May 11, 2023
Spring is here. Rain is falling. The sun is out. Spring is the time when farmers and gardeners plant seeds. Spring is also the perfect time to plant your financial garden. The first “seed” to plant is buying your first home. Homeownership is the first seed in your financial garden and growing generational wealth.
Did you know that Homeowners have net worth 40% higher than renters? In fact, the Net Worth Gap between Renters and Homeowners has increased every year since 2010 and continues to get larger. Homeownership is your financial foundation. 70% of the average American family’s net worth is in their home.
Whose garden are you growing? Rent inflation, rising to more than 9%, significantly outpacing the actual rate of inflation. Unfortunately, rents are expected to increase throughout 2023 into 2024. Every rent payment made is fertilizer for your landlord’s financial garden. Your landlord’s financial situation improves every month, while your return on rent is ZERO!
Spring is the time to plant your first seed and watch your financial garden grow.
May 4, 2023
The Federal Open Market Committee (FOMC) announced another quarter-percentage point increase lifting the benchmark federal-funds rate to a 16-year high. The Fed began raising rates from near zero in March 2022. For the 10th consecutive time Fed officials increased rates by a quarter point on May 3 to a range between 5.0% and 525%. Mortgage rates have more than doubled since the Fed's first rate hike in March 2022, and the average monthly mortgage payment for a “typical” home has risen 50 percent over that period.
The Fed increased rates this week. Why did mortgage rates get better when mortgage rates have been getting worse over the past year? The answer is inflation. When inflation rises, mortgage rates go up. When inflation looks to be headed downward, mortgage rates go down. The Gross Domestic Product (GPD) released April 27 came in at 1.1% indicating a slowing US economy. The recent jobless data also showed a cooling of the job market. The recent economic data combined with investors’ belief the Fed rate increases will finally succeed in curbing inflation pushed mortgage rates lower. That happened after the central bank's most recent rate hike on Wednesday. Yes, the interest rate on your credit cards may go up, but mortgage rates got better.
April 28, 2023
Most of us were taught from an early age that it’s rude to point. Well, this is probably true, unless of course we’re talking about mortgages. And if you’ve been following us for any length of time, you know that we here at FDM LOVE talking about mortgages, and how to put our valued clients on the best path towards their financial freedom and future!
So what does it mean to “point”? Well, put simply, points are prepaid interest, payable at closing, to obtain a lower interest rate over the life of a fixed-rate mortgage. 1 point is equal to 1% of your total loan amount. And up until recently, you could expect 1 point to reduce your interest rate by around a quarter percent (.25%) for the life of the loan, generally a good deal if you were planning on staying in your home for 5 years or more. But with the recent changes in the market, 1 point may now buy your rate down as much as 1%, meaning that your breakeven period for buying that point might be 18 months, or even less in certain cases.
What could that do for you? Well, making a small investment to buy points when you take out your mortgage could easily result in thousands, if not tens of thousands, of dollars in savings over the life of your 30 year fixed rate mortgage loan. Your preferred FDM Mortgage Professional would be happy to perform a no-obligation analysis to determine if “pointing!” is right for you.
See? Sometimes it’s polite to point, and a smart financial decision as well! How cool is that?
*The above examples are for illustrative purposes only. Your individual costs and savings will be wholly determined by your credit, income, assets, loan amount, overall financial profile. Rates and points subject to change without notice. This is not a commitment to make a loan. Equal Opportunity Lender.
April 21, 2023
What role do Bank’s play in today’ Real Estate Market? The popular misconception is banks are where to get a mortgage. Well banks may have the money, but they are not lending it. The reality is 71% of all Fannie Mae and Freddie Mac loans and 86% of all Government Loans are originated by Independent Mortgage Bankers. According to JP Morgan CEO Jamie Diamond “It is becoming increasingly difficult for banks to stay in the mortgage business.” More stringent government rules about how much capital banks need to allocate to such activity, has resulted in "derisking" in mortgage lending. Part of the “derisking” process is banks quickly changing underwriting guidelines, raising minimum credit score requirements, and reducing Debt-to-Income ratios all in an effort to reduce their mortgage business. The recent failures of SVB Bank, and Signature Bank, as well as the government supported bailouts of First Republic Bank and Credit Suisse Bank hastened banks retreat from the mortgage business.
What we are experiencing today is an overall tightening of credit. The Urban Institute estimates that if mortgage credit reverted to normal levels — below the excesses of the mid-2000s but much looser than today — an extra 1 million loans could be written per year. This market requires a team with a high industry IQ! As banks exit mortgage lending, a trend that will continue, FDM is ready, willing and stable filling the gap. FDM has expanded loan programs to meet the needs of today’s Real Estate Market. Did the bank let you down? FDM is here to help!
April 13, 2023
My credit score is 660 one day and then 620 a week later? Credit Karma, Freecreditreport.com, and my bank webpage all have different credit scores? What is a good score? What is a bad score? What credit scores count? What is the Experian BOOOOSTT? (Purple Cow Mooing). Credit scores are mysteries unless you are working with Mortgage Professionals who know what determines a credit score and how to improve it. Do not let concerns about your credit score stop you from becoming a homeowner. FDM has the tools, programs and experience to help you with any credit score. If you want to learn more about how credit scores work and what options are available to help you, please reach out to your FDM Loan Officer today.
April 2023
Over the past two-years buyers paying cash for their new home hit record levels. Nationally cash-buyers represent 28% of the total Market and in some Markets, Naples for example, cash-buyers have represented up to 90% of all transactions. The Market is starting to “normalize”, and it is time to use new tools to give your clients an advantage. How do you give your clients greater leverage in this Market? Use a little “Magic” and “Poof” turn your Buyer into a Cash-Buyer. Pre-Qualifications are just “Looky-Looks”. Rocket Mortgage’s Pre-Qualification, for example, is based on a Credit Report and “on information provided by the Borrower”. This holds no value in today’s Market. Pre-Qualifications are what most Loan Officers offer. Pull a credit report, run numbers based on what the Borrower told me and send you a Pre-Qual Letter.
Use a little FDM “Magic.” The FDM Purchase Power is a fully underwritten Pre-Approval. The power of a true fully underwritten Pre-Approval turns your borrower into the next best thing to a cash-buyer giving your client an edge in this Market. Your buyer is now equivalent to a cash-buyer subject only to the Appraisal and Title. Income…Check! Cash-to-Close…. Check! Loan Approval…..Check! No Surprises!
The FDM Purchase Power, a fully underwritten Pre-Approval, gives your client a huge advantage in this Market. Your client can close faster! Your client knows their mortgage is approved! Your client makes an offer with confidence! Cash-buyers will still have a slight advantage, but the FDM Purchase Power gets your clients close and makes your client’s offer stronger than the 72% of the Market that still needs a mortgage. Don’t leave your Sales Contract at risk with a “Looky-Look” Pre-Qualification. The FDM Purchase Power Buyer is as good as a cash-buyer.
Mar 23, 2023
How much of a down payment do you need to purchase a home in today’s market? 20%? 10%? 5%?
If you answered as little as 0%, you’re right! Your friendly professionals at Fidelity Direct Mortgage have access to multiple sources of down payment assistance (DPA), so you could put as little as 0% down to purchase your next home*. Moreover, the Federal Housing Administration just reduced the monthly mortgage insurance premium (MMIP) by over 30%, meaning that your dollar goes further in purchasing the home that you want, not just the home that you’ll settle for!
So, give the Federal Housing Administration a hug and give your preferred FDM mortgage professional a ring, because we’re both committed to affordable homeownership for you and for all!
*Subject to income and asset limits, and credit approval. Rates, terms, and programs can change without notice. This is not a commitment to make a loan. Additional conditions apply. Equal housing lender.
Feb 8, 2023
The spike in mortgage interest rates, in response to the highest rate of inflation since the late70’s, has been the focus of the media and our clients. The 400 basis points (4%) spike in mortgage rates, in only ten months, certainly shocked the Real Estate market. Increasing mortgage rates are just one part of the story. As families struggle to pay their bills credit card debt reached a record $930.6 billion at he end of 2022 a 18.5% spike from a year earlier. According to Trans Union the average credit card balance rose to $5,805.00 over that same period. Many clients are shocked to learn that even though they have made all their payments on time their credit score dropped significantly. How does that happen? The Credit Usage Ratio is the second most important factor, representing 30%, in determining your credit score. What is the Credit Usage Ratio? It is your credit card balance as a percentage of your available credit. If your credit card balance exceeds 30% of your available credit, it negatively impacts your credit score. As our clients use their credit cards to pay get by their balances increase and the credit score drops. The more they use their credit cards the lower their credit score goes. “What is my ratio?” is more than my likes on Social Media.
The unintended consequences of increased credit card usage are the surprising and rapid drop in credit scores. In fact, for the first time in over a decade the average FICO score did not increase from the previous year. At the end 2022 the Average Credit Score for ages 23 to 59, representing the majority of our clients, was 669 which is rated “Fair”. What does that mean to my clients? Lower credit scores mean higher interest rates. Lower credit scores limit loan programs. Lower credit scores make getting a loan approval more challenging. The ability of your loan officer to work with your clients to improve their credit score is crucial. FDM has the tools to help your clients increase their credit scores. If your clients are surprised by their credit score, contact us and we can help.
Jan 13, 2023
Every new year brings hope and enthusiasm. This is the reason for New Year’s Resolutions. I will lose weight. I will get to the gym. I will save money. I will spend more time with my family. For many in our business our resolutions are get more clients, close more deals, make more money.
Many of us enter Real Estate or finance careers for the financial benefits. There is absolutely nothing wrong with reaping the financial rewards of achievement in any business. 2020 and 2021 were some of the best years in the history of the Real Estate industry and we experienced a financial gain. 2022 was a very different year as the fundamentals of the market changed impacting personal income.
While reaching personal financial goals is extremely important, it is also important to fully realize the impact we have as an industry on families and the community. What we do changes lives. We help families become homeowners. We change the financial futures of generations. Homeownership is the foundation of generational wealth. We provide the safely and security of home! This amazing result of our efforts sometimes get lost in challenging years.
2023 is a great year to add a renewed purpose of helping families to our New Year’s Resolutions. Remembering the true life changing impact of what we do keeps us energize and excited even when the market is a little challenging. When we are excited and energized, we get more clients, close more deals, make more money. Funny how that works!
Ask us about the FDM Purchase Power a fully underwritten Pre-Approval with a Buy Down Rate Lock Protection. Every is a cash buyer. Find a home the loan is done!