Buying a Lakefront Home on Lake Norman? How Jumbo Loans Work

If you are buying a lakefront home on Lake Norman, you will probably need a jumbo loan, and that is not a bad thing. It is just a different set of rules. Around Cornelius, Davidson, Mooresville, and Denver, waterfront prices move past the conforming limit fast, so I want you to know exactly where the line is, what changes when you cross it, and how to plan for it before you write an offer.

The local question I hear every week

Here is the question Lake Norman buyers ask me, almost word for word: at what price does my loan turn jumbo, and what does that change?

The answer starts with the loan amount, not the price. For 2026, the conforming loan limit for a one unit home in most of the United States, including our Lake Norman counties, is $832,750. That number comes from the Federal Housing Finance Agency. A loan at or below that limit can be a conforming loan. A loan one dollar above it is a jumbo loan.

Run the Lake Norman math

Take a $1,200,000 lakefront purchase. Put 20 percent down, which is $240,000, and your loan is $960,000. That is $127,250 over the 2026 conforming limit, so it is jumbo.

Want to stay conforming on that same $1,200,000 home? Your loan would have to come down to $832,750, which means $367,250 down, about 30.6 percent. Some buyers do that on purpose. Most lakefront buyers do not, and they do not need to, if the jumbo loan is planned right.

Here is a closer call. On a $1,050,000 home with 20 percent down, your loan is $840,000. That is only $7,250 over the limit. In a case like that, a slightly larger down payment can keep you conforming, and we should run both options side by side before you decide.

The price does not decide this. The loan amount does.

What actually changes with a jumbo loan

1. Down payment. Many jumbo programs want 20 percent down, and some allow 10 to 15 percent down for a strong primary home buyer. Second homes and unique waterfront properties usually need more down, often 20 to 25 percent or more. Program rules vary by lender and by property.

2. Credit. Jumbo underwriting is tighter. A score in the 700s is the usual starting point, and the cleanest pricing and approvals tend to go to buyers at 720 and above, with a documented history of on time payments and manageable debts.

3. Reserves. This is the part buyers miss. Jumbo lenders want cash left over after closing, called reserves, measured in months of your total housing payment. Six to twelve months is a common range. Example only: if your total monthly housing cost were $6,000, twelve months of reserves would be $72,000 still in the bank after your down payment and closing costs. That is separate money, and you need to plan for it early.

4. Income and assets, fully documented. Expect full tax returns, pay and asset documentation, and a closer look at bonuses, commissions, business income, and large deposits. Self employed Lake Norman buyers can absolutely do jumbo loans, but the file needs to be built, not guessed at.

5. Appraisal. A lakefront home is not a cookie cutter comp. Water frontage, dock, view, and lot all affect value, and comparable sales can be thin. Jumbo lenders may require a more detailed appraisal, and on higher value or unique properties, sometimes a second appraisal or a review. Build time for that into your offer timeline.

Second home rules on the lake

A lot of Lake Norman purchases are second homes. Be straight about occupancy from day one, because second home jumbo loans carry stricter down payment and reserve rules than a primary home, and investment property rules are stricter still. Calling a rental a second home to get better terms is mortgage fraud, and it is not a gray area. If you plan to rent it, we structure it as an investment from the start and run the real numbers.

My advice, plain and simple

Decide which side of $832,750 you want to be on before you shop, not after you fall in love with a dock. If you are close to the line, we run conforming and jumbo side by side, same day, same numbers. If you are well over the line, we build the jumbo file early, reserves and all, so your pre approval actually holds up when a seller and a listing agent look at it.

A jumbo loan is not a luxury tax. It is just the right tool for a Lake Norman price point, when it is planned.

When you are ready, we will run your numbers and build your plan with you. No pressure, no obligation, just a clear picture of what you can buy on Lake Norman and what it will cost.

Brad Roche

The Mortgage Planner with Element Home Loans, 400 N Harbor Pl Ste H, Davidson, NC 28036, (704) 728-0191

Example only. Loan limits, down payment, credit, and reserve requirements vary by program, lender, property, and borrower profile, and they change over time. This post is education, not a quote and not a commitment to lend. Payments and reserve examples exclude a specific rate quote and are for illustration only.

Listen: Radio show with Eric Maynard, Keller Williams Lake Norman (4ThePLAN): https://www.spreaker.com/episode/radio-show-with-eric-maynard-keller-williams-lake-norman--52121586

Related reading: 2/1 Buydown vs Price Cut: What Saves Charlotte Buyers More in 2026: https://themortgageplanner.com/mortgage-planner-blog/2-1-buydown-vs-price-cut-charlotte-2026

Frequently asked questions

Q: What is the jumbo loan limit on Lake Norman in 2026?

A: For 2026, the conforming limit for a one unit home is $832,750 in most of the United States, including the Lake Norman area. A loan amount above $832,750 is a jumbo loan. It is the loan amount that matters, not the purchase price.

Q: How much down payment do I need for a jumbo loan on a Lake Norman lakefront home?

A: Many jumbo programs want 20 percent down, and some primary home programs allow less for strong borrowers. Second homes and unique waterfront properties often need 20 to 25 percent or more. Your exact requirement depends on the program, the property, and your credit and reserves.

Q: How much in reserves do jumbo lenders require?

A: Six to twelve months of your total housing payment, left in the bank after closing, is a common range for jumbo loans. Reserves are separate from your down payment and closing costs.

Q: Can I buy a Lake Norman second home with a jumbo loan?

A: Yes, second home jumbo loans are common on Lake Norman, but they carry stricter down payment and reserve rules than a primary home. Be accurate about occupancy and rental plans from the start, because investment property loans follow different rules.

Builders Are Dealing Again. How to Tell What a Builder Incentive Is Really Worth

Builders Are Dealing Again. How to Tell What a Builder Incentive Is Really Worth

Builder confidence just fell to its lowest point in 14 years. The NAHB/Wells Fargo Housing Market Index dropped to 29 in October, and in that same survey, 65% of builders reported using sales incentives to get buyers to the table, including rate buydowns.

If you are shopping new construction around Lake Norman, Charlotte, or down in Summerville, where new neighborhoods are going up fast, that number matters to you. It means the builder across the desk is probably more flexible than the price tag suggests. The catch is that not all incentives are worth the same thing, and the one that sounds biggest is not always the one that saves you the most.

First, what is a rate buydown in plain language?

A buydown is simple. Someone, in this case usually the builder, pays money up front to lower your mortgage interest rate. Sometimes the lower rate lasts the whole loan. Sometimes it lasts only the first year or two and then steps up to the full rate. That second kind is often called a temporary buydown.

Either way, the point of a buydown is your monthly payment. A lower rate means a lower payment, without changing the price of the home.

Buydown or price cut: how to compare them

Builders would often rather offer a buydown than cut the price, and there are honest reasons for that. A price cut lowers the value of every other home they still have to sell in the neighborhood. A buydown keeps the price steady and helps one buyer at a time.

For you, the comparison comes down to three questions.

1. What does each option do to my monthly payment? A price cut lowers your loan amount a little, spread across 30 years of payments. A buydown lowers the rate itself, which usually moves the monthly payment more, dollar for dollar, especially in the early years. Run both numbers side by side before you decide. This is a math question, not a sales question.

2. How long will I keep this loan? A permanent buydown pays you back every month for as long as you hold the mortgage. A temporary buydown gives you a lower payment for a year or two, then your payment steps up to the full amount. That can still be a smart tool if you expect your income to rise or you plan to refinance, but you should only take it if the higher later payment already fits your budget today.

3. What is the incentive worth in total dollars? Ask for the total cost of the incentive, not just the headline. Then ask what that same money would do as a price reduction or a closing cost credit. Sometimes the buydown wins clearly. Sometimes a credit you can apply where you choose is worth more. A good plan looks at all three on one page.

Where the negotiating power sits right now

Builders feel a slow market faster than anyone, because they are carrying land, materials, and finished homes that cost money every month they sit. That is why 65% of them are offering incentives right now. Communities around Mooresville, Huntersville, and the growing edges of Charlotte are competing for a smaller pool of buyers, and Summerville and the Charleston area are in the middle of a construction boom where builders have real inventory to move.

That does not mean every builder will negotiate on everything. It means it is reasonable to ask, politely and with your numbers ready, what they can do on rate help, closing costs, design upgrades, or price. The worst answer is no. Right now, the answer is often better than buyers expect.

One caution before you sign

Many builders pair their best incentives with their own in-house or preferred lender. Sometimes that pairing is genuinely the best deal. Sometimes the incentive looks generous because the loan terms behind it are less competitive. You are allowed to compare. Get the builder lender's full numbers and an outside quote on the same day, with the same details, and compare the total cost, not just the incentive headline.

Get the plan before you visit the model home

The best time to work out your numbers is before you fall in love with a kitchen. A short planning call can map out what a buydown, a price cut, or a closing cost credit would each do to your payment and your total cost, so you can negotiate with the builder from a position of knowledge.

Book a planning call at TheMortgagePlanner.com. Bring the builder's offer sheet if you have one, and we will run the comparison together.

Brad Roche, The Mortgage Planner

Contracts Hit a 25-Year Low. For Prepared Lake Norman Buyers, That Is Quietly Good News

Contracts Hit a 25-Year Low. For Prepared Lake Norman Buyers, That Is Quietly Good News

The headlines this week were not cheerful. The National Association of Realtors reported that pending home sales, which simply means contracts signed on homes, fell 7.3% in September. That puts contract activity at a 25-year low nationally. Here in the South, contracts were down 12% compared to a year earlier.

Most buyers around Davidson, Cornelius, Huntersville, and Mooresville will read that and think the same thing: maybe I should keep waiting.

I understand the instinct. But after more than 30 years of helping families buy homes in this area, I can tell you that slow contract markets are often when the best deals quietly get done. Not for everyone. For prepared buyers.

What a slow market actually changes

When contracts slow down, the balance of power shifts in small, practical ways that rarely make the news.

Less competition on each home. Fewer signed contracts means fewer buyers chasing each listing. The bidding wars that pushed Lake Norman buyers to waive inspections and stretch past their comfort zone are much harder for a seller to create when the phone is not ringing.

Sellers start offering instead of dictating. When a home sits, sellers and their agents get creative. Closing cost credits, help with a rate buydown, repairs handled before closing, flexible timelines. These are the kinds of concessions that disappear the moment the market heats back up.

Builders start dealing. New construction communities around Lake Norman, Charlotte, and down in Summerville, where building is booming, do not like carrying finished inventory. When contracts slow, builders sweeten their offers. Our companion post on builder incentives digs into what those offers are really worth.

None of this shows up in a headline. It shows up at the negotiating table, one house at a time.

Why "waiting for the perfect moment" is not a plan

Here is what I see every cycle. Buyers wait for the news to turn positive before they act. But by the time the headlines feel good again, the other buyers are back too, and the concessions are gone. The families who do well in markets like this are not the ones who timed it perfectly. They are the ones who were ready.

Ready means a few unglamorous things:

• A real preapproval, not a guess, so a seller knows your offer is solid.
• A clear number for what monthly payment fits your life, not just what a lender says you qualify for.
• A plan for how you would use a seller credit or a buydown if one is offered, so you can weigh an offer in hours instead of days.

That is the whole idea behind what we do. Get a plan first. Then the market, good or bad, becomes something you can work with instead of something that happens to you.

There is one more quiet advantage worth naming. In a slower market, you get time. Time to read the inspection report instead of skimming it. Time to compare two or three homes instead of grabbing the first one that will have you. Time to ask questions and get straight answers. Around Lake Norman, where many homes are one of a kind rather than one of fifty in a subdivision, that breathing room protects you from expensive mistakes.

A word of honesty

A slow market does not make every home a good buy, and it does not mean every buyer should rush out this weekend. Some homes are still priced like it is 2022. Some buyers genuinely need to wait, save more, or fix a credit issue first. A plan tells you which situation you are in. Guessing does not.

What I can say is this: if you have been sitting on the sidelines in Davidson or anywhere around Lake Norman because you assumed sellers would never work with you, that assumption is worth revisiting right now. The data says contracts are at a 25-year low. Sellers know it too. That is a conversation worth having from a position of preparation.

Start with the plan

If you are thinking about buying in the next year, the most useful step is not scrolling listings. It is a short planning conversation about your numbers, your timing, and what a seller concession or buydown would actually do for your payment.

You can book a planning call at TheMortgagePlanner.com. No pressure and no pitch. Just a clear plan, so when the right house and the right deal line up, you are the buyer who is ready.

Brad Roche, The Mortgage Planner

Used Homes? Why the New Home Slowdown Makes Existing Homes the Whole Game

"Used homes?" It sounds like a step down. It is about to be the whole market.

The Commerce Department reported this week that single-family housing starts fell 4.6% in September to an annual rate of 859,000 homes. Permits for future construction fell 4.0% to 845,000. Permits are the forward look, and they say builders are planning to build even less in the months ahead.

Here is the simple math. Families keep forming, people keep relocating to Charlotte and Lake Norman, and the supply of new homes is shrinking. When fewer new homes get built, buyers do not stop buying. They compete for the homes that already exist.

What this means if you are buying

The home you want is probably already standing, and other buyers know it too. Waiting for new construction to create your opportunity is a weaker plan than it was a year ago. Builders still offer incentives on the homes they have, but with starts and permits falling, that inventory is not getting deeper.

The buyers who win existing homes right now share two things. They are fully preapproved before they shop, not prequalified on a guess. And they know their real monthly number cold, including taxes and insurance, so they can move the same day the right house lists.

What this means if you are selling

Your "used" home just got more valuable, and not only because of price. A well-kept existing home in a good location now competes against a shrinking pipeline of shiny new alternatives. Buyers who wanted new are touring resale homes with fresh eyes.

That said, scarcity is not a free pass. Buyers comparing your home to new construction notice condition. The sellers getting top dollar are handling the obvious items before listing and pricing to the market they are in, not the one from two years ago.

The local picture

Charlotte and Lake Norman keep absorbing relocations, and our new construction is concentrated in pockets. When national starts fall, the local effect shows up fast in the established neighborhoods buyers actually want: Davidson, Cornelius, Mooresville, Huntersville. Fewer new roofs going up nearby means the existing homes in those areas carry more of the demand.

Your move

If you are buying in the next six months, get the plan built now: a real preapproval, a real payment number, and a strategy for competing without overpaying. If you are selling, your equity position is probably stronger than you think, and it is worth knowing the number.

Start with a free planning call: https://themortgageplanner.as.me/?appointmentType=19149167 More straight talk on mortgages and real estate: 4theplan.com

Brad Roche, The Mortgage Planner, NMLS 135191. Licensed in North Carolina (L-112833) and South Carolina (MLS3094). Equal Housing Lender. NFM NMLS 2893. Source: U.S. Department of Commerce, September 2026 housing starts and building permits.

2/1 Buydown vs Price Cut: What Saves Charlotte Buyers More in 2026

If you are buying a home in Charlotte right now, you will probably face a choice most buyers never think through. A seller offers you $16,000. You can take it off the price, or you can use it to buy down your interest rate for the first two years. Same $16,000. The results are not even close, and this post runs the math so you can see it for yourself.

The local question I hear every week

Here is the question Charlotte buyers ask me, almost word for word: if the seller will give me money, should I take the lower price or the lower payment?

It is a fair question, and the instinct most people have is wrong. A lower price feels permanent. A buydown feels temporary. But your mortgage payment is what you actually live with every month, and in the first two years of a loan, when cash is tightest after moving, furniture, and repairs, the payment is what matters.

What a 2/1 buydown actually is

A 2/1 buydown is a seller funded escrow account that lowers your payment for the first two years of the loan. In year one, your payment is calculated as if your rate were 2 points below your actual note rate. In year two, it is calculated 1 point below. In year three, you pay the full note rate for the rest of the loan. The seller's concession funds the difference, up front, at closing.

Your loan does not change. Your note rate does not change. The seller is simply prepaying part of your first two years of payments so your household cash flow gets room to breathe while you settle in.

The math on $16,000

In a recent Charlotte area example we ran, a buyer had $16,000 of seller money to work with.

Used as a price cut, the $16,000 came off the purchase price. The loan got a little smaller, and the monthly payment dropped by about $90 a month. That saving lasts the life of the loan, but it is small, and it arrives slowly.

Used as a 2/1 buydown, the same $16,000 cut the buyer's first year payment by about $884 a month, with a smaller but still real reduction in year two. That is real money in the exact window when buyers feel the most squeezed.

Same dollars. One choice saves about $90 a month. The other saves about $884 a month when it counts the most.

Example only. Your savings depend on your loan amount, your rate, your down payment, and the concession your seller agrees to. Payments discussed here are principal and interest only and exclude taxes, insurance, and HOA dues. This is education, not a quote and not a commitment to lend.

When the price cut wins instead

The buydown is not always the answer. Take the price cut, or split the difference, when:

1. You plan to sell or refinance within the first two years. You would pay for relief you never fully use. Actually, in that case the buydown money left in escrow at payoff generally comes back to you or applies to the balance, so ask us to run both timelines before you decide.
2. You need the lower price for appraisal or tax reasons specific to your situation.
3. Your seller will give a price cut but will not fund a concession. Some deals are simply structured that way, and a smaller win beats no win.

The point is not that the buydown always wins. The point is that nobody should make this choice on instinct. It is a math problem, and math problems have answers.

Why this matters in Charlotte specifically

Charlotte is not one market right now. The regional median price sits near $427,000, and supply is close to four months in much of the metro. In softer pockets with more new construction, sellers are offering concessions to move homes. In stronger pockets like Davidson, Cornelius, and south Charlotte, concessions are thinner and a clean, strong pre-approval matters more. Where you buy in the Charlotte area decides which lever is even on the table, so the conversation starts with the specific house, not a generic rule.

My advice, plain and simple

Ask for the concession. Then run it both ways before you spend it. I do this math with buyers every week, and the right structure regularly beats a headline price cut by hundreds of dollars a month in year one. Structure beats price more often than buyers expect.

When you are ready, we will run your numbers and build your plan with you. No pressure, no obligation, just a clear picture of what you can buy in Charlotte and what it will cost.

Brad Roche The Mortgage Planner with Element Home Loans, 400 N Harbor Pl Ste H, Davidson, NC 28036, (704) 728-0191

Listen: the 4ThePLAN episode on this

"Buyers Market? Seller Paid Cost and what to do with them" (4ThePLAN, Sep 2, 2026): https://www.spreaker.com/episode/buyers-market-seller-paid-cost-and-what-to-do-with-them--74814498

Frequently asked questions

Q: What is a 2/1 buydown on a Charlotte home purchase? A: A 2/1 buydown is a seller funded escrow account that lowers your mortgage payment for the first two years. Your payment is calculated 2 points below your note rate in year one and 1 point below in year two, then you pay the full note rate from year three on.

Q: Is a price cut or a buydown better for Charlotte buyers in 2026? A: For the same seller dollars, a buydown usually saves far more per month in the first two years. In a recent example, $16,000 used as a 2/1 buydown cut the first year payment by about $884 a month, while the same $16,000 off the price saved about $90 a month. Your numbers will vary, so run both before you decide.

Q: Who pays for a 2/1 buydown? A: The seller pays, as part of the negotiated concession at closing. The funds sit in an escrow account and cover the difference between your reduced payment and the full payment each month for the first two years.

Q: What happens to unused buydown funds if I sell or refinance early? A: In most cases, buydown funds you have not used are applied to your loan balance or returned at payoff, per your loan documents. Ask your lender to show you exactly how your program handles it before you sign.

Charlotte Self-Employed Buyers: Your Tax Return Is Not the Whole Story

If you are self-employed in Charlotte, you already know the frustration. Your business is healthy, your bank account proves it, and then a lender looks at your tax return, with every legal deduction your accountant worked hard to find, and tells you that you do not qualify. A new set of national numbers says the market is finally catching up to that reality.

Optimal Blue tracks mortgage lock activity across the country. In September, while overall mortgage volume slowed, Non-QM loan volume rose 8 percent. Non-QM loans now make up about 12 percent of all mortgage production. That is not a fringe corner of the market anymore. That is one loan in eight.

What Non-QM actually means

Non-QM stands for non-qualified mortgage. It does not mean no documentation, and it does not mean weak underwriting. It means the lender verifies your ability to repay using a different set of documents than the standard tax return route. For a growing number of buyers around Charlotte and Lake Norman, that different route is the difference between buying the home and sitting on the sideline.

The three routes we use most

Bank statement loans. Instead of tax returns, the lender reviews 12 to 24 months of bank statements and averages the deposits to establish income. This is the workhorse option for self-employed borrowers, freelancers, and business owners whose returns are written down on purpose.

DSCR loans. For investment property, a Debt Service Coverage Ratio loan qualifies the property largely on its rental income compared to its payment, rather than on your personal tax return. Investors around Lake Norman and in the Charlotte suburbs use this to buy rentals without stacking another W-2 style file.

Asset depletion. If you hold strong reserves, investments, or retirement assets, a lender can calculate a qualifying income from those assets. This fits established buyers, retirees with part-time income, and anyone whose wealth is real but whose paperwork looks thin.

What this means around Charlotte and Lake Norman

Our market runs on self-employment more than most people realize. Contractors in Mooresville, consultants in Davidson, real estate professionals in Cornelius, medical and tech contractors commuting into Charlotte: a lot of local income does not arrive on a W-2. Add the investors buying rental property from Huntersville to Concord, and you have a large group of qualified buyers that the standard process underserves.

September's numbers say lenders nationally are building more capacity for exactly these borrowers. Locally, the practical takeaway is simple: if one lender told you no based on your tax return alone, that answer may reflect their product menu, not your actual qualifications. We wrote about this before in our guide to home buying programs for self-employed and non-traditional income borrowers, and the September data shows that side of the market is still growing.

What to do next

Start with a conversation, not an application. Bring your last two years of bank statements if you are self-employed, or the rent roll and lease details if you are looking at an investment property, and we will map which route fits. No pressure and no obligation. The goal is a plan that matches how you actually earn.

Questions Charlotte buyers ask us

Does Non-QM mean I do not need documents? No. You will provide plenty of documentation. It is simply different documentation, bank statements, asset records, or rental income instead of leaning only on tax returns.

Can I use a bank statement loan for a primary home in Charlotte? Yes. Bank statement loans are commonly used for primary residences by self-employed borrowers in the Charlotte and Lake Norman area.

Is DSCR only for experienced investors? No. First-time investors use DSCR loans too, as long as the property's rental income supports the payment and the rest of the file is sound.

Want me to run your numbers? Reach out through themortgageplanner.com or call (704) 728-0191. More straight talk on mortgages and real estate at 4theplan.com.

Source: Optimal Blue, September 2026 mortgage lock data, as reported October 2026.

Brad Roche, The Mortgage Planner

Your ARM Is About to Reset. Here Is What That Costs You.

By Brad Roche, The Mortgage Planner

If you took a 5/1 or 7/1 ARM back in 2020 or 2021, your fixed-rate honeymoon is ending. Your loan is about to adjust to today's rates, and the payment shock is real. Here is what that looks like and what you can do about it.

The ARM reset wave is here. In 2020 and 2021, 30-year fixed rates sat near 3 percent, and ARMs priced even lower. Borrowers who took a 5/1 ARM in 2021 are hitting their first adjustment right about now. A 7/1 ARM from 2020 adjusts in 2027, which means the clock is ticking. Around Charlotte and Lake Norman, where 2021 was a record year for relocations and buyers stretching into new construction, plenty of those ARMs are resetting right now.

What the reset costs you. Take a $400,000 loan at a 3 percent start rate. Principal and interest ran about $1,686 a month. Most of these loans carry a 2 percent first-adjustment cap, so the rate can jump to 5 percent at the first reset, pushing the payment to about $2,147. That is an extra $461 a month, over $5,500 a year, for the same house. And the caps only slow the climb. If rates stay elevated, later adjustments keep marching toward the fully indexed rate.

Why ARMs adjust the way they do. Your new rate is your index plus your margin, subject to your caps. Most 2020-era ARMs have a 2 percent initial adjustment cap and a 5 percent lifetime cap. Even with caps slowing the climb, the direction is the same: up.

Your options before the adjustment hits.

1. Refinance into a fixed rate now. If you plan to stay, locking a fixed rate before the adjustment removes the uncertainty entirely.

2. Refinance into a new ARM. If you expect to move or refinance again in a few years, a new 5/1 or 7/1 ARM can buy time at a lower payment.

3. Recast or pay down principal. Reducing the balance before the reset shrinks the payment at any rate.

4. Do nothing, but do the math. If your caps keep the first adjustment manageable and you will sell soon, riding it out can make sense. Know your exact adjustment date and your caps before you decide.

The bottom line. An ARM reset is not a surprise if you plan for it. Pull your note, find your adjustment date, index, margin, and caps, then run the numbers. If you want a second set of eyes on yours, that is exactly what we do.

www.themortgageplanner.com

“Trump’s $200 Billion Mortgage Bond Move: What It Really Means for Rates, Buyers, and the Market”

On January 8, 2026, President Donald Trump shocked the housing and bond markets with a Truth Social post directing his “representatives” to buy $200 billion in mortgage bonds, funded by the cash reserves of Fannie Mae and Freddie Mac. The announcement grabbed headlines instantly, but the real questions for buyers, sellers, and homeowners are simple: what does this actually do to mortgage rates and home affordability—and how much is headline versus hard reality?

News outlets including Reuters, CNBC, Business Insider, Politico, and Fox Business have all confirmed the substance of the post and reported that the White House and the Federal Housing Finance Agency (FHFA) are now under pressure to explain who these “representatives” are and how such a program would legally operate. FHFA Director Bill Pulte has publicly signaled support, telling reporters that Fannie and Freddie will carry out the president’s direction by purchasing mortgage‑backed securities from the public market, though key details on timing and structure remain open.

How Could a $200B MBS Purchase Affect Mortgage Rates?

In plain English, mortgage bonds are the pipes that carry money into the mortgage market: when big buyers step in, demand for these bonds goes up, prices rise, and the yields—and ultimately mortgage rates—tend to move lower. This is not a new idea; during and after the 2008 financial crisis and again during the pandemic, the Federal Reserve bought large quantities of agency MBS as part of quantitative easing, which research shows narrowed mortgage spreads by a few tenths of a percentage point versus Treasuries.[fhfaoig +2]

Trump’s proposed $200 billion purchase would be large by historical standards—roughly comparable to some of the Fed’s earlier QE waves—and markets have already reacted, with Bloomberg reporting that current‑coupon Fannie Mae MBS spreads tightened by about 0.1 percentage point immediately after the announcement. For borrowers, that type of spread compression translates into modestly better rate sheets—think improvements on the order of a few tenths in rate relative to where the same market would otherwise have been—rather than a sudden plunge from the 6s into the 3s.

The Catch: Policy, Politics, and Unanswered Questions

Even though the post is real, there is a big gap between a social‑media directive and a fully operational program, and several key questions are still unanswered. Among them: how the purchases would be authorized under Fannie/Freddie’s existing conservatorship, what guardrails FHFA will place on risk, and whether Congress needs to sign off if the plan shifts beyond administrative adjustments into a formal facility.[whec +3]

Additionally, the executive branch cannot simply order the independent Federal Reserve to buy MBS, so any purchases must flow through entities like Fannie, Freddie, or Treasury‑backed structures rather than the Fed’s balance sheet. That means implementation could be slower and more politically contentious than the initial headline suggests, and markets will trade not just on the size of the program but on the quality of collateral, the pace of purchases, and how long the support lasts.

What This Means for Buyers, Sellers, and Homeowners

For consumers, the practical takeaway is that this plan, if executed, is a tailwind for mortgage pricing, not a magic reset button for housing affordability. A well‑designed $200 billion program could nudge rates somewhat lower than they otherwise would be, especially on conforming, FHA, and VA loans backed by the agencies, while leaving jumbo and non‑QM pricing more tied to private capital markets.[cato +4]

At the same time, cheaper money tends to support home prices, especially in markets with tight inventory, so any rate relief could be partially offset by renewed demand and firmer pricing—good news for existing owners, but still a mixed bag for first‑time buyers. For now, the smartest strategy is to treat Trump’s announcement as one more supportive factor in a broader environment where rates have already eased off their peaks and may grind lower over time, while continuing to make buy‑sell‑refi decisions based on personal timelines, local inventory, and payment comfort rather than waiting for a single policy to “fix” the market.

Pro Corner: Partner with Purpose in 2025

📈 Equity Awareness to Listing Launch: How Strategy Reports Spark Spring Success

As we prepare for another busy season, now is the perfect time to start upgrade conversations with your client base. Whether they’re looking to move up, cash out, or simply explore their options, our Equity & Strategy Reports are the ideal spark to get them thinking and acting early.

🔍 Insight That Inspires Action

Our co-branded Equity & Strategy Reports deliver more than just a number. They uncover hidden opportunities:

• Unlock funds for home improvements

• Prepare for downsizing or upgrading

• Evaluate selling vs. refinancing options

• Explore HELOC or term reduction strategies

With today’s market shifts, many homeowners don’t realize just how much equity they’ve built—and how it could fuel their next move.

🗓 The Annual Review Reboot (with Co-Branding!)

We’re also rolling out Annual Review Invitations, personalized and co-branded with your logo and contact info. These aren’t just mortgage checkups—they’re strategic planning calls designed to:

• Forecast financial goals

• Review amortization and savings strategies

• Introduce your services as their next move takes shape

• Ask who else in their world is thinking about a change

Many clients choose to sponsor friends and family to receive this free service. We handle the details—you receive the credit and referral visibility.

🎁 Add a WOW Touch

To make the conversation unforgettable, we include:

• Ticket Pack

• Pizza Night or Lawn Service for VIPs

• “Passport to Charlotte” with local business perks for new movers

These WOW extras turn routine reviews into relationship-builders.

🧭 Why This Matters for You

Early upgrade conversations = pre-spring listings. When you’re in the loop, your listings get locked, staged, and sold with a stronger financial roadmap.

And because we track every touchpoint—from review to refi to realtor referral—you’ll receive a Monthly Partner Report showing referral source, activity, and outcome.

📬 Let’s Get Started Together
Want to send your past clients a co-branded Annual Review invite? Let us know. We’ll build your custom version and schedule your walkthrough session.

🎯 Pro Tip for Partners
Pick 5 VIP clients to surprise with a strategy session and CC them on an invite email. The ROI is immediate when paired with a thoughtful follow-up call or coffee.

"Commit to the LORD whatever you do, and He will establish your plans." — Proverbs 16:3

How to Save $30K–$60K by Tweaking Your Mortgage Strategy (Without Moving or Refinancing the Wrong Way)

Eliminate PMI. Shorten Your Term. Pull Cash for Upgrades.

Ask us how to turn your mortgage into a wealth-building machine.

In today’s rate-obsessed world, most homeowners ask one thing:

“What’s the rate?”

The Mortgage Planner- reminds us, what truly matters isn’t just your rate.
It’s the real cost of your loan, how you strategically use your mortgage, and whether you're missing hidden equity or tax-saving opportunities.

Let’s unpack how a quick Annual Review can unlock $30,000 to $60,000 in savings—without needing to move or refinance blindly.

1. Eliminate PMI and Boost Monthly Cash Flow

Private Mortgage Insurance (PMI) might have helped you get into your home, but keeping it too long can quietly drain your wealth.
Most homeowners can cancel PMI once their loan-to-value (LTV) hits 80%, but few realize they’re eligible—or how to request removal.

With home values surging over the last few years, many of our clients are dropping PMI early and redirecting those savings to:

Monthly cash flow
Home upgrades
Debt payoff
Accelerated mortgage payoff

Want to know if you’re eligible? Let’s run the numbers in your Annual Review.

“74% of clients make the wrong initial decision based on goals never discussed with their loan officer.”

2. Shorten Your Term. Slash Your Interest. Own Your Home Sooner.

How would it feel to own your home 7–10 years earlier—and save tens of thousands in interest?

Refinancing or restructuring your current loan into a 20, 15, or even 10-year term often:

• Increases equity faster

• Saves $30,000 to $60,000+ in total interest

• Creates massive long-term wealth through debt freedom

Our Effective Rate Analysis shows not just your rate—but what you’re really paying over time.

“That’s the rate you’re really paying… let me show you how to take control.”

3. Tap Equity for Upgrades (Without Wrecking Your Financial Plan)

Kitchen remodel? New roof? College tuition?

Instead of putting those costs on high-interest credit cards or draining your savings, consider using your home’s equity through a smart cash-out refinance or home equity line of credit (HELOC).

The difference?
Advice vs. a fee sheet.

78% of loan originators just give you a rate quote.
Only 22% provide tailored advice.

4. The Mortgage Planner Advantage: Advice, Not Just a Loan

When you work with Brad Roche and our team, you’re not just getting a transaction—you’re stepping into a lifetime mortgage management plan.

Here’s how we help you win:

• Annual Review Service – Like a checkup, but for your mortgage

• Passport to the Carolinas – Local perks, relocation services, and WOW extras

• No-Cost Loan Strategy Sessions – Advice before you ever commit

• World-Class Concierge Service – Before, during, and after closing

We treat your money like it’s ours. That’s why we obsess over every deal, every fee, every savings opportunity.

5. Why Now? Why You? Why Us?

The truth is: the best time to review your mortgage is today.

Whether rates are up or down, we’ll help you spot the rate spread, uncover your effective rate, and explore options to save, eliminate PMI, or tap equity the right way.

“The plans of the diligent lead to abundance…” – Proverbs 21:5

🔍 Ready to See Your Savings?

Ask us how we’ve helped clients eliminate PMI, shorten terms, or fund upgrades while saving $30K to $60K in interest.

You’ll leave with:

• A personalized loan analysis

• Strategic options (without pressure)

• A plan aligned with your goals and timeline

Schedule your Annual Review here: www.TheMortgagePlanner.live
📞 Or call us now at 704-728-0191

BONUS: Sponsor 2 Friends or Family for a Free Mortgage Review

Refer two people and receive our Ticket Pack or Pizza Delivery Night on us!

Because giving what you want… is how we roll.

Interest Rates: Holding steady with short-term volatility; opportunities for strategic buys and refis. Inventory: Still tight, but improving sellers are motivated.

Interest rates in December are holding in the mid‑6% range with small day‑to‑day bumps, while inventory remains historically tight but measurably better than last year, creating room for strategic purchases and refis. Sellers are more negotiable on price and terms than they were in the last couple of peak spring markets, especially on homes that have been sitting a bit longer.​

Rates: Steady, with short‑term volatility

Average 30‑year conforming rates are running around the mid‑6s (roughly 6.2–6.3%) as of mid‑December, only a few basis points different from a week ago, which fits the “holding steady with short‑term volatility” theme. November’s average near 6.24% was the lowest in over a year, and current levels are still well below the 7%+ peaks seen earlier in 2025.​

Intraday and day‑to‑day moves of 0.03–0.10% have been common as markets react to Fed commentary, inflation prints, and bond auctions, which is ideal for “rate watching” strategies on locks and float‑downs. This backdrop supports targeted refis for borrowers coming off 7–8% loans, cash‑outs for debt consolidation, and move‑up buys where payment shock can be managed with buydowns and concessions.​

Strategic refinance angles

Refis make the most sense for owners who closed in late‑2023 through mid‑2025 at or above the high‑6s to 7s, since current mid‑6s rates can offer meaningful savings or cash‑flow restructuring even without “pandemic‑era” lows. Borrowers with consumer debt at double‑digit rates may benefit from cash‑out refis that consolidate balances into a single mid‑6% mortgage, especially if they plan to stay put long enough to recoup closing costs.​

Given the small but frequent rate swings, using rate alerts and having applications pre‑underwritten allows borrowers to lock quickly on good days, and to negotiate for lender or seller‑funded buydowns to bring effective rates into the low‑6s or high‑5s in year one. Adjustable‑rate and shorter‑term products (15‑year, ARMs) continue to price lower than standard 30‑year money, which can work for higher‑income borrowers with shorter time horizons or aggressive payoff goals.​

Inventory: tight, but improving

National existing‑home inventory is still below what would be considered a balanced market, with supply around 3.3 months versus the 4.5–6 months that would signal neutral conditions, so “still tight” is accurate. Even so, total units are up double‑digits versus a year ago, with current counts around 1.52 million versus roughly 1.37 million last year, confirming the “but improving” part of the story.​

Seasonally, December normally sees fewer new listings, yet this year homes are staying on market a bit longer and delistings are elevated, a sign that pricing is adjusting and stale listings are being repositioned. Builders are also signaling modest gains in starts and sales into 2026, which should add to options for buyers who are open to new construction instead of competing heavily for select resale listings.​

Why sellers are more motivated

Several factors are pushing sellers to be more flexible: days on market have lengthened compared with the frenzy years, and sellers are increasingly cutting prices or offering concessions to meet buyers where they are on payment comfort. Many owners who delayed listing during higher‑rate months of 2025 are now coming to market before 2026, and they understand buyers expect negotiation on price, repairs, and closing costs.​

This is translating into more frequent seller credits for rate buydowns, closing cost assistance, and flexible possession timelines, particularly on homes that have been listed longer or are slightly mis‑priced for their area. For serious buyers, December offers a quieter competition window and more leverage on terms, even if choices are still narrower than in a fully balanced market.​

Where the opportunities are

For buyers, the sweet spot is well‑priced homes that have been on market longer than the local median, where motivated sellers are open to concessions that can effectively lower the buyer’s rate and cash needed to close. Combining today’s mid‑6s rate environment with a 2–3 point temporary buydown paid by the seller or builder can create payments that feel closer to the high‑5s in the early years, with the option to refi later if rates move lower.​

For existing owners, the best strategic refi plays are: dropping from 7–8% into the mid‑6s, restructuring high‑interest consumer debt, or executing “swap” strategies where a purchase and a refi are coordinated as rates and inventory gradually normalize. In all cases, being fully pre‑approved, rate‑alerted, and ready to negotiate strong terms with motivated sellers is the key to capitalizing on December’s mix of steady rates, modest volatility, and gradually improving inventory.​

What Is Cost Segregation (And Why It Matters to Investors)

As a Mortgage Planner, our job isn’t just to quote rates—it’s to help clients make informed, strategic financial decisions. One of the most powerful but underutilized strategies for real estate investors is cost segregation.

🔍 What Is Cost Segregation?

Cost segregation is a tax strategy that allows property owners to accelerate depreciation by separating a property into individual components. Instead of depreciating the entire building over the standard 27.5 years (residential) or 39 years (commercial), assets like flooring, lighting, appliances, and landscaping can be depreciated over 5, 7, or 15 years.

This results in front-loaded tax deductions—a huge win for real estate investors looking to maximize cash flow early.

⚡ Accelerated Depreciation in Action

Let’s break it down:

• Property purchase: $1,000,000

• Cost seg study results:

  • $150,000 in 5-year assets (e.g., appliances, carpet)

  • $50,000 in 15-year assets (e.g., landscaping, parking)

  • $800,000 in standard 27.5-year depreciation

You now get to depreciate $200,000 faster, dramatically reducing taxable income in the first few years.

💸 Bonus Depreciation: A Game-Changer

The Tax Cuts and Jobs Act (TCJA) allows investors to deduct a large portion of short-life assets immediately.

• 2022: 100%

• 2023: 80%

• 2024: 60%

• 2025: 40%

Even at 40%, the ability to deduct almost half of your short-life assets in year one can unlock serious savings—especially when used alongside our mortgage planning strategies.

💰 Why This Matters to Our Clients

Smart investors use cost segregation to:

• Increase cash flow immediately

• Reinvest faster or refinance sooner

• Strategically reduce taxable income

• Shift future tax burdens (i.e., exit planning and estate strategies)

Pair this with a lower effective rate and you’ve got a game-changing wealth-building tool.

⚠️ Key Considerations

• Depreciation recapture: Can trigger up to 25% tax when you sell.

• Passive loss limits: Must qualify as a real estate professional to offset non-passive income.

• Study costs: Typically $5,000–$15,000, so this strategy usually pencils out for properties over $500K.

💡 Pro Tip: We always encourage our clients to involve their CPA or tax strategist in these conversations. Need a referral? We’ve got trusted partners we’d be honored to connect you with.

🧩 Summary Table

StrategyPurposeDepreciation PeriodTax BenefitStandard DepreciationStraight-line whole property27.5 / 39 yearsLong-term, slowCost SegregationBreak out short-life assets5–15 yearsFaster write-offsBonus DepreciationImmediate deduction on assetsYear 1Big upfront savings

🙋‍♂️ Who Should Consider It?

If you’ve recently purchased, built, or renovated an investment property over $500K—let’s talk. We’ll connect you with the right professionals and show you how this strategy fits into a bigger financial picture, including refinance or equity growth strategies.

And because we’re The Mortgage Planner, we go beyond rates—we look at the real cost of borrowing, and help you make smart, strategic moves that align with your faith, family, and financial goals.

Understanding the Note Rate vs. Annual Percentage Rate (APR) on Your Mortgage

When navigating the world of mortgages, you'll encounter a variety of terms and figures that can be overwhelming. Two of the most important terms to understand are the note rate and the Annual Percentage Rate (APR). Both play a crucial role in determining the cost of your mortgage, yet they serve different purposes. Let's break down the differences between these two rates to help you make informed decisions.

What is the Note Rate?

The note rate, often referred to as the interest rate, is the percentage of interest that you will pay on your mortgage loan each year. It is the rate that is used to calculate your monthly mortgage payment. This rate is set by the lender and is based on various factors, including your credit score, loan amount, and the length of the loan.

Key Points About the Note Rate:

• It determines your monthly principal and interest payment.

• It does not include any additional fees or costs associated with the loan.

• It is the rate you will see on your mortgage note, hence the name "note rate."

What is the Annual Percentage Rate (APR)?

The Annual Percentage Rate (APR) provides a more comprehensive view of the cost of borrowing. It includes the note rate as well as other costs and fees associated with the loan, such as origination fees, points, and mortgage insurance. The APR is expressed as a percentage and represents the total yearly cost of borrowing over the life of the loan.

Key Points About the APR:

• It gives a broader picture of the total cost of the loan.

• It includes additional fees and costs beyond the note rate.

• It is typically higher than the note rate due to these additional costs.

Why the Difference Matters

Understanding the difference between the note rate and the APR is crucial when comparing mortgage offers. While the note rate affects your monthly payment, the APR provides insight into the overall cost of the loan. A lower note rate might seem appealing, but if the APR is significantly higher, it could mean that the loan has higher fees.

Tips for Comparing Mortgages:

• Always compare both the note rate and the APR when evaluating mortgage options.

• Consider how long you plan to stay in the home. A loan with a higher APR might be more cost-effective if you plan to move before the loan term ends.

• Ask your lender for a breakdown of the fees included in the APR to understand what you're paying for.

In conclusion, both the note rate and the APR are essential components of your mortgage. By understanding what each represents, you can make better-informed decisions and choose a mortgage that aligns with your financial goals.

Exploring Mortgage Opportunities in the Lake Norman Area

The Lake Norman area is a vibrant community with a booming real estate market, making it an ideal location for first-time homebuyers, seasoned investors, and those looking to refinance. As a trusted Lake Norman mortgage lender, we are committed to providing personalized home lending services tailored to meet the unique needs of our clients.

Understanding Mortgage Rates on Jumbo loans in Davidson & Charlotte surrounding areas

Navigating mortgage rates in [City Name] can be complex, but with the right guidance, you can secure a rate that aligns with your financial goals. Whether you're purchasing a new home or refinancing, understanding the current market trends is crucial. Our team is dedicated to helping you find the best mortgage rates, ensuring a seamless and stress-free experience.

Home Loans in the Lake Norman Area

For those looking to settle in the Lake Norman area, securing a home loan is a significant step. Our comprehensive mortgage services are designed to assist you in every aspect of the home buying process. From pre-approval to closing, we ensure that your journey to homeownership is smooth and efficient. Start your private search here- https://c.homebotapp.com/home-search/lead/14c760cd-aede-40c0-b5e5-3e01cfd89bcf

Investment Property Mortgage in Lake Norman

Investing in property in the Lake Norman area offers substantial potential for growth and income. Our expertise in investment property mortgages ensures that you have the tools and knowledge needed to make informed decisions. We offer competitive rates and personalized advice to help you maximize your investment returns. Start your investment property search here- https://c.homebotapp.com/home-search/lead/14c760cd-aede-40c0-b5e5-3e01cfd89bcf

Temporary Rate Buydown in Lake Norman (Mooresville, Davidson, Troutman, Huntersville, Cornelius and Charlotte areas)

A temporary rate buydown can be an attractive option for homebuyers looking to reduce their initial monthly mortgage payments. In [Location], we offer tailored buydown programs that can significantly ease the financial burden during the early years of your mortgage. Our team will guide you through the process, ensuring that you fully understand the benefits and implications of this option. Learn more on our buydown blog.

Why Choose Us?

With over 30 years of experience, we pride ourselves on delivering exceptional service and expertise in the mortgage industry. Our commitment to personalized service sets us apart as a leading Lake Norman mortgage lender. Whether you're a first-time homebuyer or an experienced investor, we are here to support you every step of the way. Apply now or schedule a time to discuss your options at www.TheMortgagePlanner.com 704-728-0191

Understanding a temporary mortgage buydown

Basics of Rate Buydowns Q: What is a temporary rate buydown? A: A temporary rate buydown is a financing option that reduces your initial mortgage interest rate for the first one or two years of your loan. At The Mortgage Planner, we offer both 1/0 and 2/1 buydown options to help you manage your initial mortgage payments more effectively.

Q: What's the difference between 1/0 and 2/1 buydowns? A: With a 1/0 buydown, your interest rate is reduced by 1% for the first year. With a 2/1 buydown, your rate is reduced by 2% in the first year and 1% in the second year, before returning to the standard rate.

Financial Benefits Q: How does a buydown save me money? A: The buydown program provides significant savings during the initial years of your mortgage. For example, on a $300,000 loan with a 7% interest rate, a 2/1 buydown could save you approximately $400-500 per month in the first year.

Q: Who pays for the buydown? A: The buydown can be paid for by the seller, builder, or us as the lender. Our team at The Mortgage Planner can help negotiate the best arrangement for your situation.

Qualification and Process Q: How do I know if I qualify for a buydown? A: Qualification depends on various factors including your credit score, income, and the type of property you're purchasing. Our experienced team, with over 10 years in the industry, can quickly assess your eligibility.

For more infomation call 704-728-0191 or visit www.TheMortgagePlanner.com to apply.

Starting an LLC in North Carolina

Step 1: Choose a Name for Your LLC

1. Naming Rules: Your LLC name must be unique and meet North Carolina's naming requirements (e.g., it must include "LLC" or "Limited Liability Company").

2. Check Availability: Use the [NC Secretary of State Business Search](https://www.sosnc.gov/online_services/search/by_title/_Business_Registration) to see if your desired name is available.

Step 2: Reserve the Name (Optional)

If you aren’t ready to form your LLC right away but want to reserve the name, you can submit an - Application to Reserve a Business Entity Name.

- Fee: $30

- Application Form: Available on the [Secretary of State's website](https://www.sosnc.gov/forms).

Step 3: Appoint a Registered Agent

Your LLC must have a registered agent (a person or business entity with a physical NC address) to receive legal documents on behalf of the LLC.

- More Information: Learn about the responsibilities of a registered agent on the [NC Secretary of State's website](https://www.sosnc.gov/divisions/business_registration/registered_agents).

Step 4: File Articles of Organization

To legally create your LLC, file the Articles of Organization with the North Carolina Secretary of State.

1. Online Filing: You can file online using the [North Carolina Secretary of State Online Portal](https://www.sosnc.gov/online_services/business_registration/).

2. Mail Filing: Alternatively, download the form and mail it with a $125 filing fee.

   - [Articles of Organization PDF](https://www.sosnc.gov/documents/forms/business_registration/Limited_Liability_Company)

Step 5: Create an Operating Agreement (Recommended)

While not required by NC, it’s highly recommended to create an Operating Agreement to outline the ownership and management structure of your LLC.

Step 6: Get an EIN (Employer Identification Number)

An EIN is required for tax purposes and is necessary to open a business bank account. You can get an EIN for free from the IRS.

- Apply for an EIN Online**: Visit the [IRS EIN application page](https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online).

Step 7: File Annual Reports

Every year, North Carolina LLCs must file an **Annual Report** with the NC Secretary of State.

- Due Date: April 15 each year.

- Filing Fee: $200.

- File Online: [Annual Report Filing Portal](https://www.sosnc.gov/online_services/business_registration/).

Additional Resources

- **NC Secretary of State LLC Guide**: A comprehensive [guide on forming an LLC in North Carolina](https://www.sosnc.gov/divisions/business_registration/llc_faq) is available on their website for further details and FAQs.

Understanding VA Loan Assumption: A Guide for Buyers and Sellers

Assuming a VA loan can be a strategic move for both buyers and sellers, especially in a rising interest rate environment. Here’s what you need to know if you're considering this option.

Key Requirements for VA Loan Assumption:

1. Credit Score: The buyer must have a minimum credit score of 580.

2. Debt-to-Income Ratio**: A DTI ratio of 45% or lower is required.

3. Fees: Unless exempt, buyers must pay a VA funding fee, equal to 0.5% of the existing principal loan balance. Additionally, there may be a processing fee (usually $300 or more) and a credit report fee.

4. Loan Terms: Buyers must agree to take over the original loan’s terms, including the interest rate, lender, and payment schedule.

5. Payment History: Both the buyer and seller need a 12-month history of no missed or late payments.

6. Occupancy: The person assuming the loan must occupy the property.

7. Exemptions from VA Funding Fee**:

- Veterans receiving compensation for a service-related injury.

- Veterans entitled to compensation but receiving active-duty or retirement pay.

- Purple Heart recipients.

- Surviving spouses of Veterans who died in service or from a service-related disability.

Although the person assuming the VA loan doesn’t need to be a Military member, it may be advantageous for sellers to choose a Military borrower. This allows them to transfer their VA loan entitlement to the buyer, freeing up their own entitlement for future home purchases.

Steps to Assume a VA Loan

1. Find a VA-Backed Property: Work with your real estate agent to locate homes with VA loans, or use specialized platforms like TakeList.com.

2. Qualify for Loan Assumption: Buyers must meet the VA’s and the lender’s criteria for credit score, income, and DTI ratio.

3. Agree to Existing Loan Terms: Unlike traditional mortgages, buyers cannot shop for better loan terms. They must take on the same payments and rate as the seller.

4. Obtain a Release of Liability for the Seller: Without this, the seller remains responsible for the loan if the buyer defaults. Sellers must request this from the VA using form 26-6381.

5. Pay Fees and Costs: Buyers pay the VA funding fee (unless exempt), closing costs, and potentially a down payment if the home's purchase price exceeds the loan balance.

6. Exchange VA Loan Entitlements: If eligible, buyers can swap their VA loan entitlement for the seller's, allowing the seller to reuse their benefits.

Should You Assume a VA Loan?

VA loan assumptions come with both benefits and challenges.

Pros:

- Lower Interest Rates: In a rising-rate market, buyers can take advantage of the seller's lower VA loan rate.

- Reduced Closing Costs: Buyers may save on costs compared to getting a new mortgage. The VA funding fee is also lower at 0.5% compared to 2.3%–3.6% for an original VA loan.

- Sellers Regain VA Benefits: If the buyer is a qualified Military borrower, the seller can reclaim their full VA loan entitlement for future purchases.

Cons:

- Approval Process: VA and lender approval is required, which can complicate the transaction.

- Down Payment: Buyers may need a substantial down payment to cover the difference between the purchase price and the loan balance, unlike original VA loans which often require no down payment.

- Entitlement Risks for Sellers: If the buyer isn't a Military borrower, the seller may lose their VA entitlement.

- Liability: Sellers without a release of liability may still be held responsible for missed payments.

-Paying the difference between the exitisting loan amount to the sales price offered.

While VA loan assumptions can benefit both parties, they require careful consideration and understanding of the process. Whether you’re a buyer looking for lower interest rates or a seller hoping to free up your VA loan benefits, this option could be worth exploring if the terms align with your financial goals.

They saved you just enough to keep your business...

Last year, we had the pleasure of working with a client referred to us by a trusted partner and friend. When we first connected, we quickly analyzed their situation and identified some opportunities to improve their financial outlook. Despite having a mid-600s credit score (around 624), we were able to put together a plan that leveraged their equity position.

Our client was carrying slightly over $100,000 in consumer debt, but we accessed only about 70% of the home’s value, allowing us to pay off the existing mortgage and the debt. While this did result in a higher rate of 7.5% on a 30-year fixed loan compared to their previous 3.5%, the debt consolidation brought significant relief. They ended up saving over $2,200 per month! We advised them to channel those savings into a better financial strategy—building a stronger savings account and cutting down to just two essential credit cards.

They followed our advice to the letter, and it was a win for everyone involved. Recently, with interest rates starting to drop, I reached out to check in on their progress and to perform a soft pull on their credit. I was pleased to see their credit score had improved significantly to around 730, but I quickly learned that I hadn’t done a great job of staying connected after closing on the options.

The client mentioned that their loan had been sold to another lender (servicing lender, collects payments), who had reached out just a month prior to offer them a refinancing deal. Initially, I thought, “Great, they’re saving money!” But as we dug into the details, it became clear that the situation wasn’t as favorable as it could have been.

The servicing lender had charged the client another $4,800, adding it to their loan balance. Even more concerning, they kept the client in an FHA loan with a $340 monthly PMI/MIP fee, despite the fact that the client had 20% equity and a much-improved credit score. The lender reduced their rate by 0.75%, but at the time, the market had dropped by about 1.25% based on their scenario. They took the easy route, leaving the client with a suboptimal loan that saved only $230 per month when we could have saved them $670 per month.

This experience was a tough lesson in the importance of not just staying in touch but being clear about our ongoing commitment to our clients plan regardless of where payments are made. It’s not enough to deliver a great plan and close the deal—we have to ensure our clients know that we’re here for the long haul, watching the market and ready to step in when there’s a better opportunity.

In this case, had we stayed connected about alternatives to the plan that may come up, our expertise could have saved the client significantly more each month vs the easy move to just streamline. Moving forward, we’re doubling down on our commitment to proactive client care—because a good refinance isn’t just about saving money; it’s about making sure our clients get the most out of every opportunity.

Should You Get a Mortgage Now or Wait?

"Should I get a mortgage now or wait?" With current rates just under 7% for a 30-year fixed mortgage, it's a valid concern. However, let's dive into the details to understand the market and why acting now could be a wise decision, even with rates predicted to decrease in September 2024.

Historical Context of Mortgage Rates

Understanding the history of mortgage rates can provide valuable perspective. Here’s a brief overview:

-1980s: Mortgage rates peaked at around 18% due to high inflation.

-1990s: Rates stabilized, averaging between 7-9%.

-2000s: Early 2000s saw rates drop to 5-6%.

-2010s: Post-recession, rates hit historic lows, often between 3-5%.

-2020s: Rates dipped below 3% during the pandemic but have since risen to around 7%.

This historical perspective shows that mortgage rates fluctuate based on various economic factors. The current rate of just under 7% is not unprecedented, and in many ways, it's part of the natural ebb and flow of the market.

The Current Market Dynamics

Today’s mortgage rates are influenced by several key factors:

1. Economic Recovery and Inflation: As we recover from the pandemic, inflationary pressures have led central banks to adjust interest rates upward.

2. Housing Demand and Supply: A surge in demand coupled with limited housing supply impacts mortgage rates.

3. Global Market Trends: Geopolitical events and global economic conditions also affect rate fluctuations.

The Long-Term Value of Real Estate

Despite the current rates, real estate remains a strong investment. Historically, property values appreciate over time, providing significant long-term benefits:

- Equity Building: As you pay down your mortgage, you build equity in your home, which can be a valuable financial resource.

- Appreciation: Real estate tends to appreciate over time, often outpacing the initial costs of higher mortgage rates.

- Inflation Hedge: Property ownership acts as a hedge against inflation, with home values increasing as the cost of living rises.

Why Buying Now Makes Sense

Here’s why acting now, rather than waiting for rates to drop, could be beneficial:

1. Home Prices on the Rise: With demand outstripping supply, home prices are expected to continue their upward trajectory. Locking in a home now means you avoid higher prices in the future.

2. Rate Prediction for September 2024: While it’s true that rates are predicted to decrease in September 2024, the exact timing and extent of the decrease are uncertain. Current rates, though higher than in recent years, are still historically reasonable.

3. Financial Stability: Owning a home provides financial stability and security. Fixed mortgage payments offer protection against rising rental costs and contribute to building personal wealth.

Strategic Planning for the Future

For those concerned about the current rates, consider this strategic approach:

- Refinancing Opportunities: Should rates decrease as predicted in September 2024, and continue to refinancing your mortgage can be a viable option. This allows you to benefit from lower rates while already having secured your home at today's prices.

- Locking in Now, Benefiting Later: By purchasing now, you can take advantage of the anticipated appreciation in home values and potentially refinance to a lower rate later.

Make an Informed Decision

As The Mortgage Planner, my advice is to carefully consider the long-term benefits and management against the backdrop of current market conditions. While waiting for potentially lower rates as they kick the can in 2024 might seem tempting, the ongoing rise in home prices and the inherent value of securing a home now make a compelling case for acting sooner rather than later.

By purchasing a home today, you position yourself to benefit from future appreciation, build equity, and secure a stable financial future. Don’t let the current rate environment deter you from achieving your homeownership and networth. #gethePLAN

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