Ethan Brooks Mortgage Blog

What is The Cost of Waiting to Buy a House?

Fri, 21 Feb 2025 19:56:38 GMT

How much net worth is your household missing out on if you wait?

I first want to say, the timing and choice to buy a house is different for every household. Sometimes, the timing just isn't right, and that's okay!! Perhaps you may not be staying in the area very long, or you have other financial goals you want to accomplish first. I completely understand that. Renting would be a great choice for you!

That being said, the perspective I would like to address is: perhaps you, or someone you know, is waiting for the "Time to feel right". As with many things in life, I find that the timing may not often feel right, or it is a rare find, anyways.

For example, during the COVID housing era, rates were artificially lowered by the government to stimulate the housing industry, to provide jobs, and financial stimulus to a struggling economy. It may have "felt right" to buy a that time because the 2.75% mortgage rate was "too good to give up!"

These days, unfortunately, house prices continue to rise, and we expect them to rise over the next 5 years, and it's possible we will not see lower rates for another 12+ months.

So then, that begs the question, what is the cost of waiting to buy a house, or is there logic in buying a home even if it doesn't "feel right"? What if your rent payment is lower than your new mortgage payment? (This happens sometimes).

Let's take a look at what you may be missing out on, if you'd choose to rent for another year or so, while waiting out the market.

Property Appreciation: for an average first time homebuyer purchase of $300,000, based on a conservative, low estimate of 3% growth per year (most are forecasting 4-5% growth per year over the next 5 years), average monthly net worth (wealth) increase will be $750/month, or $9,000 per year . This will happen with an increase in equity in your home. It's not directly cash in the bank, but when you sell the home in the future, it'll be a nice payday for your family, that is not taxed! (so long as you live in a property 2 of the last 5 years there is no tax on your profits from the sale of real estate).
Mortgage Amortization: What does this mean? Part of your monthly payment is towards mortgage interest. But another part is towards the principle, or your actual loan amount! For the same $300,000 home, with an average first time homebuyer mortgage, you can plan to build $260.41/month in equity because that's how much, on average, your mortgage payment will pay down your loan.
To put it all together, you're building over $1,000/month on average in wealth for your family by buying a home instead of renting. $1,010.41 to be exact!
let's say your current rent payment is $1,950 / month and your new mortgage would be $2,500. Sounds more expensive right? However, about $1,000 of your $2,500 mortgage will be "yours to keep" as equity/net worth/wealth in your new home, every single month! How cool is that?

Questions on this? As always, feel free to call/text me at: 414-488-0438 .

Do PhD Economists Believe Our Market Will Crash?

Tue, 11 Feb 2025 20:54:51 GMT

Don’t take my word for it! Ask 100+ of our country’s smartest economists!

Many people love to weigh in on their opinions about the housing market. Some people are current homeowners and want prices to go up! Some people are frustrated renters and want prices to fall!

Some people are "arm chair economists" and have interesting theories!

As for me, I love to see what the chief economists, the PhD's, the heads of finance and real estate companies believe will happen. They have the experience, education, and vested interest in being obsessed with the data that supports the market.

Pulsenomics produces a quarterly survey that asks over 100 economists their forecast for the next 5 years, and I am excited to share their feedback.

The average property appreciation estimate for our country is 4.09% over the next 6 years ! That means in total, a house today will be worth 27.16% more total, in 5 years. How cool is that? (If you are able to buy a house before that happens anyways!)

Here's another perspective, let's say you buy a $300,000 house today, and do a 6% down payment (average first time homebuyer down payment). That's a $18,000 investment in the home.

The house is expected to be worth $381,480 in 6 years. A "profit" of $81,480!

If you could invest $18,000 in a stock and you were fairly certain it would be worth $81,480 in 6 years, would you buy it? That's a 352.67% rate of return on your investment. Or 28.62% per year.

Here is a link to the report. pulsenomicsq42024.pdf

Here is a link to the website: https://pulsenomics.com/surveys/#home-price-expectations

And here's a link to an interesting special report they released .

Questions? As always you can text or call me at 414-488-0438

When Will Mortgage Rates Come Down?

Fri, 24 Jan 2025 19:42:30 GMT

And is it worth waiting for?

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Do Appraisers Think Wisconsin Homes Are Overpriced?

Fri, 17 Jan 2025 21:05:00 GMT

The answer may surprise you!

Every year, so it seems, over at least the last 7 years a news channel commentator shares a headline that "property values will plummet" in the following year, or some other scary story like that. Of course history shows that in Wisconsin we have seen at least 5% growth per year, and experts predict much of the same over the next 5 years too!

The media likes to stir up drama, so I prefer to stick to the facts. It helps me personally and it has helped my clients over the years too.

What then do the facts say about Wisconsin property values? Let's ask our local appraisers. Their fulltime job, after all, is to evaluate properties.

The company I work with, Fairway Mortgage, owns our appraisal management company, and so we have access to a lot of data!

I wanted to see if APPRAISERS think property is overpriced! Do appraisers constantly value property for less than the contract offer amount? Are appraisers secretly believing a crash is coming?

Ultimately, it is the appraiser's job to show the house is worth at least how much the client is paying/financing. We don't necessarily need to know if it is worth more, although it is nice when that happens.

I think many will be surprised to hear that over the last 12 months only 6.8% of appraisals have come in low. An even more surprising number is that 70.3% of appraisals came in above the contract price. Some of this is rounding up (Sales contract purchase price was $299,000 and the appraisal came in at $300,000. Is that really "above" the purchase price?).

Here's another fun fact. You are able to DISPUTE a low appraisal value if you have data to support a higher evaluation. In reviewing the dispute data from last year, we were successful 42% of the time in increasing the initial appraised value. Appraisers are open to feedback, and are open-minded to the fact that our SE Wisconsin real estate has value!

However, notwithstanding a staggering number of appraisals are above the contract, and a relatively small amount is below. Remember, appraisers only need to "prove" the house is worth our contract value, not necessarily above it!

I have been watching this data for a few years now, and its consistently true, trained professionals think about 70% of buyers in this market are "getting a deal". If you close a home for $300,000 and it's actually worth $310,000 you have "instant equity" after closing! How cool is that?

Any questions on this? Text or call me at 414-488-0438 !

How to Get Offers Accepted Without Offering More Money

Fri, 17 Jan 2025 20:55:05 GMT

This is a subtitle for your new post

As we head into Fall/Winter, historically this market is more favorable toward buyers. Here are the main reasons:

Fewer buyers willing to purchase homes in the colder weather
Families don't want to disrupt their kids school schedules
As new listings slow down, buyers want to wait for "more listings to be available"

Since your competition is less, you can typically get sellers to help cover closing costs, etc.

That being said, we are still seeing competition for the most in-demand housing, and so I wanted to recap the different ways we can help our financed buyers remain competitive:

1. Waiving the financing contingency: we can help buyers complete the majority of the loan process up front, otherwise called "pre-underwriting", for free. In doing this, buyers can demonstrate to the seller that their loan is already approved , rather than "pre-approved". Considering that about 30% of offers are cash, this helps buyer stay competitive with cash offers.

2. Closing super fast: we can help buyers close as quickly as 6 business days from start to finish. If a seller has a vacant home and is hoping for a quicker closing, we can facilitate a lightning fast transaction to make the offer more attractive.

3. Calling the listing agent: Also free, my team and I are able to call the listing agent, who represents the seller, and assure them we have fully verified our buyers finances. We also share we have over 300+ 5-star Google reviews to help them feel more confident in their financing support.

Questions on this? Text me any time: 414-488-0438

What if an Appraisal Comes in Low?

Fri, 17 Jan 2025 20:51:14 GMT

This is a subtitle for your new post

It can be scary to buy a home, especially in competition when emotions run high.

Many buyers are concerned they are "overpaying" for a home, because of the competitive atmosphere, and the consistent lack of supply that is driving demand in our market.

After an offer is accepted, if a buyer is obtaining financing, the lender wants to conduct an appraisal to ensure the home is worth what you're paying for it.

But what happens if it comes in low, does that mean you are making a bad / irresponsible decision?

Usually not! I want to encourage you about a few things:

1. Fewer than 10% of appraisals come in low, in fact about 60% come in ABOVE the contract price (sometimes that's just rounding up, but still!)

2. Appraisers are humans too with their own biases and opinions. You can have 10 appraisers view a home and receive probably 6-8 different values.

3. Appraisers do receive ~2 years and hundreds of hours of training and apprenticeship time to earn their license, so they are quite educated on the subject.

That being said, a home is ultimately worth what you are willing to pay for it , so long as you can responsibly purchase it, hopefully sell it for more than you bought it for, and easily finance it, if needed.

So, what happens if an appraisal does come in low?

1. We first must attempt a "Reconsideration of Value" or ROV. Each lender has their own guidelines about the process and requirements but they're quite similar across the board:

a. provide better comparable sales than the appraiser used in the original report.

b. provide objective data to contest the numbers and results in the first appraisal. (example: The subject property was significantly renovated, and the comparable sales 2-4 are quite outdated. As a result, the subject should be worth $50,000 more than comps 2-4 on the basis of the renovations. The appraiser only gave a $15,000 value, which does not reflect how the market would value such upgrades).

2. If the first appraiser responds within 48 hours and increases the value to where we need it, or close enough, then YAY! We smile, celebrate and move on.

3. If they do not respond at all (this happens too) or if they disagree with our data, then we can attempt to "flaw" the appraisal. This means we determine the first appraisal is factually incorrect, and does not properly reflect the subject property value. This is most often approved, but not always. The comps, data and argument needs to be compelling and persuasive. The "flaw" process goes through our highest underwriting department, Credit Risk Oversight, who are seasoned 20+ yrs experienced underwriters who determine the exceptional credit decisions like this.

4. If approved, we would then order a new appraisal. (we have done this 4-5 times over the last 7 years, and each time, we were able to close the loan with an appraisal at value!). Great track record of success on this.

Questions on this, reach out by call or text at 414-488-0438 !

How to Write a Cash Offer, With Financing

Fri, 10 Jan 2025 21:33:24 GMT

You have options!

I hope you had amazing Holidays with family and friends! 2024 was truly an amazing year (my 3rd child Frances was born, among other amazing things!)

As the market already starts to warm up ahead of the "spring market", I wanted to share a really powerful tool at my client's disposal!

Pre-Underwriting / Cash Offers / Waving the Financing Contingency!

My favorite FREE way to help a client strengthen their offer is to WAIVE the financing contingency. This can be accomplished quickly and easily by pre-underwriting their loan.

When you do this, we typically leave the financing contingency box on the offer to purchase blank, or write in "N/A". What this communicates to the listing agent is (the realtor representing the seller), not only is your loan "pre-approved" but it is "fully approved". There is then no need for a financing contingency, as your financing is already done! This instills great confidence in the sellers as they can be assured your financing is complete.

Almost EVERY buyer can qualify for this, by the way. And, once we receive the needed documentation, can get to this underwriting status in a few business days in most scenarios. We submit a loan to underwriting with "TBD" as the listed address, and clear every credit, income and asset condition so that the loan is totally ready to go, besides appraisal (if applicable) and title.

Questions on this? Please call/text me at 414-488-0438

Also, one of my favorite statistics is that in the Winter months (November - February), in the greater Milwaukee market, only about 50% of houses sell ABOVE list price. The remainder sell at or below. However, during the spicy Summer months, especially between May - August, around 60-70% of houses sell above list price.

You are much more likely to get an accepted offer with seller credits or a better "deal" during the winter, if you are indeed able to move during those months!

Do Appraisals Matter?

Fri, 13 Dec 2024 15:53:22 GMT

A house is ultimately worth what people are willing to pay for it, right?

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Mortgage Loans for Business Owners

Mon, 21 Oct 2024 15:28:12 GMT

Do your tax returns not tell the whole story? No Problem!

Rates continue to go down, but a weird phenomenon is happening: the pending sales number is lower than expected. Meaning, fewer homes are under contract to be sold than we would have expected, considering that mortgages are more affordable as rates come down.

Sales have increased compared to last year in the 4-county area (Milwaukee, Waukesha, Ozaukee, and Washington), however they pale in comparison to 2022. We do expect demand to rise once mortgage rates consistently "start with a 5", and feel much more palatable. Property values in Wisconsin have risen annually, and so potential homebuyers still feel the pain. Even as rates have started to come down, the greater home sale prices still drive up monthly payments.

A few things are at play:

1. Existing homeowners likely refinanced during the COVID-mortgage boom when rates were below 3%.They are experiencing "lock in affect" and are reluctant to give up their mortgage.

2. People are likely still waiting for rates to "fully" drop. They see the decline and are waiting for the optimal moment. "Yes, rates have come down to the mid/low-6's, but my payment will look so much better when rates hit 5.75%".

What does this mean for you?

1. Buy while others are standing by. If you can lock down a home while competition is lighter, as rates continue to drop, and when competition rises, your home's value will too.

2. In 6-12 months you can explore a refinance and lock in a lower rate.

Buying a house is a very individual decision for each household, but the above are at the least points to consider!

We have had a blast recently helping clients qualify for a unique type of mortgage loan, bank statement loans.

This may not apply to you, but perhaps to someone you know:

If a self-employed individual has a lot of write-offs and business-related expenses that reduces their taxable income, then as far as their tax returns are concerned, they don't make a lot of money.

However, for many business owners, in "real life" they do actually make quite a bit of profit.

So, for those individuals we have an exciting option, a 12-month bank statement program.

We can analyze 12 months of bank statements to determine which deposits are business-related revenue, and calculate qualifying mortgage income from there. We can use anywhere from 40-80% of those deposits as qualifying income on a mortgage application - how cool is that!

As an added perk, we can fully review and pre-underwrite a client so that by time they are writing an offer to purchase a property, there is no further issue down the line with the mortgage approval. We even had a client waive their financing contingency and write a "cash offer" while utilizing this program.

Questions? As always, shoot me a text at 414-488-0438 .

Why Do Property Values Keep Rising in Wisconsin?

Fri, 11 Oct 2024 17:39:48 GMT

For those waiting for house prices to fall in Wisconsin the last couple years, they may need to keep waiting for a while!

The news continues to be a Debbie Downer in regards to the future of real estate, because fear gets people's attention, it drives people to click on articles and sell ad revenue. Every year over the last 7 I have been in real estate, I have heard the news predict the "demise" of housing, and impending crashes, bubble pop's, corrections, etc. However, so far, it hasn't happened!

Let's take a look at the data to support why not!

Strong Demand from Gen Z Buyers : Gen Z, currently aged 12-27, is showing a strong interest in homeownership. At age 25, a higher percentage of Gen Z individuals own homes compared to Millennials and Gen X at the same age. With 69 million Gen Z members in the U.S., this demographic is set to drive demand for the next decade.
Limited Builder Activity : Since the 2008 financial crisis, builders have not returned to pre-crisis levels of construction. This lack of expansion in new housing has contributed to a persistent shortage in supply.
Decreasing Inventory : In Wisconsin, inventory has been trending downward over the past seven years. This reduction in available homes further intensifies competition among buyers.
High Competition : The combination of strong demand and limited supply naturally leads to greater competition, driving prices higher.
Resilient Buyer Demand : Even when mortgage rates rose to 8%, buyer demand remained strong, and prices did not fall in Wisconsin. This resilience suggests that buyers are motivated despite higher borrowing costs.

Given these factors, I am confident that home prices will continue to rise over the next five years, especially if mortgage rates decrease to below 6%.

Questions? As always, you can call or text me at 414-488-0438

Can The Federal Reserve Make Mortgage Rates Go Down

ethan.brooks@fairwaymc.com (Ethan Brooks) — Tue, 08 Oct 2024 14:50:34 GMT

Not exactly...

How fun can I make a kind of dense/challenging economics lesson? Let's see!

I have been getting a lot of questions regarding how the Fed Funds Rate affects mortgage rates.

"So the Fed is cutting rates .25%, does that mean mortgage rates will go down .25%???"

One thing I want to point out is, the market is more savvy than ever, and Wall Street traders have the same data we do (and more!), so it is no surprise to anyone the Fed will be cutting rates soon. Most often these upcoming changes are already "priced in" meaning, current prevailing rates are already reflecting future changes expected to be made!

That being said, allow me to share my take on how the Fed Funds Target Rate (FFTR) will be impacting mortgage rates.

If you want to skip to the ending, I believe mortgage rates will be heading down in the next 12 months - somewhere around 5.5% if I had to guess!

**PLEASE NOTE: as mortgage rates head down, more households will qualify to purchase homes with the more affordable payments, competition will rise, and so will house prices.**

Here's the fun part:

Does the Federal Reserve Set Mortgage Rates?

Not exactly.

The Federal Reserve (the Fed) does not directly set mortgage rates. Instead, it influences them through its monetary policy, particularly by setting the federal funds target rate (FFTR). Here’s a concise breakdown of how this works:

- Federal Funds Target Rate (FFTR): This is the interest rate at which banks borrow money from each other overnight. The Fed adjusts this rate to control economic activity, influencing the overall cost of borrowing money in the economy.

- Bank Borrowing: Banks may borrow from the Fed or each other to manage short-term liquidity needs, such as covering significant outflows like auto loans or deposit withdrawals.

- Impact on Consumer Rates: When the FFTR increases, the cost of borrowing for banks rises. Banks typically pass these higher costs onto consumers through increased interest rates on various loans, including auto loans, home equity lines of credit, and credit cards.

- Economic Conditions: If unemployment is rising (it is) and inflation is falling (it is), the Fed may lower the FFTR to stimulate the economy. Lowering the FFTR reduces borrowing costs, encouraging spending and investment, which can help stabilize the economy.

- Treasury Demand: A lower FFTR can increase demand for Treasury securities as investors seek fixed returns. Higher demand for Treasuries typically lowers their yields, which can indirectly reduce mortgage rates since mortgage bonds are often priced relative to Treasury yields.

- Mortgage Bonds: Mortgage bonds are considered riskier than Treasuries but are still influenced by Treasury yields. Historically, mortgage rates are about 1.5% higher than the 10-year Treasury rate. Currently, this spread is around 3%, but it is expected to narrow as the FFTR decreases. This would support mortgage rates around 5.5%, which would be pretty cool!!

Summary: While the Fed does not set mortgage rates directly, its policies significantly influence them. Lowering the FFTR can lead to lower mortgage rates indirectly through its impact on the broader financial markets and investor behavior.

Thus, mortgage rates may continue to fall over the next 12 months, not in direct proportion to the FFTR but as a result of its broader economic impact.

Here is a list of my sources:

[1] https://www.nerdwallet.com/article/mortgages/fed-mortgage-rates

[2] https://www.cnet.com/personal-finance/mortgages/advice/how-the-federal-reserve-affects-mortgage-rates-in-2024/

[3] https://www.investopedia.com/articles/personal-finance/050715/how-federal-reserve-affects-mortgage-rates.asp

[4] https://www.amres.com/amres-resources/understanding-the-role-of-federal-reserve-in-mortgage-rates

[5] https://www.businessinsider.com/personal-finance/mortgages/how-does-fed-impact-mortgage-rates?IR=T&international=true&r=US

[6] https://www.federalreserve.gov/faqs/why-do-interest-rates-matter.htm

[7] https://www.cnbc.com/select/how-does-fed-affect-mortgage-interest-rates/

Is it still affordable to buy homes in Wisconsin?

Tue, 01 Oct 2024 15:22:48 GMT

Let's look at the facts-

It's a tough market out there, competition is high, and mortgage rates have been stubborn. A lot of families are asking me, is it still a good time to buy a house?

I think most people would agree, they would rather see mortgage rates and house prices lower, (unless they already own a home, then they want their equity to rise). That being said, will real estate in Wisconsin get any more affordable than it is today?

That lead me to do one of my favorite things, research!

People are moving to Wisconsin!

A recent survey revealed that 60% of households moving across state lines are doing so for affordability reasons. This raises an important question: Are people moving to Wisconsin because it is affordable? The answer is a resounding yes. Wisconsin has seen a positive net migration over the last few years , meaning more people are moving to our state than leaving. One significant factor is that our housing is, on average, 18% cheaper than the national average

Wisconsin has a Stable Housing Market!

While house prices and mortgage rates have risen in recent years, Wisconsin's housing market remains stable and less volatile compared to other regions. Unlike the West Coast, which experiences massive increases and corrections, Wisconsin has a history of steady, stable growth. For instance, house prices in Wisconsin rose by 5.6% from 2023 to 2024. This stability makes Wisconsin a safer investment for homebuyers.

Gen Z's Want to Buy Houses!

The Gen Z demographic is particularly eager to own homes. Impressively, 30% of 25-year-olds in this generation already own homes, a higher percentage than Millennials and Gen X when they were the same age. As Gen Z continues to age into homeownership, we can expect increased housing demand in the coming years, further solidifying the market.

The Future is Bright for Wisconsin's Economy!

With inflation starting to moderate and incomes on the rise, experts forecast that personal income in Wisconsin will outpace inflation in 2024 and 2025 . This means that people will receive raises without an equivalent increase in the cost of living, easing budgets and making homeownership more attainable.

Any questions? Text me at 414-488-0438!

How we've helped clients get offers accepted recently

Thu, 23 May 2024 17:36:23 GMT

We love to think outside the box

Wanted to share 3 ways we have helped clients get offers accepted regarding their financing:

For most conventional, FHA and WHEDA loan files, we can support as quick as a 9-day closing. Just please double check with me first before submitting the offer ;)
Deliver loan commitment with your offer, then you can write N/A on your financing contingency. We would pre-underwrite the clients' mortgage loan, subject to clean title and appraisal. If they take it one step further and get the loan cleared to close (everything totally done), then Fairway will support the offer with a cash offer. Fairway will pay cash for the home if we can't close on time.
Quick appraisals - especially in metropolitan areas, Milwaukee, Waukesha, Racine/Kenosha, we have no issue whatsoever supporting a 7-day appraisal contingency. This can help strengthen an offer especially if paired with an appraisal gap buffer!
Speaking of: Appraisal gap buffer! Any client doing at least a 10% down payment has a built-in, low risk appraisal gap of 5%+ of the purchase price, with no additional cash due at closing. The only risk would be a slightly higher PMI payment because the appraisal would imply less "equity" in the home.

Questions on this or anything else? Would love to chat further! You can always text me at 414-488-0438!

Mortgage Rate Rollercoaster

Tue, 14 May 2024 18:17:18 GMT

This is a ride we’d like to get off

Mortgage rates have been on a wild rollercoaster the last couple of weeks. By most measures, rates have gone up about 1% full percent since the beginning of April.

The easiest way to describe the market right now is this: Imagine you are holding a dice that will tell you how mortgage rates will change tomorrow. 4 of the sides are "bad" and only 2 are "good". Rates historically go up much more quickly than they go down, they are considered "sticky".

So, whenever we have an event that causes rates to go up, it will usually take 2-3 "good" events to undo the damage for mortgage rates to go back down again. We need inflation to come down before our economy will relax and mortgage rates will head down. As a result, even a Fed Reserve President recently said a rate INCREASE this year is not off the table.

That being said, an updated rates forecast is still holding on to mortgage rates around low 6's at the end of this year.

Brief review of why rates went back up (again) in the first place. ( Article here with some more detail for the nerds among us ):

Inflation causes mortgage rates to go up. If inflation is on the rise, then mortgage bonds are less valuable to investors, and so mortgage lenders need to charge higher rates to clients, to offer a higher rate of return to investors.
We received a strong jobs report on April 5th. Unemployment is low. Nationally, most people that want to work are able to find work (based on national data, individuals may have a different experience trying to find a job of course).
Inflation report was high April 10. Prices are still rising higher and faster than we would like to see.
On April 15 we saw a strong retail sales report (consumers are showing signs of feeling confident in their jobs, financial future and savings, and so they are spending lots of money!)
Finally, April 25, the PCE quarterly report also came in stronger than expected.

That being said, is there a silver lining, or good news in all of this?

In my opinion, yes !

So long as a homebuyer can afford their current payment, and they expect their income to be stable/increase into the future, they may even save money on their home purchase with a higher rate.

Approximately 3 million households on average will enter the homebuying market for every .5% that rates go down. This is based on average annual household income, and average home prices. Nationally speaking, if rates go down 1% there are about 6 million more "competitors" in the market.

Assuming the higher rates cause people in the local market to hit the pause button, then a homebuyer may even get a "deal" on a home

As always, if you have any questions, don't hesitate to text/call me at 414-488-0438!

Recent win for clients!

Thu, 25 Apr 2024 20:33:18 GMT

This is a subtitle for your new post

One of my favorite questions clients ask me is "what is the difference between you and a credit union / bank?"

To help answer the question, I'll share some recent wins we've had with clients to tell the story:

1. Low Appraisal : Just this last week we had a client with a $380,000 purchase receive a low appraisal. The value came back at $353,000, which is obviously significantly lower than the contract price. Both realtors (buying and listing agents) felt the sales price was supported, and so we gathered comps to help support the value. The appraiser on Monday (4/15) was unwilling to change their value. We notified underwriting that the appraisal report should be flawed, because the appraiser did not use the best available comparable sales, and some of other internal notes were also incorrect. The appraisal was officially flawed on Tuesday (4/16). We ordered a replacement appraisal with a rush on Wednesday (4/17) and received a report back SAME DAY! We closed on Friday with an appraisal at a $385,000 value, above the contract price. How did we pull this off? Fairway owns our own appraisal management company, and so we are able to have a high level of input / feedback on the process and ensure things are done properly . We CANNOT influence the final appraisal value, but we can certainly share feedback if something isn't right. Most lenders hire a 3rd party appraisal management company, and so they are not able to as easily flaw a low appraisal or order a same-day rush appraisal if needed.

2. Quick Closings : Sometimes a seller needs to sell their home as quickly as possible. Maybe the home is vacant, or they have already moved to another state. We have recently closed a number of "barn-burner" quick closings. Examples: WHEDA first time homebuyer with 10% down, we closed in 9 days. Conventional 11% down we closed in 13 days. Conventional 3% down, we closed in 14 days. All within the last 8 weeks.

3. Nights and Weekends : Sometimes there are last-minute questions, clarifications, or collaboration required in a competitive offer scenario to ensure an accepted offer. We have an on-call service that is available for any nights and weekends questions, to ensure deals keep on moving!

4. Rate Locks : In an incredibly volatile market like the one we have, a little-known trick has come in handy for my clients very often. We have the ability to lock in clients rates after-hours, in the evenings and weekends. This is unusual as most lenders require locks during business hours only. Here is why this is handy: last weekend I was seeing news updates about Geopolitical tensions brewing, that would likely affect future oil prices. If the cost of oil goes up, so does gasoline, which is very inflationary. If American consumers see the cost of gas going up, they will believe inflation in general is rising, which causes them to, for example, as for raises at work, and then business owners increase the cost of their goods to cover their rising employee costs. I had four clients get accepted offers last weekend, and I was able to lock in their rates ahead of mortgage rates rising on Monday (they did, and so we won ;) ).

5. In-House Underwriting : If we have any concerns about a clients' file, namely employment history, income, or credit concerns, we have the ability to pre-underwrite a loan to ensure we can have utmost confidence in their upcoming closing. As a result, we can offer confident, quick closings even on files we may otherwise have concerns about. This has been invaluable so that every household can have the best chance possible of getting an accepted offer in this dynamic market.

What a fun time to be in the business! I love what I do, and I do believe it is still a great time to invest in real estate!

As always, if you have any questions, don't hesitate to text/call me at 414-488-0438!

Is buying a home in Wisconsin still a good investment?

Fri, 05 Apr 2024 16:22:56 GMT

Money talks

I hope you're having a wonderful Easter weekend!

The financial markets and housing market continue to surprise! It's been a 'wild' last 4 years, to say the least.

I continue to get asked the question, "is it still a good time to buy a house"?

The numbers show, yes! Property values have risen consistently the last 5 years in Wisconsin and we expect the same to continue in the future, simple supply/demand continue to explain the story. If there are more buyers than sellers, which will be the case for many years to come, then property values will continue to gradually rise!

Did you know, out of a list of the top metropolitan areas anywhere in the US, Milwaukee-Waukesha ranked #31 for the highest property value gain this last year? We are honored to make the list! Property values rose 8.4%!

To put this another way, a $300,000 house, if it gains 8.4% compounding annually, would be worth $324,000 in just one year! This is net worth generated for your family and heirs.

See the graphic below!

And here is a link to access the information.

As always, feel free to text me or call at 414-488-0438 if you have any questions!

Benefits of choosing a lower down payment

Fri, 29 Mar 2024 12:14:16 GMT

Weighing the costs

Many people, or their relatives, have very strong feelings about down payment, so I am here just to share another perspective why someone may choose to do a lower down payment, even if they could still do 20%+ down.

While a higher down payment is often encouraged, there are scenarios where opting for a lower down payment might be advantageous for you. Here are some key points to ponder:

Prioritizing Higher Interest Debt: If you have other debts with higher interest rates than your mortgage, it may be more financially prudent to focus on paying off those debts first. By directing your resources towards clearing these obligations, you could potentially save more money in the long run. Once you've tackled these higher interest debts, you can then reassess and consider making extra payments towards your mortgage.
Investment Opportunities: I would be happy to run a comparison simulation for you to illustrate the potential benefits of choosing a lower down payment and investing the difference. Investing in avenues like a S&P 500 index fund, which historically yields average rates of return between 9 to 11%, could offer you an opportunity for greater returns over time. While I am not a financial advisor, I am here to provide you with information to help you make informed decisions about your finances.
Building Emergency Savings: It's crucial to have an adequate emergency savings account in place to safeguard against unexpected financial hardships. If you currently lack savings that would cover at least 6 months of living expenses, opting for a lower down payment could provide you with the means to establish or bolster your emergency fund, offering you greater financial security.
Capitalizing on Opportunities: Are you considering starting a business or investing in additional properties in the near future? Choosing a lower down payment could free up capital and put you in a better position to seize promising opportunities as they arise. By maintaining flexibility with your finances, you can be prepared to act swiftly when favorable prospects present themselves.

Ultimately, the decision regarding your down payment should align with your unique financial goals and circumstances. I'm here to provide support and guidance every step of the way, ensuring that you feel empowered to make choices that serve your best interests.

Please feel free to reach out if you have any questions or would like to further explore your options. Your financial well-being is my top priority, and I'm committed to helping you make informed decisions that pave the way for a secure and prosperous future.

You're always welcome to text me at 414-488-0438! ��

Surprising credit repair strategies!

Fri, 15 Mar 2024 14:39:27 GMT

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Over the last 7 years I have seen over 3000+ client credit reports, and a few consistent observations stand out to me. The topics below may not apply to you, but perhaps they apply to someone you know - feel free to forward this email to them as well!

**Disclaimer: Pay your scheduled debt payments on time. The topic of this email is making EXTRA payments to pay down your debt early.**

People are excited about paying off their debt early - and this is an exciting thing! However, there may be better uses for your extra money than just paying off your debt early!

1. If you have a very low rate, and you can afford the payment, maybe the money would be best used elsewhere? Such as:

- Paying off the highest rate debt. Focus on the credit cards with double digit interest rates, then slowly make your way toward the lower interest rate debt. If you have debt with interest rates below 4%, there may be other places for you to invest your money since the debt is so "cheap"!

- Saving for a down payment for a house. Homeownership is an amazing way to build wealth for your family. If you are spending your down payment on paying off debt with a really low interest rate, you may want to reconsider!

- Placing the money in a 5% yield savings account. There are high-yield savings accounts that will pay you a high rate of return to park your money with them!

- Invest in a stock market index fund. The stock market on average has provided a rate of return of about 8-11% depending on how far back you look - this rate of return out-earns how much low interest rate debt costs you! (This email is not investment advice, but an encouragement to consider your financial plan with a financial advisor, or do your own further research ��)

2. Avoid using your emergency savings: be careful to not use your emergency savings, it should cover about 2-6 months of bills, because if you fall on hard times, you’ll need to go back into debt again anyways, at probably a higher rate.

3. If you pay off a collection and it reports with a $0 balance, your score will usually NOT go down. Use your money as leverage, only pay off the collection if the creditor agrees to “delete” your collection from your credit report. This is a very common thing I see on credit reports- $0 balance collections that are still dragging down a client's credit score.

Want to chat more or review your credit profile? I would love to set up a time to chat! Just shoot me a text! 414-488-0438

When are rates going to drop?

Fri, 01 Mar 2024 13:37:50 GMT

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Rates are "supposed to be" about 1.5% lower than they are today, about 5.5%.

1. It's actually fairly simple: "Volatility" has created a lot of fear and uncertainty in the market, and so the treasury bill is higher than normal, and so are mortgage rates. Mortgage rates generally follow treasury bill rates. Volatility means the financial market has had massive day to day changes, inflation is still high, our country is creating a massive amount of new jobs, unemployment is still impressively low. The Federal Reserve still needs to keep the Fed Funds Rate (FFR) higher to slow down our economy. The FFR being higher means it is more expensive for banks to borrow money and lend to us as consumers, so auto loans, credit cards, and HELOCs are more expensive.

Eventually, inflation will die down, our jobs market will stabilize and slow down, and the Fed will need to lower the FFR. This means the market will be less "volatile" and then the treasury bill will go down, and mortgage rates will follow!

In other words, because our economy is filled with uncertainty, investments are riskier, and so investors need a higher rate of return in order to invest. Investors buy mortgage bonds, and so we need to charge higher rates to consumers so that investors get higher rates of return on their investments.

2. Pre-payment risk is the other contributor. I am watching my past clients' mortgages closely to make sure I reach out to them as soon as they would benefit from a refinance. The investors know this as well. Investors buy mortgages up front, and they pay a one-time fee in exchange for the right to collect mortgage interest for 30 years, or however long the term of the mortgage is. However, if clients pay off their mortgage within 6-12 months, the investors don't have much of a chance to collect interest. So, we need to charge even higher rates to attract investors to purchase our mortgages.

As soon as mortgage rates start heading down, then prepayment risk will go down as well. It becomes less likely clients will ever refinance if they have a rate of 5.5% or less. because that is already a historically low mortgage rate.

Questions on this? Text me any time! 414-488-0438

Avoid A Homesale Contingency

Fri, 16 Feb 2024 18:48:06 GMT

Three options to help avoid a homesale contingency

Unbelievably, the market is already warming up! It's Spring in February!

Bridge Loan on Your Current Home: With a bridge loan, you can tap into the equity of your current home to use as a down payment on your new home. Essentially, this loan bridges the gap between the sale of your current home and the purchase of your new one. By leveraging your equity, you can avoid the need for a home sale contingency, giving you more flexibility and a stronger position when making offers on new homes.
Cash Offer on Your Current Home: Receiving a cash offer for your current home can expedite the selling process and eliminate the need for a home sale contingency. When you have a cash offer, there's no reliance on a buyer securing financing, reducing the risk of delays or complications. With the assurance of a cash offer, you can proceed with confidence, knowing that your home is effectively sold and freeing you up to pursue a new home without the burden of waiting for financing approval.
Loan Commitment from the Buyer's Lender: If the buyer of your current home is obtaining financing, securing a loan commitment from their lender can provide similar benefits to receiving a cash offer. Once the lender delivers a loan commitment, it indicates that the buyer's financing is in place and the sale is likely to proceed smoothly. At this point, you can proceed as if your house is already sold, allowing you to qualify for a new home with a much higher purchase price. This removes the uncertainty associated with financing contingencies and strengthens your position as a buyer in the market.

By utilizing these strategies, you can avoid the pitfalls of a home sale contingency and position yourself more favorably when buying a new home. Whether through leveraging equity, receiving cash offers, or securing loan commitments, these methods provide greater flexibility and confidence in your home buying journey.

If you, or someone you know currently has a house to sell, but needs to access the equity as a down payment for a new purchase, or cannot afford two mortgages at the same time (who wants that?), we have come up with a number of solutions to help solve this problem! See below!

As always, if you have questions for me, don't hesitate to text me at 414-488-0438!

Is it possible to have fun buying a house in 2024?

Fri, 26 Jan 2024 14:48:47 GMT

Preparation tips so you can enjoy the ride

It has been a crazy couple years for real estate, and I don't really believe it will slow down any time soon! That being said, how can you best prepare for buying a house this year, so that you actually ENJOY it and feel PREPARED?

here is a quick guide you could download and review as well.

1. Preparation is Key: In a market where opportunities arise unexpectedly, being prepared is crucial. I would estimate at least 25% of home purchases are a “last minute” or rush preapproval for a same-day showing and offer - buyers see their dream home on Zillow and were not prepared. Do you know someone who may be wanting to buy a house in the next 6 months? I would love to meet them and help them prepare, so they don't become a number in this statistic!!

2. Strategic Planning for Competitive Offers: Work closely with your realtor to strategize different competitive offer scenarios. Knowing the ins and outs of the process from offer to closing is essential. Educate yourself on every aspect to ensure you're ready to make informed decisions when the time comes. If you need an introduction to a realtor that will take the time in advance to cover these crucial topics, I would love to make the connection!

3. Video Buyer Consultation: Spend 45 minutes with me in a video buyer consultation and your future self will thank you because you will feel that much more prepared. we will discuss the housing market, different programs you qualify for, and the monthly payment and amount due at closing, and the pros and cons of purchasing a home in this current market

4. Financial Analysis: Take the time to review your finances and determine a comfortable budget for a monthly mortgage payment. This proactive approach ensures that your home purchase aligns with your lifestyle and financial goals.

5. Long-Term Perspective: It's worth considering the potential growth in the greater Milwaukee area. With expectations of 3 to 5% growth over the next five years, finding a home you love in a desirable neighborhood could not only fulfill your immediate needs but also contribute to long-term wealth building for your family.

Embarking on the journey of buying a home can be exciting, and the right preparations can make the process enjoyable. If you have any questions or if you'd like to discuss your specific situation further, please feel free to reach out. I'm here to assist you on your path to homeownership.

Any questions? Don't hesitate to text me at 414-488-0438

Keep your super low rate AND buy a new house!

Thu, 18 Jan 2024 14:47:23 GMT

The best of both worlds

One of the most-discussed topics with clients this year has been something along the lines of: "We are dabbling with the idea of renting our house out instead of selling, and then buying our new home, how would that impact my home purchase?" or, "is there any way to move my current mortgage rate over to my new house?" Sadly, I can't help with the second question, but the first is an awesome opportunity current homeowners have.

Recently, a client I was working with found out their total net worth would be predicted to increase $130,905.99 over the next 5 years if they would choose to keep their home and rent it out - which is why this is such an exciting opportunity for you, or someone you know!

*Quick note: If you do not yet own a home, or if a friend or family member is in this position, you can still plan ahead for your next TWO purchases. (Buy your first house, live in it for a while, rent it out, buy your next house)*

A few quick notes:

1. Even if you've already bought a home and are not considered a "first time homebuyer" any conventional-qualified homebuyer can do a 5% down payment for every subsequent home purchase. So, if you do end up keeping your home and renting it out, you don't have to worry about not being able to access your current equity for down payment.

2. If you DO want to access your current equity, you can easily take out a home equity line of credit before moving out, accessing your equity up to 80-90% of your home's value!

I have a very easy-to-use spreadsheet that compares the benefits of keeping your home and renting it out, versus selling it, and using the profits as a down payment, thereby reducing how much you'll pay in mortgage interest on your new home. Click here to take a look at the spreadsheet.

Being a landlord can be a lot of work, so let's do a re-cap of the benefits:

It's possible to buy a new home and keep your current low-interest rate through a strategy like renting out your existing property. This can offer various financial benefits, such as monthly cash flow, property appreciation, mortgage amortization, and tax advantages through depreciation.

Here are some key points to consider when pursuing this strategy:

Rental Income - Cash Flow: By renting out your current home, you can generate monthly rental income that will ideally exceed your housing expenses. This can contribute to positive cash flow.
Property Appreciation: Real estate has the potential for property appreciation, which can add to your overall wealth. Keeping your current property may allow you to benefit from any increase in its value over time. We are predicting a conservative estimate of 3-5% this year in Southeast Wisconsin.
Mortgage Amortization: Your tenants' rent payments help you cover your monthly mortgage payment, which contributes to paying down your mortgage balance, effectively building equity and wealth over time.
Tax Benefits Through Depreciation: Depreciation is a tax strategy that allows you to deduct a portion of the property's value each year, reducing your taxable income. This can create a tax loss on paper, even if you're making a profit in reality.
Passive Income: Managing rental properties can be time-consuming, but there are tools and strategies to make it more passive and hands-off. Utilizing property management services or tools can help streamline the process. I personally self-manage, and I have plenty of automations (automatic monthly rent and late payment collection) and tracking systems to keep myself organized.
Massive Wealth Generation: I was able to help a client see that their total net worth increase forecast over a 5-year period would be $130,905.99 if they chose to keep their home and rent it out, versus selling it and using the proceeds as down payment (which would only save them $47,452.24 in mortgage interest). In fact, if you compare the two options, they come out ahead by $83,453.75 by choosing to be a landlord!

It's important to note that while this strategy offers potential benefits, there are also risks and responsibilities associated with being a landlord. Understanding local rental laws, maintenance costs, and having contingency plans for vacancies or repairs is crucial.

If you're considering this approach, consulting with a financial advisor or real estate professional can provide personalized guidance based on your specific situation and goals. Keep in mind some mortgage types or lenders do NOT allow you to move out and rent out the property, if you had purchased it originally as a primary residence.

See a snippet of this excel spreadsheet you can download and play around with to help determine your exact scenario! If you'd like to set up a call to discuss your scenario, I would love to do that with you! Text me at 414-488-0438 to get it scheduled!

2024 Housing Market Predictions

Fri, 12 Jan 2024 13:25:34 GMT

Exciting predictions on the horizon!

As we embark on the journey that is 2024, I wanted to share some exciting predictions about the housing market that might interest you. So, grab a cup of coffee and let's dive in!

To Buy or to Rent? That is the Question!

Making the decision to buy or rent can be a bit of a puzzle, and we get it! It's a unique choice for every household. While your new mortgage payment might initially seem higher than your current rent, remember that you do not build equity in paying rent, and rent is expected to continue to rise annually! Your mortgage payment is effectively locked in. (Yes, property taxes or insurance could increase over time. 2023 Property taxes actually went DOWN for most homeowners in SE Wisconsin).
On the flip side, we're expecting a 4-6% property appreciation this year, and a portion of your mortgage payment goes towards paying down your debt, making it a wise investment. Plus, with Milwaukee ranking among the top 20 most competitive rent cities in the US, the stability of a fixed mortgage payment is definitely appealing.

Property Values on the Rise!

Brace yourself for some good news – property values are projected to increase by a conservative estimate of 4-6% this year. Our market is growing, adding more potential buyers, but we're constructing very few new homes.
Combine that with a multi-year housing inventory shortage, and we may witness a spike in demand if rates drop below 6%. It's a great time to be a homeowner!

Rates Set to Drop Below 6%!

The stars are aligning for favorable interest rates in 2024. With the Fed Funds rate expected to decrease, paving the way for a reduction in the 10-year Treasury bill, mortgage rates could dip below 6%.
As the financial markets stabilize, the increased value of mortgage bonds will allow us to pass on the benefit to consumers like yourself with lower rates. It's a win-win!

Remember, these are just predictions, but they paint a pretty optimistic picture for the housing market this year. If you have any questions or want to chat more about how these trends might impact you, feel free to reach out. Here's to a fantastic 2024 and potentially exciting developments in the real estate world!

Any questions, feel free to text me at 414-488-0438!

Is rent in MKE going up in 2024?

Fri, 05 Jan 2024 15:12:36 GMT

How rent increases correlate to property value

Is rent going up next year in Milwaukee, and how will it affect the housing market?

Yes, likely yes. And here’s why: Supply and demand!

If builders were to add excessive new rental property supply, then renters have plenty of options to choose from and rents go down. Landlords would be compelled to lower their prices to attract tenants.
However, We can see from number of permits pulled by builders in Wisconsin the construction market is slowing down, and we are returning to pre-covid lows. This data is publicly available from my favorite government website, FRED.
In fact, the number of permits we are seeing for new housing is trending toward the lowest levels we have seen in 25 years. Ever since the 2008 crash, the market hasn’t recovered. Prior to 2008 Wisconsin saw an average of 7,600 permits per quarter (statewide), and after the crash, the average has been 4,080. There are more and more people fighting over less and less housing available.
Milwaukee area vacancy rates are incredibly low, there are 16 renters per vacant unit, according to rentcafe.com . In fact, it was ranked the second most competitive rental market in the country! Maybe not the recognition we were hoping for.
This has lead Milwaukee rents to go up about 4% this last year, and considering the rest of the county, as a whole, has gone down -1.2% this year, that makes it even more remarkable! This was reported by the Journal Sentinel.
As rents rise, it compels more households into purchasing homes, and as demand for homeownership rises, so will property values.

So, here is your punch line: if rents rise, it will encourage property values to rise too. As demand rises for home purchases, so does property values. If you, or someone you know, is considering buying a home, now may be a good time to consider making that purchase, before demand continues to rise in the future!!

Any questions, as always, you can text me at 414-488-0438 !

Buy when others are fearful

Tue, 19 Dec 2023 12:31:25 GMT

Sometimes it makes sense to go against the grain!

If American households think it is a "good time" to buy a house, they'll likely feel comfortable listing their home for sale, and buying another.

The problem is, most currently don't.

That's why, just in greater Milwaukee county, through the end of 3rd quarter, the number of home sales is down 23%, by about 4,000 sales! The market recently has screeched to a halt as many households are "waiting". But this begs the question, for what?

Our economy has actually improved from last year, according to the data, but when 2,217 adults were surveyed by FocalData, the majority got it wrong - how can consumer perception be so far off from what's going on? (see the chart below)

Here are the things that have actually improved from one year ago (supported by the data)!:

1. Wages have increased faster than the cost of goods

2. Inflation has gone down since last year (a lot!)

3. the average American household is wealthier than before the pandemic

4. A household earning average income can indeed afford a better lifestyle today

I want to be clear about something, everyone's personal circumstances are different. It is possible your personal income has not increased, and your net worth is lower than before the pandemic!

That being said, the moment the market gains confidence, watch out! It's not that long ago that we remember 30-45 offers being written per property. We are in this pickle because new construction is only adding inventory to the $500,000+ housing market, in most cities, and so the first-time homebuyer price point $200,000-350,000 is hyper competitive, especially when consumer sentiment is up.

If you, or someone you know is considering making a purchase, and you love the home and the neighborhood, why not pull the trigger while everyone else is "waiting on the sidelines"?

As soon as the majority of people are optimistic about our economy, it's likely purchasing the same exact home could cost 10-15% more (we saw this affect during COVID when mortgage rates rallied the housing market!)

Questions? As always, text or call me at: 414-488-0438

Do Price Drops = Market Losing Value?

Wed, 13 Dec 2023 17:15:02 GMT

Even though there are price drops here and there, the Milwaukee market is up 8.55% this year from last

Winter usually means "opportunity" for the buyers who are willing to bundle up, put their boots on, and do showings in the snow!

Sometimes homebuyers see price reductions and ask me if this means property in the market is losing value. Price reductions can be due to a number of factors, but it is helpful to see the bigger picture as well.

Zillow has a robust research department and one of their jobs is to measure local market data. Zillow's Home Value Index measures the actual estimated rising or declining value of homes on a monthly / yearly basis. This measurement method is widely accepted as more accurate. (You can also see the nationwide home value measurement from a few nationwide data organizations, Case-Shiller, FHFA, and Corelogic).

One data point I want to highlight is that Zillow measures that our beloved Milwaukee market is up 8.55% from last year!!

https://www.zillow.com/research/monthly-snapshot-32052/
You can see the Zillow Research page here (make sure to select Milwaukee as "choose your MSA")

Even if certain properties see price reductions, it is incredibly unlikely it is due to homes actually "losing value".

Here are a few reasons properties have sales price reductions:

Bad timing: perhaps the buyers that are out shopping over a particular weekend have specific needs (more than 1 bathroom), and so a house sits longer until the right buyer comes along
The seller wanted to list a home "too high" - the listing was over-valued, and so the price needed to come back to reality. Sometimes sellers do costly updates, and they don't get the value expected, and are reluctant

One final point I'd like to make is that the percentage of homes sold above list price is a perfect example of how there are opportunities galore in the winter to snag a good deal. Over the last 6 years, more than 50% of property sell BELOW list price, while each year it surged over the summer.

As always, please text/call with questions, here's my cell: 414-488-0438

Blink and you missed it!

Tue, 05 Dec 2023 14:41:34 GMT

Let's focus on the facts

I know this market is not for the faint of heart! There is a lot of "information" online, on the news, coming from our "Uncle Jimmy" at Thanksgiving, that can make it hard to know what is "right".

Rather than share opinions, I try to focus on the data, on the facts. Here is a "Buyer Survival Guide" that accurately depicts the state of the market with facts, not opinions.

Click this link to download.

If you, or someone you know, was waiting for "prices to drop/crash/fall/correct", etc., you may have already missed it. I watch closely a few different national measurements of how house values have risen/fallen, and the National Association of Realtors, Case-Shiller, and Freddie Mac all agree that prices (nationwide), dipped about ~1-4% this last summer of 2023, but have immediately turned around and started increasing again. See the blue circle below highlighting the "dip".

What happened? Rates did rise and that suppressed demand. However, there is still a tidal wave of potential buyers that have been waiting for the right opportunity.

So long as there is demand, house prices will stay strong.

Also, you likely already know that a "homesale contingency" can put buyers at a disadvantage in a competitive situation. The buyer would be asking the seller to allow them to cancel the deal if they can't sell their current home in time - this presents risk for the seller.

For that reason, we try to avoid the homesale contingency at all costs:

Here are 3 clever ways to avoid a homesale contingency:

Bridge loan – you can pay off your existing mortgage and/or take out a loan just for your equity so you have money available for your down payment! As an added bonus, most of my clients have little/no closing cost with this option for the bridge loan portion!
We can often do the bridge loan at the same time as the new purchase loan, which is convenient, and then the buyer doesn't need to apply for a bridge loan before they need it.
There are many versions of this type of loan, and the financing market has been changing rapidly over the last 12 months, so it doesn't hurt to double check if you, or someone you know, has explored all of their options!
Some people qualify to buy a new place with a 5% down payment (with money they have on hand, or borrow from a retirement account), and after selling their current home, lower their new mortgage balance. This process is called a “re-cast”.
This one is my personal favorite: Rent out your current home! We can use that new rental income to “Cancel out” your mortgage payment. That way you qualify for your new home as if you didn’t have an existing mortgage payment!
I've actually prepared a spreadsheet to help homeowners analyze this situation. You can take a look at it here.
People are often overwhelmed or unsure of how to proceed with a rental property. I'm not going to pretend to be an expert, but I do have 4 long term rentals, and I am currently embarking on a short term rental, so I have some personal experience as well to share!

Questions on any of this? Don't hesitate to call / text at 414-488-0438!

Is Real Estate on Extended Black Friday Sale?

Fri, 01 Dec 2023 19:19:33 GMT

Something like that...

Rates went down about .5% over the last few weeks, which means 3 million households just entered the market – or will, as soon as they hear about it in the news!

There is often a 2-week lag between when rates change and the general public hears about it.

If/when rates go down, competition rises.

Millions of households have been priced out of the market for this last year, and are eagerly awaiting lower rates.

Buyer demand is also slower once the school year starts and it gets colder outside (families don’t want to disrupt the school year for their children).

So here is the Black Friday sale: Your mortgage payment just got about $120/month cheaper (difference of 8% and 7.5% rate), and the crowds have not yet caught on to it. You can buy a home with less competition at a lower monthly payment...for now.

It will not surprise me if property becomes 10% more expensive as soon as we hit a 6.5% rate

(that’s 6 million more “friends” entering the property to take your dream home)

Also, consider the shocking chart below, Wisconsin has gone from 36,000+ active listings in 2017, to averaging below ~10,000 in the last 5 years.

If buyer demand skyrockets again, with so few listings that we have, it is not unreasonable to think we would have bidding wars of 20-30 buyers per property again - which happened from the end of 2020-2021.

Finally, builders have pulled back on new construction significantly in Wisconsin, and we are averaging lows we haven't seen since 1990.

If builders are scared to build, then listings will stay low for a long time, further driving up competition and house prices.

Questions on any of this? Don't hesitate to call / text at 414-488-0438!

Rates went down. When will they stay down?

Tue, 28 Nov 2023 16:45:08 GMT

Is it possible we have hit a turning point and rates are starting to come down?

Maybe! But the journey isn't always a straight line :)

Rates did peak over 8% for most clients this last month, and over the last week they have dropped again to mid-to-low 7's%, which is welcome news!

Why did this happen? And what needs to happen to see consistently lower rates in the future?

**For a more technical synopsis, see this link!**

Ready for a fun ride? Here are the reasons I do NOT expect rates to hit 3-5% any time soon, but rather closer to 6% by the end of 2024!

When the pandemic hit, our government wanted to boost our jobs and economy any way it could, since unemployment skyrocketed. The government bought mortgages from lenders to artificially lower / subsidize rates. The Fed and banks ended up buying $2.5 trillion dollars worth!! That is a lot of money. Since mortgage bonds were in such high demand, lenders didn't need to raise rates to make the investment more attractive to investors.
Lenders originate the the mortgage, but investors buy the mortgages and collect the interest payments!
The government also made it basically free for banks to borrow money from them, and if banks get money for “free” they’ll lend it out for close to “free” as well.
The government did all of this stimulus to help the jobs market. If the housing industry was doing well, then insurance agents, title companies, builders, builder suppliers, lenders, realtors would also do well! That is a lot of new job creation happening.
This was a disaster relief plan! Not a replicable event!
Once our country had navigated its way out of the pandemic, inflation started to rise rapidly around the same time.
These emergency measures actually helped cause inflation, which makes mortgage rates go up!
Once inflation eventually goes down, and stays down, experts predict a 6% mortgage rate by the end of 2024.
Not only does inflation need to go down, but consumers need to be able to believe inflation will stay down for a while, that way the market can plan on it. This part can take a while, and there are spikes sometimes (if gas prices shoot up, for example).
Unless we have another crisis or recession, its unlikely rates will go lower than 6%, considering it required a pretty massive subsidy to make it happen the last time!
So, the question is, if you’re otherwise ready to buy a house, what are you waiting for?

This may feel like a big "bummer", or maybe not the news you were looking for - but here is the silver lining!

If other people are scared, and choosing to not buy, that means it is a perfect opportunity for you to purchase a home with less competition.
If you do choose to buy now, you can refinance if/when rates do go down.
If you love the home and can afford the payment, then that is the recipe for success!
We do expect property to appreciate 3-5% per year over the next 5 years, which is about $1,250/month for the average Milwaukee home! Even if your mortgage payment is higher than you'd like it to be, avoiding rent and buying a house can be a wealth-building strategy!

Have questions on this? Don't hesitate to call/text at 414-488-0438!

Charmingly steady Wisconsin market

Mon, 20 Nov 2023 16:05:41 GMT

This is a subtitle for your new post

I recently had a client write an aggressive 18-day closing with a $60,000 appraisal gap, and lose to a cash offer. I have four other clients submitting offers this weekend using the Fairway Cash Guarantee (they are waiving financing contingency altogether, because Fairway is offering to pay cash for the house if we can't close on time), here's how the official cash guarantee contract looks. To qualify for this program, just email me, you need to be fully underwritten and approved prior to using this program. Then our legal department signs the contract so you're ready to attach the secondary offer to purchase.

There are plenty of buyers that want to join this crazy market! We helped over 100 families obtain preapprovals from March 1, 2023 through today, and people are finding it's a very competitive market, even with high rates.

To be clear, according to basic economics, it's not supposed to be like this. High rates are supposed to make enough people hit the pause button to take a break. That is supposed to level the market so sellers are more willing to negotiate. But, we have been seeing declining inventory in Wisconsin the last 5 years, with no end in sight!

This speaks to the strength of the housing market for years to come. Supply and demand dictates that property values will continue to rise because it's a sad game of musical chairs, there are 4 buyers for every one listing available. When the music stops, there are not currently enough houses available. According to the Greater Milwaukee Association of Realtors, we would need 4,340 more homes available for sale just to arrive at a balanced market!

I want to be really clear about something, most news headlines you see about housing are based on the nationwide market, which has shocking outliers. This will make the housing market seem like doom and gloom. In Wisconsin, and specifically Milwaukee, it is NOT doom and gloom.

Some of the hotspot cities have seen meteoric rises (20%+ per year) and collapses (-10%+) since June 2021. This is not the case in Wisconsin. We are a "steady-eddy". In fact, we just had a 5.7% INCREASE in prices in the 3rd quarter of 2023, compared to this time last year, according to the Greater Milwaukee Association of Realtors.

Many news outlets are focusing on the select hot markets where prices rose exponentially fast and fell just as quickly. Tune that junk out!

As always, any questions? let me know! 414-488-0438.

When are rates coming down?

Fri, 17 Nov 2023 16:34:20 GMT

The #1 question of the year is: "Should I buy a house right now?"

The answer may not feel as “easy” as it has in the past! Rates aren’t historically low like they were, and there are still more buyers than sellers which means there are usually still bidding wars, even as property values continue to rise!

Let’s keep the decision more straightforward for you with a few simple questions:

1. How long are you going to stay in the home?

If it’s a super short-term decision, (less than 24 months) you may be better off renting! What if property values do fall in the near future and you feel “stuck”?

On the other hand: There has NEVER been a decade historically in the last 80 years within which property values went down. Over any 10-year period in history, property values may have dipped temporarily but they always went back up.

2. Can you afford the monthly payment TODAY, even if rates never do go down?

There is a lot of wisdom predicting that rates will go down to anywhere from 5-6.5%, which would really help people out! If you’d buy a house today, you could refinance if rates go down and lower your monthly payment by hundreds of dollars, potentially.

But, what if rates never go down?

3. Do you LIKE the home, do you LIKE the neighborhood?

Buying a home isn’t just an investment, it’s a lifestyle choice. Do you LOVE the home and neighborhood? Will you enjoy making memories there, even if you lose money on the purchase?

I do NOT believe homeowners over a 5+ period will lose money, but what if you do? Will it have been worth it?

4. Have you read the data about the housing market?

Or have you just watched the news, which is designed to sell clicks and show you paid advertisements? I can quickly prepare a “housing report card” that shows the numbers of any particular county so you can see how much we expect values to rise, population to change, and the local housing market to prosper.

When will rates finally come back down? (Warning this is a bit of a nerdy read!)

If you read what smart economists are saying, it is safe to predict mortgage rates will come down from where they're at currently (mid 7's%) to low 6's or even high 5's! (5.75-6.25%) as soon as the spring of 2025. Want to read a super nerdy article about it? Check this out!

Here is why:

You may have noticed banks are willing to pay higher rates of interest on your savings account and CD's (certificates of deposit).

If you didn't know about this - you may consider opening a high yield savings account with an online bank who is offering rates of return around 4%+!

Not to mention US Treasury Bonds: The government is willing to borrow money from you and offer you a GUARANTEED rate of return around 5%!

If banks are willing to pay you a high rate of interest for deposits, they'll need to charge consumers even more if they're lending out money for auto loans, credit cards, and mortgage loans. That's how they make money / stay in business!

Why is this happening?

Inflation rose after COVID, and the Fed raised the Fed funds rate in response to this, in order to slow down the economy and cool down inflation. If the Fed raises the Fed Funds Rate (FFR) then it is more expensive for banks to borrow money from the Fed in order to lend it out for auto loans, credit cards, etc. if they need the money and don't have it already on hand.

There are many signs pointing to inflation going down, and staying down next year. If/When that happens, then the FFR will come down, treasury bill rates will come down, and mortgage rates will follow.

Mortgage rates are very sensitive, and mostly tied to, how the 10-yr treasury bills are performing, so if treasure rates go down, so will mortgage rates.

Here's another big reason mortgage rates will eventually go down:

During COVID, the Fed was buying mortgages in the amount of billions of dollars per day(!!) in order to artificially lower mortgage rates. This was their way of stimulating the economy where they were able to.

Well, now that inflation has gone up so much, the Fed needs to reverse course and get rid of all of these mortgage bonds they bought. As they are selling off their supply, that is flooding the market with additional bonds and causing mortgage rates to go up.

This will eventually slow down as well, and mortgage rates will breathe a sigh of relief and go down!

If you made it this far, congratulations! I know this was a heavier read, and if you have any questions at all, make sure to text me at 414-488-0438!

Good as cash?

Tue, 14 Nov 2023 16:07:25 GMT

Fairway's cash guarantee

One of my clients wrote an offer against 47 other offers, and won. She had a wonderful realtor who wrote a very strong offer, and we used one other trick to win: Fairway's Cash Guarantee.

According to Redfin's most recent report, 31% of closings are "cash". Sometimes a borrower receives money from their parents, then after closing they take out a mortgage to repay their parents. Other times, some people just have enough cash lying around to not need a mortgage.

This is a very strong offer because it is less risky for a seller.

Sellers have two goals when they sell their home:

1. Get as much money as possible in sale proceeds

2. Choose the LEAST RISKY offer.

That is why cash offers are desirable, the seller doesn't need to sweat the buyer not qualifying for financing.

That begs the question, how can a buyer who needs financing compete with 1/3 offers being very desirable cash?

Here's the secret weapon: The Fairway Cash Guarantee. Once complete, you would NOT need to check the financing contingency box. This elevates your offer to the same level as cash.

How does it work, and how can you take advantage of the program?

1. Submit all of the required documents for loan approval (we will let you know what you need).

2. We will submit your entire file to underwriting for thorough review and approval

3. Once complete, our legal department will complete and sign this (click link:) secondary offer to purchase

4. How does it work? You are waiving your financing contingency because your loan is DONE, subject to title and appraisal. If the loan would happen to not close on time, the secondary offer would kick in, and Fairway would buy the home, with cash. And look, we can swing it, our current cash position is north of $400 million. We do not want to own homes, but it is a show of faith that we are putting our money where our mouth is - we back our process and underwriting.

If the seller does not want to sell the home to Fairway, we will offer them a $10,000 check and cancel the deal. All the details of the offer are in the 3-page addendum here.

Questions? Text me at 414-488-0438

73 Spam calls in a day

Fri, 10 Nov 2023 14:33:52 GMT

This has to be illegal, right?

I think most of us have heard of the friend or family member that applied for a mortgage typically or maybe a car or credit card and then they were bombarded by telemarketers. What happens actually is entirely legal .

The Credit Bureau's Transunion, Equifax and Experian are allowed to sell their records of you as a consumer to mortgage lenders to credit card providers, to auto loan companies and they use that data of course, as leads to try to sell products to you.

Mortgage applications are down year to date anywhere from 30 to 40% based on recent numbers that I've seen, meaning mortgage companies volume is down by about half or just a little less and so many of them are desperate to stay busy.

I'm thankful and my team is so grateful that we are down about 10% this year. Thanks to the wonderful, amazing partners that we work with realtor partners, past clients, family, etc. But it's tough times out there considering rates have gone up and inventory is so low.

There just isn't enough property to go around so mortgage companies are more desperate than ever to get business. They buy these leads!

I had a client this week get called 73 times in one day, which is obscene.

Now, the most sad part is by time the client reaches out to me for a pre approval, it's too late for them to protect themselves from getting harassed by these companies. You can do something called optoutprescreen.com which opts you out from prescreened credit offers but it takes about 5 to 7 days to go into effect.

So the reason I'm sharing this is if you have family, friends, clients, et cetera that are considering purchasing a home or doing a credit transaction soon or for yourself, just to protect for the future. It's a very quick and easy process. You go to the website listed in the email and you are protected for five years from being harassed like my poor dear client was this last week.

The other thing I want to talk about is a little bit different angle of something I've been discussing recently.

What happens when rates hit 6%?

Well, a fun fact (and I think it's fun because I'm a data nerd) is every half percent that rates go down, about 3 million households become eligible or qualified to purchase a home.

That's how sensitive affordability is these days. We are under supplied in housing by about half. We have a three month supply of housing.

Meaning if not a single new home hit the market, we would run out of listings in, in about 3.4 months. At least that's through September.

That's right. Now, if rates drop, basically 2% from where they are at right now, technically 12 million households become eligible to purchase a home.

And as of right now, we're only on pace to sell about 4 million house houses per year nationwide. So the industry, the market, as we know, it would just be toppled theoretically if rates drop, if and when, that it's quite likely that rates will go down. I don't think we'll see 3%.

But maybe high fives, mid to low sixes is pretty likely.

And so with a relatively high degree of certainty, we can know what that future will look like. So, if, if you know someone that's on the fence, perhaps this is a word to the wise, a cautionary tale of what could happen if they wait too long.

Why not otherwise buy the house now with less competition and then if rates do go down, then you can refinance and at that point. There'll be so much competition driving up housing values. At that time, you would have so much equity in your home that you could easily refinance, you could probably get rid of PMI if you had it and take advantage of all those opportunities.

So I hope this is beneficial. I hope you have an amazing rest of your weekend. And as always, shoot me a text if you have any questions 414-488-0438.

Save it and rent it? Or, sell it and pay down your mortgage?

Fri, 03 Nov 2023 13:16:47 GMT

Keep or sell?...

Ever wanted to run the numbers to determine if you should Save Your House and Rent It, or Sell it, and use the cash to lower your new mortgage balance?

Perhaps this doesn't apply to you, but do you know someone that would appreciate this data?

Well, thanks to my handy new excel spreadsheet, you can easily run the comparison for yourself or someone else, so that you can have total CLARITY regarding the very important decision to be made. Click this link to download it!

I just had the joy of helping a client with this thought process-

(Client's home is currently worth $334,000 and has a mortgage balance of $207,000.)

Did you know there are 3 income streams if you keep a house and rent it out?

Think of it this way, if you only considered cashflow, $211.88/month may NOT be worth the hassle of being a landlord. Finding tenants, dealing with tenants, doing repairs, etc.

However, this client had had their current mortgage since 2021 and they've made great progress in their amortization schedule. Every month, $435.91 of their mortgage payment paid down their loan (principal payment).

Also, based on a conservative 3% rate of appreciation, the client's house value should be rising at least $835.00 per month! (3% per year of a $334,000 home!)

The total "wealth accumulation" would be $1,482.78 per month!!

If you consider the full housing expense per month (mortgage principal and interest, taxes and homeowners insurance, even assuming you need to replace one furnace per year $300/month or $3,600 annual, and have the property vacant 1 month of the year for turnover, you're still converting a $211.88 profit! I would consider this a conservative estimate. Sometimes tenants stay longer than 1 year, so you wouldn't have a vacancy, and sometimes you have years when nothing / very little breaks!

Finally, what if you'd choose to sell the house instead and use the sale proceeds to pay down your new mortgage instead?

Even if you had $100,280.00 in sale proceeds, and used it all to do a larger down payment, you'd save $34,776.47 in mortgage interest over a 5-year period- which is pretty cool!

However, if you'd keep your home and rent it out, over a 5 year period you would generate $88,966.93 in net worth for yourself - how amazing is that! See the grand totals below! That beats selling the home by $54,190.46!

I have done this twice now, with the first two homes my wife and I bought, and it has been an exciting and dynamic experience to say the least!

I would be happy to prepare a custom spreadsheet analysis for you if you or someone you know would be interested in a report like this! Just shoot me a text at 414-488-0438

What happens if you "overpay"?

Tue, 31 Oct 2023 17:03:31 GMT

Property appreciation in action

"What happens if you “overpay” for a home?" This is one of the top questions I have been asked recently.

I speak with a lot of buyers that are concerned about ultimately paying too much for a home…

I recently sent out a report that year-to-date, only 5-8% of appraisal have been coming in below contract price, and over 50% of appraisals are coming in ABOVE the final purchase price.

Wh a t happens if the market adjusts and all of a sudden, you are stuck with a home you paid too much for?

I believe Milwaukee real estate values are here to stay, primarily for the following reasons:

We would need 4,050+ more listings right now just to have a “balanced” healthy market as of September 30, 2023. That's how short we are on inventory!!
Our local jobs economy is strong and has a bright future. We have a diversified employer base, we are not focused on one particular business or industry.

All that aside, let’s say you do “overpay” for a home:

There is a listing coming up in Wauwatosa, it’s listed for $439,900, let’s say you end up getting an accepted offer for 10% more than list, or $484,000. But let’s say it’s ultimately actually “worth” $440,000. The list price.

It is well established fact that property values slowly rise every year, as they have for the last 70+ years! Let’s use 3.25% as a safe estimate. You’d only need to own the home for a little over 2 years for the “value” to rise from $440,000 to $484,000!

This is the magic of property appreciation in action. Property steadily gains value and builds wealth for you and your family.

I can generate a similar "bid over ask" tool very quickly for any offer you are considering so you can feel comfortable with your offer. Here's a PDF copy as well if you'd like to look more in depth.

Questions? Let me know! 414-488-0438

8% Rates - Will it crash the market?

Fri, 27 Oct 2023 15:55:50 GMT

No, and here's why:

the national average mortgage rate for some clients hit 8% this week, depending on which website/tool you follow. Yes, housing is less affordable with higher rates, but will a change like this dramatically affect the market, or cause it to crash? See my answer below!

P.S. - Here is a daily mortgage rate update for those interested in the technical background to why mortgage rates are going up and down. You can bookmark this link as it always has the most updated information:

https://housingbrief.com/article/rate-update/6158b035c065b49f906c43e3

Will 8% rates affect the housing industry in a big way? Meaning, will it cause a bubble burst, crash, etc.?

No, and here are two reasons why not :

We don't have nearly enough homes available. According to the most recent Greater Milwaukee Association of Realtors report , the Greater Milwaukee area would need 4,090 more listings TODAY just to have a "balanced" market, meaning a healthy inventory to support our current buyer demand. See the hyperlink above for the full report, super interesting data in there! Because we don't have enough available listings (and we haven't for years), property values are supported, even though mortgage rates are making housing payments even higher.
The last time we saw mortgage rates seriously spike in recent history (October of 2022 we saw a 7% mortgage rate for the first time in years, and buyers hit the pause button), sellers offered credits / interest rate subsidies to make mortgage payments more affordable. If rates go high enough again that buyers meaningfully bow out, or exit the buying pool, then sellers will once again offer subsidies to make the new mortgage rates more comfortable. Sellers currently do not need to offer those credits on most listings because there is simply too much demand. Even during periods the average rates were around 7.5% -7.75%.
Homeowners saw on average a 5.7% appreciation in the last year, and so if they are looking to sell their home, they will have more equity to work with, so they can offer subsidies discussed in #2 to entice buyers.

As a result, I don't think buying a home in Milwaukee will be any more affordable than it is today in the next 5 years - even with higher mortgage rates. Here is a PDF download for a few more reasons why I believe this.

Questions on this? As always, I'm a text away at 414-488-0438!

Have a great rest of your weekend!

Why I love a lower down payment

Tue, 24 Oct 2023 17:57:58 GMT

Consider all options

One of my favorite things to do as a loan officer is creatively tweak a file to help my client personalize a mortgage so that it best suits their needs for the next 5-7 years of their life.

Important questions we encourage clients to consider:

1. Is your new home a starter home (3-4 years) or forever home?

2. Do you believe rates will drop soon? We can provide context on this one!

3. What are other plans or goals you have for your family? Do you need to start / fund a college savings account? Emergency fund?

These and other questions are the starting point for deciding what down payments and setup is right for a client. Not to mention, there are 3 fun and unique perks to choosing a lower down payment we will discuss below:

1. You get better rates if you choose a lower down payment. Usually.

For example, if you have a 740 credit score, for a $400,000 loan, it is $1,000 more expensive to choose a 20% down payment, versus a 3% down payment, for the same interest rate. The adjustment is .875% versus .625% (this is a percentage of the loan amount you'd need to pay at closing to get the same rate as someone doing a 25%+ down payment with a 780+ credit score.

In most cases, on a $400,000 loan amount, you'll save between $1000 - $2000 at closing by choosing a 3% down payment versus a 20% down. Yes, you would then have a monthly PMI payment.

2. Your future net worth will likely be higher if you choose a lower down payment, and INVEST the difference, for example, in the stock market.

I love doing a side by side comparison for clients so they can see how the numbers come to life. Let's say you are debating between a 20% down, or a 5% down payment. On the same $400,000 purchase scenario we were discussing above.

Yes, if you do a larger down payment, you'll have more equity in 5 years! Approximately $185,472 to be exact. Thanks appreciation!! Your $80,000 down payment ballooned into $185,472 thanks to 4% annual appreciation, and paying down your mortgage every month. This is of course an estimate for home appreciation and not a promise of future returns!

However, if you do only a 5% down payment, and invest the $60,000, your investment account would balloon up to $81,583 assuming a 6% annual rate of return.

Your total net worth would be $25,111 greater if you'd choose a LOWER down payment and invest the difference.

3. Last question I ask clients: Have you made sure your emergency savings account and retirement savings is on track before choosing a larger down payment?

This is why we often cover the questions listed above with clients, to help them consider where their money is best serving them.

For the scenario above, the monthly PMI for a 5% down payment would be ~$79/month assuming a 780+ credit score borrower, and a 25% DTI ratio. Would you consider it worth keeping $60,000 in your savings account in exchange for a $79/month PMI payment?

Again, down payment % is a different answer for every family, but certainly worth considering all the options available.

Questions on this? Don't hesitate to text me at 414-488-0438

House hacking explained

Fri, 20 Oct 2023 15:48:35 GMT

House hacking for passive income

Have you ever heard of "house-hacking"? Essentially, you buy a rental property, and live in one of the units with lower rates and only a 5% down payment. That simple! This does solve one big problem for homebuyers: single family housing is in such high demand - expanding your search to 2-4 unit properties opens up a lot more opportunities for you as a buyer!

Perhaps being a landlord isn't a fit for you - but maybe there's someone in your life that would benefit? Consider forwarding this email to them!

Here's a quick rundown:

Buy a 2-4 unit property as a primary residence (move into one of the units)
You can do as low as a 5% down payment with a conventional loan (NOT FHA) on a 2-4 unit property with no income limit (this rule is officially going into effect November 18, 2023)
Immediately start collecting rents on the units you do not live in
Let's say you live in the property for 6-12 months, and decide you want to move into a larger, more valuable place, you can do the same thing again! You could get a lease agreement on the unit you were living in, which will also help cover your monthly mortgage payment.
For any new rental property you plan to buy and move into - we can use the rents from the other units to help you qualify for the property! Here is the big take-away: If you'd only qualify for a $300,000 single family home, you could buy a $450,000 4-unit property because we would expect $3,600 in monthly rents from the other 3 units, that would help you qualify for your purchase.

Questions? As always, give me a call or text at 414-488-0438

Buydown refresher

Tue, 17 Oct 2023 13:10:13 GMT

Sales price reduction = seller can lower your mortgage payment

A conversation I have been having with my homebuyer clients recently is:

Price reduction = Opportunity

When the seller does a price drop, usually $5,000 - 10,000 or more, why not offer the original sale price and ask for a matching credit?

Example: A property is originally listed at $300,000, then does a price drop to $290,000. Why not offer $300,000 and have the seller pay for all of your closing costs AND reduce your first year interest rate by 2% and your second year by 1%?

Did you know there are two ways a seller can help reduce your monthly payment?

Instead of taking a $6k sales price reduction, the seller can reduce your monthly payment by 2% the first year, and 1% the second year. That’s a $360/month reduction in the first year, and $180 reduction year two for a typical Milwaukee mortgage! This is called a temporary rate buydown, or a 2/1 buydown.

OR!

Instead of taking a $6k sales price reduction, the seller can permanently lower your rate by about .75% – for 30 years! That’s a $150/month reduction forever on a typical Milwaukee mortgage!

There are creative ways to make your home more affordable while we wait for rates to go down!

Questions? As always, give me a call or text at 414-488-0438

Is the market overpriced?

Fri, 06 Oct 2023 18:34:34 GMT

One of my most asked questions...

"So I basically need to "overpay" in order to secure a new home for my family" - I receive this question or something similar from clients often.

Rather than me speculate about what I (Ethan) personally think about the housing market, let's look at DATA - namely appraisal data. Have appraisals been coming in high? Low?

Based on the data below, here is my synopsis: Property values continue to rise, but even in this market, buyers are still able to get property at a fair value, and sometimes even BELOW an appraisers' assessment. (They're getting a deal, or "instant equity" after closing).

There are two answers to the question "How much is a house worth?":

1. A house is worth what someone is willing to pay for it. I prefer this answer, but lets look at the data.

2. Let's look at recent appraisals, in Milwaukee and Waukesha specifically, to see how things have been going. Focusing in on specifically the last 12 months, as well as year-to-date:

**This data is provided by Fairway's appraisal management company, covering all appraisals the company orders as of June 2023.**

Milwaukee:

1. Of the last 533 orders completed in Milwaukee in the last 12 months, only 5.6% have come in low (30). 165 appraisals have come in exactly at the contract price (not the list price). And here is the big whammy, 338 have come in ABOVE the contract price - that is 63%!!

2. How about just in 2023? Out of 201 orders, 67 were right at the contract price, 17 were below contract (8.5%), and 117 were above contract!

What do we learn from this? The Midwest is charmingly consistent, compared to the coasts where we see property price increases and sudden drops. The purpose of an appraisal is so that a professional that is UNBIASED can make sure markets don't get inflated or out of control.

If appraisers believe that over 50% of contracts are "Deals", then I would suggest we are in good shape. An appraiser has a rigorous process ahead of them: initial research, data collection, in person inspection, comparable sale study, etc. in order to create their reports. Yes they're human, but there is science behind it.

Wisconsin property has intrinsic value because of supply and demand. There are not enough houses to satisfy the thousands of new first time homebuyers entering the market, while existing homeowners refinanced to rates below historic norms and are reluctant to sell.

Here is Waukesha data, which is fairly similar:

For Waukesha, over the last 12 months, we have seen 228 orders: 57 at contract, 15 below contract (6.6%), 156 above contract (68%).

For Waukesha this year so far, we have had 91 orders: 24 at contract, 10 below contract (11%), 57 above contract (62%).

Question on this? Shoot me a text! 414-488-0438

Can you write an offer with a 3% down payment?

Fri, 22 Sep 2023 17:07:07 GMT

Cash guarantee program - and how it works

How is it possible that 33.4% of homebuyers are writing cash offers, as of this most recent Redfin report? Where is all this cash coming from??

Also, Milwaukee new listings are down 23.5% compared to last year according to this most recent report from MLS.

That means competition is fierce in certain markets and price points, and you want to make sure you are using every tool at your disposal.

So, if you are serious about buying a house this year, how can you position yourself to beat out dozens of other competing buyers?

Over the last year, Fairway has helped 540 homebuyers get offers accepted with our Cash Guarantee program - and here's the background:

Fairway is so confident in our process, we will guarantee to the seller that we will close on time. If we don't, Fairway will pay our own cash for the house.
This means, as a buyer, you can choose to WAIVE the financing contingency, meaning, your offer would not be contingent upon obtaining a mortgage - because you basically already have! You can write "N/A" on the line.
If we, Fairway, cannot produce a loan on time, then Fairway will pay for the house with our own money. Let me put this another way, if you accept our offer, someone will be buying your house on closing day, no matter what.

So, you've dropped the financing contingency, what else can you drop to make your offer more attractive? I've recently spoken about the power of the appraisal gap guarantee, which you can read about here.

Questions? You can always text me at 414-488-0438

Fall - the season of opportunity!

Tue, 19 Sep 2023 13:30:20 GMT

Taking advantage of the change of the season

I hope you've been able to enjoy our beautiful cool, fresh air and spend some time outside! This is my favorite time of year.

Over the last few years, I've personally noticed that buyer demand slows down a little bit after the school year starts. Buyer demand also slows down because kids are back in school and a lot of families don't want to disrupt their school year. I think many local realtors would agree with me.

I consider Fall a "second spring market" because the buyers that are still around have amazing opportunities to get houses under contract without having so much competition.

Keep an eye out for properties that have price reductions, or have been sitting on the market for a while. What can happen is sellers wait to long to list their home, and they miss the Summer rush. Then when they do list, they still want to receive summer prices. When the house sits for a bit, then they need to start reducing their price. But once the seller starts reducing their price then people get worried - they'll ask: "What's wrong with home?"

My wife and I have successfully bought three homes over the last seven years that have had price reductions and seller credits, and we waited for opportunities like this to strike. Each property we used the lowest down payment possible. 3% for our first condo, 3% for our first single family, and 5% for our forever home. We kept each property and we rent them out now.

If you're able to negotiate an inspection and get a home warranty, that usually covers all of your bases. Especially if you're willing to have an open mind regarding the current condition of the home.

That's why I love to offer renovation loans as well, That way you can take advantage of making the home of your own and financing the cost of the repairs. You can usually cover most of the cost of renovations out of pocket, so long as your budget is over ~$15,000 for upgrades/repairs.

Questions, don't hesitate to call me at 414-488-0438

Perspective

Fri, 15 Sep 2023 14:51:34 GMT

When are rates going down?

Example, want to check in daily what mortgage rates are at nationwide, and why they've changed since the day prior? Here's a link you can bookmark that will always have updated rates and information as to why rates changed. Please note this is a national average not a rate quote for you :)

When are rates going to go down? That continues (understandably) to be the most frequent question I receive.

Quick review of the fundamentals. If you get nothing else from this email, here are the key takeaways:

1. Inflation drives mortgage rates - mortgage rates went up and stayed up as soon as inflation went up and was here to stay.

2. Every time the monthly CPI (inflation) reports come in lower than expected, mortgage rates generally go down (at least for a bit). The Fed Funds rate rising does NOT necessarily mean mortgage rates will go up.

3. We are watching two factors that have kept inflation stubbornly high: strong employment figures (historically low unemployment), and strong and rising rents (and cost of homeownership in general).

4. Rents recently have gone down big time, and the amount of new construction in the multi-family space has increased dramatically, so there is more rental inventory coming nationwide, which will further drive down rental demand / rates. Also, unemployment has been trending upward, which will likely pressure inflation to go down as well.

One theory as to why mortgage rates haven't been declining is incredibly low unemployment numbers. If unemployment is low, then employers will need to offer higher wages to attract and retain employees, which is a cost that usually gets passed on to the consumer with higher prices. Higher inflation leads to higher mortgage rates.

However, it seems we are rounding a corner with unemployment numbers, which should eventually lead to lower inflation, and lower mortgage rates!

(p.s. not that I want to celebrate that unemployment numbers are rising, because that means people are losing their jobs.)

So, what happens when mortgage rates do go down?

Buyer demand increases... a LOT. For every .5% decrease in mortgage rates, about 3 million buyers enter the market nationwide.

Here's one final note. In June, the country as a whole, year over year, saw a minor decrease in value (-.1% to be specific).

However, Wisconsin, continues to perform. Home values went UP 5.6% since last year.

Wisconsin has not had the insane price increases some hotspots in the country have seen. As a result, we continue to see steady price increases year over year, compared to much of the rest of the country.

Wisconsin was one of the top states in the country to see property value INCREASES since last year.

Any questions? Text me at 414-488-0438.

Buy now, refinance later

Tue, 12 Sep 2023 17:03:44 GMT

Marry the house, date the rate

A very popular mantra right now is: "marry the house, date the rate". What does this mean?

While rates are high, it is causing there to be less buyer demand / competition. Enough buyers are hitting the "pause" button until rates come down.

As soon as rates do go down, we predict competition to rise steeply, and so will house prices.

If you can afford to buy a house now, if and when rates go down, you can choose to refinance at that time.

So, if you do end up wanting to do a refinance, how much does it cost, and how does it work?

To put it simply, it is the same processing fee (at this time we're charging $1,499.00), and a new title policy from a local title company, they usually charge $825. That's usually it - we often do not need clients to pay for / order an appraisal.

Even better, most clients don't bring ANY money to closing. You can use your equity you have to cover the closing costs.

Also, what if you refinance and then rates go down again? What then?

Well, for clients that are nervous about that, every time you apply for a mortgage refinance, you can choose a lower rate, or you can choose a rate slightly higher than the new lower rate, but then I can give a lender credit to cover the closing costs. I give you up front money in exchange for a higher interest rate. You're still refinancing for a lower rate than you currently have, but by choosing this route, it's a "free" mortgage, since the loan itself is paying for the closing costs!

Quick example, let's say you take out a mortgage today for 6.75%. In 12 months, the "low rate" option is 5.75%. Or, you could do a "no closing cost" option for 5.99%. If you'd choose the 5.99% option, you'd still be saving about $150/month without paying any "cost" for it.

Every client is offered a refinance comparison spreadsheet that helps illustrate how much you'd save over a 3-5 year window (including any applicable closing costs) to make sure it is worthwhile for your family and your finances!

Questions about this? Don't hesitate to text me at 414-488-0438.

Create your own inventory!

ethan.brooks@fairwaymc.com (Ethan Brooks) — Fri, 08 Sep 2023 14:40:21 GMT

How to "unlock" new inventory

As of July 31, 2023, new listings are down 19.4% from last year in the greater Milwaukee area. Even with higher rates, buyers are needing to fight over fewer houses.

As the competition rages on, some buyers are considering other options to find more housing inventory available.

You have two options to consider:

Renovation Loans – I love the renovation loan! You can finance the cost to do small cosmetic repairs, or even major structural changes if you’d want. Add a bedroom, make the living space open-concept. You need a contractor bid before closing, and the loan is based on how much the home WILL be worth after the work is done! How cool is that? Quick example. Say you buy a home for $250,000 and it needs some "love", and you would like to do about $100,00 worth of updates on the home. Your total acquisition cost is $350,000, and you could do a 3-5% down payment on the total "acquisition cost" of $350,000.
House-hacking! I love the house-hack option. Some borrowers qualify for a special program that allows for a 5% down payment on a 2-4 unit property – with a conventional loan! Another program available for many first time homebuyers is the FHA 3.5% down payment option as well. You can live in a "future rental property" - while you live in one of the units, you can rent the other(s) out! After 6-18 months, you may decide you don't want to be in the same property, and you could choose to move on and purchase your next home! You could then keep your original mortgage.

Both of these programs allow you to consider a different type of property than most, which gives you access to dozens more available homes for you to choose from. The “average” homebuyer is seeking a move-in-ready single family , these programs help you look outside the box with less competition!

Even if these options don't apply to you, is there someone else you know that could benefit from one of these solutions?

Questions? Don't hesitate to text me at 414-488-0483

I believe today is the most affordable time to buy a house in Wisconsin, and here’s why

Tue, 05 Sep 2023 14:25:05 GMT

Housing isn't getting cheaper any time soon

Example: We are steadily approaching my favorite time of year in Wisconsin, beautiful, crisp fall nights. I can't wait.

I have been thinking about and researching this topic for a few weeks now, as I wanted to make sure I had adequate support for the following statements – it may be a bit technical/nerdy, but I truly believe it is important to understand. I do believe this concept is the most important to understand for a homebuyer in 2023:

I truly believe that TODAY is the most affordable time to buy a home in Wisconsin, compared to forecasts I'm seeing for the next 5 years. I know you can't drop a statement like that without some support, so here we go:

1. There is no guarantee rates will go down. I’ll spare you the nitty-gritty here, but it is entirely likely that the “new normal” mortgage rate could be around 6-6.5%. Pre-pandemic rates averaged around 5-6%, at least since 2000. Our "new normal" rate could very well be 6.5%. If you want to read more (nerd alert), you can read this article here: ( Calculated Risk Article ). And here: ( Lawler )

2. The media loves to scare people, so here's a headline you aren't likely to see (that is entirely true): "Housing is slightly less affordable than it has been over the last few years, but historically speaking, is marginally above the average affordability rate." (if the line in the chart below goes higher, then the market is less affordable). A measurement of 1 means the average income can afford the average house, if the measurement is higher, then fewer people can afford average priced housing.

Yes, housing is less affordable today than it was over the last few years, but historically speaking, we aren’t that far off from average affordability looking all the way back to 1972. (we aren’t in an “unsustainable” crisis that will need to correct, or a “house of cards” waiting to collapse). Wages have increased over time to mostly match house price and payment increases. Affordability is measured comparing average household income vs. average mortgage payments in a particular market. The market has been in this place before, a few times.

3. The “most expensive” choice to make right now is to not buy, if “waiting for a better opportunity” is the only other reason to wait – there are plenty of other valid reasons why you’d rather not buy a house, for example: moving within the next 3 years, don’t want responsibility/hassle of owning property, etc. If you do choose to wait to buy: what are you missing out on?

$750/month in appreciation (for an average Milwaukee property. 3% appreciation per year on a $300,000 home is $9,000 annual). 109 Economists were recently surveyed and predict 13.4% national annual appreciation . Wisconsin is expected to beat the national average.
$260.41/month in equity building (mortgage amortization for a typical first time homebuyer mortgage loan). This is the average monthly portion of a mortgage payment that pays down the mortgage balance.
Don’t forget: you can lock in a house price today, and refinance later (if that is available). If you wait to buy until rates drop, then you’ll have more competition to battle with.

If you believe house prices will come down, there will need to be a “reason”. We have so much pent-up buyer demand over the last few years, if there is a single, momentary weakness in buyer demand and prices start to drop, that will bring all the “buyers out of the cracks”. What massive shift could possibly happen in the market that would be big enough to cause prices to fall? Will builders start building new, more affordable homes? Will people fall behind on their mortgage payments and cause a foreclosure crisis? If enough foreclosures hit the market, as they did in 2008, then that would cause a drag on property values as severely discounted properties start hitting the market. I don’t believe these things will happen for the following reasons:

Mortgage delinquencies are at an all-time low.
~42% of homes are un-mortgaged (owned free and clear), so not at risk of foreclosure
Among those who do have mortgages, their average equity is 52%.
Builders have slowed down new construction

I know this was a lot. But I do believe it is the #1 most important concept for a homebuyer in 2023 to understand. Questions? Text me at 414-488-0438

"I wish I had bought when I had the chance"

Thu, 31 Aug 2023 14:42:12 GMT

This is the sign you were looking for - the experts say it’s a great time to buy

Example: Do you know the person who almost bought Apple, Microsoft, etc stock when it was worth $1.29, and now it's worth $150-$200? "I could have had a 10,000% rate of return!!", they say. Maybe you yourself are that person? ��

While we cannot fly back in a time machine and buy stock or housing when it was cheaper, I truly do believe there will be people 5 years from today who "wished they had bought a home in 2023 when they had the chance".

Here are two reasons why:

1. The University of Michigan conducts a monthly survey during which they ask individuals and families about the economy as a whole, as well as about specific industries and niches, such as housing. According to their reporting, we recently have approached almost an all-time high regarding appreciation expectations for housing!

The average American believes house prices will go up ~3.3% per year. In other words, an average $300,000 home in Milwaukee will appreciate $750/month, or $9,000 per year the next 5 years.

Even when rates are at 7% and above.

And here's the deal, often in life consumer confidence/expectations become a self-fulfilling prophecy. If people believe house prices will rise, they'll be more likely to sell their current home and buy a new home, or stop renting and purchase a new place.

The decision to buy a new place will support higher future property values - since there will be more competition for housing!

This level of optimism is really encouraging/healthy for our housing market!

2. Economists also believe property values will rise, on average 13.4% over the next 5 years. These are 109 of our countries smartest Economists that believe, on average, property values will continue to rise.

A typical Milwaukee home worth $300,000 today will be worth about $340,000 in 5 years, according to their expectations. How cool is that!

Questions on this? Text me at 414-488-0438

When is the "right" time to buy

Tue, 22 Aug 2023 16:52:06 GMT

One of the top questions and concerns I received from clients is simply " When is the right time to buy a house? "

It's hard for two reasons to buy a house right now. Just being honest with you. Prices have gone up over the last couple of years through all of COVID. Epically low rates have caused a surplus of buyers to enter the market which drove up prices. Now we've run out of houses. We have not nearly enough houses available for how much buyer demand there is. Even though rates are high, there are so few houses to grab that that's driving up property prices. That's the other thing. Rates are higher than they've been in a decade. One would have expected that to lower the sale prices because if it's so much more expensive to borrow, then that should technically erode the value of houses a little bit. There are so few and there will be so few houses available that it hasn't taken a single bite out of property value.

In fact, Wisconsin continues to print positive appreciation numbers year over year. So the ultimate question, when is the right time to buy? Really, there are three questions you should be asking for you and your household:

Can I afford it right now?

What if rates never go down?

Can I still afford it forever? If the answer is " Yes .", that's a start.

109 economists were recently surveyed and the average expectation of appreciation is 13.4% over the next five years. A $250,000 house should be worth about $290,000 in five years time. These economists are our nation's smartest numbers, people. They're the chief economists of different institutions. They've got probably over 109 doctorates, you know, over the lot of them. They live in numbers and they are expecting a high appreciation.

Next thing, how long will you stay over any 10 year period? Over the last 80 years, property values have always risen. Yes, there were a year or two where property values dipped and then went up again. But if you look at any 10 year span, anywhere you look, property values always went up over that 10 year period. If you're holding a house long enough, it's almost statistically guaranteed the property values will rise during that time, you most likely will get a return on your investment.

Finally, does it fit with your other financial goals? After doing the 3 to 20% down payment that most buyers do, will there still be room for other things in your life? Consider- an emergency savings account, a college savings account, retirement, this mortgage payment you're signing up for... is it the same or less than rent that you're paying? Will this house build wealth for your family? We'll talk about that in a buyer consultation. Will this be part of your retirement and eventually and the equity you build? Thanks to appreciation and then also paying down your mortgage.

Don't forget that buying a house isn't just an investment. It's also a place where you're making memories, you're making it your own, you're feeling safe, and comfortable, you can customize it. There is a bona fide emotional fulfillment out of purchasing and owning a home. I can speak for myself. I'm standing in mine right now. Don't hesitate to reach out, but those are the three big questions I'd ask and the mental process I would follow if I was deciding when the right time to buy a house for my family.

What happens if property values DROP after you close on a new purchase?

Tue, 25 Jul 2023 15:41:18 GMT

Nothing. If you keep making payments you keep the home. Property values have always risen over time, even if there is an adjustment from time to time.

I often get asked two similar but different questions by clients about equity:

What happens if the appraisal comes in above the purchase price?
You CAN indeed increase the contract price within the appraised value, and request a seller credit to cover your closing costs. Let's say you wrote an offer at $200,000, and the appraisal comes back at $205,000. You could increase your offer to $205,000 and request a $5,000 credit to cover closing costs.
Sellers don’t always love doing this, but it is possible!
Even if the seller doesn't agree to this plan, you have “instant equity”! If your appraisal is one of 50% that have been coming in high recently, then at the least you can have a mini celebration.
What happens if property values DROP after you close on a new purchase?
Nothing. Keep making your monthly payments and you’re completely fine.
However, remember since 2000, property values have gone up annually on average 3.57% per year (8.38% on average the last 5 years).
Even if there is a small dip, quality assets have always gained value over the long haul

By the way:

We want to be your ally in getting offers acccepted! We have successfully helped clients get accepted offers in competition by offering a quick closing.

the first image below was a 15 day closing start to finish, second was 14 days, the third was 13!

It is certainly a brisk experience but if you are competing against 5-25 other offers, certainly can help!

Why are Milwaukee Home Values up, while much of the rest of the country is down?

Fri, 30 Jun 2023 16:59:07 GMT

The Midwest is charmingly consistent compared to some hot-spot cities that have seen massive price increases and drops the last few years.

why are Milwaukee and Wisconsin average median sale price values UP compared to last year, while most of the rest of the country is down?

It's important to note, I DON'T think people are overpaying, and neither do appraisers. I recently sent an email showing the last 12 months local appraisal data demonstrating just how FEW appraisals have come in low, you can click this link to learn more.

Nationwide, the median existing home sale price is down 3.1% compared to this time last year (May 2023 vs. May 2022), but in the Midwest as a whole, median sale price is UP 1.1% compared to this time last year!

For Milwaukee specifically, as reported by the MLS (multiple listing service), Milwaukee specifically is up 8.6% compared to last year.

The rate of sales is down nationwide, including the Midwest. We are down 20% for total number of home sales compared to this time last year. That means the whole market is moving slower.

What does this all mean for you?

Housing values, and the question of whether or not a real estate purchase is a “good idea” is hyper local to each market.

Milwaukee and Wisconsin as a whole continues to be a solid performer, consistently rising in value, and avoiding the dramatic fluctuations up or down. If you’re only looking at nationwide data, you’ll likely be mislead!

Part of the reason is, Milwaukee would need 6,200 more listings in order to have a “balanced” market, that’s just to avoid the crazy bidding wars of 20+ offers on one property. Until we see more inventory, there will be bidding wars driving up value.

Lock-in affect doesn't help either, current homeowners who have mortgage rates <3% aren't excited about selling their house in exchange for a 6-7% mortgage rate.

Also, the Greater MKE employment market is super diversified over goods and services, and not too reliant on one employer or industry, meaning we should have stable employment for years to come.

Not to mention, Milwaukee county is adding ~14,230 new households to the market annually and about 52% of them statistically want to buy a house or own a home, and we are building less than 500 new homes per year in the Greater Milwaukee area, so people have no where to go but fight over the same properties! See the graphic below for some more details!

For this reason, I am optimistic property values will continue to rise!

In fact, we are predicting 16.2% appreciation over the next 5 years, or for a $248,541 house, it will be work $40,257 more in 5 years' time!

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Should I Wait to Buy a Home Until Mortgage Prices Drop?

Thu, 29 Dec 2022 19:42:53 GMT

Are there upsides to buying a house when mortgage rates seem high?

Mortgage rates seemed higher than ever starting near the beginning of 2022, and they’ve been on a steady incline for most of the year. Recent drops within the last few weeks of December have caused many potential home buyers to question whether or not the decline will continue and if they should wait a bit longer before deciding to purchase a home.

Experts have conflicting opinions on whether or not the decline in mortgage rates will continue throughout next year: some say that rates will remain steady while others believe that they will continue to climb throughout 2023 until inflation is under control. Without knowing exactly what the future holds, you may find yourself asking these same questions and waiting to pull the trigger on buying a new home.

What Affects Mortgage Rates?

Recently, mortgage rates are affected most heavily by two factors: both high inflation due to the COVID-19 pandemic and also actions taken by the Federal Reserve to restrain inflation have caused mortgage rates to skyrocket. High demand for mortgages can also push inflation to the upper limits due to less available capital for lending.

Pros of Buying a Home Now

Accurately predicting mortgage rates for the next coming years isn’t possible, especially considering how drastically they’ve fluctuated within the last two years. But higher rates don’t necessarily mean bad news for people who want to buy a home now.

A lower inventory of houses pushed home buying competition to its limits in the last two years, causing home prices to soar. With higher rates, competition has decreased significantly. Buyers may even find themselves with more leverage during negotiations due to a decrease in demand. When rates eventually go down, the housing shortage problem will cause competition to spike once again and sellers will be more inclined to jack up the prices of their property to profit as much as possible.

With competition at its highest, home offers with contingencies like appraisals and inspections were often being ignored in favor of simpler offers. With less competition, you can be sure that you’re able to get both an appraisal and an inspection of your new potential home, which ultimately lowers your risk as a buyer.

Finally, potential buyers should consider the possibility of refinancing once rates go back down. A high rate doesn’t necessarily have to stay high forever if your credit remains solid and you’re able to refinance when rates are lower at a later date.

If you’re looking to buy a new home now, news from the Federal Reserve and about skyrocketing mortgage rates may scare you away from deciding to make an offer on the home of your dreams. Luckily, higher rates don’t necessarily mean you’re doomed to regret buying a home now. There’s always a lot of different information to consider, and when in doubt, contact me to learn more about your options!

6 Mistakes That Homebuyers Make (And How to Avoid Them)

Fri, 30 Sep 2022 22:17:19 GMT

Avoid making these surprisingly common home-buying mistakes.

Buying a new home can be one of the most exciting things you’ll ever do. On the other hand, it might turn out to be one of the most overwhelming things you’ll ever do, too! Between finding a mortgage lender, budgeting for a down payment and closing costs, touring multiple homes, and moving out of your old home, there are a lot of logistics to work through before closing on a new home.

If you’ve bought a home before, you may already be a pro at making sure you cover all your home-buying bases. If this is your first time, the excitement and stress can make it easy to miss some crucial blindspots, and you might end up making some costly mistakes that could be avoided with a little extra research. Never fear: we have tips to help you avoid making some of the common errors that many first-time homebuyers make.

1. Not Researching the Neighborhood

At first look, the home you’ve found could seem absolutely perfect: it has the right amount of bedrooms and bathrooms, it has the porch you’ve always wanted, and the yard is huge! But, what about your neighbors? You won’t just be spending time inside your home, after all. What is the neighborhood like? What’s the crime rate? Does it have all of the things you want or expect in your community?

Because this will hopefully be your home for a long time, you should feel safe and even excited about where your house is located. More importantly, you should feel comfortable in your own home. Another important thing to consider is how long your commute would be and what the schools in the area are like if you already have or are planning on having children in the future.

2. Applying for a New Credit Card Before the Sale Has Closed

When you apply for a new credit card or a loan, or even when you buy a new car, there will be a hard pull on your credit report. Your mortgage lender will have to do a credit check before providing the mortgage loan, and new lines of credit or credit inquiries lower your credit score temporarily. This could easily impact the mortgage total and rates that you’re offered, which might mean you’re no longer able to afford the home you had your heart set on. Even closing old lines of credit can negatively impact your credit, so it’s best to wait until after closing to make any sudden financial changes.

3. Not Budgeting for Utilities

It’s easy to forget about utilities. Whether they’re billed monthly or quarterly, they can sneak up on you when you think you’ve finally paid off all your bills and can relax. When you’ve found a mortgage lender, you’ve explored the rates, and you’ve decided on a down payment that allows you to afford your monthly mortgage, don’t forget to factor in the heat, gas, electric, water, and other services that you’ll be paying for. This amount can end up being several hundred dollars a month, and you may find yourself with a tighter budget than you’re comfortable with.

4. Not Taking Advantage of Home Inspections

Home inspections can reveal all sorts of issues that you didn’t anticipate–– and they often do! If your budget only covers what your monthly mortgage payments will be, you’ll find yourself in a bit of trouble if you find that your roof needs to be replaced or if there’s mold to deal with. Make sure you have a home inspection done before closing and that you factor their finds into your final decision.

5. Talking to Only One Mortgage Lender

It’s important to explore your options and not to settle on the very first mortgage lender that you talk to. Shop around for the best deals until you find the one that works best for you. Different lenders and brokers may offer very different interest rates and mortgage amounts, so don’t be surprised if you come across a few that really don’t work for you.

A mortgage broker can also be a huge source of professional advice for you, so make sure you get along with and trust the lender that you choose!

6. Buying More House Than You Can Afford

It’s tempting to get the big house with the pool that technically fits inside your budget. But if after closing costs, utilities, repairs, and other lifestyle costs, you’d be scraping by just to make your mortgage payments, you really can’t afford it. The house you can truly afford will leave you with all the money you need to pay your bills with some left over. Paying your mortgage shouldn’t be a source of extreme stress that you dread having to make work!

Buying a home, especially your first, should feel exciting! Having a house offers you stability, comfort, and financial benefits. Watching your family grow, hosting holidays, and celebrating with loved ones under the roof you own are some of the most special moments you can experience. Although some of the stress that comes with the home-buying process is unavoidable, we hope these tips help you avoid some of the most common pitfalls that first-time home buyers make. Happy hunting!

Will the Housing Market Crash?

Fri, 02 Sep 2022 03:08:32 GMT

With such a hot housing market, we're all wondering...

Buying a home is an exciting and challenging process. Deciding whether or not to make such a large purchase can be stressful, and your search might leave you with a lot more questions than answers. Even when the economy looks good and housing prices are right, the amount of thought that goes into this decision-making process can be understandably overwhelming. So, during times of economic uncertainty like we’re experiencing today, when housing prices are sky-high and mortgages spike, thinking about buying a home might just seem like the most stressful thing you ever do!

Since the beginning of the coronavirus pandemic in March 2020, housing prices have seen a huge 45% increase , according to NAR (National Association of Realtors) data. The last time that the housing market looked this threatening was in 2008 when house values crashed along with the global economy– the most disastrous economic downturn since the Great Depression. With rising mortgage rates and housing prices sky-rocketing much more quickly than incomes, many potential buyers and sellers are asking themselves if or when the housing market will crash.

According to NAR data, the median home price in the US passed $400,000 for the first time ever– an $100,000 increase since the beginning of the pandemic. Experts are worried at the pace of this pricing increase; however, this doesn’t mean that a sharp drop in real estate prices is necessarily the outcome.

Some housing economists do predict a slight decline in prices of about 5% due to the massive rise in mortgage rates by mid-2023, but there doesn’t seem to be any prediction of a severe drop on the horizon. Why? Well, credit conditions are much more stringent than in 2007, fixed-rate mortgages are much more prevalent, and an imbalance of supply and demand are all likely factors in assuring that a dramatic crash doesn’t happen any time soon.

Logan Mohtashami, lead analyst at HousingWire, explains, “We don’t have a bubble. We just have unhealthy home price growth .” Some economists think that the growth may steadily continue throughout 2023, but not at such a harsh incline as within the last two years. So, will the housing market crash? Probably not, according to many economists. But, will prices become more affordable any time soon either? Maybe by a small percentage, but it’s not likely that we will see anything much more affordable within the next year or so.

As for mortgage rates, some experts think that the federal government’s reaction to inflation will cause rates to dip back down to normal while others expect a slight appreciation in these rates. Similar to predictions about housing prices, there isn’t an expectation that mortgage rates will continue to skyrocket but rather that they will plateau or increase only by a small percentage in the next year.

Across the board, expert predictions seem to indicate that at least for the next year our housing market will continue to be hot but will decelerate in pricing appreciation. This means that we can expect prices to look the same as they do now, with a potential decrease in mortgage rates on the horizon. But as for a repeat of the 2008 crash? So far, we seem to have learned our lesson!

Your Guide to Buying a Home With a VA-Backed Loan

Mon, 01 Aug 2022 21:03:27 GMT

Buying a home: it’s the American dream! It’s a big deal to buy a home, and the process of buying a home has only gotten more complicated. It’s crucial to know about all of the resources out there to help make the process easier, especially if you’re a veteran. Veterans have one of the most powerful mortgage options available to them, but about 33% of veterans don’t actually know they have it! This guide will help to ensure that you don’t miss out on any other important details, and so that you can begin the process of finding a place to call your own.

First, you’ll want to figure out if you’re ready to buy a home. Looking over your finances (including your credit report, expenses, and income) is an important first step to make sure you’re ready to take on mortgage payments. Don’t forget about closing costs! Closing costs will almost certainly run you a couple thousand (to many thousands of) dollars, and any other unforeseen expenses like repairs or maintenance your home may need can add up quickly. Decide on how much you can afford in mortgage payments monthly and how much you can pay out of pocket up front.
Apply for your VA-backed Certificate of Eligibility (COE). You qualify for this certificate if you meet the minimum active service requirements, which depend on where you served. You can check your eligibility here and you can apply for the COE here .
Pick a lender and make sure to tell them about your veteran or military status. You can talk to many different providers to find the best rates and the most manageable fees for you.
Find a real estate agent. Friends and family can help recommend a real estate agent they’ve worked with before, and some real estate agents are experienced in working with veterans to find homes. Be sure to ask questions about any fees your agent charges and carefully read over any agreements your agent has you sign.
Look for a home . Search for homes that are within your price range and be sure to consider the most important factors for you and your family. If you have a young child, finding homes near schools is a great starting point!
When you’ve found a home you want to purchase, work with your agent to make sure that the purchase agreement includes the “VA escape clause” or the “VA option clause” so that you can void your contract if the home isn’t appraised for the contract price. Work with your agent on any other contingencies that are important to your ability to buy the home.
Schedule an inspection and an appraisal. An inspection ensures that any damages or defects in the property are found before you purchase your potential home. A VA-approved appraiser will also appraise, or give an opinion of value on, the home for you. After you receive the appraisal and the inspection report, you can try to renegotiate the sales price of the home if the appraised amount does not match the amount of the loan you are trying to get. Note that some sellers will not be easy to negotiate with, but your agent can provide your lender with sales data to prove that the house is worth more than the appraised value.
After carefully reviewing the pre-closing paperwork and going over any odds and ends with your lender and agent, you will close on your new home. Closing can take a while as you have to sign many, many documents and will usually happen at a title company or an attorney’s office. Now it’s time to move in!

This process may seem a little daunting at first, but disclosing your status as a veteran to both your lender and your agent can be extremely helpful in making sure that you receive the benefits you deserve. Visiting va.gov can also aid in answering any of the questions you might have for this exciting process!

What to Look for When Touring Homes

Fri, 15 Jul 2022 17:55:25 GMT

Since you’ll be spending a pretty sizable amount of money when you buy a home, going into the decision-making process with a keen eye is the best way to make sure you won’t be spending even more cash on unforeseen repairs and renovations that you’re not financially (or mentally) prepared for. Knowing what to look for is key when touring a home, and knowing what not to worry about is just as important.

If you’re already touring houses, chances are you’ve already nailed down the best location, size, and price for your budget. So what should you look for when you tour a home, apart from your personal preferences? Here is a list of what to be on the lookout for while you peruse the square footage and scope out the perfect spot for your new couch:

1. Condition of the Yard/Lawn

It’s not uncommon to have dry, brown patches of grass in the yard. A home without someone to consistently and properly care for its lawn will often have parts that have fallen somewhat to the wayside; however, these spots are sometimes the result of a fungal infection. Soggy spots with a bad odor also may indicate serious sewage issues. Both a fungal infection and sewage issues cost a lot of time and money to fix. Ask for more information about the condition of the lawn or if there is anything to report.

2. Water Damage

Look out for signs of water damage, like dark or wet spots on the ceiling or floors, cracking or bubbling in the ceiling, and a musty smell. Water damage can cause serious issues within the structure of the house and cost a lot of money to fix. Another way to check is to ask to see the utility bills spanning the last year to see if there has been a noticeable uptick in water usage.

3. Structural Damage

Be aware of any large cracks in the flooring or basement floor, ceilings, walls, or outer foundation of the house. These signs can include cracks in the chimney, uneven gaps on the windows and doors, sagging floors, a damp subfloor, or soil pulling away from the walls of the house. In addition, a sagging roof is going to need to be fixed right away and costs thousands (and sometimes tens of thousands) of dollars.

4. HVAC/Integrated Systems

HVAC systems that are outdated or haphazardly installed are unsafe and make for costly fixes. Look for exposed or eroded wires, warm or vibrating outlets, and a squealing sound from the central AC unit. Finding brown tinted water when you turn on the faucets could also be a sign that the plumbing system needs a total overhaul.

5. Smells

There can be many strange smells to notice when you walk into a new home, but only a few should be cause for concern. Strong smells of pet urine can be extremely difficult to remove. A musty smell in the basement can indicate water damage, structural problems, or leaks. A gas smell in the kitchen may mean that the hot water heater has a compromised gas valve. It’s always best to ask and receive confirmation about any strange smells you may be noticing throughout and near the perimeter of the house.

It’s easy to sweat the small stuff when it comes to touring houses. Old paint, wallpaper, light fixtures, ancient appliances, and shag carpeting can all be huge turn-offs when it comes to considering houses. But, luckily, most of these kinds of changes can be easily and somewhat affordably made, especially if you have some renovation room in your budget. There will always be compromises to be made when finding the right home for your family and your budget, but knowing these deal-breakers can save you the hassle of putting in an offer and paying for an costly inspection.

The Most Popular Home Styles in Milwaukee

Thu, 26 May 2022 22:03:47 GMT

In addition to its beer and brewing culture, famous sports teams, beautiful lakefront, and being home to one of the most famous music festivals in the world, Milwaukee is also well-known for its historical architecture. From the Art Deco of the Wisconsin Gas Building to the Flemish Renaissance Revival of the Pabst Mansion and Milwaukee City Hall to the Gothic style of St. Joan of Arc Chapel at Marquette, Milwaukee’s rich history lends itself to a wide array of architectural beauties. This rich history is even reflected in the more than 130,000 residential homes across the city, including a few designed by Wisconsin-native Frank Lloyd Wright.

What’s even more unusual and stunning about Milwaukee’s architecture is that it varies in style not by neighborhood, but by “concentric circles around the center of the city, like rings in the trunk of a tree,” according to data mapped by Marquette University research fellow John Johnson. These layers reflect Milwaukee’s history and the events that have shaped the city over time.

Knowing about the city’s history makes looking for and touring homes that much more exciting. From bungalows to Polish cottages, history is mirrored by the vast variety in home styles throughout the city. Let’s take a look at the most popular home styles in Milwaukee:

Bungalow/Craftsman

Bungalow style homes began popping up around Milwaukee in the 1910s. The bungalow style has recently become extremely popular once again in the architectural world. Known for their street-facing gables and wide, overhanging eaves, bungalow style homes are often painted in natural colors to blend with nature and usually have shingled roofs. A classic bungalow typically has a modest porch and squared columns. The interior will often have 1.5 stories and an open floor plan with a lot of built-ins.

Raised Cottage/Polish Flat

Known also as “Polish flats” only in Milwaukee, these homes started showing up in the 1910s in the city as a means of creating multiple family homes, or duplexes. Cottages were raised in order to make a living space in the basement to be rented to other families. Today, some of these “Polish flats” have been reconverted into single family homes, but many remain as duplexes. In fact, Milwaukee is the city with the most duplexes in the entire United States, making it a very densely populated city in comparison to other cities similar in size.

Colonial Houses

Colonial houses are somewhat simply architectured, symmetrical, and are at least two stories high. These homes often have crown molding and detailed fireplaces with formal front entryways. Their layouts lend themselves to large families, many times with four bedrooms upstairs, and the main living spaces are focal on family time.

Tudor Houses

Tudor homes are easily recognized by their decorative timber facades and white-stuccoes walls as well as their steep gable roofs and chimneys. These started to become more popular in Milwaukee during the 1930s and were more common in wealthier neighborhoods. They have slate shingles which are meant to mimic medieval architecture. The interiors typically feature wooden accents and a wooden staircase.

Cape Cod Houses

Cape cod style houses also began to show up in Milwaukee during the 1930s and 1940s. These are low and broad houses that feature simple silhouettes, shingled exteriors, and clean lines. They usually have a central chimney and are only one or two stories high. Beloved for their simplicity, the interiors usually have simple, traditional accents and are popular among younger buyers for their ability to be energy efficient due to their shape and build.

While these certainly aren’t the only styles of home found within Milwaukee’s diverse array, they are easily spotted and are timelessly popular. The richness of the city’s history can be found simply by taking a drive down any street, and while looking for a home you’re bound to come across each of these styles and more. Whatever vision you have for your future home, Milwaukee and Wisconsin have something to offer everyone!

Should I Rent Or Should I buy? Wisconsin Pros and Cons

Thu, 12 May 2022 20:00:19 GMT

Renting and housing prices are rising steeply around the country. In Wisconsin in particular, rent has risen up to 10% over the last two years in certain communities, and housing prices reflect a similar growth in the last year alone. It’s a stressful time for everyone, especially those who may have felt ready to buy a home but are now pumping the brakes and asking themselves, Is it better to rent or buy right now?

When the lockdown for COVID-19 began two years ago, many people began to rethink their housing situation. However, because there was a general discomfort among sellers’ to let a large number of people walk through their doors during the uncertain initial stages of COVID’s outbreak, there weren’t as many options available on the market. This, of course, led to a competitive market, but it was forecasted to cool down rather quickly.

Unfortunately, instead of softening, the market has only become worse for buyers. 2021 had the highest sales prices and sales volume on record. For every seller there seem to be multiple more buyers who come onto the market every day. To make matters worse, mortgage rates have increased and spurred an additional sense of urgency among buyers. Because experts can’t confidently predict when the peak of this market will occur, that leaves buyers with more questions than ever.

On one hand, buying a home today could mean purchasing a house at its most expensive price. On the other, this upward trend could continue for quite some time, leaving buyers with remorse over not having pulled the trigger earlier. According to Fannie Mae and Freddie Mac, it is predicted that rates will continue to increase for the remainder of 2022 and well into 2023.

This, however, doesn’t automatically mean that renting in today’s economy is a more prudent financial decision. Inflation has caused rent prices to skyrocket as well. Historically, inflation takes several years to regulate, and it is not predicted that these renting prices will drop any time soon.

With all of this information in mind, making a decision may seem impossible. On top of that, there seems to be a lot of conflicting advice out there telling you which way to turn. We’ve compiled a list of pros and cons to help you make the important decision about whether or not you are ready to buy a home.

Pros for Buying a Home

You Can Build Equity When You Own Your Home Equity is the difference between what you owe on your mortgage and what your home is currently worth. For example, if you owe $150,000 on your mortgage your home is currently worth $200,000, you have $50,000 of equity. Equity is a great financial tool that you can use when you want to buy a more expensive home in the future or to make home improvements. Your equity builds as you pay your monthly mortgage on time.
Buying a Home Can Give You More Stability When you buy a home, you can lock in your mortgage rate over the loan’s lifetime. This means that you’ll be paying the same amount each month, whereas rent can increase at the end of your lease and under other circumstances.
More Control Over Your Living Space With working from home becoming more of a norm (one that is likely here to stay in many cases), many people want a home office or space to be able to work within their own home. When you rent, you aren’t able to make the kinds of changes to your living space that you would if you owned your home.
There Are Tax Advantages To Buying Your Home Property taxes and mortgage interest are tax-deductible in Wisconsin.
You Can Improve Your Credit By Owning a Home If you make your monthly mortgage payments on time, your credit score may improve.

Pros For Renting

Renters Don’t Pay For Maintenance Your landlord is usually responsible for maintaining the property, like the heating, water and air conditioning units. You will, however, still usually have to pay for the monthly use of these. You also will likely not have to maintain your yard or shovel the sidewalks around your rental property.
Renters Don’t Pay Property Taxes When you rent, you don’t have to pay the property taxes that go along with owning property. You also won’t have to pay any HOA fees.
You Can Move More Frequently If you like variety in your home-life, you may not want to stay in one place too long. Renting allows you the freedom of moving without penalty when your lease is up.

2022 has so far reflected the record-setting trends of 2021, and it’s likely going to continue into 2023. It’s a stressful time for many people as they decide where and how they want to live. As a potential property owner, you’re likely hearing all kinds of advice, but there are pros and cons for each choice you make. Don’t let the stress of our current economic climate keep you from experiencing the excitement of choosing to buy a new home. It’s ultimately up to you!

An Inside Look at the Career of Ethan Brooks

Tue, 15 Mar 2022 14:49:41 GMT

When it comes to loans, everything to do with them can feel overwhelming and intimidating, surrounded in a thick (and beyond frustrating) layer of red tape. It’s enough to make anyone feel a little defeated, and sometimes even talking with a loan advisor does little to make things better.

And it’s no wonder. Oftentimes discussions with them end up being a cold and impersonal experience, one that can end in you being handed a denial with no explanation and leaving you with a million unanswered questions. In fact, this exact situation happened to mortgage loan advisor Ethan Brooks when he himself was a first-time homebuyer.

It was a surprising and saddening event for him and his wife, Molly. With no warning, they went from happily shopping around for condos after being pre-approved by their bank to sitting back wondering what they did wrong. Two weeks into their transaction and they were left right back at square one － with nothing to go off of and no idea what to do next. All they were left with was their loan officer’s sympathies and a thick layer of confusion.

Luckily, the couple was connected to an amazing lender and were finally able to buy a house for themselves and their future family. But the entire experience still left Brooks deeply affected. What happened? Could they have done anything differently? Why was their mortgage loan officer not doing anything to help? Why had so many people just shrugged their shoulders at their questions rather than giving them more information?

It didn’t seem right to Ethan. It didn’t seem like something that should be happening, not after so much time and energy had already been expended through the journey of securing their home. He just knew that there had to be a better way. So, he decided to step up and learned how to do it better himself.

Of course, it wasn’t something that happened overnight. The idea occurred to him about five years ago now, sometime after his new lender started walking him through the entirety of the mortgage and home buying process. It was a seed planted that took quite a while to root, just slowly growing over the following days and weeks. But eventually, it did, and Ethan decided to embrace it when it became abundantly clear to him that it was time for a career change.

Finally making the plunge into the financial sector, Ethan took on a job as loan originator with CrossCountry Mortgage, Inc., a respected area mortgage lender offering a range of loan programs and services nationwide, to get a feel for his new career path and gain some experience within the field. The position served him well and set him up for further success down the road. Yet, it still wasn’t quite what Brooks wanted.

With an innate drive for ambition and success and a deep commitment to the career path he fell for, Ethan felt moved for something more. He didn’t want to merely find a spot within a great company; he wanted to carve out a niche for himself, to become a go-to resource for mortgage-seekers and offer all the things he didn’t get at first when he was on their side of the table. Thus, Brooks buckled down like always and made the change he knew was needed, moving on from CrossCountry and becoming a mortgage advisor here at Fairway Independent Mortgage Company in the very early days of 2020.

Despite this career move happening at arguably one of the hardest times it possibly could － right before the COVID-19 pandemic and soon after welcoming a child into the world － it was immediately a perfect match. Brooks fell into a rhythm remarkably quickly and has amassed a huge network of devoted clients, co-workers, and mentees along the way ever since, and this is all thanks to Ethan’s dedication and passionate love for what he does.

As explained by one of the people who had been taken under the man’s wing, it’s more than a job to Ethan. His business is his life. It’s his top priority, second only to family, and he puts the work in to match, taking the time and care necessary to ensure that clients’ short-term goals and long-term visions are always met and that everyone else gets all the support and assistance he can offer.

It’s an earnest, eager approach that could leave the loan officer in question completely drained. But instead, he thrives on it － and the people around him do, too. Just through Google Ratings alone, Ethan Brooks has 153 positive reviews and has maintained a perfect five-star rating, with client after client applauding him for his ability to make the home buying process smooth, stress-free, and easy.

That’s quite a feat for any loan officer or mortgage advisor to obtain. But for Ethan, it truly is a massive accomplishment. He’s done what he’d set out to do: offer the lending services and solutions that had seemed out of his own reach. After helping hundreds of clients around Wisconsin close on time and secure the mortgages they need to move onto the next stage of their lives, he’d be forgiven for taking a small step back.

Yet, he’s done no such thing. If anything, Brooks has only become more ardent in the mission to help people with all their lending needs, now not only advising clients on the entire mortgage and home purchasing process but also offering free education through the use of his educational modules and crafting a team of equally-devoted individuals who are ready to provide aid at every step of the loaning way. It’s a lot, but it’s the Ethan Brooks difference.

Home Sweet Home: 2022 Step-By-Step Guide for First-Time Home Buyers

Tue, 01 Feb 2022 14:50:17 GMT

As the turkey and poultry section in the grocery store begins to fill back up again, toys appear back on shelves, and all those expensive Christmas decorations start finding themselves packed up again, it’s apparent that the holiday season is over. This can be a sad time for many, but the birth of a new month and new year can also bring wonderful possibilities – including that of finally getting your first home!

Scared by this, excited, guarded, all of the above? All are understandable reactions. The entire home buying experience can be anxiety-producing. After all, where do you even start with such a monumental task? Well, we know and are here to send some of that wisdom in your direction. Continue below for our comprehensive step-by-step guide that’ll take you through the entire process – from getting a mortgage to identifying your ideal house to making an offer and beyond.

1. Take a Look at Your Financial Situation

Nobody likes being limited by the amount of cash in their wallets (or, more accurately, within the digital confines of their bank account), but it’s a reality, nonetheless. Unless you’re remarkably wealthy, you’re going to have to carefully consider your financial position before you even think about seeing houses, much less preparing yourself to put in an offer.

So, take this seriously. Do a thorough financial audit, taking into account not just upfront expenses of the initial purchase but also regular upkeep and repair costs. This means looking at your savings, reviewing your average spending habits, and checking to see if your credit is good, bad, or practically non-existent. After this (and after seeking out any other financial help, if you’re wont to do so), set a budget and don’t let yourself budge.

2. Examine Your Housing Needs

Nearly everyone loves a big 3000 square-foot house with a million bathrooms, a pool, and a dedicated mudroom. But first-time buyers especially need to look beyond the pretty image on the surface and really consider what they need to be happy in a house. What do you genuinely need for it to work with your lifestyle?

Do you really need to be in a condo with a great view that’ll cost you most of your salary, or would a lovely single-family home be a better use of your money? Is that outdoor garden space a legitimate must-have, or is having enough rooms so that each child can have their own higher on the priority list? Are you really sure that you’re willing to take a long commute to work for an updated kitchen? These are just a few examples of questions that could crop up – be prepared. Define your priorities and needs early, and stick with them regardless of how un-fun it might be. Trust us. You’ll be happier in the long run if your home works for you rather than the other way around.

3. Reach Out to Mortgage Lenders

First-time homebuyers are put in a difficult position. Having no experience and probably little formally-taught knowledge, mortgages can be an incredibly confusing topic. And when you don’t understand them, you can make poor choices. Fight against this by getting educated. Need a little help with the basics?

Mortgages essentially have six steps: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing. The former pulls on basic information about your credit score and history to show what kind of loan amount you qualify for, and this saves you time and signals to everyone that you’re a serious buyer.

After you’re pre-approved and have a house you want to put an offer on, you’ll need to apply for a mortgage by gathering up some documents like employment info, W-2s, asset docs, etc., to get a loan file through underwriting. A loan officer will guide you through, and loan processors will review the info to draft up a package for the underwriter to approve. If all looks good with your credit and documentation, you should be approved, and you’ll officially close with a bunch of paperwork, sealing the deal and securing your mortgage.

4. Hire a Real Estate Agent

Underwriters, loan docs, budgets – none of that sounds like a good time. Fair enough, but with them now out of the way, it’s time to focus on what actually is: looking at some houses. The best way to do this is by hiring a good real estate agent since they’ll help you locate homes that make sense for you and your situation, arrange times to walk through, and possibly give you some constructive feedback if you’d like a little more support.

These individuals also assist in the price negotiation and loan processes, making them insanely valuable members of your first-time homebuying team. In other words, find one you click with and never take them for granted. They’re essential should you want things to go as smoothly as possible.

5. Make a Housing Offer

Buying a home for the first time is exhausting but ultimately worth it when you find the perfect fit that just feels right. Experienced this magical “click” moment for yourself already? You’re likely ready to take that next step and actually put in an offer. When you decide to go for it, talk to your real estate agent. They’ll assist you in deciding how much to offer, what conditions need to be fulfilled (if any) before a deal can be reached, and what counteroffers you’ll make should the seller not accept right off the bat.

Just be warned, these last stages of the home buying experience can be brutal and draining – emotionally and financially. Be honest with yourself about budget and cut your losses if that counteroffer is looming a little too ominously for comfort. There will be other costs to consider and money already starting off tight is a recipe for disaster.

6. Get a Home Inspection and Close

An initial walkthrough of a home is great. It gets you a feel for the space and helps you envision what your life could look like in it. However, what it doesn’t do is tell you if there are any real issues you should be worried about. Don’t take a quick look at face value. Get a home inspection. Let a trained professional do their job, checking to make sure electrical, plumbing, roofing, foundation, and other important safety and quality stuff are looking good. If it’s not, you should be able to rescind your offer or negotiate for lower costs/more extensive conditions before moving forward with buying.

And in the event that everything looks good during inspection or the seller agrees to lower the price or take care of all necessary repairs for you? You’re now in a position where you can close on your home. This just involves a lot of paperwork, so break out your good pen and patience. Once this is done, you’re officially a first-time homeowner!

Deductible Mortgage Interest: What You Need to Know

Thu, 13 Jan 2022 02:21:29 GMT

They always say that there are only two things truly inevitable in life: death and taxes. Just the latter’s proximity to the former isn’t exactly a ringing endorsement for the financial charge, is it? But despite how much we may dislike the concept, taxes are a necessary tool for keeping our society running smoothly – and they’re not going anywhere anytime soon. Although, there is a little bit of good news if you’re a homeowner: your mortgage interest might actually be deductible when the new year rolls around and the taxman comes knocking.

What Is Mortgage Interest Deduction?

All of this is well and good, but what exactly does it mean? At its core, a mortgage interest deduction is a tax incentive thought up and created specifically for people who own a home. A common itemized deduction for these folks, it allows interest paid on loans taken out in order to build, renovate, or more typically purchase a place of residence to be deducted from one’s taxable income.

For those who care far more about practicality than piecing out financial jargon, this basically just translates into savings on your end since it reduces the amount of taxes you owe. Reduced costs are always a welcome happy surprise, but as should be expected, there are a few conditions and fine print associated with deducting your mortgage interest.

Limits bound up in mortgage amount are included under this umbrella, and the date you bought your home is also a factor when looking at deduction. We’ll talk about this more shortly, yet the main thing to remember is that itemizing must happen on your tax return. Choosing to skip this essentially means relinquishing the possibility of a mortgage interest deduction, so be careful to go through the process should you qualify if you don’t want to miss out!

How Mortgage Interest Deduction Works

While all things loans, taxes, and general finance are kind of our thing here, we thoroughly appreciate when any of the above is made simple enough that our expertise isn’t necessarily required. And luckily, mortgage interest deduction fits the description without too many issues as it’s a relatively straightforward concept.

Originally introduced in 1913 – the same time that income tax first hit the scene – this tax deduction has become a major one for millions around the country ever since. It’s for a good reason, too, because the deduction’s requirements aren’t super restrictive, and acquiring it simply requires you to itemize rather than take the standard deduction. Want to get in on it yourself?

Well, it all starts by staying on the lookout for a 1098. Typically sent to you by your mortgage loan provider sometime between early January and the middle of February, the form documents your mortgage interest paid within the tax year. Keep this form handy because you’ll need it for the next step: itemizing your taxes. Easy and straightforward, just take your time and take care to copy over the mortgage interest detailed in your 1098 onto the schedule A of your 1040. That’s really all you need to do.

However, there is something to be mindful about! Pay close attention to your deductions. It’s possible even with mortgage interest considered that your itemized deductions could be lower than your standard. In this case, skip the mortgage interest deduction and stick with what makes more financial sense. After all, the whole point of doing this is to save you in the long run – not waste your time and hard-earned cash.

Who (and What) Qualifies for Deduction

The basics of how the mortgage interest deduction works and how one can claim it for themselves aren’t especially difficult to understand. As far as anything tax-centric goes, this is actually remarkably clear and simple. But, before going through the couple steps that accompany the deduction, you should make sure you qualify.

So, who all falls under this banner? Well, homeowners – regardless of whether they’ve got mortgage interest on a primary home or a secondary one. Both situations can allow for a deduction, at least as long as your house is collateral for your loan and that your home has all the primary facilities that legally make it a house (sleeping spaces, kitchen, and bathroom).

Not too much of a chore, overall. Things are slightly more conditionate for mortgages on second homes, though. The key here is to ensure that you’re still using a rental home for a small portion of the year. Any second houses rented out must have you present within them for at least 14 days or more than 10 percent of the days rented at fair market value for a mortgage interest deduction to be possible.

And as for the type of loans that qualify, you’re pretty open-ended here. Mortgages taken out before October 13, 1987, are the best off, allowing for all interest to be deducted because purchase happened before current tax rules went into effect. Though mortgages taken out after this period totaling out to a million dollars or less before 2018 or $750k from 2018 will also receive tax treatment as determined by old rules, meeting these limits despite nowadays lower ones.

Curious about home equity debt? According to TurboTax , any taken out after that 1987 deadline on a main home and/or second totaling $100k or less through the year for tax years before 2018 was generally deductible no matter your loan proceeds use. Any after 2018 is largely still deductible, but only if that interest was used to build, buy, or extensively repair/renovate your home.

Market Assessment: Mortgage Rates Anticipated to Rise From Now Into 2022 and Beyond

Thu, 09 Dec 2021 18:27:16 GMT

December is a magical time of the year, one reserved for togetherness, goodwill towards all, and a healthy dose of seasonal cheer. But come this holiday season, it’s looking like the gift that keeps on giving won’t have anything to do with reliable finances or an ultra-low priced housing market because mortgage rates are set to see a moderate change over coming days.

End of the Year Recap

Over this last year, the market has been a strange thing to behold. Unlike once upon a time where it seemed like things would continue skyrocketing until homeownership was a relic of the past, mortgage rates throughout 2021 have seen a great deal of fluctuation.

Starting in January, rates were at a record low , with 30-year fixed mortgage rates hovering around 2.65% within the month’s first week. By the tail end of March and early April, we were already back up around 3.2%, a percentage that bounced up and down over the following days until eventually settling back down around 3.1% in mid-November.

As evidenced, these shifts have been by no means earthshattering. Instead, they’ve been small and gradual throughout 2021, modest on both paper and in real-world effect – for good reason, too. Regardless of all the documented market vacillation, these mortgage rates are still meager when viewed through a historical lens.

Just a decade ago, 30-year fixed mortgage rates were nearly 5%, and ten years before that? We were firmly at 8%, thinking we were lucky we weren’t saddled with the ridiculously outrageous 18 of the mid-80s. In other words, we’ve witnessed far starker and more distressing shifts in the past.

A couple of points here and there is nothing in the grand scheme of things. 2021 has still been overwhelmingly good for borrowers. It’s why housing is positively booming, and first-time buyers aren’t left scrabbling like they might’ve been only years ago. Now the main question is: will this trend continue from here on out?

December Mortgage Rate Forecast

Merely a couple of weeks ago, most of us would probably be inclined to say “yes,” but things are looking a little murky right now. Wondering why? This is primarily caused by three main contributors: inflation, economic recovery, and changes to federal policy.

Simply put, we are not in the dire straits that we were within recent memory. Our country is not flailing around in a constant downward spiral like many of us remember during the Great Recession, and our economy has been adjusting to post-2020 life surprisingly adeptly. We’ve hit a 30-year high rate of inflation, retail has come back strong after the unexpected knock of early pandemic days, stimulus checks have stalled, and unemployment is at its lowest point since Covid reared its ugly head.

All of this together adds up to a winning recipe for the US economy and considering that higher inflation all on its lonesome is a strong predictor (and contributing factor) for higher mortgage rates, that plus all the other evidence of economic upturn means we have every reason to expect upped rates, like, now.

Before you get too worried, though, let’s clarify something. None of this suggests that mortgage rates will suddenly look like they did in the Reagan era. You can be confident that won’t happen anytime soon. But big names like Freddie Mac and the NAHB both think average 30-year fixed rates could end up at or over 3.25% before the new year hits, making it something well-worth planning for.

What Will Rates Do Heading Into 2022?

So, a small hike up to 3.2% or a little higher is looking to be in the cards while we’re busy hanging our stockings, lighting the Kinara, or preparing a Yule-time feast. But what about the coming year? What can we expect from mortgage rates as we tentatively venture into 2022?

Currently, forecasters fully anticipate that the current trend of rising rates will continue into January and beyond thanks to continued inflation and low incidences of unemployment. Despite the trials and tribulations that we’ve gone through (and will undoubtedly face in the days to come), our country’s in a pretty good spot, which typically means those predictions of rising rates will hold true.

The big mystery that we have to untangle is (generally) just how significant those increases will wind up. After aggregating predictions from the main industry forecasters, a 30-year fixed rate of about 3.5% could be on the horizon for 2022, a conservative but still present increase from our current mortgage rate of 2.9%.

That being said, we could still see a bit of a shakeup in our future because Covid sadly remains relevant. The pandemic has been a strong indicator of mortgage rates, just like any other major world adverse world event. Times of high infection, fear, and economic strain push down rates while the dissipation of such has been a signal of increases, putting us in a very volatile, uncertain position with the emergence of the Omicron variant. Should current vaccinations prove effective against the new virus variant and everything continues to be relatively under control, those mortgage rates will probably see the aforementioned increases as expected.

Yet if the coronavirus pandemic sees another major wave, rates could stay the same or even potentially fall depending on the severity. Only time will tell, but if we have to trade poorer pandemic conditions for lower mortgage rates, well, maybe taking the few percentage point hit wouldn’t be such a bad thing. As it stands, that’s around the corner, and it certainly looks like the more attractive option right now.

Ethan Brooks Mortgage Blog

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Do Appraisals Matter?

A house is ultimately worth what people are willing to pay for it, right?

Mortgage Loans for Business Owners

Do your tax returns not tell the whole story? No Problem!

Why Do Property Values Keep Rising in Wisconsin?

For those waiting for house prices to fall in Wisconsin the last couple years, they may need to keep waiting for a while!

Can The Federal Reserve Make Mortgage Rates Go Down

Not exactly...

Is it still affordable to buy homes in Wisconsin?

Let's look at the facts-

How we've helped clients get offers accepted recently

We love to think outside the box

Mortgage Rate Rollercoaster

This is a ride we’d like to get off

Recent win for clients!

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Is buying a home in Wisconsin still a good investment?

Money talks

Benefits of choosing a lower down payment

Weighing the costs

Surprising credit repair strategies!

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When are rates going to drop?

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Avoid A Homesale Contingency

Three options to help avoid a homesale contingency

Is it possible to have fun buying a house in 2024?

Preparation tips so you can enjoy the ride

Keep your super low rate AND buy a new house!

The best of both worlds

2024 Housing Market Predictions

Exciting predictions on the horizon!

Is rent in MKE going up in 2024?

How rent increases correlate to property value

Buy when others are fearful

Sometimes it makes sense to go against the grain!

Do Price Drops = Market Losing Value?

Even though there are price drops here and there, the Milwaukee market is up 8.55% this year from last

Blink and you missed it!

Let's focus on the facts

Is Real Estate on Extended Black Friday Sale?

Something like that...

Rates went down. When will they stay down?

Is it possible we have hit a turning point and rates are starting to come down? ﻿

Charmingly steady Wisconsin market

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When are rates coming down?

The #1 question of the year is: "Should I buy a house right now?" ﻿

Good as cash?

Fairway's cash guarantee

73 Spam calls in a day

This has to be illegal, right?

Save it and rent it? Or, sell it and pay down your mortgage?

Keep or sell?...

What happens if you "overpay"?

Property appreciation in action

8% Rates - Will it crash the market?

No, and here's why:

Why I love a lower down payment

Consider all options

House hacking explained

House hacking for passive income

Buydown refresher

Sales price reduction = seller can lower your mortgage payment

Is the market overpriced?

Is it possible we have hit a turning point and rates are starting to come down?

The #1 question of the year is: "Should I buy a house right now?"