Rate Update, Trump's Dilemma and Successful BRRRR | Mortgage Monday
Dec 9, 2024
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Christian Bachelder, a mortgage expert at The One Brokerage, unpacks the rising conforming loan limits and their implications for borrowers. He shares strategies for navigating traditional vs. jumbo loans, emphasizing flexible financing with innovative products. The discussion turns to future mortgage rates, influenced by economic factors and political decisions, including how they may affect Trump's policies. Success stories, like a notable BRRRR deal, highlight effective investment strategies amidst a shifting real estate landscape.
The increase in conforming loan limits from $766,000 to $802,000 in 2024 offers borrowers better access to lower rates.
The podcast highlights the unpredictable nature of current mortgage rates, emphasizing the importance of timing home purchases amidst market fluctuations.
Deep dives
Understanding Conforming Loan Limits
Conforming loan limits represent the maximum amount of a mortgage that government-sponsored entities like Fannie Mae and Freddie Mac will purchase, and these limits are adjusted annually based on inflation and local market conditions. For example, in 2024, the conforming loan limit for a single-unit property in a majority of counties is increasing from $766,000 to $802,000, offering better opportunities for borrowers. This change is particularly important for buyers who may have previously qualified for jumbo loans, enabling them to access lower rates and potentially lower down payments. In high-cost areas, such as Los Angeles and San Francisco, the high balance conforming limits allow for even higher loan amounts before crossing into jumbo territory, thereby catering to the unique demands of these metropolitan markets.
Navigating Jumbo Loans with Innovative Solutions
Jumbo loans, which typically come with stricter requirements and higher rates compared to conforming loans, can present challenges for borrowers attempting to finance high-value properties. The podcast discusses a hybrid mortgage approach known as the Fusion product, where a borrower can split their mortgage into two separate loans, keeping both under the jumbo threshold to save costs and improve cash flow. For instance, instead of a borrower facing a high down payment and interest rate through a traditional jumbo loan, this product can help maintain lower monthly obligations while achieving the necessary financing. Additionally, a successful client story is shared, illustrating how a borrower leveraged alternatives to secure a lower down payment and avoid Private Mortgage Insurance (PMI), which often burdens most jumbo loan clients.
Impacts of Interest Rate Fluctuations on Homebuyers
Current mortgage rates are experiencing volatility, with some terms increasing while others decrease, creating an unpredictable landscape for homebuyers. Recently, the popular 30-year fixed rate has dipped slightly to 6.59%, while industry experts anticipate a future decline to around 5%, although this prediction remains highly uncertain. The discussion emphasizes that factors beyond interest rates significantly influence housing affordability, including home prices and inventory levels, suggesting that potential buyers should prioritize purchasing during lower price periods. As the market evolves, the advice pivots towards buying properties while prices are reduced and considering refinancing later, rather than waiting for rates to drop before entering the market.
Welcome to another episode of Mortgage Monday. This week, we dive deep into the rising conforming loan limits and what that means for borrowers. We also discuss the potential for interest rates hitting 5% and the implications of current mortgage rates. Hear client success stories, including a remarkable BRRRR deal and insights on using The One Brokerage's fusion product to save money. To top it off, we analyze how the housing crisis could influence Donald Trump's policies. Don't miss this information-packed episode! 00:00 Introduction and Welcome 00:30 Understanding Conforming Loan Limits 02:23 High Balance Conforming Loan Limits Explained 06:11 Jumbo Loans and Fusion Products 11:06 Current Mortgage Rates and Loan Options 13:33 Future of Mortgage Rates and Trump's Impact 20:25 Client Success Stories and The BRRR Strategy 24:34 Wrap Up Subscribe to The David Greene Show! Apple: https://podcasts.apple.com/us/podcast/the-david-greene-show/id1755485708 Spotify: https://open.spotify.com/show/5Nu6kCJTVzM2x2WsujqBOZ Submit your question for David: https://davidgreene24.com/ask Contact Christian: Christian@TheOneBrokerage.com @theonebroker www.TheOneBrokerage.com Follow David: @DavidGreene DavidGreene24.com RealTalkRealEstate.com Podcast-The David Greene Show Spotify, Apple Podcasts Book a session with David: Help@DavidGreene24.com Ask a Question: DavidGreene24.com/ask Find me on the “minnect” app Real Estate University: SpartanLeague.com Join my Free Newsletter: Davidgreene24.com/textletter Finance Your Real Estate TheOneBrokerage.com Intake@TheOneBrokerage @theonebrokerage Free Textletter DavidGreene24.com/join STR Management STR@DavidGreene24.com Investor Retreat
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