maricopa county and are within the non profits AMI income limits, they are offering an interest free $35,000 silent second mortgage. Free money!! This can be all of your downpayment or in addition to a small downpayment. Currently, it only works for conventional loans, but FHA/VA is coming up next. Reach out for details!

We also have partnered with a lender that has their own FHA DPA loan and is a great option for those needing to go FHA as well.

every state, county, etc has different programs. We have a couple lenders that have their own in house FHA DPA, thats pretty cool. And, we have a DPA in Maricopa county as well for conventional. 1st time buyer, AMI income limits, etc. These are all going to be for a primary home, not investments.

3-6 months before you plan to buy is my recommendation.  

@Patrick Sikorski - If you but a 1-4 unit property, "delayed financing" will work for your scenario.  There are still "cash out" pricing hits on the refinance, there is no way around that part, but you can buy with all cash and than cash out refinance the next day.  

The details - it must be all cash. No mortgage secured to the property. Next, you must repay any cash that was not your own. And, you will be held to LTV restrictions based on the property type. a 2-4 unit is capped at 70% loan to value. And, they will not let you use a higher appraised value to get additional cash out. For that, you must wait a full 6 months.

@Beau Thompson - PM'ing you.  It depends on your scenario, but we have a few options

IMO - the Fed looks in the rear view mirror rather than at the road.  But, it seems like Powell is concerned that wage growth is sticky and that if they let up too early inflation will come back.

But, we have some encouraging numbers on inflation recently.  The past 5 months, headline CPI is at 1% flat, pretty much on target annualized.  Core CPI is at 1.9% the past 5 months, still too high, but much better.  CPI will come down to 2%-3% by next year.  32% of the CPI report is "shelter costs"  8% is an actual rent survey but its done in a YoY analysis, so rents appear to still be going up when they are going down in real time.  That will take another 3-9 months to works its out way down.  And OER is 24% of the entire CPI report.  Owners Equivalent Rent survey.  

OER - get this!!  The US Bureau of Labor statistics calls random home owners each month and asks them what they think their home would rent for if they had to move.  A subjective opinion from homeowners on what their home would rent for.  Let that sink in for a moment... This metric, is 24% of the entire CPI report!!!  It takes months and months for the avg home owner to realize that rents are actually going down, so OER is another lagging indicator that could take another 3-6 months to start coming down.

Nov CPI -  Core rose 0.2%, headline rose 0.1%.  Shelter costs were up 0.6% - and they make up 32% of the report.  Imagine in 3-6 months when shelter costs are -0.3%, we will see some negative CPI numbers and I think by Q2/Q3 we hit an annual 2% CPI number.

PCE - that is more challenging.  But, I am willing to bet that if CPI is at 2% and PCE is at 4%, Powell is going to focus on PCE and still keep rates high... 

and WY 6%...

 LOL, good catch.  I pulled a chart from ppic.org that shoes 27% of the CR goes to CA.  23% Colorado, 17% AZ, 10% utah, 9% Mexico, 5% NM, and 2% Nevada.  But, the CA portion goes to So Cal exclusively from what I can see

 The Fed also said inflation was transitory and they constantly change their target rate and plot predictions.  Q2/Q3 we will likely be in an "official" recession, whatever that hazy term means now, and inflation will be coming down quickly.  When do they start to lower rates?  Great question, that may take a little more time.  The Fed is intent on stopping inflation.

CPI and PCE are the two most important inflation reports, and the Fed bases their decisions off of these numbers (and unemployment).  I think by Q2/Q3 2023 CPI inflation will come down drastically, faster than most realize.  Annual CPI is the sum of the past 12 months of CPI inflation numbers.  The largest monthly numbers were in Feb, May, and June of 2022.  Once those numbers fall off, we could be on 12 month 2% target again much faster than the Fed is forecasting.  PCE is a little tougher to predict, but check out the CPI numbers.  This is headline CPI, not Core numbers.  Core strips food/energy and is more closed followed.  But, I can only find the headline numbers at the moment

Nov 21 - 0.7%

Dec 21 - 0.6%

Jan 22 - 0.6%

Feb 22 - 0.8%

Mar 22 - 1.2%

Apr 22 - 0.3%

may 22 - 1.0%

Jun 22 1.3%

jul 22 - 0%

Aug 22 - 0.1%

Sept 22 - 0.4%

Oct 22 - 0.4%

Nov 22 - 0.1%

The last 5 months we have 1% inflation, which is 2.4% annualized.  The Fed target is 2%.  If we continue this trend the big numbers start to fall off and get replaced by smaller numbers we could be in the 2%-3% range 6-7 months from now.

The biggest item, that I think could lead to CPI specifically dropping even faster is the way the CPI report calculates shelter costs.  8% of CPI is based on an actual rent survey, but its y/y changes not m/o, so even as rents are dropping in real time it will take another 3, 6, 9 months for rent numbers to come down on CPI.  Than, 24% of the entire CPI report is OER.  Owner Equivalent rent survey.  I have written a few pieces on it and will put up a post soon.  It takes 3-6 months at least after rents start to drop for the OER survey to start reflecting that.

Point being, "shelter" costs make up 32% of the entire CPI report and they are still going up!  Even though real life shelter costs are going down.  It may take another 3-6 months, but the CPI shelter costs will start dropping and that will further push inflation numbers down.  Combining that with the fact it takes 3-6 months after each Fed hike for the impact to start to be felt.

CPI numbers will be LOW very soon.  PCE is a little different, and I have a feeling the Fed will focus on whichever number is higher.  So, CPI is only half the battle