All Forum Posts by: Stephen Rinaldi

 Mike are you saying its not valuable to members to understand the logic to buying with higher rates, due to the continuous appreciation and then saying that you agree with my thesis?  Seems you are hypersensitive to my delivery.

As an owner of a mortgage broker shop I hear it all...  Im just going to wait until rates go down or prices are going to drop soon..  People dont get it, we have inventory shortage.  There may be some events that may occur that may loosen this up over the next 6-12 months, but a solution to the inventory shortage is no where on the horizon.

This means that there will be no price drop, at least in my area interest PA DE NJ MD.  So lets talk about the cost in not buying. Houses here are appreciating 6-8%..so that house you see for 400k will be 430k next year and possible 465k the year after.

Also, what do you think is going to happend to house prices when rates go down...you guessed it values will jump.

The reality is the best time to buy real estate was yesterday, and the next best is today.  People who think that some magic bullet is coming to solve the inventory issue created by 20 years of limited building are mistaken.

 Matt,

Sounds great, I have 400 people preapproved looking for opportunities.  

 Alot of factors to consider in terms of rates but Id say par for the course in the conventional space high 6's

I dont know about everyone else but there has been a uneasiness in the air recently, many of my clients with rates in the 2.7-3.7% range have been inquirng about HELOCs and/or cash out refinances.  As I do some digging the credit card debt Im seeing is outrageous.  People who generally speaking are unable to keep up with their obligations.

I question whether thats where the swing in inventory comes from, people who cannot maintain their bills or access their equity decide to sell as a last resort.  Family average of cc debt has risen from 3k to 7k recently and its expected to go to an average 12k by December 2023..  this is something to keep an eye on.

We have been blessed to serve a a ton of Bigger Pockets clients and the biggest challenge we have with house hackers is the FHA Self Sustainability test.. 75% of the overall rent has to cover the PITI.. with rates where they are this has been a big challenge. This has caused our clients a lot of missed opportunities or having to grapple with putting 15% down on a duplex and 25% down on a 3-4units.

This new program changes the game, now clients with income $92,000 can put 5% down up to a 4 unit.  As an independent broker Im always loooking for programs to add value, I believe this one is a bigger winner for my partners and clients.

FHA loans for the longest time have been frowned upon in the industry, most agents look at these loans as more difficult to close and usually envison a buyer with a 600 credit score and no money... time are changing quickly. Earlier this year FHA lowered their MI by 35%, and the rates FHA Im seeing are close to 6.125-6.25% while conventional rates with out points, a true comparable, are pushing near 7%.

The real negative of FHA loans was MI for the life of the loan, but with a refinance being imminent in the upcoming years, that negative isnt as much of a deterent. The truth is, unless you have prestine credit, in may cases FHA is just the better deal in the market place today. Just FYI

I think I get a call 3-5 times a week about a client who wants to use a FHA or VA loan on a multi-unit, this is because in many ways its the easiet way to become an investor or to live in a house without a monthly cost. I figured I'd share the bullet points of my "House Hack" conversations:

*FHA allows a 3.5% down payment on properties up to 4 units, VA 0% down

*Must live in the property a minimum of 1 year

*Yes clients could do this multiple times, its process but it can be repeatable

* FHA has a self sustainability test, VA does not

* Yes you can get still seller's assist. 6% FHA even more VA

* Be careful on the appraisal, make sure that there are appropriate comps

* Contrary to popular belief, primary residence duplex's on a conventional loan can put down 15% down, sometime this makes mathmathematical sense or solves the self sustatinability issue.  

I always think its important to partner with a lender and Realtor that has experience with these loans, as when mistakes are made it can be costly.

As a broker/owner part of my day to day is finding lending options. Recently added a 6month arm DSCR in 5's. My logic is that I think the rate environment is going to change into 2024 for the positive and having an arm with rate far below other for 6months adds alot of value. The risk would be the loan would be a loss if rates remained the same or worsened in 12-18months.. to me this seems low risk. Good to present options to clients.

I personally can go full doc on investment purchases, but If I had to go DSCR I would jump on a ARM.

For the past 21 years I have been monitoring and anaylyzing rates... The rule that rates go up like rocket and down like feather has been the rule of thumb for as along as I can rememeber .  In October we saw a jump it rates never seen before, as we enter in April it appears the feather is beginning fall.  

My first thought is why does it happen that way?   I actually think its more of a industry protection logic, if rates dropped a .5 points in a a day it would make national news.  Every person with a locked rate would be switching lenders and bedlam would insue.  Its just a guess but it does seem logical.

What does this mean to the investor or buyer. Rates slipping will mean value will increase, buying power will rise and a great opportunity to increase the spread between PITI and rent. It also may mean greater competiton.