Luminate Bank | Blog

Why I Emerged from Retirement to Join Luminate Bank

webadmin@goluminate.com (Luminate Marketing Team) — Thu, 07 Mar 2024 16:27:57 GMT

Why I Emerged from Retirement to Join Luminate Bank

It's been a year since I joined Luminate as an early executive. It was my first time joining a community bank after more than 30 years as a banker.

My career required weekly travel and time away from family and my passions. When all travel stopped during the COVID-19 pandemic, I realized life was better being home more, so I took a two-year break from the workforce.

A combination of things led me to emerge from semi-retirement last year, but a few elements stand out. Throughout my career, I’ve been a builder and have always harbored an entrepreneurial spirit. Luminate allowed me to exercise my entrepreneurial creativity again.

I was also wildly impressed with the executive team at Luminate. I believe that if you surround yourself with great people you will rise to their level.

And, lastly, I was especially drawn to the opportunity to work within a community bank. My involvement with the City of Lakes Community Land Trust reaffirmed my passion for working hard to improve our community from the inside out.

So, what have I learned since joining the Luminate executive team a year ago, and has the experience met my expectations?

I've joined a team of entrepreneurs who believe banking can be simpler.

It's not that we’re doing anything grandiose. Instead, we focus on innovating the small tasks—those 10 to 15-minute activities that can add up quickly. If we can eliminate keystrokes and save you minutes on the hour, we’ll find a way to make it happen.

I’ll give you a few examples:

Mobile Deposit—deposit a check on your phone rather than having to come into a branch
Approve your company’s transactions during a meeting because, once again, you can do it on your phone
Use DocuSign to open an account—from anywhere, even your phone

In the past year, I’ve seen customers get just as excited as we are about simplifying their banking experience. Wherever you go and whatever problem you’re trying to solve, you’ll find restraints on practically everything. People always seem to have a reason for why a business can’t do something.

It’s not like that at Luminate. Our team is always thinking: Is that scalable? Can we make it work across the country?

It ties back to working with a team of entrepreneurs who know there’s always a simpler way.

I’ve joined a tight-knit community that understands banking can be accessible.

Online banking is almost irreplaceable—except when it’s not. It may be rare, but when you want to pick up the phone and call someone, it makes a difference to have someone to call!

At a larger bank, you’re going to be sent to a call center, but that doesn’t happen at Luminate. We make sure that you can and will always have access to a banker.

If you call my team for your commercial depository needs, you’re going to talk to Kari Glynn, Lindsay Fisher or Nick Purohit.

Or, if you need to talk with someone about your personal banking, you’ll call Gretchen Holmgren, or a member of her team. And guess what? They’ll all still be available tomorrow.

Over time, you’ll naturally build these relationships, and they’ll be the ones you want to come back to again and again.

I've joined a team of doers that work hard to make banking products better.

When Silicon Valley Bank failed in March 2023, it created a nationwide struggle for community banks as we saw a significant number of deposits migrate toward larger banks.

Because of the national narrative around smaller banks at that time, we knew we had to do something to entice people to stay.

Everyone on our team, including the CEO and co-chairmen of the board, offered to meet with our customers, to better understand what would make customers more satisfied with their banking experience.

We brought our competition up a notch with scalable tools to simplify our customers’ lives. One standout product mix includes the unique combination of an interest-bearing checking account and high-yield savings accounts with a great suite of tools to support your needs, a combination that other banks simply aren’t offering.

Needless to say, my experience at Luminate has far exceeded the expectations I held in January 2023.

Now, a year later, I’m remarkably proud of who we are and what we offer. I’ve got an exceptional team with Kari, Lindsay and Nick who each bring unique insights and shared enthusiasm to the table.

And my colleague, Gretchen, has an amazing breadth of knowledge, and I learn something from her and her team every day.

It’s unique to be in a place that’s absent of hidden agendas and where everyone shares the same priorities. If you’d like to be involved, I’d love for you to join us.

Reach out in the comments or send me a direct message and let’s chat more.

How the Right Treasury Management System Can Boost Your Title Agency's Productivity

webadmin@goluminate.com (Luminate Marketing Team) — Thu, 07 Mar 2024 16:10:54 GMT

How the Right Treasury Management System Can Boost Your Title Agency's Productivity

Having worked in banking for over 30 years, I've learned that treasury management systems are way more complicated than they need to be. Especially in the title insurance industry, poorly designed technology can really take a toll on operational efficiency and overall effectiveness.

At Luminate Bank , we’ve worked hard to understand the pain points that title companies and their banking administrators experience within treasury management systems. After hundreds of conversations, we've learned that a painful user experience is often the result of a system built poorly, causing the following impacts:

Basic tasks feel like a burden because outdated security measures require extra, unnecessary steps;
Manual errors are common because title software and treasury management systems (TMS) are not integrated;
Important priorities are missed because the TMS is confusing and not easy for the closer to use.

In today's world, a treasury management system doesn't need to be so complicated. If you have access to a tech stack that streamlines and optimizes processes, you can expect your title agency’s workflow to be more efficient and productive.

If you’re looking for a new treasury management system to better support your agents’ productivity, here’s what I’d recommend you prioritize with a TMS:

Secure, yet efficient software that protects your business operations without impacting agent productivity.

Many banks require callbacks for wire confirmation, forcing closers to wait at the bank’s convenience. This places an unnecessary burden on title companies, slowing down closer efficiency and causing unnecessary delays.

Look for a treasury management system that prioritizes efficiency without compromising on security. For example, Luminate’s system relies on uniquely serialized tokens to determine what users can access and the actions they can perform in their account—and what they can’t.

Interestingly, we found that this approach enhances security while eliminating the need for banking admins to navigate outdated security measures before they can move forward with their tasks.

It is possible to have both efficient and secure software. Ask your banking representatives about what security measures are in place within their treasury management systems and how they enhance, rather than inhibit, productivity.

Direct integration with title production software to reduce the likelihood of manual errors.

Many TMS are not integrated with title production software, forcing closers to constantly switch between platforms to complete their work. This friction results in unnecessary manual errors that could be avoided with better integration.

A TMS that is directly integrated with title software allows agents to operate seamlessly within their familiar environment, simplifying tasks like sending wires and drafting checks.

This not only streamlines processes for closers but also decreases the likelihood of errors by eliminating the manual entry of account numbers or beneficiaries.

Ask your banking representative whether their TMS directly integrates with title production software and what your team can expect from this integration.

A user-friendly platform with optimized workflows to boost your agency’s efficiency.

Many TMS lack user-friendly interfaces, making it difficult for closers to perform basic tasks. Unfortunately, complicated systems not only slow down a title agency’s productivity but also divert valuable attention from the more crucial aspects of their operation.

Ask your banking representative to give you a thorough demonstration of their TMS—and invite a few closers to sit in on the demonstration. Pay close attention to its usability as that will have a direct impact on your agency’s productivity.

We’ve provided a way to streamline internal account transfers and allow for multiple transfers in a single operation—saving closers several minutes on each transaction.

Without it, the process becomes cumbersome and time-consuming, forcing closers to perform one transfer at a time and ultimately impeding their productivity.

At Luminate Bank, we strive to better understand the pain points of our customers and build a more secure, yet efficient treasury management system.

If you own or handle banking functions for a title company, I’d love to hear your thoughts about what you like or dislike about your current TMS. Drop a note in the comments below or shoot me a private message!

You can also learn more about our tech stack at luminate.bank/treasury-management.

Escape the Frustration: Luminate's Recipe for Stress-Free Banking

webadmin@goluminate.com (Luminate Marketing Team) — Thu, 07 Mar 2024 16:05:18 GMT

Escape the Frustration: Luminate's Recipe for Stress-Free Banking

Do you love your bank? If your banking experience has consistently been subpar or downright dreadful over the past year, it's time to reassess your banking partnership—yes, it is a partnership!—and consider exploring better options.

We believe the right banking partner can significantly impact your financial game for a few reasons. Here’s the difference between a subpar and exceptional banking experience:

Subpar Banking Experience

Engaging with a call center to resolve issues
Poor mobile banking options
Signing paperwork at a physical branch
Unnecessary and excessive fees
Rigid policies that offer no flexibility

Exceptional Banking Experience

Access to seasoned bankers with diverse experiences
Personalized support—for everyone
Digital banking—from anywhere
Competitive pricing
Flexible customization

At Luminate Bank, we work hard to continually do what’s right by our customers. We firmly believe that an exceptional banking partnership should be accessible to everyone.

Here’s the top 3 ways Luminate offers an exceptional banking experience for our customers:

Access to seasoned bankers and personalized support

You can’t train earned wisdom. Many on our small but mighty team come with over 20 years of banking experience—a level of expertise you can’t always find at community banks.

Chances are, whatever goals or challenges you have, our team has navigated a similar situation with another customer, and our seasoned bankers can pull from their toolbox of best practices.

We believe in keeping a personal connection with each customer, making sure that joining us doesn’t mean you’re only dealing with automated processes like a call center.

Consistency with your banking partner is key—the same individuals who chat with you online are the ones you'll find emailing and talking with you on the phone.

You never know when you might need to reach out to your banking partner, but when that time comes, it’s crucial that they are easily accessible.

Best-in-class digital banking solutions

Even with a tenured staff, Luminate is proud to be led by a tech-forward team driving innovation across our organization.

Digital banking is particularly beneficial for busy executives and professionals, who value the efficiency and ingenuity of tech-forward solutions.

By avoiding costs tied to physical branches, we can invest heavily in superior technical solutions compared to our competitors.

This eliminates the necessity for in-person visits, with cash withdrawals being the sole exception.

As a result, we are a part of the MoneyPass network, which offers nationwide surcharge-free ATM access, so you can easily access your money anytime.

Competitive pricing with flexible customization

In the first several months of 2023, our team met with our customers to better understand what would make for an exceptional banking experience.

We know many customers choose the best value, and that’s why we offer a unique product mix that doesn’t exist elsewhere—an interest-bearing checking account with high-yield savings accounts.

Here’s a few facts about our unique combination:

Luminate Brighter Checking

Earn 2.02% APY* interest
No fees or minimum balance
Surcharge-free access to MoneyPass network of ATMs
Flexibility on mobile deposit limits

Luminate Radiant Savings

Earn 5.00% APY** interest
No fees or minimum balance
Surcharge-free access to MoneyPass network of ATMs
Flexibility on mobile deposit limits

We’re also able to offer greater customization than you’d experience at a larger bank. For example, while large banks might make it difficult to change external transfer limits, we collaborate with you to adjust limits when appropriate.

____________________________________________________________________________________

Bottom line—it’s not uncommon for a bank to create obstacles if you attempt to transition away from their services. That’s why we step in to help you every step of the way.

At Luminate Bank our priority is to help you escape the frustration and experience stress-free banking. If we can simplify your banking so that you can focus on more important things in life, we’ll consider the job well done.

You can open an account at luminate.bank as soon as you’re ready.

Or, if you’d prefer to connect with someone on our team, reach out to Gretchen Holmgren , our Director of Retail Banking, at 952-939-7224 or gretchen.holmgren@luminate.bank .

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*Annual Percentage Yield (APY) for Luminate Brighter Checking on daily balances. No Minimum Balance. APY is accurate as of 9/5/2023. Rates are subject to change. Fees could reduce earnings on the account.

** Radiant Savings 5.00% APY guaranteed through April 30, 2024. Annual Percentage Yield for Luminate Radiant Savings on daily balances. No Minimum Balance. APY is accurate as of 9/5/2023. Rates are subject to change. Fees could reduce earnings on the account. Consumer accounts only. Contact Luminate Bank for current market rates.

The Magic of Leverage: Maximizing Returns on Minimal Down Payments

Fri, 01 Mar 2024 15:20:00 GMT

In a world where financial forecasts can turn the tide of investment strategies, Goldman Sachs' recent projection for U.S. home prices sends ripples of opportunity for savvy homebuyers.

With the revered "U.S. economic analysts" team at Goldman Sachs pointing to a steady climb in home prices over the next few years, the horizon looks promising, particularly for those considering dipping their toes into the real estate market with minimal initial investments.

A Window of Opportunity in Real Estate

The figures speak volumes: a 5.5% appreciation in 2024, followed by 4.4% in 2025, and an anticipated 4.9% increase for both 2026 and 2027. These numbers aren't just digits; they represent a beacon of potential for generating substantial returns on investment (ROI), especially for individuals leveraging small down payments.

The figures speak volumes: a 5.5% appreciation in 2024, followed by 4.4% in 2025, and an anticipated 4.9% increase for both 2026 and 2027. These numbers aren't just digits; they represent a beacon of potential for generating substantial returns on investment (ROI), especially for individuals leveraging small down payments.

The Power of Leverage

Consider the leverage effect in real estate investments. By putting down just 5% on a home purchase, buyers can control 100% of the asset. This leverage amplifies the impact of price appreciation on the ROI. For instance, a 5.5% increase in property value translates to a far more significant percentage increase in the invested capital, magnifying the returns on that initial 5% down payment.

Consider the leverage effect in real estate investments. By putting down just 5% on a home purchase, buyers can control 100% of the asset. This leverage amplifies the impact of price appreciation on the ROI. For instance, a 5.5% increase in property value translates to a far more significant percentage increase in the invested capital, magnifying the returns on that initial 5% down payment.

A Real-World Scenario

Imagine a homebuyer purchases a property for $300,000 with a 5% down payment, which amounts to $15,000. With a 5.5% appreciation rate in the first year, the property's value increases to $316,500. This $16,500 gain in value boosts the ROI on the initial $15,000 investment, showcasing the compelling power of leverage in real estate.

Imagine a homebuyer purchases a property for $300,000 with a 5% down payment, which amounts to $15,000. With a 5.5% appreciation rate in the first year, the property's value increases to $316,500. This $16,500 gain in value boosts the ROI on the initial $15,000 investment, showcasing the compelling power of leverage in real estate.

Long-Term Growth and Cumulative Returns

The beauty of this investment strategy lies not just in the first year but in the compounding appreciation over multiple years. As the property value grows, the equity built by the homeowner expands, further enhancing the potential for wealth creation. The successive years of 4.4% and 4.9% appreciation contribute to a snowball effect, amplifying the returns on the initial investment over time.

To visualize the cumulative return on investment, consider the compounding effect of each year's appreciation. Starting with an initial investment, the property's value grows annually at the forecasted rates, leading to a significant increase in equity over the four-year period. This cumulative growth exemplifies the potential for substantial returns, particularly for those who enter the market with a modest down payment.

The beauty of this investment strategy lies not just in the first year but in the compounding appreciation over multiple years. As the property value grows, the equity built by the homeowner expands, further enhancing the potential for wealth creation. The successive years of 4.4% and 4.9% appreciation contribute to a snowball effect, amplifying the returns on the initial investment over time.

To visualize the cumulative return on investment, consider the compounding effect of each year's appreciation. Starting with an initial investment, the property's value grows annually at the forecasted rates, leading to a significant increase in equity over the four-year period. This cumulative growth exemplifies the potential for substantial returns, particularly for those who enter the market with a modest down payment.

Navigating the Path to Wealth Creation

This forecast from Goldman Sachs illuminates a path to wealth creation that is both accessible and potent, provided the investors are strategic in their approach. While the allure of high returns is undeniable, it's crucial for potential homebuyers to consider the associated risks and conduct thorough due diligence.

In conclusion, the forecasted home price appreciation presents a golden opportunity for individuals willing to leverage small down payments. Through strategic investment in real estate, coupled with the power of leverage, homebuyers can potentially transform modest initial investments into significant assets, laying the groundwork for long-term financial security.

Building Wealth Through Real Estate: Understanding Homeownership as an Investment Strategy

Fri, 23 Feb 2024 16:24:00 GMT

For decades, the idea of owning a home has been a way of considering building up net worth and gaining financial growth and security.

With the continuing and consistent rise of home values over the years, we can all take a lesson in caution. Investing in real estate requires careful consideration. For instance, how is homeownership a durable form of wealth compared to renting? What’s the intrinsic value of real investment? We’re here to answer these questions, as well as give practical advice for anyone considering getting into this form of wealth building.

A Historical Perspective on Building Wealth

It’s no secret that most of us were told that if we bought a home and kept paying our mortgage, that our home would yield a profit. This is based, not on any speculation, but on historical fact.

For example, take a home purchased in 1942 for $100,000: its value would have appreciated by 153% to $252,761 ten years later. While we may not always see an increase in equity that drastic, you can take comfort in knowing that equity holds true for every year. That means that homeowners who have held their properties for a decade or more, have gained equity every year since 1942 (except for 2006, when there was a small national average decline of about 3%).

Renting vs. Owning

Even with home values continuing to appreciate, we often hear the “rent vs. own” argument. While it’s true that the upfront costs and flexibility with renting can be beneficial, you’ll likely miss out on the long-term financial benefits of homeownership.

For instance, renting means you have minimal responsibility when it comes to repairs and maintenance of your home. Renting also allows for greater mobility without being tied down by a single property.

On the other hand, owning a home is much like a forced savings plan. Your mortgage, interest, and principal payments amount to equity in your home, and appreciation potential can work wonders for your financial status.

Beyond the Roof: The Value of Real Estate Investment

Real estate investment extends beyond the confines of your home. It includes rental properties, business, and REITs (Real Estate Investment Trusts), offering various income streams and opportunities for capital appreciation. Real estate can offer steady income streams from rent and may also offer some tax advantages. Therefore, it can prove a flexible part of an investment portfolio.

Financial Standing for Informed Decisions in Real Estate

Just remember that if you’re dreaming of buying a house or investing in real estate, there are a few things to consider. Here’s what we suggest:

Conclusion: Where Your Financial Legacy Awaits

Building wealth through real estate is a journey of making the right decisions, patience, and resilience.

As history tells us, it’s not a question of timing the market; it’s the time spent in the market. If you’re ready to regard real estate as a net-worth diversification instrument, then let’s assess your financial readiness and set out with clear and achievable investment goals.

Grab this opportunity to own a real property legacy that lasts forever. Let the unwavering growth since 1942 be your beacon. Seize that leap into your future wealth, and remember, in real estate, the rewards are for the steadfast.

Buy Your New Home Now, Sell Later (Formula for Low Stress & Maximum Profit)

Wed, 14 Feb 2024 19:49:00 GMT

In today's fast-paced, ever-changing real estate marketplace, moving homes without the immediate need to sell an existing residence provides an unmatched level of flexibility and strategic advantage to the process. In an environment where the movement of interest rates and market dynamics is so erratic, the traditional process of buying and selling can be very intimidating. But the historical record is clear, it pays to invest in real estate. How? Well, since 1942, homeowners who have held their properties for a decade or more have never failed to realize gains on their investments in all but one period.

Despite unfavorable current interest rates and market conditions, opportunities to invest in a new home still exist. Intrinsic value and historical growth trends highlight that there are still considerable benefits to be achieved in the longer term. All in all, the best solutions to be traded are those with a good balance between low risk and high profitability.
One available solution is our Power Buyer program, which allows you to make a strong cash offer for your new property even before you sell your existing one. It increases your bargaining position, of course, but it does so much more: it takes the uncertainty out of a contingent offer, making your proposal more attractive to sellers.
Here are a few more products and programs that could help you on your financial journey:

Home Equity Line of Credit (HELOC): Unlock the value trapped within your current home using a HELOC and secure the needed funds for down payments or home improvements to increase marketability. By using it, the only time the costs come into play is when the money is used, so it might be a wise preparatory step before the entrance into the market.
Bridge Loans: Tailored to transition, bridge loans offer an amount equal to part of the value of the existing home as immediate cash to make it easy to purchase the new property without an urgent need to sell. No ongoing payments are required; what's more, the fee structure often undercuts traditional loan costs, buying sellers some breathing room to sell at the optimal time.
Buy and Hold Strategy: Keep your current house as a rental property, leveraging prospective rental income for qualifying to purchase your new house. This not only maintains your investment but also taps into potential rental market gains, offering yet another avenue of income. For those with financial flexibility, retention of the existing property as a long-term investment capitalizes on market growth, diversifying your investment portfolio.
Proof of Pending Sale: Demonstrate that your current home is under contract – this can alleviate the need to cover two mortgages, easing the financial transition between properties.

Beyond the Sale: The Long-term Vision

Considering the long-term vision, converting your current home into a rental property presents another viable option. It can be a way of putting off the decision to sell in a potentially fluctuating market, as well as initiating an opportunity for ongoing passive income coupled with long-term asset appreciation.

Your Financial Journey, Our Expert Guidance

Our role is to illuminate the best options for your unique journey, ensuring your new home meets both personal and financial aspirations. In this market landscape that keeps changing with every passing day, your decision to invest in a new home means more than just buying a place to live in. It means the first movement towards financial growth and stability.

Move a Step Ahead

We invite you to explore these innovative offerings designed for your journey. Act now for a seamless transition through the our Power Buyer program, or to capitalize on strategic rental income benefits. Connect with us to chart a course to your new home, grounded in expertise and driven by your vision for the future.

The Real Impact of Unemployment on Mortgage Rates in 2024

Mon, 12 Feb 2024 14:58:00 GMT

If you're waiting for mortgage rates to come down, you want to be paying attention to what is happening with inflation and the economy. Unfortunately, figuring out where the economy is heading in 2024 is not an easy task.
We've been saying for a while that mortgage rates will start making meaningful progress lower once we enter a recession, but the economy has been surprisingly resilient even in the wake of the most aggressive interest rate hikes in history. As it stands at the start of 2024, the U.S. is still not currently in a recession, according to the traditional definition (a significant decline in economic activity that is spread across the economy and lasts more than a few months).
The job market remains one of the U.S. economy's main engines, with the nation's unemployment rate near a 50-year low and wages finally pulling ahead of inflation. At the same time, major companies in technology, finance, media and other key sectors have all recently announced sizable job cuts, with layoffs nationwide more than doubling in January from a month earlier.
This positive jobs report and continued delay of an economic downturn has given even more credence to those who believe the Federal Reserve will be able to achieve a "soft landing" for the economy - raising interest rates just enough to slow the economy and reduce inflation without causing a recession.
But is the U.S. labor market really as "healthy" as the headlines say? Let's find out.

January Jobs Reports Show Conflicting Numbers

In their analysis of the most recent labor data from The Bureau of Labor Statistics (BLS), MBS Highway notes that January's jobs report might not be the blockbuster that it appears to be on the surface.
The BLS reported that there were 353,000 jobs created in January, which was nearly double expectations. Revisions to November and December also added 126,000 jobs in those months combined.
According to MBS Highway, while the headline job growth figure for January appears strong on the surface, future revisions lower are a very real possibility. January is always a heavily adjusted month, as new benchmarks, seasonal adjustments and population controls play a big role in calculating the data.
The Household Survey, where the Unemployment Rate comes from, is considered more real-time because it’s derived by calling households to see if they are employed. This survey has its own job creation component and it told a completely different story, showing 31,000 job losses.
Average weekly hours worked also declined to the lowest level since 2010 (excluding the pandemic). This is important because one of the ways businesses cut costs is to cut the number of hours worked. On average the entire labor force is working 30 minutes fewer per week, which equates to 2.4 million job losses on its own. What's more, ADP’s Employment Report showed that private payrolls began 2024 slower than expected, with employers adding just 107,000 new jobs in January.

MBS Highway also notes that there was a surprising uptick in December's job openings.
The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings were stronger than expected in December, rising from 8.925 million in November to 9.026 million. The hiring rate rose from 3.5% to 3.6% while the quit rate remained at 2.2%, suggesting there’s a lack of employers trying to entice workers with other offers.
There's also the unemployment claims. The latest weekly Initial Jobless Claims reached their highest level since November, as 224,000 people filed for unemployment benefits for the first time.
Continuing claims also surged higher, up 70,000 with 1.898 million people still receiving benefits after filing their initial claim. Both Initial and Continuing Jobless Claims have risen over the last two weeks to nearly three-month highs.

Why We Believe Mortgage Rates are Heading Lower

Inflation is declining, but further declines are dependent upon continued slowing in the labor market. The latest jobs numbers, while they might show some strength right now, hint at weakness that could encourage Fed policymakers to permanently halt any future rate hikes.
A slowing economy is deflationary, and mortgage rates always follow the direction of inflation: higher in inflationary markets and lower in deflationary markets.
Layoffs are a harbinger for slowing economy, and there has been an uptick in job cuts recently across technology and media. Alphabet, eBay, TikTok, and the Los Angeles Times have all recently announced layoffs. And just recently, Snap (the owner of Snapchat) announced it was cutting 10 percent of its workforce. UPS, Macy's, and Levi's also recently cut jobs.
We are seeing multiple indicators of layoffs, rising continued jobless claims, and a rising unemployment rate. The unemployment rate has risen from a low of 3.4% in April 2023 to 3.7% currently. Every time the unemployment rate has bottomed and moved higher, a recession has followed. Recessions are deflationary by definition and therefore bring lower mortgage rates and greater housing affordability with them.

Looking back to 1970, we can see a pattern of lower mortgage rates during recessions. According to realtor.com , when mortgage rates push 7%, 20 million households are priced out of the market compared to when rates are at 3%. Essentially, this means that for every 1% drop in mortgage rates, 5 million more borrowers are able to afford a mortgage on a median priced home.

The Bottom Line

Mortgage rates will see some ups and downs for the next little while, but we anticipate them to continue a downward trajectory as more labor reports are released and the economy feels the effects of layoffs and unemployment claims.
While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing.
But remember, a slowing market does not mean a crashing one! Even though mortgage rates have increased, demand for homes is still very high. This has led to home prices reaching all-time highs in many areas of the country. Mortgage rates will drop when the economy slows down, which we expect to happen later this year or in the beginning of 2024. When that happens, even more people will want to buy a home. This will keep home prices rising, which means the sooner you buy a home, the sooner you will benefit and see your home equity grow.

Debunking the 3 Most Common Myths About the 2024 Housing Market

Mon, 05 Feb 2024 16:28:00 GMT

Debunking the 3 Most Common Myths About the 2024 Housing Market

Constantly changing headlines and predictions are already making the 2024 housing market extremely challenging to navigate.
Unfortunately, the number of misconceptions about buying, selling, and owning a home has never been higher. According to Fannie Mae’s most recent Home Purchase Sentiment Index, only 17% of people think it’s a good time to buy a home.
It’s not surprising that the outlook about future housing demand and the stability of home prices is negative as we leave behind a year of decades-high mortgage rates and low demand for homes.
We understand the headlines can sometimes be alarming: “Home sales activity at a decade low.” “Prices are collapsing.” “The market is set to crash.” The attention-grabbing narratives can be confusing to those who are reading that the market is in trouble, yet finding very competitive conditions and price increases when they look at homes.
With so many competing voices vying for your attention – who do you trust?
As mortgage advisors, the biggest part of our job today is dispelling myths that paint housing as a bad investment. While it’s true that buying a home in 2024 will not make financial sense for everyone, we believe that homeownership is still an effective way to build wealth for those who can afford a mortgage payment today and plan on keeping their property for several years.
In this article, we’ll break down the FACTS and DATA about what’s currently going on with supply and demand, what has happened in the past with home prices and interest rates, and how we believe the housing market will change in 2024.

Myth #1: Interest rates are not going to come down.

Let’s look at the history of the Federal Reserve’s economic policy, recessions, and their impact on mortgage rates.

In the early 1980s, tight monetary policy in the United States to control inflation led to a recession. The Fed Funds rate was increased from 11% to 20% to combat the hyperinflation that carried over from the 70s because of the 1973 oil crisis and the 1979 energy crisis.
In the two years leading up to this recession, fixed mortgage rates reached their highest point in modern history at an annual average of 18.6%. However, once inflation calmed down and the recession started, rates fell to 12%.
In 1999, the Federal Reserve began a tightening program to combat inflation caused by the dot-com bubble. This cycle saw the Fed Funds rate rise by 1.75% in just under 12 months, and mortgage rates jump nearly 2%. Inflation fell because of the rate hikes and the 2001 recession, and the market response saw mortgage rates drop lower than they had ever been down to 5.5%.
This brings us to the current monetary tightening cycle. In the last 3 years, we’ve seen inflation jump from 1.75% to 9.1%. Consequently, mortgage rates skyrocketed from a low of 2.5% to a high of over 7% in October 2023.
The Fed has hiked the Fed Funds rate at the fastest pace in history. Luckily, the policymakers currently have a positive outlook on inflation for 2024 and have continued pause any additional rate hikes, keeping the Fed Funds rate steady at a target range of 5.52% to 5.50%.
The Fed’s moves don’t have an impact on mortgage rates directly, but rate cuts usually lower the yield on the 10-year Treasury, which is an indicator mortgage lenders look at when setting their rates. Average mortgage rates have been steadily declining since last year’s highs.
The aggressive monetary policy will eventually bring inflation to the Fed’s target and the economy will slow down as a result, which will bode well for mortgage rates.

Myth #2: Lower mortgage rates will not bring more buyers into the market.

A lot of people think that, even if mortgage rates do come down, nobody is going to buy homes because prices are too high.
Prices of course influence home affordability, but so do interest rates. Rates will come down eventually, and even a small decrease will impact affordability in a meaningful way. For every 0.5% improvement in interest rate, the payment on a median priced home (currently $416,1000) decreases roughly $110.
According to realtor.com , when mortgage rates push 7%, 20 million households are priced out of the market compared to when rates are at 3%. Essentially, this means that for every 1% drop in mortgage rates, 5 million more borrowers are able to afford a mortgage on a median priced home. To have that same impact on affordability, the value of the median priced home would have to decrease by almost 11%. And there is just no concrete evidence that this is going to happen (more on that below).
Lower prices could also have the opposite effect when it comes to buyer demand. Currently, there are a lot of homeowners who want to move but do not want to give up their low interest rate. If home prices come down before interest rates do, these homeowners will be even more entrenched in their homes because they will not want to sell at a lower price.

Myth #3: Home prices are falling and will continue to fall.

Those who think home prices are falling simply are not paying attention.
Home prices reversed course in February 2023 and have continued to rise at a steady pace in most areas of the country. All the reputable home price indexes confirm that in many areas of the country, price cooldowns were just mild corrections. Not only that, but many of the new numbers have eclipsed the ones we saw at the peak of the market in June of 2022.

According to Redfin’s November 2023 Home Price Index , prices are up year-over-year in 49 out of the 50 most populous U.S. metro areas that the index follows.
Goldman Sachs housing analysts, who have been consistently bearish on housing over the last few years, also recently changed their tune on the market and no longer think home prices will fall this year.
Their latest housing forecast shows a modest growth in home prices for 2024, with an estimated increase of 0.6%. However, the subsequent years, particularly 2025 and 2026, are expected to witness a more robust rebound, with prices projected to grow by 3.8% and 4.9% respectively. This positive outlook signifies a recovery from the challenges faced by the U.S. housing market in recent times.
The reason home prices will continue to rise is because there are still not enough homes on the market. According to Black Knight’s December 2023 Mortgage Monitor , the inventory of homes listed for sale improved for a fifth consecutive month in October 2023, but the deficit relative to pre-pandemic listing levels is still at -42%.
Realtor.com’s December 2023 data draws the same conclusion. While we are still seeing a small amount of month-over-month growth in active listings (a spike happens every year around this time), the growth rate is declining as sellers continue to list fewer homes than last year and buyers compete over the remaining affordable homes for sale.
As you can see below, while inventory has slightly increased since the start of 2023, levels are still drastically lower than pre-pandemic.

The Bottom Line

Home prices are determined by two things: supply and demand. Yes, there are few buyers in an inflation-heavy economy with high interest rates, but for home prices to go down there needs to be fewer buyers than sellers – and that is just not within the realm of possibility today.
There is a lot of pent-up demand in the housing market right now that has been kept at bay because of the affordability problem. But as affordability improves, we are going to continue to see more people move forward with their homebuying plans.

Why Aren't Home Prices Falling as Inventory Rises?

Mon, 29 Jan 2024 16:25:00 GMT

Why Aren't Home Prices Falling as Inventory Rises?

2024 is shaping up to be a year of solid home appreciation following the numbers that are coming in from last year.
Recent reports from CoreLogic and Redfin confirm that home prices rose in 2023 despite rough homebuying conditions. Not only that, but the 2023 numbers eclipsed the ones we saw at the peak of the market in June of 2022.
Even the Zillow Home Value Index, which is usually the most conservative measure of the popular home price indexes, is showing 3.2% positive home appreciation in 2023.

Why the Housing Market Will Continue to Surge

Housing inventory and new listing data are all rising, but the price cut percentages are falling. This is because there is still a shortage of sellers willing to list their homes, even though mortgage rates have fallen recently.
Zillow’s December 2023 Market Report, fewer new listings are hitting the market, which is typical for this time of year. Nationally, new listings fell 30.2% from November. There were fewer new listings than last December in all 30 of the 50 largest markets.
However, new listings are now up 2.1% compared to the year prior. A deficit of 14.5% compared to pre-pandemic norms is vastly improved from a trough of 35% in April.
The driving force behind the inventory shortage continues to be mortgage rates. Even though they have improved recently (more on that below), they remain much higher than pre-pandemic levels. The bond markets that determine mortgage rates are still reacting to recent Federal Reserve news that more hikes to the Fed Funds rate are likely coming in the near future, as well as economic data reports that show the economy is not slowing down as quickly as anticipated.

Mortgage Rates See Improvement As Inflation Outlook Improves

Housing inventory and mortgage rates are closely connected, as the record-low home inventory comes largely due to sellers feeling trapped by their low mortgage rates.
While mortgage rates are still much higher than all of us would like, they did improve fairly significantly recently following the release of the December Personal Consumption Expenditures (PCE) price index – another closely watched economic indicator that measures changes in the prices of goods and services purchased by consumers in the United States.
While the public more closely follows the Labor Department’s Consumer Price Index (CPI), the Federal Reserve prefers the PCE because it adjusts for shifts in what consumers actually buy, while the CPI measures prices in the marketplace.
The latest PCE report showed that headline or all-in inflation rose o.17% for the month of December, which was close to the 0.2% expected. The year-over-year reading remains at 2.6%.
The core rate, which the Fed focuses on and strips out food and energy prices, rose 0.17% last month, which was also just beneath expectations. One year-over-year basis, the index fell from 3.2% to 2.9%.
According to MBS Highway , when you annualize the last 8 months, the core PCE reading is only at 2.08%, which is very close to the Fed's target and something they must feel good about.
The markets are seeing this as a positive signal that inflation is moderating, which is helping mortgage rates.
Basically, we are on the right track to lower mortgage rates that actually stick. As rates drop, it will encourage some sellers who have been reluctant to sacrifice their low interest rates to be less wary of putting their homes on the market, which could help the inventory problem. However, increased home affordability will also bring more first-time homebuyers into the market who will not be adding to the number of homes for sale.

What This Means for You

Our advice remains the same: if you are ready to buy a home, schedule a meeting with a mortgage advisor to find out how much you can afford with the current market conditions.
If you can make the numbers work, we still believe the best strategy is to pull the trigger on buying a home you love sooner rather than later. Your mortgage payment might be a bit higher than you would like initially, but you will be able to lock in your housing payment and immediately start building equity through appreciation. Rates will come down like they always do, and you will be able to refinance to a permanently lower housing expense.
If you’re ready to get started, we’d love to help you!

This won’t be an immediate drop to 5% mortgage rates. We will likely see some ups and downs in the months ahead, but the recent economic reports are clear indicators that the trend has reversed from higher and higher mortgage rates to lower rates ahead.
If you are not ready to make a move just yet, here are 3 steps you can take now to prepare for when the time is right:

1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!)

It’s always best to do this sooner rather than later. No credit check or application needed – we will just discuss your options and put a plan in place so you can move quickly when the time is right.

2. Choose a loan program.

Every mortgage program has unique benefits and different requirements to qualify. If you learn about these now and choose the one that makes sense for you, you will have a solid roadmap for what you need to do to prepare for your purchase.

3. Start improving your finances.

Once we’ve decided on the best mortgage strategy, the rest of the time will be spent here. Get your down payment in order, make sure you have all your income and asset documentation, pay off any debt you need to improve your credit score, and start planning for your new housing payment.
Preparation is key in this market! Starting the process early will make sure you are able to submit an offer on a home right away and lock in a lower rate when the time is right.
If you would like to know exactly what you need to do to prepare for a home purchase, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison and action plan so you can be ready to submit an offer and move quickly when the time is right.

Factors That Will Impact Your Mortgage Rate in 2024

Mon, 22 Jan 2024 17:59:00 GMT

Factors That Will Impact Your Mortgage Rate in 2024

There are a few really important numbers when it’s time to obtain a home loan: your credit score, the amount you want to borrow, and the interest rate. The news is full of talk about interest rates lately. Will they go up? Will they go down? Will they stay down?

It’s a losing battle to follow the news on mortgage interest rates on a daily basis if you’re hoping to lock in the best possible loan rate. However, you can certainly get a sense of key trends by keeping your eyes and ears open when it comes to the economy and the bigger picture of the housing market.

However, before you do that, you’ll want to make sure you understand what factors are at play that will be influencing mortgage rates in 2024.

Economic Health & Supply and Demand

The overall economy affects mortgage rates. When the gross domestic product (or GDP) and employment rise, it’s a sign of a growing economy, so there is a greater demand for goods and services, including real estate. A growing economy creates competition from those wishing to borrow money. This demand causes interest rates to rise.

The opposite is true in a slowing economy. When demand falls, interest rates tend to go down.

In terms of home loans, the “supply” is the money (or credit) available to lend. A high demand for mortgages means banks have less money to lend; therefore, the cost of a loan goes up via higher interest rates.

This also means that when there is more money to lend, or an increase in the supply of credit, the cost of borrowing goes down in the form of reduced interest rates.

Another factor is how other debts impact a bank’s ability to lend money. For example, a missed credit card payment or mortgage payment will reduce the amount of credit available in the market. When the credit supply tightens, that creates higher interest rates.

Inflation

Everyone is affected by inflation. You, your mom, your dry cleaner, and even your bank.

Inflation occurs when the money supply used to purchase products exceeds the products available for purchase. The bigger the gap, the higher the inflation. Put another way, a high rate of inflation means your dollar doesn’t go as far. You have to do more with less.

Higher inflation will typically cause Treasury yields and mortgage rates to rise as well. This occurs because investors demand higher rates as compensation for the decrease in the purchasing power of money they are paid over the course of the loan.

The Federal Reserve

When the Federal Reserve raises or lowers the federal funds rate, which is the rate lenders charge one another, it can create a ripple effect resulting in higher or lower mortgage rates. While the Fed Rate doesn’t have a direct impact on mortgage rates, it impacts several markets across the globe, and the effects are felt in the mortgage market.

The fed funds rate can be as low as zero, and it affects the bottom line of those offering credit. When the Fed is trying to control inflation, or cool the market, they start raising this rate in increments over time. When they’re trying to spur the economy, they start lowering the fed funds rate.

Recently inflation has started to cool, a signal that the rate increases over the past few years have worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July.

2024 Housing Forecast: What to Expect with Rates, Prices, and the Economy

Tue, 16 Jan 2024 15:57:00 GMT

2024 Housing Forecast: What to Expect with Rates, Prices, and the Economy

2023 will go down as one of the worst years in recent memory for the housing market.
It started with a continuation of negative trends from the end of 2022 and turned into the least affordable year for home buying on record. But even though high mortgage rates resulted in a severe drop in home sales, they also kept a lot of would-be sellers "locked in" to their low mortgage rates, and home prices continued to rise throughout the year as a result.
At the end of the year, activity slightly increased as positive inflation signals brought rates down. But will that continue as we move into 2024? And if it does, will more homebuyers enter the market? How will that increased demand impact home values?
To help with this analysis, we turned to Barry Habib and MBS Highway The data below is pulled from their 2024 Housing Forecast report.

Mortgage Rates

First things first, mortgage rates. While we expected mortgage borrowing costs to fall in 2023, they defied expectations and ended up reaching multi-decade highs.
Rates began the year 2023 on a downward slope, but quickly reversed course and surpassed 7% by spring. Things got even worse as rates climbed beyond 8% in October.
However, inflation has since cooled and economic reports continue to signal that the worst of it could be over. The Federal Reserve has also gotten on board, and they are very optimistic about rate cuts in 2024. After raising rates 11 times in less than two years, there could be three or more cuts next year.
While the Fed doesn’t directly control mortgage rates, their monetary policy tends to correlate. As they cut rates in the face of a cooling economy, mortgage rates should also fall.
We anticipate 30-year fixed rates to decrease throughout the year, possibly reaching as low as the mid-5% range by December. The way things are going, it could come sooner. And rates could go even lower, potentially dropping into the high-4% depending on loan product and qualification factors.
30-year fixed rate mortgage

Mid-5% to high-6%
Under 6% should unlock move-up buyers

10-year Treasury

3% to 4.4%
Return to more normal spreads could cause mortgage rates to drop further

For current homeowners, this also means there will be more opportunities to refinance.
There were about $1.3 trillion in home purchase loan originations during 2023, despite it being a slow year. And rates have since come down quite a bit from what will likely be the highest point in this cycle.
Considering all those high-rate mortgages that funded over the past two years, we're confident there will be a large pool of homeowners who will benefit from refinancing their current loans and see substantial savings on their monthly payments.
In addition, we might see homeowners tap equity via a cash out refinance if rates keep coming down and get closer to their existing rate.

Home Prices

Lately, there’s been a lot more optimism in the real estate market thanks to easing mortgage rates.
Housing inventory hit historic lows during the pandemic and a lack of supply has been a major constraint on the housing market. Supply has continued to remain low largely because of the "rate lock-in" effect.
Many homeowners who likely would have listed their homes for sale decided to stay put last year because of their ultra-low rates. Nationally, more than 60% of homeowners with a mortgage have an interest rate below 4%.
However, we believe supply will loosen up in 2024. Even homeowners who have been locked in to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6%. More new listings will add to inventory, though overall supply will likely still remain low. This will continue to put upward pressure on home prices.
Between 2019 and 2022, the median home price nationally rose by more than 40%, or by about 13.7% annually, a much faster past of price appreciation than during a typical market. Strong demand during the pandemic, fueled by historically low mortgage rates and increased savings, drove up home prices.
Home price growth moderated in 2023, but still saw higher-than-average increases thanks to persistently low supply in the market. CoreLogic's latest Home Price Insights report shows that prices were up 5.2% year-over-year in November 2023.
Looking ahead, several factors will push and pull at home prices. More inventory will be generally offset by more buyers in the market. As a result, we believe homes prices will rise at a similar pace they did in 2023 at an annual rate of 4.5-5%.
2024 Real Estate Forecast

Nationwide Appreciation 4.5% to 5%
Transaction Volume up 15-20%

The Bottom Line

In 2024, we expect mortgage rates to drop closer to 6% in the wake of easing inflationary and less restrictive monetary policy.
These lower rates will bring more activity into the market. Demand will continue to overwhelm supply, and we believe we will see low-single digit appreciation throughout the year.
We are confident that the housing market will remain steady in 2024 and beyond, and that real estate will continue to be a safe investment and a great way to build wealth.
If you would like to know if homeownership is a possibility for you this year, fill out the form to request some more information from one of our mortgage advisors. They will be able to answer all your questions about the state of the housing market, and help you put together a plan to get a great deal on a home and start building wealth through home equity when the time is right.

How to Maximize Your Tax Refund as a Homeowner in 2024

Mon, 08 Jan 2024 17:55:00 GMT

How to Maximize Your Tax Refund as a Homeowner in 2024

Over the past decade, homeownership costs have skyrocketed, posing affordability challenges amidst soaring home prices and high mortgage rates. Did you know that beyond mortgage payments, US homeowners spend an average additional $17,459 yearly?

However, these increased expenses give homeowners the opportunity for potential tax benefits that can significantly boost your refund come tax filing season.

Understanding these potential tax advantages is pivotal for homeowners aiming to maximize their tax refunds. Here’s a breakdown of key homeowner tax breaks and credits available in 2024 to ensure you claim every possible deduction and savings opportunity.

How Do Homeowner Tax Breaks Work?

Most homeowner tax breaks come in the form of deductions, reducing your taxable income. When filing your return, you choose between the standard deduction or itemizing deductions like charitable contributions and state taxes.

To take advantage of homeowner tax deductions, you'll need to itemize your deductions using Form 1040 Schedule A. Your decision to itemize will depend on whether your itemized deductions are greater than your standard deduction. All of the best tax software can quickly help you decide whether to itemize (as well as help you fill out all of the tax forms mentioned in this article).

Tax credits, on the other hand, directly lower your tax liability without requiring itemization. They offer savings opportunities while allowing you to simplify your taxes with the standard deduction.

Key Tax Advantages for Homeowners in 2024

Mortgage Interest Deduction

Mortgage interest is a prevalent tax deduction for homeowners, especially beneficial for new homeowners, as their initial mortgage payments primarily cover interest.

For joint filers, deductions apply to mortgage interest payments on loans up to $1 million or $750,000 for loans made after Dec. 15, 2017.

Single filers can claim half these amounts - $500,000 or $375,000, respectively.

To claim this deduction, use IRS Form 1098 provided by your lender in early 2024, entering the amount from Line 1 onto Line 8 of 1040 Schedule A.

Mortgage Points Deduction

Mortgage points, known as "discount points," are purchasable to lower mortgage interest. Typically, for every 1% of the mortgage amount paid beyond the down payment, home buyers can reduce their interest rate by around 0.25%, the exact reduction varying based on the lender and loan terms.

Investing in discount points can yield significant savings on a 30-year mortgage, diminishing total interest payments over the loan term. Moreover, they offer tax advantages upon purchase. The IRS categorizes mortgage points as prepaid interest, enabling their inclusion in the total mortgage interest reported on Line 8 of 1040 Schedule A.

Mortgage Interest Credit

Homeowners holding a Mortgage Credit Certificate (MCC) from a state or local government, typically obtained through a mortgage lender, can receive a tax credit on a portion of their mortgage interest payments. The credit rate varies by state, ranging from 10% to 50%, capped at a maximum credit of $2,000.

This tax-saving strategy is especially advantageous for first-time homeowners, defined as individuals not owning a home for the past three years. If you're a first-time buyer, consult your lender or mortgage broker to determine MCC eligibility.

To claim the mortgage-interest tax credit, utilize IRS Form 8396. Notably, itemizing deductions is unnecessary to claim these tax credits.

Property Tax Deduction

Property taxes, also known as local and state real estate taxes, remain deductible from your taxes, albeit with revised limits post-2017. Thanks to the Tax Cuts and Jobs Act of 2017, deductions are capped at $10,000 for combined property taxes and state/local income taxes. Previously, before 2017, the entire property tax amount was deductible.

To claim your property tax deduction, meticulous tracking of annual property tax payments is essential. These taxes might be detailed in Box 10 of Form 1098 from your mortgage lender. Record the total real estate taxes paid for the year in Line 5b of 1040 Schedule A to claim this deduction.

Home-Office Deduction for Self-Employed

Individuals utilizing a portion of their residence exclusively and routinely for personal business or side ventures qualify for home business expense deductions using IRS Form 8829. Renters can also benefit from these deductions.

The simplest approach to claim a home-office tax deduction is through the standard home-office deduction, calculated at $5 per square foot used for business, up to 300 square feet. Alternatively, the "regular method" involves determining the percentage of home space utilized for business. Both methodologies involve reporting through Form 8829.

Notably, remote employees of companies aren't eligible for home-office deductions.

Energy Efficiency and Clean Energy Credits

If you made energy-efficient enhancements to your home in 2023, there's a possibility of receiving tax credits, though the process can be intricate. These credits encompass two categories: the residential clean energy credit and the energy efficient home improvement credit.

The residential clean energy credit refunds 30% of expenses incurred from installing solar electricity, solar water heating, wind energy, geothermal heat pumps, biomass fuel systems, or fuel cell property. However, there's a cap for fuel cell property - $500 for every half-kilowatt capacity.

The energy-efficient home improvement credit, also termed the nonbusiness energy property credit, divides into "residential energy property costs" and "qualified energy efficiency improvements." The former offers a flat tax credit ranging from $50 to $300 for Energy Star-certified installations like heat pumps or water heaters. The latter provides a 10% tax credit for improvement costs such as insulation, roof repairs, or window replacements.

Previously capped at $500 for all improvements, the energy efficient home improvement credit now holds an annual limit of $1,200 from the 2023 tax year, thanks to the Inflation Reduction Act.

To claim tax credits for energy-efficient home improvements made in 2023, maintain records of costs and report them using IRS Form 5695.

Home Equity Loan Interest Deduction

Interest from a home equity loan or second mortgage qualifies for tax deductions akin to regular mortgage interest, but with a crucial caveat: maximum loan totals are capped at $1 million or $750,000 (for joint filers) for homes purchased after Dec. 15, 2017.

It's imperative to emphasize that the 2017 tax law restricts deductions for home equity loan interest solely to funds utilized for "buying, building, or substantially improving" homes. Using the loan for other purposes like purchasing a car or funding vacations negates eligibility for deductions.

If the interest paid on a home equity loan was directly invested in your residence, you can claim the deduction alongside mortgage interest and points. Report this deduction on Line 8 of Form 1040 Schedule A.

Sale of Primary Residence Deduction

Upon selling a home, taxes are levied on the earned amount as capital gains. However, residing in the home for two of the past five years before selling unlocks a substantial tax exclusion - $500,000 for married joint filers or $250,000 for single or separate filers.

This tax exclusion is universally available to all Americans, irrespective of age or prior benefit utilization. Notably, residency requirements pertain regardless of homeownership. For instance, if you rented a house for two years before purchasing it, you're eligible for the standard residence exclusion upon selling.

Typically, you'll receive tax information concerning the home sale through a 1099-S form. Report your ultimate gain, applying the $500,000/$250,000 exclusion, on IRS Form 8949. However, if you don't receive a 1099-S form and your house's profit falls below the exclusion limit, no reporting of the sale on your taxes is necessary.

Which Home Expenses are Not Tax Deductible?

Despite all the tax breaks available for homeowners, there are some home-related expenses that can't be deducted from your income.

Conclusion

Understanding the types of tax breaks for homeowners is essential for maximizing savings. While the standard tax deduction provides a straightforward option, itemized deductions can offer greater benefits.

From mortgage interest and property taxes to necessary home improvements and home office expenses, homeowners can potentially reduce their tax liability. Be sure to consult with a tax professional for personalized advice and to stay updated.

However, it’s important to stay updated on the latest tax regulations, income limitations, and qualifying criteria. By taking advantage of these deductions, you can make the most of their tax benefits and potentially save more money in the long run.

2023 Housing Market in Review: Looking Back on a Rough Year for Buyers

Tue, 02 Jan 2024 20:34:00 GMT

2023 Housing Market In Review: Looking Back on a Rough Year for Buyers

Things are finally turning around for the better as far as housing is concerned - and it looks like they might actually stay that way this time!

Mortgage rates have continued to drop over the last couple of weeks, and we are now in the ninth consecutive week of improvement. The average 30-year fixed mortgage rate is now back to where it was in late June!

Existing home sales also increased month-over-month in November, which is great news after five consecutive months of declines. This shows that buyers are becoming more confident in the market and ready to take advantage of improving affordability conditions.

We're also getting more home supply! Housing starts hit an 18-month high in November and will probably gain even more momentum as we move into 2024, with declining mortgage rates and incentives from builders likely to draw even more potential buyers back into the housing market.

Why Have Rates Fallen So Much?

Empty heading

The decline in mortgage rates happened after continued news of easing inflation and as the Federal Reserve decided to keep the Fed Funds rate unchanged while hinting at possible rate cuts in 2024.

With the inflation rate hitting the 2% target and unemployment still relatively low, the Fed voted unanimously during their December 13th meeting to keep the Fed Funds rate steady between 5.25%-5.5%. They also mentioned they expect at least three rate cuts in 2024 if things continue to improve.

Mortgage rates don't exactly follow the Fed Funds rate , but instead track the yield on the 10-year U.S. Treasury. The yield has been falling since mid-October and saw a big drop immediately following the Fed's comments.

Still Worried About a Housing Crash? Buyer Activity and Home Prices UP in December

Tue, 26 Dec 2023 15:35:00 GMT

Still Worried About a Housing Crash? Buyer Activity and Home Prices UP in December

Things are finally turning around for the better as far as housing is concerned - and it looks like they might actually stay that way this time!
Mortgage rates have continued to drop over the last couple of weeks, and we are now in the ninth consecutive week of improvement. The average 30-year fixed mortgage rate is now back to where it was in late June!
Existing home sales also increased month-over-month in November, which is great news after five consecutive months of declines. This shows that buyers are becoming more confident in the market and ready to take advantage of improving affordability conditions.
We're also getting more home supply! Housing starts hit an 18-month high in November and will probably gain even more momentum as we move into 2024, with declining mortgage rates and incentives from builders likely to draw even more potential buyers back into the housing market.

Why Have Rates Fallen So Much?

The decline in mortgage rates happened after continued news of easing inflation and as the Federal Reserve decided to keep the Fed Funds rate unchanged while hinting at possible rate cuts in 2024.
With the inflation rate hitting the 2% target and unemployment still relatively low, the Fed voted unanimously during their December 13th meeting to keep the Fed Funds rate steady between 5.25%-5.5%. They also mentioned they expect at least three rate cuts in 2024 if things continue to improve.
Mortgage rates don't exactly follow the Fed Funds rate , but instead track the yield on the 10-year U.S. Treasury. The yield has been falling since mid-October and saw a big drop immediately following the Fed's comments.

Mortgage Application Volume Increasing

After mortgage rates saw a large decline in mid-November, both purchase and refinance applications increased to their highest weekly pace in five weeks.
The chart below compares mortgage application activity (the MBA Purchase Index) and movement in the average 30-year fixed mortgage rate. The Purchase Index includes all mortgages applications for the purchase of a single-family home. It covers the entire market, both conventional and government loans, and all products. The Purchase Index has proven to be a reliable indicator of impending home sales. (investing.com)

As you can see, even a small drop in rates results in a LOT of demand for mortgages, which never happens this time of year. When rates fell in November, we saw application numbers like we saw in July and August at the peak of the homebuying season.
Most of this purchase activity has been for new homes. According to the MBA data, new home purchase mortgage applications soared by 21.8% in November compared to a year ago.

Home Inventory and Sales Also Rising

Lower rates are bringing some buyers off the sidelines and increasing demand, but we still have a long way to go as far as home supply is concerned. There are still limited options on the market as the many homeowners who locked in ultra-low mortgage rates in recent years remain reluctant to sell. This is what's keeping housing inventory at historical lows.
Luckily, we're starting to see some improvement on the inventory front. A surge in construction and more existing homes coming on the market should give buyers more opportunities in the new year.
Housing starts jumped in November and passed 1.5 million units for the first time in 2023. The U.S. Census Bureau and the Department of Housing and Urban Development said construction began during the month at a seasonally adjusted annual rate of 1.560 million residential units - increase of 14.8% from October’s rate of 1.359 million units.
Existing-home sales also showed gains last month, breaking a streak of five consecutive monthly declines. The National Association of REALTORS® recently reported that existing-home sales rose 0.8% in November . NAR is confident that figure will grow even more in the coming months as borrowing costs fall.

What Does This Mean for You?

We are on the right track to lower mortgage rates that finally stick!
There is a common misconception that the only way for housing to become more affordable is for the market to "crash" and bring home prices down by double-digit percentages.
Supply and demand tell us that this will not happen, but the recent drop in mortgage rates and subsequent surge in buyer demand do tell us that when affordability improves, more people will come off the sidelines. Historically, high mortgage rates have never been a catalyst for a housing crash. As you can see in the chart below, over the last 50+ years it was quite rare for mortgage rates (blue line) to rise while home prices (red line) simultaneously dropped. This only occurred in the early stages of the Global Financial Crisis and during the recovery.

We are optimistic that 2024 will continue to bring lower mortgage rates and provide some relief for homebuyers. This won’t be an immediate drop to 5% mortgage rates. We will likely see some ups and downs in the months ahead, but the recent economic reports are clear indicators that the trend has reversed from higher and higher mortgage rates to improving affordability ahead.

Will The U.S. Follow China Into A Massive Housing Collapse?

Tue, 19 Dec 2023 15:57:00 GMT

Will The U.S. Follow China Into A Massive Housing Collapse?

Real estate in China has been unwinding over the last few years following a pattern similar to the U.S. in 2008 and 2009.

Lax lending standards, cheap credit, and a popular belief that real estate values never decline have created a massive bubble in the Chinese housing market, and the effects are just now starting to be felt.

When you see stories about the China housing collapse, you might think that the U.S. is experiencing a similar crisis. Although both real estate markets are struggling with their own challenges, these challenges could not be more opposing.

It's important to understand the many differences between the U.S. and China housing markets, conflating the very different dynamics facing both markets would be a significant mistake.

China is Experiencing a 2008-Style Deflationary Housing Crisis

Empty heading

We know that China's economy has experienced swift growth over the last few decades, accompanied by a housing market boom fueled by rapid population growth (from 667 million in 1960 to 1.43 billion in 2023, a 113.7% increase), upward economic movement by the Chinese middle class, and massive speculation in the residential real estate market.

China’s housing market is currently the biggest asset class in the world with an estimated value of nearly $60 trillion. About one third of China’s economic activity involves the real estate sector (compared to 15 to 18% of the American economy). These numbers are even more shocking when combined with the fact that housing accounts for about 70% of Chinese household wealth .

The current real estate crisis originated shortly after China relaxed its rules on private home sales back in 1998. This shift coincided with an already booming economy and resulted in millions of people moving from the country to the city for better economic opportunities. Real estate developers jumped at the opportunity to provide the homes this new group needed and could now afford.

The seemingly endless demand for housing put dollar signs in the eyes of Chinese investors looking for better returns, which made the supply problem even worse. Developers began to take on massive amounts of debt to keep up with the pace of demand and began selling properties in developments that hadn’t even begun construction (therefore shifting significant amounts of risk to the investor buyers).

The cracks really started to show in the wake of the COVID-19 lockdowns. The slower pace of home sales meant less cash flow for the highly leveraged developers who began to default on their credit lines, and construction stopped on many of the unfinished projects that had already been sold to buyers who had taken out mortgages to buy those unfinished units.

Many of these borrowers were left paying a monthly mortgage on nonexistent homes. In the summer of 2022, these frustrated borrowers refused to make payments and called for a nationwide mortgage boycott.

Since then, the Chinese government has intervened to ensure that property developers have sufficient credit to deliver on unfinished homes and that potential home buyers are incentivized with attractive mortgage rates and better financing terms.

Key Differences Between U.S. and China Housing Markets

Population Growth & Housing Completions

After more than doubling from 1960 to 2023, China’s population is now the fastest aging population in the world, and new household formations have been declining since 2013 alongside the falling marriage and birth rates.

Between 2010 and 2020, demand for residential properties in urban China averaged 18 million units a year. As China’s population ages and demand for replacement properties fall, Goldman Sachs estimates that number will drop to 6 million units a year by 2050.

While China is experiencing the fallout from years of overbuilding, the United States is experiencing the opposite. In the years following the Great Recession, builders massively pulled back on residential construction. We still have not recovered from that period, and new households have been significantly outpacing new home completions since 2015.

Conforming Loan Limits: What They Are and How They Impact You

Mon, 11 Dec 2023 16:13:00 GMT

Confirming Loan Limits: What They Are and How They Impact You

If you are planning to buy or refinance a home next year, we have some great news for you!
Due to the significant home appreciation that happened in 2023, the Federal Housing Finance Agency (FHFA) has raised the conforming loan limit for 2024 for all counties across the country.
This means that homes you could previously only buy with a jumbo mortgage loan may now be eligible for a conforming loan – meaning lower interest rates and less restrictive qualification requirements.
In most counties, the 2024 maximum conforming loan limit value for one-unit properties will be $766,550 - an increase of $40,350 from 2023. In higher-cost real estate markets (areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit above), the limit for a conforming home loan will be $1,149,825 – an increase of $60,525 from 2023.
Here is a map showing the new conforming loan limits in all counties across the country.

What is a Conforming Loan?

Since the financial crisis of 2008, most consumers are familiar with the names Fannie Mae and Freddie Mac. These two entities are mortgage aggregators that exist under the oversight of the FHFA. They serve the purpose of purchasing mortgages, packaging them into mortgage-backed securities, and selling those securities to investors.
A conforming mortgage refers to a loan that meets (or 'conforms' to) Fannie Mae or Freddie Mac’s purchase requirements. These requirements take into account factors like down payment, income, credit score, and debt-to-income ratio.
Loan amount is another factor, which is where the conforming loan limit comes into play. Fannie Mae and Freddie Mac will not purchase loans above the conforming loan limit. A home with a purchase price beyond the conforming loan limit must be financed through a jumbo (or 'nonconforming') loan, which comes with stricter qualification requirements.
NOTE: The terms 'conforming' and 'conventional' are often used interchangeably, but there are some differences. A conventional loan just refers to a mortgage that is NOT backed by a government agency. Simply put, a conventional mortgage is any loan that is not issued by the Federal Housing Administration (FHA), the Department of Veterans' Affairs (VA), or the United States Department of Agriculture (USDA).

How Do Conforming Loan Limits Impact You?

One of the advantages of conforming loans is that they offer competitive interest rates. Since these loans are backed by Fannie Mae and Freddie Mac, lenders are more willing to offer lower rates to borrowers who meet the criteria. This can result in significant savings over the life of the loan.
Another benefit of conforming loans is that they often have more flexible credit requirements. While a good credit score is still important, borrowers with a slightly lower credit score may still qualify for a conforming loan. This can be especially helpful for first-time homebuyers who may not have an extensive credit history.
When conforming loan limits increase, it means more homebuyers are able to take advantage of these benefits.
For example, let's say you tried to buy a home in Salt Lake County in Utah in 2023. You needed to get a mortgage for $750,000, but because your loan amount was higher than the 2023 conforming loan limit of $726,200, you had to apply for a jumbo loan.
Unfortunately, you only had 5% saved up for a down payment and your credit score was not high enough to qualify for a 5% down jumbo loan. But in 2024, things are changing! Conforming loan limits will be increased to $766,550, which means the home you want can purchased with a conforming loan. Not only will you qualify for the loan, but it's likely you will enjoy a lower interest rate than you would have gotten with the jumbo loan. You may even be able to lower your down payment to 3.5% and reallocate those funds to pay off some other debt and saving even more money every month.

The Bottom Line

If you have been trying to qualify for a home loan but have been having some trouble getting a jumbo loan, you may soon be able to qualify for a conforming loan with better terms.
If you’re in the market to buy a home, now is the time to start the mortgage process so you are ready to purchase when these loan limits change next year. If you have any questions or would like to start the application process, fill out the form below to request a consultation with one of our mortgage advisors.

House Hacking How to Save Money and Build Wealth with a Multi-Unit Property

Mon, 04 Dec 2023 22:27:00 GMT

Save Money and Build Wealth with a Multi-Unit Property

On average, Americans who are able to build significant wealth do so through creative use of real estate investments. In the long run, owning a home will always be better than renting for life. However, if you’re willing to “house hack,” purchasing your own home could catapult your net worth even faster. Broadly speaking, house hacking is the practice of owning a property and having your tenants pay your mortgage for you. This can be done by renting out a spare bedroom or basement, building an accessory dwelling unit (ADU) on the property, or buying a multi-unit property (duplex, triplex, or fourplex) and renting out the units you are not living in.
House hacking is a smart way to reduce or completely offset your monthly mortgage payments while being able to own 100% of the equity in the property and benefit from appreciation. Whether you are a seasoned real estate investor or a first-time homebuyer, house hacking can be a powerful path to financial freedom.

Benefits of House Hacking

The greatest benefit of house hacking is that because you will actually be living in the property, you have access to residential mortgage programs that come with lower interest rates and lower down payment requirements than most investment property loans.
Investment properties can require down payments as high as 25 to 30 percent, but you can purchase a primary residence with as little as 5 percent down. FHA loans have down payments as low as 3.5 percent and can be used to purchase properties of one to four units. Veterans can even use VA loans to purchase primary residences with no money down!
House hacking also allows you to take advantage of the tax benefits associated with home ownership, while saving on taxes by deducting rental-related expenses and accounting for depreciation. Hacking allows people with modest incomes to live in nicer areas, pay off other expenses, or to make repairs they might otherwise need to defer.
By adopting a house hacking strategy, you get to significantly reduce or even eliminate your monthly mortgage payments. The rental income generated can cover a large portion, if not all, of your mortgage, taxes, and insurance. Over time, as you build equity in your property, the financial benefits can extend beyond just covering your living expenses.
Remember, rent prices increase while your monthly mortgage payment remains fixed over the life of your loan!

House Hacking Cost Scenarios

NOTE: The scenarios shared below are purely illustrative and may not reflect the actual financial dynamics in different parts of the U.S., where rent costs and property values vary widely.

Scenario 1: Purchasing a Duplex for $450,000

Down Payment: 3.5% of $450,000 = $15,750
Loan Amount: $450,000 – $15,750 = $434,250
Monthly Mortgage Payment (at 7% interest rate over 30 years): ≈ $2,888
Rental Income (assuming $1,600 rent from the other unit): $1,600
Net Monthly Payment: $2,888 – $1,600 = $1,288

Scenario 2: Purchasing a Triplex for $750,000

Down Payment: 3.5% of $750,000 = $26,250
Loan Amount: $750,000 – $26,250 = $723,750
Monthly Mortgage Payment (at 7% interest rate over 30 years): ≈ $4,819
Rental Income (assuming $1,600 rent from each of the other two units): $1,600 * 2 = $3,200
Net Monthly Payment: $4,819 – $3,200 = $1,619

Scenario 3: Purchasing a Fourplex for $1,100,000

Down Payment: 3.5% of $1,100,000 = $38,500
Loan Amount: $1,100,000 – $38,500 = $1,061,500
Monthly Mortgage Payment (at 7% interest rate over 30 years): ≈ $7,069
Rental Income (assuming $1,600 rent from each of the other three units): $1,600 * 3 = $4,800
Net Monthly Payment: $7,069 – $4,800 = $2,269

With the increased rent amount, the net monthly payment in each scenario is reduced, illustrating how higher rental income can further offset your monthly mortgage payment in a house hacking setup.
SOURCE: JVM Lending

You Can Now Purchase a Multi-Unit Property with Only 5% Down!

When it comes to house hacking, the best way to earn the maximum amount of financial benefit is to go big by investing in properties with two, three, or four units. This allows you to own multiple completely separate units, have your privacy in one of them, and get top dollar in rental income without having to invest even more money into finishing a basement or building an ADU on your property.
In the past, purchasing a multi-unit property meant shelling out 15-25% for down payment. However, new conventional loan guidelines allow you to buy a two-to-four-unit property with only 5% down.
With this new program, you will be able to save money on your home purchase and start building wealth in more ways than one:

Own multiple income-generating properties without having to save 15-25%.
Generate rental income to help cover your new mortgage payment.
Use projected rents as income to help you qualify.
Start building equity right away.
Have some extra cash to tackle high-interest debt and save even more money every month.

This new program offers a fantastic chance to generate rental income and/or ease the burden of mortgage payments with only modest upfront costs. And to make things even easier, you will be able to use the projected rents from the other units as income to help with qualification.

The Bottom Line

As housing has become increasingly less affordable, purchasing a multi-unit property to live in and renting out the other units is a great way to own a home without breaking the bank – and now, this strategy is a lot more affordable! If you’d like to explore your options for buying a multi-unit property with minimal cash investment, fill out the form below to request a consultation with a mortgage advisor.

Why The No-Cost Refinance Makes Sense - Buy Now, Build Equity, and Save Big in 2024

Mon, 27 Nov 2023 14:44:00 GMT

Why the No-Cost Refinance Makes Sense - Buy Now, Build Equity, and Save Big in 2024

Owning a home is a crucial part of finding financial freedom, but deciding when to make the move into homeownership is never an easy decision. That decision is especially hard today with home prices and mortgage rates at record highs.
Buying a home now would likely come with a housing payment that is significantly higher than you would like. But waiting to buy until next summer, or until rates drop, will likely mean more competition, higher home prices, and less ability to negotiate on your purchase.
This is where the no-cost refinance comes in. While mortgage rates are high, many homebuyers have chosen to buy now and refinance for free later. This gives you the ability to jump into homeownership now, immediately benefit from paying down your mortgage balance, lock in your home price, and eliminate the gamble that home prices and mortgage rates will fall at the same time (spoiler alert: they never do.)
An economic recession is all but inevitable now , despite the government stimulus that delayed for much longer than expected. When the economic slowdown comes, mortgage rates will drop and allow those who bought at higher rates to refinance into much lower rates - usually at no cost.

Understanding Refinance Closing Costs

Closing costs are the dollar amounts it costs to get a mortgage done. There’s an appraiser, loan processor, underwriter, title or escrow officer, recording fees, credit reports, transfer taxes – you get the point. There are a lot of parties involved in writing a mortgage, and everyone needs to get paid. This is true whether you're buying a new home or refinancing an existing mortgage.
Typically, there are three different buckets of costs or fees associated with refinancing a mortgage:

·Lender fees are the costs associated with taking your loan from application to closing. While these kinds of fees typically include an application fee, credit report fee, origination fee, processing fee, and an underwriting fee, the full list of what you pay will vary depending on the lender you choose.
Title fees are the third-party costs associated with the sale of the property or refinance of the loan. You might also hear these called escrow fees depending on where you live. The amount and type of title fees you pay will vary depending on the state and property type, but typically include the costs associated with title insurance, attorney fees, settlement fees, recording fees, etc.
Prepaids are the upfront payments that need to be made to cover certain expenses in advance. Prepaids commonly include monthly homeownership expenses like homeowners’ insurance premiums, property taxes, and any mortgage interest that accrues on the loan from the closing date through the end of the month before your first payment.

What is a No-Cost Refinance?

When a lender advertises a no-cost refinance, they are saying they will offer you a credit to offset the lender, title, and other third-party fees. This is usually done in exchange for a slightly higher interest rate than you would receive if you chose a traditional refinance and paid all your closing costs out of pocket.
With most no-cost refinances the only costs you will be responsible for are the prepaids. These costs can vary widely depending on the location of your property (for property taxes) and when you close your loan (for prepaid interest). You can either pay these upfront costs when you close, but often your lender can roll them into your new loan amount, so you truly do not have to pay anything out of pocket.
This might make you question the "no-cost" part of your refinance, but prepaids are not really considered closing costs. Even if you did not refinance, you would still be paying property taxes, homeowner's insurance, and mortgage interest. Getting a new loan just means you pay a few months' worth of these costs upfront to get your escrow account funded with enough to pay taxes and insurance when due.
Keep in mind you will also likely get a refund from your previous mortgage escrow account. When you refinance, your original loan is completely paid off, and any balance you had left in that escrow account will be refunded to you in the form of a check issued by your old mortgage servicer typically within 30 days. You could always put that escrow refund from our previous loan, to work by paying down the balance of the new loan.

When Should You Consider a No-Cost Refinance?

In a market where rates are expected to go down, no-cost refinance is one of the savviest tools you can use to save money both short and long term. If you bought a home today, it's very likely that you will have multiple opportunities to refinance your loan and capture savings before rates settle at their cyclical bottom.
If you refinance and pay closings costs, then refinance again as rates continue to drop, it’s likely you won’t have recouped all the closing costs from the initial refinance.
Let's say you bought a home today, and six months from now you can refinance and save $250 on your monthly payment. Assuming you added the closing costs of $8,000 into your new loan, you would have to keep your loan for 32 months to breakeven. If you refinance again any time before that, you will have lost money.
A no-cost refinance eliminates this risk, even if the rate for the no-cost refinance is a little higher. Let’s say the monthly savings are only $200. With $0 closing costs, even if you refinance again in one year, you will have saved $2,400.

The Bottom Line

In today’s market where interest rates are expected to fall considerably, a no-cost refinance can be a simple and risk-free way for homeowners to save money.
While rate is certainly an important consideration, along with the term of your loan, a no-cost refinance can eliminate the risk of paying double or even triple closing costs in a market where rates decline substantially.
Nobody knows where the bottom of the market is, or what the lowest rate will be in the future, but if the savings make sense and you can get those savings without costs, a no-cost refinance can be a great way to reduce your monthly payment and save you money.
At Luminate, our goal is to make sure you know exactly the rate at which it makes sense to do a no-cost refinance. Our mortgage advisors constantly monitor your loan relative to the current market conditions, and whenever there is enough of a benefit for you, we will proactively reach out to you and offer to refinance your loan at the most advantageous loan structure possible for your unique situation.
This is what we like to call our Mortgage Under Management strategy. Where we constantly keep eyes on your existing loan, relative to what rates are available in the market, so you never have to worry if you are in the best possible mortgage. If we are doing our job right, the closing of your first home loan with us, is where our relationship begins.

Now Could Be the Best Time to Buy a Home in Months as Affordability Improves

Mon, 20 Nov 2023 17:26:00 GMT

Now Could Be the Best Time to Buy a Home in Months as Affordability Improves

Seasonal home price cuts and a big improvement in mortgage rates over the last few weeks are contributing to a welcome improvement in homebuying conditions.
The surge in mortgage rates, limited inventory, and expensive home prices this year have resulted in a reservoir of pent-up demand from anxious and ready homebuyers. But with rates dropping over 0.5% in the last few weeks and more sellers lowering prices, that demand is slowly being released into the market. According to data from the Mortgage Bankers Association applications to purchase or refinance a home were up by 2.8% last week - the highest in five weeks.
The housing market is clearly showing signs of turning around. Let's dive into some of the big changes we've seen over the last few weeks and what they mean for your home purchase.

Inventory Increases Uncommon This Time of Year

Redfin recently reported that some “glimmers of hope” are emerging for prospective home buyers. The first one being that new listings increased 1.5% from a year ago during the four weeks ending November 5th. This was just the second increase since July 2022, which underlines the continued short supply in the housing market. Redfin noted that this increase is partly because new listings were falling during this period last year.
At the same time, active listings are at their highest level since the beginning of 2023, and months of supply ticked up 0.2 points to 3.6 months. Inventory remains constrained nationally, with 4 to 5 months typically signifying healthy supply. But it is rising, which appears to be leading to price reductions. The share of listed homes with a price drop increased to 6.8%, a new record high.

More People Are Applying for Mortgages

Mortgage-purchase applications rose 3% from a week earlier during the week ending November 10, bringing them to their highest level in five weeks. That marks the second straight week of increases. And while pending home sales were down 8% year over year during the four weeks ending November 12%, that’s one of the smallest declines since April 2022.
House hunters are coming off the sidelines because mortgage rates are dropping from their peak: Average rates have declined from a two-decade high of 8% to the 7.4% range in the last month.

Mortgage Rates are Improving with Inflation

Inflation has been one of the biggest stories of the past two years. Prices have been high, and the inflation rate peaked in June 2022 at 9.1% year-over-year, leaving many families with less purchasing power despite having the same income.
However, the Bureau of Labor Statistics announced last week that the inflation rate for October 2023 was 3.2%. Mortgage rates calmed in response to the data showing that the economy is finally cooling off. This includes October's jobs report, which showed that job growth slowed quite a bit last month.
The 10-year Treasury yield, which mortgage rates closely track, also fell following the CPI data release and is now at its lowest level in almost two months.
Cooler economic data is good news for mortgage rates, because it means the economy is normalizing. Over the past couple of years, sky-high inflation has helped push up mortgage rates, and as inflation decelerates, mortgage rates should come down further.

Lower Rates Will Bring Sellers off the Sidelines

New listings of homes for sale are up 3% from a year earlier, the biggest increase in two years and just the second increase since July 2022 (the first was last week). The total number of homes for sale is near its highest level since the start of the year.

There’s a variety of reasons why more homeowners are putting their homes on the market: Some are noticing the small uptick in homebuyer demand, some are worried home prices are going to decline if they wait any longer, and others are ready to give up their low mortgage rate after realizing rates are unlikely to drop back to pandemic-era levels anytime soon.

The Bottom Line

We are still optimistic that 2024 will continue to bring lower mortgage rates and provide some relief for homebuyers. This won’t be an immediate drop to 5% mortgage rates. We will likely see some ups and downs in the months ahead, but the recent economic reports are clear indicators that the trend has reversed from higher and higher mortgage rates to lower rates ahead.
If you are not ready to make a move just yet, here are 3 steps you can take now to prepare for when the time is right:
1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!) It’s always best to do this sooner rather than later. No credit check or application needed – we will just discuss your options and put a plan in place so you can move quickly when the time is right.
2. Choose a loan program. Every mortgage program has unique benefits and different requirements to qualify. If you learn about these now and choose the one that makes sense for you, you will have a solid roadmap for what you need to do to prepare for your purchase.
3. Start improving your finances. Once we’ve decided on the best mortgage strategy, the rest of the time will be spent here. Get your down payment in order, make sure you have all your income and asset documentation, pay off any debt you need to improve your credit score, and start planning for your new housing payment.
Preparation is key in this market! Starting the process early will make sure you are able to submit an offer on a home right away and lock in a lower rate when the time is right.
If you would like to know exactly what you need to do to prepare for a home purchase, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison and action plan so you can be ready to submit an offer and move quickly when the time is right.

Debt-Consolidation Refinance: Use Your Home Equity to Pay Off Debt and Save Money

Mon, 13 Nov 2023 17:34:00 GMT

Debt-Consolidation Refinance: Use Your Home Equity to Pay Off Debt and Save Money

Even if you have a low rate on your mortgage, do you know how much you’re paying in interest each month for your credit cards, vehicles, and other personal debts?
Managing debts with high interest rates can feel like an uphill battle. Monthly debt payments take over a large chunk of your income, and it can feel like it will take forever to pay off the amount you owe. And with inflation and interest rates still elevated, more and more people are racking up balances and falling behind on their monthly debt payments.
Taking control of your finances and reducing debt can greatly reduce stress and provide a sense of financial freedom. If you find yourself overwhelmed with multiple debts, a debt consolidation refinance can help you consolidate your bills and simplify your financial obligations.
Let's explore what a debt consolidation refinance is and how you can use it to secure a strong financial future.

How Does a Debt-Consolidation Refinance Work?

To understand how this works, we need to discuss equity. Equity is the difference between what you owe on your mortgage and how much your home is worth. A debt-consolidation refinance allows you to tap into your earned equity to access cash and pay off debt.
Here’s a hypothetical situation: you bought a house for $200,000 with a $180,000 loan. Five years have passed, and now you owe $160,000 on the mortgage. The home has also appreciated and is now worth $300,000, which means you have $140,000 in equity.
Most debt-consolidation (or cash-out) refinance programs allow you to access up to 80% of your equity, so in this case you would be able to receive up to $112,000 to pay off any other debt balances you have (car loans, credit cards, medical bills, student loans, etc.). These debts are essentially wrapped into your mortgage, resulting in just one monthly payment.

Does a Debt-Consolidation Refinance Actually Save You Money?

Even though mortgage rates have been hovering in the 7% range lately, mortgages are still one of the least expensive ways to borrow money. Paying off your credit card debt that has 20% interest or your car loan that has 11% interest can save you a significant amount of money and minimize your bills. Mortgage debt is also secured and has a fixed interest rate, so your payment will be the same over time compared to a credit card bill that is variant and compounds depending on how much you choose to pay each month.
It is important to note that this does not make your debt disappear. You are still paying it off, just at a much lower interest rate. This can save you money and improve your monthly cash flow by eliminating excess bills. Another perk is that mortgage interest is typically tax-deductible while other consumer debt is not.

Don't Forget About Closing Costs

You also need to understand how closing costs play into your decision. Closing costs are lender fees and third-party fees you pay when getting a mortgage. You must pay these on a refinance just like you did on your original mortgage.
Closing costs vary but will usually be several thousands of dollars. While these costs can often be rolled into your new mortgage rather than paid with a lump sum of cash (also called a no-closing cost refinance), they are going to add to your overall debt balance. This is money that could potentially go towards paying down your existing debts.
To determine if a debt-consolidation refinance is financially beneficial, you must weigh these closing costs against the overall interest savings you stand to gain from consolidating your debts.
A debt-consolidation refinance is not meant to be an escape from debt problems, but it can be a win-win situation when used as part of a responsible plan to manage your finances.

Debt-Consolidation Refinance Example

John owns a home worth $650,000, with a current mortgage on the property of $300,000 at a 3.75% interest rate. John experienced some financial strain related to a job loss in early 2020 when COVID became a global pandemic, and he has been struggling to pay off the $50,000 in credit card debt he accrued during that time.
With an interest rate of 17%, John’s credit card debt is costing him $703 per month in interest expense alone. He had considered consolidating the debt into his mortgage, but since his mortgage has an interest rate of 3.75% and the current interest rate on a debt-consolidation refinance is around 7.50%, he is hesitant to move forward.
Given John’s current mortgage interest rate, is he making the right decision? Let’s take a closer look.

Current Payment

John’s current principal and interest payment on his mortgage is $2,223 per month, and he is paying an additional $703 per month in credit card payments. These two debts combined total to a monthly payment of $2,926 per month.

New Payment

If John went ahead and consolidated his credit debt into a new mortgage with a loan balance of $350,000 and an interest rate of 7.50%, his new principal & interest payment would come out to $2,447 per month. In contrasting these two scenarios, it’s clear that John would save $479 per month by moving forward with the debt-consolidation refinance. Not only would his monthly payment drop, but he would also be chipping away at the principal balance of the total debt each month, unlike his current scenario where he’s making interest-only payments on his credit card debt.

Benefits of a Debt-Consolidation Refinance

With this information top of mind, refinancing to consolidate debt offers a range of compelling benefits, including:

Streamlined debt management. One of the primary advantages of debt consolidation through refinancing is achieving a much simpler financial life. Instead of dealing with multiple high-interest debts from various sources, you consolidate them into a single, more manageable payment. This consolidation streamlines your finances, reduces the complexity of tracking multiple due dates and payment amounts, and provides you with a clearer picture of your overall finances.

Enhanced monthly cash flow. Consolidating high-interest debts through refinancing can lead to immediate financial relief. It can help provide more breathing room in your budget, making it easier to manage finances effectively and potentially improve your overall financial stability.

Positive impact on credit score. Timely and consistent payments on your consolidated debt can positively impact your credit score over time. As you pay down your debt and maintain good credit habits, your creditworthiness may improve; this can open doors to better financial opportunities in the future, including access to lower interest rates on future debts.

Potential tax benefits. In certain cases, the interest paid on mortgage debt may be tax-deductible, while interest on credit cards or personal loans typically is not. When you consolidate your debt through a mortgage refinance, you may gain access to potential tax deductions, reducing your overall tax liability. Consult with a tax professional for additional details.

Long-term financial strategy. Debt consolidation through refinancing is not just a short-term fix; it can be a crucial component of your long-term financial strategy. By eliminating high-interest debt and creating a structured plan for repayment, you set yourself on a path toward financial stability and security. It enables you to regain control of your finances, reduce financial stress, and work towards achieving your broader financial goals.

Is a Debt-Consolidation Refinance Right for You?

If you have owned a home for a few years, you should not have to worry about drowning in consumer debt payments. Your home equity can be used to lower your monthly obligations, free up some cash flow, and give you financial peace of mind.
Before committing to a debt-consolidation refinance, however, you will want to view thorough Total-Cost analysis. This means understanding the total cost of the refinance (including closing costs) and comparing it to the potential savings to see if it will be worth it. It's crucial you consider how the new mortgage terms will impact your monthly budget and whether the long-term interest savings outweigh the upfront expenses.
If you believe that consolidating your bills through a mortgage refinance is the right step for you, our team is here to assist you. Our mortgage advisors will guide you through the refinancing process, helping you identify the best mortgage option and how a debt consolidation can help reduce your monthly obligations.

No, A 'Housing Recession' Does Not Mean Falling Home Prices

Mon, 06 Nov 2023 18:12:00 GMT

No, A 'Housing Recession' Does Not Mean Falling Home Prices

Earlier this week, an article was posted to fortune.com with this headline:
The housing market is headed back to a 1980s-style recession, Wells Fargo says—and it’s all because of ‘higher for longer’ mortgage rates
On first read, this clearly sounds like a warning that home prices are going to fall because of high mortgage rates. But if you actually read the article, you would find a different story:
The bank expects worsened affordability in the near term as mortgage rates remain elevated, which will in turn weaken housing activity. Home prices will continue to appreciate at a slightly slower pace because of underlying demand and tight supply, rising 1.8% by the end of this year, as tracked by Case-Shiller, and 2.5% in 2024. In 2025, Wells Fargo forecasts home prices will rise 4.4%.
The article even painted a positive picture for the near-term future of mortgage rates:
Assuming Wells Fargo’s forecast that the Fed has finished hiking interest rates and will lower them next year is accurate, mortgage rates should also move lower…The average 30-year fixed mortgage rate would finish off this year at 6.94%...Next year, the bank forecasts the average 30-year fixed mortgage rate will be 6.39%—and in 2025, it’ll sink lower still, to 5.70%.
So, headlines today sound like the housing market is heading into a massive recession, but mortgage rates are forecasted to go down and home prices are forecasted to go up. What gives?
Yes, we are experiencing a housing recession today, but it is not a recession of home PRICES – it is only a recession of ACTIVITY in the market. Home prices and mortgage rates do not have an inverse relationship, like most people believe. Just look at history and you’ll see that it’s perfectly normal for home prices and interest rates to rise simultaneously. This is not a new phenomenon.
However, home sales definitely slow down when the cost of financing rises. That is the ‘housing recession’ we are experiencing today.

Why Home Prices Still Rise When Rates are High

Even though mortgage rates are more than double what they were three years ago, home prices are still rising. According to the most recent CoreLogic Case-Shiller Index, prices rose 0.4% in August and were 2.6% higher than a year ago.

How could home prices outperform with mortgage rates rising?
More jobs and increased wages, combined with a low-interest rate environment, increased the money circulating in the economy and led to a lot more consumer spending and an increase in prices. Home prices were not immune to this.
Unfortunately, this also resulted in high inflation, which is why the Federal Reserve has raised its own policy rate 11 times since early last year. Inflation has cooled significantly, and the Fed paused rate hikes in its meeting on November 1 ^st , but this economic strength has coupled with the severe lack of for-sale inventory to propel home prices higher.

High Rates Severely Affect Homebuying Activity

On the other hand, when mortgage rates increase significantly, home sales tend to take a big hit.
This happens for obvious reasons, the main one being a lack of affordability. Fewer home buyers can qualify when financing costs are prohibitively high. Homebuyers may have seen their wages increase and they may have good jobs, but they are dealing with higher costs of living because of inflation. They have probably taken on a lot more debt, as well, so their debt-to-income ratios are not as favorable.
Per Redfin, current home sales are down 11.9% from this time last year and are now at their lowest sales pace since October 2010. For reference, in June of 2021, home sales hit their highest level since 2006.

Meanwhile, the inventory of active listings has slowly been rising, but it is still down nearly 12% since this time last year.

But despite less demand and fewer buyers, the lower number of sales isn’t resulting in lower prices. Instead, we have a housing market with low demand and low supply and not a lot of budging from sellers on price.

Nobody is Selling, and There are Not Enough Homes Being Built

While there has been some debate about the mortgage rate lock-in effect, there’s no denying how strong of a force it is in today’s housing market when you look at the distribution of rates out there today.
Existing homeowners aren’t moving because their mortgage rates are so low. But it’s not only that they’re so low, it’s also the cost of replacement, with prevailing market rates now edging closer to 8%.

And this isn’t just a small number of homeowners. Nearly two-thirds of all mortgages out there today have an interest rate below 4%, and nearly a quarter have a rate below 3%. Most of these homeowners will not budge and will continue to enjoy their low, fixed-rate mortgage for many years to come.
Why would these owners ever want to sell? Why wouldn’t they rent out their homes and enjoy the cashflow from rents that have been pushed higher due to inflation while benefitting from their 30-year fixed mortgage rates that are well below the real rate of inflation?
In a new survey from Fannie Mae, researchers argued that even if mortgage rates were to decline by a meaningful amount in the intermediate term, they would not expect to see a big surge in for-sale listings. They believe there are a “confluence of factors and trends contributing to the lack of housing inventory in the United States.”
Low-rate homeowners are keeping existing home supply out of the market, but builders are also having trouble bringing new homes to the market. The Associated Builders and Contractors reports that building material costs have increased by 37.7% since 2020. Since 2022, lumber has come down in price by 12.3%, while concrete products have increased by 14.8%.
Builders still face significant labor shortages, too. While there’s not a shortage of projects, there’s an increasing challenge to find qualified workers to complete these jobs. On top of that, construction equipment prices are up by 12.2% since 2022. As you can see from the chart below from census.gov, housing permits and starts have fallen quite a bit since last year, and completions have remained relatively flat. If permits and starts are falling, we will start to see completions fall in the coming months, as well.

As the Economy Slows, Rates Will Come Down

The U.S. economy is heading for a recession. You might see a lot of stories about how strong the economy is and how likely it is that the Federal Reserve will achieve a “soft-landing” and bring down inflation without severely slowing down the economy, but there are just too many red flags right now that say otherwise. The chart below shows the average 30-year fixed-rate mortgage based on Freddie Mac data. The shaded portions are U.S. recessions.

The most recent recession was the COVID-19 recession that lasted from February to April of 2020. It was very short-lived, but it caused 30-year fixed mortgage rates to fall from 3.75% to their bottom of 2.75% in January 2021.
During the Great Recession, which spanned from December 2007 to June 2009, rates started around 6% and fell to roughly 4.875%. That recession was caused by the mortgage crisis, and the loose home loan lending collapsed the global financial system.
In the early 2000s recession, from March 2001 to November 2001, rates began at 7.375% and fell to 6.75%.
In the early 1990s recession, from July 1990 to March 1991, mortgage rates fell from around 11% to 8.75%.
The prior recession, from July 1981 to November 1982, saw rates plummet from the record high of 18% down to 13%.
And the 1980 recession from January 1980 to July 1980 saw rates move lower from 16% to 11.75%.
In all instances, mortgage rates went down during and immediately following the recession. And what will happen when rates come down? We agree with what real estate mogul Barbara Corcoran recently said:
The days of the 2 or 3% interest rates are never going to come again. Forget about that, but they will come down. The minute they drop and come down to anything with a five in front of it, the whole world is going to jump back into the market, there's going to be no houses around and prices are going to go up by 10% or even 15% — so don't get out of the market.

The Bottom Line

Home prices will continue rising over the long term like they always have. The home you want is going to be more expensive a year from now. Buying today means you will be able to lock in your home’s price before housing costs increase even more. If interest rates do go down as predicted, you can refinance to a permanently lower rate.
And remember, because interest rates are high right now, fewer people are buying. This means you won’t have as much competition when you make offers, and it’s likely you will have some negotiating power to secure a lower price or seller credits to reduce your costs even more. We understand that everyone’s situation is different. Before making any decisions on your homebuying plans, it’s crucial that you look at the numbers for your specific purchase scenario and financial situation.
If you would like to know more about your options for purchasing a home today, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison so you can create a solution that is best suited to fit your needs.

Rates Are High and Demand Is Low... So Why Aren't Home Prices Falling?

Mon, 30 Oct 2023 20:41:00 GMT

Rates Are High and Demand Is Low... So Why Aren't Home Prices Falling?

By now, everyone knows that demand in the housing market has seen a bit of a slump as homebuyers hold back in hopes of improving affordability. Home prices are still near all-time highs, and last week the average 30-year fixed mortgage rate hit a 23-year high. But despite this, there are still virtually no homes for sale - which is continuing to push up prices and affect affordability even more.
How is this possible? Most would assume that when homebuying costs skyrocket, demand would significantly drop, and more homes would flood the market. Yet here we are, looking at a housing market that has barely any for-sale inventory available.
Let’s dive into what got us here and what it might take to see more homes come to the market.

Why Are There No Homes for Sale Right Now?

The housing market is highly unusual right now, and it has been for a while. In fact, since the pandemic, the process of buying and selling a home really hasn't been 'normal' at all.
The housing market came to a halt in early 2020 as the world stopped, but then took off like a rocket. 30-year fixed mortgage rates spent the entire second half of 2020 under 3% and demand for homes absolutely exploded.
This new demand from those who were waiting for homes to become more affordable collided with an already record-high wave of first-time homebuyers entering the market (the average age of a first-time homebuyer in the United States is 33-years old).

At the same time, current homeowners and investors took advantage of low rates to purchase second homes and investment properties in the hopes of profiting off the growing rental market (Airbnbs and short-term rentals were very popular). This quickly depleted supply, which was already trending down thanks to a lack of new home building after the 2008 housing crash. When foreclosures and short sales skyrocketed, builders really pulled back on new construction for many years. They've been trying to catch up for the last decade, but it just hasn't been enough to keep up with the growing housing needs of Americans.

Another unique issue affecting housing supply is a concept known as mortgage rate 'lock-in'. Today’s homeowners have such low mortgage rates that they either won’t sell or they simply can't sell and take on a more expensive housing payment at a higher rate.
And this isn’t just a small number of homeowners. Nearly two-thirds of all mortgages out there today have an interest rate below 4%, and nearly a quarter have a mortgage rate below 3%. Most of these homeowners will not budge and will continue to enjoy their low, fixed-rate mortgage for many years to come.

Housing Supply Is Still Near Historic Lows

Redfin reported that new listings climbed 1.4% month over month in September, the largest increase since February 2022 on a seasonally adjusted basis. That’s a glimmer of relief for homebuyers, who for months have been waiting for more homes to hit the market. Still, new listings dropped 8.9% on a year-over-year basis in September and remained far below pre-pandemic levels.
There were 435,00 new homes for sale at the end of September. At the current pace of sales, there is a 6.9 month's supply. This means that if no more homes came on the market, it would take 6.9 months for every home to be sold.
However, according to census.gov , only 74,000 of those homes are actually completed. 262,000 are under construction, and 105,000 have not even started being built. When look at the pace of sales vs. homes that are completed - that ACTUAL available supply - there is only 1.2 months' supply.

One-Third of Homes for Sale are New Construction

While existing homes, also known as previously owned or used homes, are hard to come by because of mortgage rate lock-ins, newly-built homes are taking over the market. In fact, newly built single-family homes for sale were up 4.5% year-over-year in June, while existing homes for sale were down 18%. Roughly one-third of homes for sale were new builds, up considerably from prior years and well above the norm that might be closer to 10%. The National Association of Realtors (NAR) predicts that new home sales will increase 12.3% this year, and 13.9% in 2024.
Why are home builders seeing a big increase in market share? It’s mostly due to a lack of competition from existing home sellers. Builders don’t need to worry about finding a replacement property if they sell and seeing their mortgage payment increase like existing homeowners do.
Builders are also able to offer huge incentives such as rate buydowns, including temporary and permanent ones, along with lender credits to help cover closing costs. This allows them to sell at higher prices but makes the monthly payment more manageable for the buyer.

Will More Homes EVER Hit the Market?

This new reality of low housing supply is probably going to persist for the foreseeable future. After all, those with so-called golden handcuffs have 30-year fixed-rate mortgages. They can continue to take advantage of their cheap mortgages for the next few decades. This includes the second homeowners and investors who got in when costs were much lower.
Meanwhile, home builders don’t seem to be taking advantage of the low supply by building a lot. Even if they did, it probably wouldn’t make much difference (existing home sales typically account for around 85-90% of sales).
Many believe that economic turmoil and a recession will bring a lot more homes to the market, but that's very unlikely for a couple reasons:

Homeowners today have massive amounts of home equity. If they lose their jobs, it's very likely they will be able to fall back on their home equity.
Recessions always bring lower mortgage rates, and even if the economy takes a dive, there are still going to be people who remain employed and want to buy a home. Lower rates will bring those people into the market.

Should You Buy Now or Wait?

The answer to this question first and foremost depends on your financial situation. If you are not financially prepared to take on a mortgage payment today, you should wait to jump into homeownership until you can comfortably afford it.
However, if you have met with a mortgage advisor, ran the numbers, and have the room in your budget, you should buy a home now.
Housing prices will keep going up like they always have over the long term. The home you want is going to be more expensive a year from now. Buying today means you will be able to lock in your home’s price before housing costs increase even more. If interest rates do go down as predicted, you can refinance to a permanently lower rate.
And remember, because interest rates are high right now, fewer people are buying. This means you won’t have as much competition when you make offers, and it’s likely you will have some negotiating power to secure a lower price or seller credits to reduce your costs even more.
We understand that everyone’s situation is different. Before making any decisions on your homebuying plans, it’s crucial that you look at the numbers for your specific purchase scenario and financial situation. If you would like to know more about your options for purchasing a home today, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison so you can create a solution that is best suited to fit your needs.

Why Price Drops and More Inventory Are Completely Normal This Time of Year

Mon, 23 Oct 2023 15:02:00 GMT

Why Price Drops and More Inventory Are Completely Normal This Time of Year

Over the last week, there has been an increase in the number of news articles and talking heads warning that major home price declines are on the horizon.
This negativity is largely in response to the release of Zillow's September 2023 Market Report . The report shows that typical U.S. home values fell 0.1% from August to September – the first month-over-month decline since February.
Despite what you may be hearing in the news, nationally, home prices aren’t falling. It’s just that price growth is beginning to normalize - and this happens every single year.
Here’s the context you need to really understand that trend.

What is Seasonality in the Housing Market?

Seasonality in real estate refers to the natural fluctuations in the real estate market that occur at different times of the year.
Every year, transactions and prices tend to be above-trend in the summer while activity typically slows down in the winter. Seasonality plays an important role in the housing market since it has an impact on supply and demand.
During winter and the holiday season in particular, demand tends to slow because people are unlikely to want to move. Aside from colder and more unpredictable weather, people are also dealing with end-of-year deadlines, family obligations, taking time off for the holidays, and more. In the summer, on the other hand, real estate activity tends to increase. Families will often wait until the end of the school year when there’s more free time to move, so they don’t have to uproot their kids in the middle of the year.
The chart below from jpking.com shows Total Home Sales and Median Home Sale Price from June 2013 - June 2021, and it illustrates that this ebb and flow always plays out with remarkable consistency.

The graph below uses data from Case-Shiller to show typical monthly home price movement from 1973 through 2022 (not adjusted , so you can see the seasonality):

As the data shows, at the beginning of the year, home prices grow, but not as much as they do in the spring and summer markets. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates.
After several unusual ‘unicorn’ years, today’s higher mortgage rates helped usher in the first signs of the return of seasonality but muting homebuyer and seller activity. CoreLogic explains this in their September 2023 US Home Price Insights :
“High mortgage rates have slowed additional price surges, with monthly increases returning to regular seasonal averages. In other words, home prices are still growing but are in line with historic seasonal expectations.”

Why This Is So Important to Understand

In the coming months, you’re going to see the media talk more about home prices. In their coverage, you’ll likely see industry terms like these:

Appreciation: when prices increase.
Deceleration of appreciation: when prices continue to appreciate, but at a slower or more moderate pace.
Depreciation: when prices decrease.

Don’t let the terminology confuse you or let any misleading headlines cause any unnecessary fear. The rapid pace of home price growth the market saw in recent years was unsustainable. It had to slow down at some point and that’s what we’re starting to see – deceleration of appreciation, not depreciation.
Even with the slowdown in the market, home values are still up considerably for the year. Depending on which report you look at, we are still on track to see between 5 and 8% cumulative appreciation for 2023.

Remember, it’s normal to see home price growth slow down as the year goes on. And that definitely doesn’t mean home prices are falling. They’re just rising at a more moderate pace.

Bottom Line

While the headlines are generating fear and confusion on what’s happening with home prices, the truth is simple. Home price appreciation is returning to normal seasonality.
What does this mean for you? If you can afford it, now is a great time to buy. The chances are very high that you will be able to get a great deal on a home and more favorable terms on your mortgage if you buy within the next few months. Once winter is over and we start to see some improvement in rates, competition will increase and prices will go up again.
Remember, wealth is not created by timing the market – it’s created by time IN the market. The sooner you buy a home, the sooner you will start building equity and be one step closer to financial freedom.

Why We Believe Mortgage Rates Will Drop in 2024

Mon, 16 Oct 2023 14:59:00 GMT

Why We Believe Mortgage Rates Will Drop in 2024

We understand how incredibly frustrating and disheartening the current mortgage rate environment is.
Everybody had a prediction going into Summer 2023 that mortgage rates would decrease. Unfortunately, the resilient U.S. economy, the Fed’s ongoing war on inflation, and a sharp rise in 10-year Treasury yields have kept rates higher for longer than we all expected.
If you have the goal of buying a home soon, we know the most important question on your mind is: Should I buy a house now, or wait for mortgage rates to go back down?

Will Mortgage Rates Go Back to 3%?

Let’s put some things into perspective first - it is highly unlikely mortgage rates will fall back to 3% anytime soon, if ever.
When mortgage rates hit a record low of 2.65% in January 2021, it was because the Federal Reserve had artificially pushed them down by purchasing trillions in mortgage-backed securities (MBS) and lowering the fed funds rate to nearly zero.
These lower borrowing costs, combined with the massive amounts of stimulus that were pumped into the economy during the pandemic, are what led to massive inflation and mortgage rates nearly tripling from their record lows.
Long story short, we probably won’t see mortgage rates go back to 3%. But that doesn’t mean they need to stay at 7% either...

2024 Mortgage Rate Predictions

At the moment, we are optimistic that 2024 will bring lower mortgage rates and provide some relief for homebuyers. With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle.
Of course, interest rates are notoriously volatile and could tick back up on any given week. However, nearly every economic forecast is predicting lower rates in 2024.
The Mortgage Bankers Association's Mortgage Finance Forecast for September 2023 predicts 30-year fixed mortgage rates will be in the 5% range for most of 2024:

Q1: 6.1%
Q2: 5.8%
Q3: 5.5%
Q4: 5.4%

What’s more, they predict that the 30-year fixed will stay low and average 5.1% in 2025.
Fannie Mae also releases a monthly Housing Forecast , and while their September predictions are not as optimistic, they still have 30-year fixed mortgage rates in the 6% range for the entirety of 2024:

Q1: 6.8%
Q2: 6.6%
Q3: 6.4%
Q4: 6.3%

Wells Fargo's latest U.S. Economic Outlook puts 30-year fixed rates pulling back to 6.75% in the fourth quarter 0f 2023, and its forecasting group predicts that rates will fall below 6% in the third quarter of 2024. Finally, in their August Real Estate Market Outlook , the National Association of Realtors puts 30-year fixed rates at near 6% by early Spring 2024. As it stands right now, the general consensus is for mortgage rates to be in the 5-6% range for 2024.

Should You Buy Now Or Wait?

The answer to this question first and foremost depends on your financial situation. If you are not financially prepared to take on a mortgage payment today, you should wait to jump into homeownership until you can comfortably afford it.
However, if you have met with a mortgage advisor, ran the numbers, and have the room in your budget, you should buy a home now. Housing prices will keep going up like they always have. The home you want is going to be more expensive a year from now. Buying today means you will be able to lock in your home’s price before housing costs increase even more. If interest rates do go down as predicted, you can refinance to a permanently lower rate.
And remember, because interest rates are high right now, fewer people are buying. This means you won’t have as much competition when you make offers, and it's likely you will have some negotiating power to secure a lower price or seller credits to reduce your costs even more.
We understand that everyone’s situation is different. Before making any decisions on your homebuying plans, it’s crucial that you look at the numbers for your specific purchase scenario and financial situation. If you would like to see a Cost of Waiting Analysis for your area, similar to the one shown above, give us a call or fill out the form below to request a consultation with a mortgage advisor.

Why Zillow Says Fall 2023 is a Homebuying 'Sweet Spot'

Mon, 09 Oct 2023 13:57:00 GMT

Why Zillow says Fall 2023 is a Homebuying "Sweet Spot"

Most people grow up dreaming of owning a home someday, escaping the cloud of rising rents and building wealth through home equity. However, with the recent surge in home prices, you may be wondering if this is the smartest move today. With home prices so high, is it worth buying a home? Or is it safer to continue renting right now?
In the latest survey from Fannie Mae measuring housing sentiment, 82% of respondents said now is a bad time to purchase a house — a record high. That’s up from 78% in June. Only 18% percent of people think now is a good time to buy a home.
However, despite the higher homebuying costs, Zillow thinks it's a good time to buy if you have the budget. And we agree!

How is the Market Different Now?

Zillow's assessment that Fall 2023 is a "sweet spot" for homebuyers is based on the fact that a larger proportion of sellers are relenting on their asking prices.
Zillow's research shows that 9.2% of home listings saw a price cut in the week ending September 16 — the highest share since November. But it's not just about the price. Buying a home at the end of 2023 also means you have more choices than you did over the last few years. There are more motivated sellers and more active listings overall than any time since last December.
Usually, home listings decrease as the summer ends. This year, however, August saw a bump in new listings compared to July. Even though inventory is increasing, home values are still projected to rise. Zillow predicts prices to continue upward through the first half of 2024, saying prices could jump as much as 5% by next August - and that estimate is on the low end compared to the trajectory of appreciation we've seen so far this year.

The Benefits of Buying Right Now

Buying a home today means more room for negotiation on price and more options to choose from, but those are just two of the several ways you benefit by buying a home sooner rather than later.

1. Building Equity

Buying a home means you are investing in your future. When you own a home, your wealth grows in two ways at once:

Principal Reduction

From day one, part of your mortgage payment goes directly toward paying down the balance of your loan. This is essentially paying yourself, as every principal payment increases the equity you have in your home.
Yes, buying a home with a mortgage means you also pay interest, but the amount of interest you pay decreases over time and the amount of principal increases. When you rent, 100% of your money is going to pay someone else's mortgage.

Appreciation

While you are paying down your mortgage balance every month, your home value is also increasing. This is FREE money! And when you look at it as a return on your investment, the wealth gains are astronomical.
Appreciation is calculated based on the total value of your home, not just the amount of cash you invested in it (i.e., your down payment). Look at it this way: if you bought a $400,000 home today with 3% down - which is the minimum allowed for a conventional loan - you could expect to pay around $18,000 out of pocket between your down payment and closing costs.
Zillow says home values could easily increase by 5% over the next year. If that happened, your home would be worth $420,000 - that's an 111% return on your initial cash investment!

2. Stable Monthly Payment

If you finance your home purchase with a fixed-rate mortgage loan, you will know the precise amount of your principal and interest payments for the life of the loan. This long-term predictability fosters financial stability.
If you rent, you'll have much more difficulty accurately predicting your monthly rent for years to come. You will be at the whim of your landlord and the rental market every year.
According to ipropertymanagment.com, average rent prices have increased 8.85% per year since 1980. You may be able to rent a home cheaper than you can buy one right now, but in a few years your housing payment will likely be higher than it would be had you locked in a fixed mortgage payment today.
A fixed housing payment provides considerable financial peace of mind. You are also likely to earn more money in the future, which means your principal and interest will dwindle relative to your overall budget.

3. Tax Incentives

The United States tax code heavily benefits property owners. The IRS has extensive rules about the tax breaks available for homeowners, and the ones you choose/are eligible for will depend on a variety of factors.
Here are a few of the tax breaks you may be able to take advantage of after your home purchase.

Mortgage Interest. Many homeowners can deduct what they paid in mortgage interest when they file their taxes each year. You can deduct interest paid on up to $750,000 of your mortgage, or $375,000 if you’re married and filing separately.
Mortgage Points. If you bought points on your mortgage, that entitles you to similar tax deductions, because the IRS sees it as mortgage interest.
Property Taxes. The IRS offers tax deductions on income, sales, and property taxes for most homeowners of up to $10,000 total, or $5,000 if married and filing separately.
Residential Energy Credits. If you install alternative energy equipment to make your home more efficient, such as solar panels, you might be able to claim a residential energy credit for it.

4. Lifestyle Stability

Homeownership means you are the boss and can control your lifestyle and family decisions. If your kids are in public school and you don't want to risk having them change schools because your landlord doesn't renew your lease, owning a home would remove much of the risk of having to move.
Do you have pets you don't want to part with? Do you love gardening or redecorating? Need a place to store your boat?
As a homeowner, you can more easily enjoy these leisure activities without worrying about logistics or restrictions.

Make Your New Home Even More Affordable with a Rate Buydown!

Buying a home today means you could get a break on price, which is great. But if you want to make your new mortgage payment as affordable as possible, there's a better way to use your negotiating power.
Instead of asking for a price reduction, ask that the seller give you concessions to temporarily lower your mortgage payment for the first few years. You might have heard this strategy be called a "temporary rate buydown" or a "2/1 buydown", and it is hands down the best way to combat higher mortgage rates today.
Using seller credits in this way essentially lowers the interest rate on your mortgage for the first few years, consequently reducing your monthly mortgage payment by hundreds of dollars every month. Often, this strategy ends up costing considerably less for the seller than lowering the price would be, and the home value gets to remain high.
And the best part? If market rates fall before your buydown funds are used up, the remaining funds can be applied to the cost of your refinance. This could mean you end up locking in a permanently lower rate with NO additional charge.
If you would like to see how much more a rate buydown would save you today compared with a price reduction, fill out the form below to request a mortgage discovery consultation with one of our experienced mortgage advisors.

3 Powerful Ways to Combat Home Affordability Challenges in 2023

Mon, 02 Oct 2023 15:21:00 GMT

3 Powerful Ways to Combat Home Affordability Challenges in 2023

Are you worried that you can't afford even an entry-level home in your market today? You're not alone. According to a recent survey by Divvy Homes, only 53% of Americans are confident in any way that they’ll be able to own their own home someday. The study shows that the average American thinks it would take them between three and four years to afford a home - and a third believe it would take them five years or more. Another 20% expect that they’ll never be able to afford one.
Affordability is the overall problem: 63% of respondents said they often struggle to make ends meet, most commonly because of the high cost of living (69%) and rising inflation (56%).
Trust us, we want housing to become more affordable just as much as you do! Unfortunately, economic conditions are keeping homebuying costs higher for longer than we anticipated.
Today’s affordability challenges mean following the status quo when home shopping and making an offer just won’t cut it. You need to use every tool at your disposal to help make your new mortgage payment as affordable as possible!
This could mean finding creative ways to lower your monthly mortgage payment directly OR restructuring your overall debt picture, so a higher mortgage payment has less of an impact on your finances.
Our mortgage advisors have helped a lot of homebuyers strategize their mortgage financing to make a new mortgage payment more manageable in this market. Here are the top three strategies we believe are the most effective at improving home affordability in 2023.

1. Use seller concessions for a temporary rate buydown

When high mortgage rates dampen homebuying demand, it becomes more common for sellers to offer concessions to get their homes sold. According to Redfin, 42.9% of buyers received concessions from the seller in the first three months of 2023, which is close to the record high of 45.6%. These numbers are likely even higher now as higher rates have sidelined even more buyers.
Seller concessions are most commonly used to help reduce the buyer's out-of-pocket closing costs. However, when the goal is to make a mortgage payment more affordable in a high-rate environment, the best strategy is to use those concessions for a temporary rate buydown.
A temporary buydown gives you the option to lower your mortgage payment for one, two, or three years. The time period of the buydown depends on what your mortgage lender will allow and the amount of concessions you are able to get. The cost of the buydown depends on your loan amount and your interest rate (you can read this article to see how buydown costs are calculated).
After your loan closes, the funds for the buydown are placed in your escrow account (the same account that holds your prepaid taxes and insurance). Those funds are then used to reduce your mortgage payment every month until the buydown period is over.
For example, let's say you qualify for a mortgage at a 7.5% interest rate and are able to negotiate concessions to pay for a 2/1 buydown. For the first year of your mortgage, your monthly payment would be calculated at 5.5% interest instead of 7.5%. In the second year, your payment would be recalculated at 6.5% interest. After two years (the buydown period), your payment will return to 7.5% interest and stay there for the rest of the time you have that loan.
A temporary buydown is a great strategy to improve affordability in 2023 because mortgage rates are anticipated to come down. When that happens, you have the opportunity to refinance your mortgage to a permanently lower rate. And if you decide to refinance before the buydown period is over, you can use the remaining funds to reduce the cost of your refinance!

2. Use seller concessions to eliminate private mortgage insurance

If you are buying a home with a conventional mortgage and do not have enough money saved for a 20% down payment, you will have to pay private mortgage insurance (PMI). This is insurance that protects the lender against losses if you are not able to repay your loan.
The amount of PMI you pay depends on the size of your down payment, your loan amount, your credit score, and your debt-to-income ratio. The fees typically range between 0.22% and 2.25% of your loan amount per year.
In addition to paying for a temporary buydown, seller concessions can also be used to completely remove or "buy out" the PMI on your loan. Depending on how much you are borrowing, this strategy could save you hundreds of dollars every month.
Just like a temporary buydown, your lender will tell you what the cost of the PMI buyout would be, and you would negotiate that amount in concessions from the seller. A PMI buyout could save you more than a temporary buydown, or vice versa.

3. Reduce your down payment

This might seem counterintuitive - wouldn't less money down INCREASE your monthly mortgage payment? Aren't we trying to save money here? So many people are focused on getting their mortgage payment as low as possible that they forget to consider their overall financial picture. If your goal is to make a mortgage payment more affordable, you want to zoom out and take a look at your finances as a whole.
Here's what the average American currently owes and pays monthly on credit cards, car loans, personal loans, and student loans:
Credit Cards

Average credit card balance: $7,279 (lendingtree.com)
Average credit card interest rate: 22.16% (lendingtree.com)
Average credit card payment: $207 (interest + 1% of balance)

Used Car Loans

Average used car loan balance: $26,420 (lendingtree.com)
Average used car loan interest rate: 11.38% (nerdwallet.com)
Average used car loan payment: $516 (lendingtree.com)

Personal Loans

Average personal loan balance: $8,018 (lendingtree.com)
Average personal loan interest rate: 18.35% (lendingtree.com)
Average personal loan payment: $205 (3-year term)

Student Loans

Average student loan balance: $37,338 (educationdata.org)
Average student loan interest rate: 5.8% (educationdata.org)
Average student loan payment: $503 (educationdata.org)

Obviously, these numbers vary widely and depend on a variety of factors, but they do give us a good idea of just how much Americans are paying every month IN ADDITION to their housing payments. It's no wonder people feel like they can't afford a mortgage today!
This is why it's so critical for you and your mortgage advisor to look at your entire financial picture. Your down payment is not just a down payment - it is a tool that should be strategically used to help you purchase a home with the lowest total cost.
Often, this means using some of those funds to eliminate other high-interest debt. Let's take a look at an example:
You want to buy a $400,000 home today with a 30-year fixed rate loan. With $80,000 down (20%) and a 7.5% interest rate, the estimated monthly payment on your new mortgage would be $2,620*.
You also have a car loan and credit card debt. The total balance on these debts is $33,699 with a total monthly payment of $723 (using the average amounts above). What would the impact be if you used some of your down payment to completely eliminate these other debts?
If you used $34,000 of your down payment to pay off your car loan and credit cards, you would have $46,000 left for an 11.5% down payment. This would increase your estimated monthly mortgage payment by $238 to $2,858*.
Putting less than 20% down would also force you to pay PMI. The estimated PMI percentage in this scenario is 0.46%, which would be $136 every month. This brings your total monthly mortgage payment to $2,994*.
So, putting less money down increased your mortgage payment by $374, but you were able to completely eliminate $723 in other monthly debt payments. You are now able to own a home and benefit from appreciation and a fixed housing payment while saving $349 a month!

The Bottom Line

Yes, buying a home in 2023 is more expensive than it has been in the past, but there are options available to combat affordability challenges and make your new mortgage payment less stressful on your wallet. By changing how you use seller concessions and your down payment, considering your overall debt picture, and focusing on total monthly payment rather than just rate, it's very possible you will be able to purchase a home in this market and start reaping the incredible benefits that homeownership brings.
With a long-term plan for your home purchase that considers your overall financial picture – not just how low your mortgage rate can be – you can put your money to work for you, purchase your dream home, and set yourself up for financial success.
We understand that everyone’s situation is different. Before making any decisions on your homebuying plans, it’s crucial that you look at the numbers for your specific purchase scenario and financial situation. If you would like to see a loan comparison that clearly shows how much you could save on a mortgage payment with these different strategies, give us a call or fill out the form below to request a consultation with a mortgage advisor. *Estimated monthly mortgage payments reflect hypothetical Principal, Interest, Taxes and Insurance amounts rounded to the nearest dollar amount and do not include other possible fees. These figures are estimated based on a minimum credit score of 740. Figures and rates shown are for educational purposes only and do not reflect an official mortgage loan offer.

Interest, It's Meaningful Again! And You Could Earn More with Luminate Bank

webadmin@goluminate.com (Luminate Marketing Team) — Wed, 31 May 2023 22:04:00 GMT

Interest, It's Meaningful Again! And You Could Earn More with Luminate Bank

Are you tired of earning negligible interest on your hard-earned money while it sits in your bank account? Are you content with leaving potential earnings on the table? How much could you really be earning if your bank offered competitive interest rates?

In today's financial landscape, finding a bank that truly values your financial well-being can feel like searching for a needle in a haystack. If you're like most people, you might be earning a measly 0.10% or even less on your deposits. But what if we told you that you could be earning thousands of dollars annually without any fees, instead?

Welcome to Luminate Bank, where we believe in making your money work harder for you. We invite you to challenge the status quo and explore the possibilities of maximizing your earnings as we shine a light on how Luminate Bank's Brighter Checking account can help you unlock substantial interest earnings.

Reclaim the Power of Your Deposits

Consider this—how much are you paying your bank every year by simply leaving your deposits with them? We're not just talking about account fees; we're talking about the potential interest you could be earning on your hard-earned money.

In today's typical banks, a checking account often yields a paltry 0.10% interest rate or even lower. But imagine if you or your small business maintained an average balance of $100,000. With Luminate Bank's Brighter Checking account, you could earn up to $2,000 annually—without any fees! And the benefits only grow from there.

If your checking account holds $250,000 (the insurable limit from the FDIC for a single account holder), you could earn an impressive $5,000. And if you have a cool million? That's $20,000 in interest in your pocket. These numbers may be simplified, but they shed light on the importance of seizing the opportunity to earn meaningful interest.

Unlock Your Financial Potential

Now, pause for a moment and let those figures sink in. Can you afford to leave $2,000, $5,000, $20,000, or potentially even more on the table? That's real money, and it's time to take charge of your financial future. That’s where we step in – to help you make the most of your deposits and unlock your financial potential.

But what it is that makes us different than other local banks near you? Well, quite a few things!

Up-to-Date Technology: With the Luminate Bank mobile app, you can use Mobile Deposit to quickly and safely deposit checks into your account without needing to visit a physical branch. Additionally, our surcharge-free ATM network gives you easy access to your funds wherever you are.
Meaningful Interest Rates: We believe that your money should work harder for you. Our Brighter Checking account offers competitive interest rates that surpass the industry average, allowing you to maximize your earnings and watch your money grow.
A Community Connection: As a community bank, Luminate Bank is deeply rooted in fostering relationships and supporting local businesses and individuals. When you join Luminate Bank, you become part of a close-knit community that values your goals and financial success.
Consistency and Trust: We believe that consistency is one of the key ways we build trust with our customers. We want you to fully understand the value of your banking relationship and make informed decisions about your finances. We do all the work so you don’t have to.

Take Action Today!

Whether you're an individual or a small business owner, it's time to rethink your banking options and choose a bank that prioritizes your financial success.

Don't let your hard-earned money go to waste! Start earning meaningful interest with Luminate Bank's Brighter Checking account. Don’t hesitate to contact us to learn more about how we can help you maximize your savings and achieve your financial goals.

Luminate Bank Brings on New CEO, Marc Campbell

webadmin@goluminate.com (Luminate Marketing Team) — Wed, 21 Dec 2022 20:45:40 GMT

Luminate Bank Brings on New CEO, Marc Campbell

MINNETONKA, MINN. (DECEMBER 2022) – It is with much anticipation and gratitude that Luminate Bank has officially announced Marc Campbell as the new CEO. This change has been a few months in the making, and the bank could not be more excited to share the news.

Campbell brings with him over 30 years of expertise in community banking, with experiences across many areas that include operations, finance, credit, sales, compliance, and leadership. Campbell first started his career at Lake Area Bank in November 1997 and was in the role of President & CEO from August 2007 through October 2022.

During this time, he led the bank through branch acquisitions, as well as the significant expansion of the Lake Area Mortgage division. Campbell has been a leader through many banking challenges and changes—including the great recession and the complex sale of the bank—all while achieving notable results. A primary contributor to his success is his passion and beliefs which stem from a desire to develop a supportive, honest, open, and rewarding environment.

“I take great pride, passion, and responsibility in the role as a community banker and CEO,” says Campbell. “Realizing the impact and difference we make in the lives of our customers, communities, and employees is part of my approach to success. I’m excited to celebrate and share in that success with my new peers at Luminate Bank.”

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Luminate Bank—formerly American Equity Bank—is a bank that offers personalized, one-on-one service to all of its members. Luminate Bank’s mission is to work hard to make the American Dream happen and to have everyone achieve their financial goals. For more information about Luminate Bank, please visit www.luminate.bank or reach out to the company at (952) 939-7200.

Luminate Home Loans is a national mortgage lending company that has been in business since 1998. Luminate’s mission is to help unlock people’s full potential through finances and to make lending approachable by bringing transparency and consistency to every part of the client experience. For more information about Luminate, please visit www.goluminate.com or reach out at (952) 698-3300.

American Equity Bank Changes Name to Luminate Bank

webadmin@goluminate.com (Luminate Marketing Team) — Fri, 29 Apr 2022 19:56:58 GMT

American Equity Bank Changes Name to Luminate Bank

MINNETONKA, MINN. (APRIL 2022) – After careful consideration, American Equity Bank (AMEC) has partnered with Luminate Home Loans and has officially changed its name to Luminate Bank. The new name not only reflects the growth of the company, but also embraces improving on the values of (formerly) AMEC.

For Luminate Bank, this change is much more than a new name and the company looks forward to showing improved services, technology enhancements, and access to new product offerings to help bank members reach their financial and lifestyle goals. The company will remain locally owned and managed.

“We are so thrilled to be sharing this exciting news,” says Jeff Williamson, CEO of Luminate Bank. “Our members come first, which is why it’s so important for us that this change has an emphasis on bettering our community. It’s so exciting for us to be partnered with Luminate Home Loans so that we can continue to go above and beyond for our customers.”

In the coming months, there will be new signage, a new and improved website and online banking experience, as well as a renewed commitment to providing the best banking services possible. Luminate Bank encourages you to reach out if you have any questions or would like more information on this transition.

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Luminate Bank | Blog

Why I Emerged from Retirement to Join Luminate Bank

Why I Emerged from Retirement to Join Luminate Bank

How the Right Treasury Management System Can Boost Your Title Agency's Productivity

How the Right Treasury Management System Can Boost Your Title Agency's Productivity

Escape the Frustration: Luminate's Recipe for Stress-Free Banking

Escape the Frustration: Luminate's Recipe for Stress-Free Banking

Subpar Banking Experience

Exceptional Banking Experience

Access to seasoned bankers and personalized support

Best-in-class digital banking solutions

Competitive pricing with flexible customization

Luminate Brighter Checking

Luminate Radiant Savings

The Magic of Leverage: Maximizing Returns on Minimal Down Payments

A Window of Opportunity in Real Estate

The Power of Leverage

A Real-World Scenario

Long-Term Growth and Cumulative Returns

Navigating the Path to Wealth Creation

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Building Wealth Through Real Estate: Understanding Homeownership as an Investment Strategy

Renting vs. Owning

Beyond the Roof: The Value of Real Estate Investment

Financial Standing for Informed Decisions in Real Estate

Conclusion: Where Your Financial Legacy Awaits

Buy Your New Home Now, Sell Later (Formula for Low Stress & Maximum Profit)

Beyond the Sale: The Long-term Vision

Your Financial Journey, Our Expert Guidance

Move a Step Ahead

The Real Impact of Unemployment on Mortgage Rates in 2024

January Jobs Reports Show Conflicting Numbers

Why We Believe Mortgage Rates are Heading Lower

The Bottom Line

Debunking the 3 Most Common Myths About the 2024 Housing Market

Debunking the 3 Most Common Myths About the 2024 Housing Market

Myth #1: Interest rates are not going to come down.

Myth #2: Lower mortgage rates will not bring more buyers into the market.

Myth #3: Home prices are falling and will continue to fall.

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The Bottom Line

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Why Aren't Home Prices Falling as Inventory Rises?

Why Aren't Home Prices Falling as Inventory Rises?

Why the Housing Market Will Continue to Surge

Mortgage Rates See Improvement As Inflation Outlook Improves

What This Means for You

1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!)

2. Choose a loan program.

3. Start improving your finances.

Factors That Will Impact Your Mortgage Rate in 2024

Factors That Will Impact Your Mortgage Rate in 2024

Economic Health & Supply and Demand

Inflation

The Federal Reserve

2024 Housing Forecast: What to Expect with Rates, Prices, and the Economy

2024 Housing Forecast: What to Expect with Rates, Prices, and the Economy

Mortgage Rates

Home Prices

The Bottom Line

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How to Maximize Your Tax Refund as a Homeowner in 2024

How to Maximize Your Tax Refund as a Homeowner in 2024

How Do Homeowner Tax Breaks Work?

Key Tax Advantages for Homeowners in 2024

Mortgage Interest Deduction

Mortgage Points Deduction

Mortgage Interest Credit

Property Tax Deduction

Home-Office Deduction for Self-Employed

Energy Efficiency and Clean Energy Credits

Home Equity Loan Interest Deduction

Sale of Primary Residence Deduction

Which Home Expenses are Not Tax Deductible?

Conclusion

2023 Housing Market in Review: Looking Back on a Rough Year for Buyers

2023 Housing Market In Review: Looking Back on a Rough Year for Buyers

Why Have Rates Fallen So Much?

Empty heading

Still Worried About a Housing Crash? Buyer Activity and Home Prices UP in December

Now Could Be the Best Time to Buy a Home in Months as Affordability Improves