The Mortgage and Real Estate Scoop
As we step into 2025, I want to express my heartfelt gratitude to all my clients and those considering the journey to homeownership. A new year means fresh opportunities to turn your dreams into reality. Whether you’re planning to buy your first home, refinance, or invest in your future, I’m here to help every step of the way.
Let’s make this year the one where your goals come to life. Wishing you health, happiness, and success in 2025!
As we approach the end of this year, we can’t help but reflect on the incredible journey we’ve had together with all of you. This year has been filled with growth, new opportunities, and the realization of long-held dreams, whether it’s buying a new home, refinancing to secure a better rate, or exploring the best mortgage options available. We are honored to have played a part in helping so many of you achieve your homeownership goals.
As we look forward to the new year, we are excited to continue guiding you through the ever-evolving landscape of home financing. With the challenges and triumphs of the past year in mind, we are ready to face the future with renewed dedication, fresh insights, and a steadfast commitment to helping you find the best mortgage options for your unique situation.
A Year of Growth and Gratitude
We want to take a moment to express our heartfelt gratitude to each of you who trusted us with your mortgage needs. Whether you were a first-time homebuyer, someone looking to refinance, or a family in search of a construction loan, we are incredibly grateful for the opportunity to work with you. We’re thankful for the trust you’ve placed in us and the relationships we’ve built along the way.
In the past year, we’ve seen incredible resilience and adaptability from our clients. In a year filled with market shifts, rate changes, and economic fluctuations, you’ve shown us how important it is to be well-prepared and to have the right people by your side. Your patience, determination, and commitment to your goals have inspired us all, and we are proud to have been part of that journey.
As we move into the new year, we will continue to be here for you. Ready to offer guidance, answer questions, and provide the resources you need to make informed decisions about your home financing. From helping you navigate complex loan structures to securing the right type of mortgage for your needs, we are here to ensure you feel confident and well-informed every step of the way.
Here’s to a successful, prosperous, and exciting year ahead, we can’t wait to help you make your homeownership dreams a reality!
With Christmas concluding the prior week, there were few reports other than Consumer Confidence, which had come in slightly below expectations. This should prove to have little impact, especially in the following week. With the New Year on the horizon, there are no reports other than the Chicago Manufacturing output report for the entire week. Happy Holidays!
Consumer Confidence
A post-election pop in consumer confidence fizzled at the end of the year, owing to worries about the U.S. stock market and a potentially higher cost of living as a result of new tariffs. The index of consumer confidence dropped 8.1 points to a three-month low of 104.7 in December, the privately run Conference Board said Monday.
Primary Mortgage Market Survey Index
• 15-Yr FRM rates saw an increase of 0.08% with the current rate at 6.00%
• 30-Yr FRM rates saw an increase of 0.13% with the current rate at 6.85%
MND Rate Index
• 30-Yr FHA rates saw an increase of 0.03% for this week. Current rates at 6.45%
• 30-Yr VA rates saw an increase of 0.03% for this week. Current rates at 6.46%
Jobless Claims
Initial Claims were reported to be 219,000 compared to the expected claims of 225,000. The prior week landed at 220,000.
What’s Ahead
Chicago PMI Report will be the only release for next week.
If you’re considering buying a home while dealing with unpaid taxes, you might be wondering how your tax debt affects your mortgage approval. The good news is, it is possible to buy a home even if you owe taxes. Here’s what you need to know about how owing taxes can impact your homebuying process.
How Owing the IRS Affects Buying a Home
You might not need to wait until your tax debt is completely paid off to apply for a mortgage. It’s important to speak with a loan officer who can guide you through your options based on your specific financial situation. If you’ve been paying off your tax debt through a payment plan, be sure to let your loan officer know and provide supporting documentation and proof of payment.
Getting a Mortgage While You Owe Taxes
While paying off your tax debt isn’t always required before getting a mortgage, there are specific qualifications for mortgages when you have unfiled taxes or a tax lien.
How to Qualify for a Mortgage with Unfiled Taxes
When applying for a mortgage, you’ll need to provide the last two years of your tax returns. If your taxes are unfiled, you’ll need to file an extension with the IRS or your state government to remain eligible.
How to Qualify for a Mortgage with a Tax Lien
A tax lien gives the government a legal claim to your property due to unpaid taxes. Federal and state liens typically need to be paid off before closing to qualify for a mortgage. The IRS releases the lien within 30 days after the tax debt is paid in full.
Exceptions to the Rule
In some cases, exceptions are made for tax liens if you have a payment plan in place. These exceptions depend on the type of loan program.
Conventional Home Loan Requirements
Government Home Loan Requirements
Government-backed loans (like VA, USDA, and FHA) have more flexibility but still require you to resolve your tax lien situation.
Does Owing Taxes Affect Mortgage Approval?
Tax debt won’t automatically disqualify you from getting a mortgage, but paying off your debt will increase your chances of approval. If you can’t pay off your tax debt in full, request an installment agreement and ensure you’re making timely payments.
Experiencing bankruptcy can feel like a significant setback, but it doesn’t mean the end of your dream to own a home. With time, effort, and careful planning, you can rebuild your financial foundation and secure a mortgage. Here are some key steps to guide you through the process of buying a home after bankruptcy.
Step 1: Get a Professional Credit Assessment
After your bankruptcy is discharged, there is typically a waiting period before you can apply for a mortgage—usually two years for Chapter 7 bankruptcy and as little as one year for Chapter 13, depending on the loan type. Use this time to focus on improving your credit score.
Your credit report will be closely scrutinized by lenders, so taking proactive steps to improve it is essential. The better your credit profile, the more likely you’ll be approved for a mortgage—and with better terms.
Step 2: Create and Stick to a Monthly Budget
Rebuilding financial stability after bankruptcy starts with creating a budget. A clear budget helps you manage your income and expenses, ensuring you don’t overextend yourself and remain on track toward homeownership.
Start by listing all your sources of income and subtracting your necessary expenses, such as housing, utilities, and groceries. Use budgeting tools like apps or spreadsheets to make tracking your finances easier. The goal is to allocate a portion of your income toward savings for a down payment and other home-buying costs.
Step 3: Save for a Down Payment
Saving for a down payment is one of the most critical steps in securing a mortgage after bankruptcy. A larger down payment reduces the lender’s risk and shows your commitment to the home-buying process.
The amount required for a down payment depends on the loan type and home price. Conventional loans often require around 20%, but some government-backed loans, like FHA loans, may allow down payments as low as 3.5%. Start saving as early as possible to meet your target amount.
A substantial down payment not only increases your chances of approval but may also qualify you for better interest rates and loan terms.
Step 4: Maintain Financial Discipline
Once your bankruptcy is discharged, maintaining strict financial discipline is crucial. Avoid unnecessary purchases, pay off any remaining debts, and refrain from opening new lines of credit.
Staying disciplined also helps improve your credit score over time, which is vital for qualifying for favorable loan terms and interest rates.
Step 5: Stay Positive and Patient
Rebuilding after bankruptcy is not an overnight process. It takes time, patience, and dedication to improve your financial health. However, by following these steps and staying committed to your goals, homeownership can become a reality.
Remember, your financial past does not define your future. With the right plan and support, you can move forward, secure a mortgage, and build a brighter future in the home of your dreams.
As the holiday season surrounds us with its warmth and cheer, we reflect on the incredible connections we’ve made this year. To our valued clients, whether we’ve worked together already or you’re considering partnering with us—thank you for trusting us to be part of your journey.
This season is not only a time for celebration but also a moment to appreciate the opportunities ahead. We’re truly grateful for the chance to help you achieve your dreams, whether it’s finding the perfect home or planning for a brighter financial future.
As we step into the new year, we’re filled with hope and excitement for what’s to come. May this holiday season bring you peace, joy, and cherished moments with loved ones. Here’s to a wonderful year ahead filled with growth, opportunity, and success!
Happy Holidays and best wishes for a prosperous New Year!
Refinancing can help homeowners save money, but it’s essential to determine if the potential savings outweigh the upfront costs. One key tool in making this decision is calculating the refinance break-even point. This simple calculation reveals how long it will take for your monthly savings to cover the costs of refinancing. Here’s everything you need to know about determining when refinancing will pay off.
What Is the Refinance Break-Even Point?
The refinance break-even point is the time it takes for the savings from lower monthly payments to equal the total costs of refinancing, such as closing fees and other expenses.
For example, if your closing costs are $4,000 and you save $200 per month, your break-even point is 20 months.
If you plan to stay in your home beyond the break-even point, refinancing can offer substantial long-term savings.
How to Calculate Your Break-Even Point
These costs generally amount to 2-6% of the loan amount.
Factors That Influence Your Break-Even Point
Several factors affect how quickly you reach your break-even point:
When Does Refinancing Make Sense?
Refinancing might be a good choice if:
Common Mistakes When Calculating the Break-Even Point
To ensure accurate calculations, avoid these common pitfalls:
The Long-Term Benefits of Refinancing
Once you pass the break-even point, the monthly savings from refinancing can add up to significant financial benefits, potentially saving you thousands over the life of the loan. However, resetting your loan term may extend repayment time, so it’s essential to weigh the pros and cons.
The rate cut by the Federal Reserve was hotly anticipated, and as predicted, they proceeded with the reduction, signaling the possibility of further cuts depending on inflation data. Although markets were generally receptive to the positive news, other government-related issues had dampened the high spirits temporarily. Outside of the rate decision, the PCE Index (the Federal Reserve’s preferred inflation indicator) has performed positively by beating the forecast. In addition, the Consumer Sentiment was exactly where it should be as expected.
PCE Index
The PCE index increased a scant 0.1% last month, the government said Friday. That’s the smallest rise in three months and just half as much as economists polled by The Wall Street Journal predicted. The barometer of U.S. inflation favored by the Federal Reserve rose more slowly than expected in November, breaking what appears to be a gradual drift higher in prices that forced the central bank to scale back plans to cut interest rates.
FOMC Rate Decision
The Federal Reserve on Wednesday cut interest rates by a quarter point, the third rate cut since it began to lower borrowing costs in September. The central bank’s latest move leaves its benchmark lending rate at a range of 4.25%-4.5%, a two-year low.
Primary Mortgage Market Survey Index
• 15-Yr FRM rates saw an increase of 0.08% with the current rate at 5.92%
• 30-Yr FRM rates saw an increase of 0.12% with the current rate at 6.72%
MND Rate Index
• 30-Yr FHA rates saw an increase of 0.10% for this week. Current rates at 6.42%
• 30-Yr VA rates saw an increase of 0.10% for this week. Current rates at 6.43%
Jobless Claims
Initial Claims were reported to be 242,000 compared to the expected claims of 220,000. The prior week landed at 224,000.
What’s Ahead
With an extremely light release schedule ahead of Christmas, the jobs release data will be the only important release.
Buying a home is a huge milestone, and the excitement of closing can lead many buyers to quickly accept any mortgage offer without fully understanding its terms. One important detail to watch for is whether your mortgage includes a prepayment penalty. This fee can be an unwelcome surprise, so it’s crucial to know what you’re signing up for before finalizing your loan.
What is a Prepayment Penalty?
A prepayment penalty is a fee that some lenders charge if a borrower pays off their mortgage within a specified period, typically during the first two to five years. Though less common, some loans still include this clause. The lender charges the penalty to recoup the loss of expected interest from the loan. Prepayment penalties can apply whether you refinance or sell your home, so understanding the conditions of this fee before signing is essential.
How to Determine if You Have a Prepayment Penalty
Don’t wait until the closing process to ask about a prepayment penalty. Review your loan estimate thoroughly after pre-approval. While prepayment penalties are more typical with certain loans, always read the fine print. If anything seems unclear or if there’s a discrepancy between what you’re told and what’s on paper, reach out to your loan officer for clarification.
What Can You Do About It?
If you find out that your loan includes a prepayment penalty, you still have options. For some borrowers, the penalty isn’t a concern, especially if they plan to stay in the home long-term and don’t expect to refinance soon. Sometimes, agreeing to the penalty can lower your interest rate or closing costs.
However, if you foresee moving or refinancing within a few years, this fee could be problematic. In that case, try negotiating with your lender to remove or reduce the penalty. If that doesn’t work, consider shopping around for another lender who offers better terms.
A prepayment penalty can significantly impact your mortgage, but understanding it upfront allows you to make informed decisions. If you do encounter this fee, negotiation and comparison shopping could help you secure more favorable loan terms for your dream home.
A mortgage pre-approval is one of the most valuable tools in your homebuying journey. It’s not just a letter stating how much you’re qualified to borrow; it’s a written commitment from your lender that assures sellers you have the financial backing to make a competitive offer.
Having a pre-approval letter in hand can give you a significant advantage in a competitive housing market, signaling to sellers that you’re serious, financially prepared, and ready to move forward.
However, like many things in life, pre-approval letters have an expiration date. If you don’t find your dream home before that date passes, you may be wondering what your next steps should be.
When Does Pre-Approval Expire?
Pre-approval letters typically expire within 60 to 90 days from the date they are issued. The exact expiration period depends on your lender and personal financial situation. A variety of factors may contribute to the expiration of your pre-approval, including changes in your credit, income, or debt. It’s important to stay mindful of the expiration date so you can plan ahead and ensure you’re still on track for purchasing the home of your dreams.
What Happens If You Don’t Use Your Pre-Approval?
It’s important to remember that just because your pre-approval expires doesn’t mean your home search is over. If you haven’t yet found the right property, or if the market has been particularly competitive, don’t be discouraged.
If your pre-approval expires, all you need to do is refresh it. This is a common step in the homebuying journey and is relatively simple to do. You’ll need to provide updated documentation—such as your most recent bank statements, pay stubs, or any changes to your financial situation—to ensure your pre-approval remains accurate and valid. This allows the lender to reassess your qualifications and ensure you still meet the necessary requirements for a mortgage.
Steps to Take When Your Pre-Approval Expires
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