A mortgage rate is highly subjective and can vary for a variety of reasons. A news story that provides an outright level like 7.5% requires context and qualification. Some online advertisements (especially among builders) could still be showing rates in the high 6’s. Some borrowers will be seeing rates of 7.625 or higher.
Loans with less than 25% down will have higher and higher costs, either in terms of upfront closing costs or the rate itself. Investment properties incur significant extra costs as do lower credit scores (you start getting hit for anything under 780 in many cases these days).
These are just a few considerations to illustrate the point that a 30yr fixed rate isn’t necessarily apples to apples. Fortunately, we can control for most of the variables by only ever looking at the same scenario, free from most of the subjective adjustments. We can also control for the practice of advertising lower rates by quoting them with implied discount points (extra upfront cost that goes toward “buying down” the prevailing rate). That’s one of the reasons the MND index is higher than Freddie Mac’s weekly survey.
All that to say, 7.5%+ might not be the exact rate you see today, but after adjusting for everything we can control, that’s the most prevalently quoted top tier conventional 30yr fixed rate again today. It’s the 3rd time we’ve seen 7.5 in the past 2 weeks.
Today’s increase followed the release or the Employment Cost Index–one of the economic reports the Fed watches closely in determining rate policy. In not so many words, it suggested higher momentum in price pressures than previously expected. This wasn’t necessarily out of line with any of the other recent inflation-related reports, but the confirmation was worth a bit of extra weakness in rates nonetheless.
Speaking of Fed rate policy, we’ll get the latest Fed announcement tomorrow. There’s zero chance of a cut (or a hike), but the Q&A portion is always worth some potential volatility in the afternoon.
(Bloomberg) –As delinquencies on multifamily mortgages pile up, lenders who had bundled those borrowings into securitizations known as commercial real estate collateralized loan obligations are racing to stave off trouble.
To keep the share of bad loans from spiking too high — a development that would cut the issuers off from the fees they collect on the CRE CLOs — they’ve been furiously buying them back. The lenders acquired $520 million of delinquent credit in the first quarter, a 210% increase on the same period last year, according to estimates by JPMorgan Chase.
It’s the latest sign of strain among the $79 billion of loans packaged into CRE CLOs, a market which grew in prominence in recent years as Wall Street financed syndicators who bought up apartment complexes with the intention of renovating them and boosting rents. When interest rates surged, many borrowers whose floating-rate loans were bundled into the securitizations were caught off guard and began falling behind on their payments.
To buy the defaulted loans, some lenders have been borrowing the money from banks and other third parties using what are known as warehouse lines, a type of revolving credit facility. It’s surprising they haven’t had more trouble accessing that debt given how quickly loans seemed to be deteriorating in quality heading into this year, said JPMorgan strategist Chong Sin.
“The reason these managers are engaged in buyouts is to limit delinquencies,” he said. “The wild card here is, how long will financing costs remain low enough for them to do that?”
One reason they have is that risk premiums, or spreads, on commercial real estate loans have tightened materially since last November. As a result, even with a more hawkish tone on the path of rates, the all-in cost of financing is still lower than where it was late last year. Still, there’s no guarantee it will remain that way.
“If the outlook for the Fed shifts materially to hikes or no rate cuts for a while, that might lead to a sharp increase in delinquencies, which can stifle issuers’ ability to buy out loans,” said Anuj Jain, a strategist at Barclays Plc, who expects buyouts to continue as distress increases in the sector.
Market Surge
CRE CLO issuance surged to $45 billion in 2021, a 137% increase from two years earlier, when buyers of apartment blocks sought to profit from the wave of workers moving to the Sun Belt from big cities. Three-year loans would give them time to complete upgrades and refinance, the thinking went.
Fast forward to today and the debt underpinning many of the bonds is coming due for repayment at a time when there’s less appetite for real estate lending, insurance costs have skyrocketed and monetary policy remains tight. Hedges against borrowing cost increases are also expiring and cost significantly more to purchase now.
Those blows helped increase multifamily assets classed as distressed to almost $10 billion at the end of March, a 33% rise since the end of September, according to data compiled by MSCI Real Assets.
“There was so much capital flowing into that space to real estate operators and developers, and that led to a lot of reckless lending,” said Vik Uppal, chief executive officer at commercial real estate lender Mavik Capital Management., who avoided the space.
The pain is now filtering through to the CRE CLO market. The distress rate for loans that were bundled into these bonds rose past 10% at the end of March, according to CRED iQ, compared with 1.7% in July last year.
The firm defines distress as any loan that’s been moved to a special servicer or is 30 days or more delinquent. Some other data providers prefer to wait until payments are 60 days or more overdue before using that classification.
Short Sellers
The outlook for the sector has caused short sellers, who borrow stock and sell it with the intention of buying it back at a lower price, to target lenders who used CRE CLOs. That’s because the issuers own the equity portion of the securities, so take the first losses when loans sour.
Short interest in Arbor Realty Trust stood above 37% on Monday, the highest level on record, according to data compiled by S&P Global Market Intelligence.
“The multifamily CRE CLO market was not prepared for rate volatility,” said Fraser Perring, the founder of Viceroy Research, which is betting against Arbor. “The result is significant distress.”
Arbor Realty declined to comment. Reached by phone on Tuesday, billionaire Leon Cooperman said that Arbor founder Ivan Kaufman has been “a good steward of my capital” and had correctly seen the need to position the company defensively more than a year ago.
CRE CLOs appealed to some investors because the issuers tend to have more skin in the game than issuers of commercial mortgage-backed securities. Critics argue the products contain loans of lower quality than you’d find in a CMBS, where loans are typically fixed rate so are, in theory at least, less exposed to interest rate hikes.
“These vehicles are a way for borrowers that need speculative financing that they often can’t get from elsewhere,” said Andrew Park, an analyst at nonprofit group Americans for Financial Reform. “CRE CLOs package the reject loans from CMBS.”
I’m currently in the process of buying a house. Even though I’ve done so in the past (spoiler alert: it didn’t end well), I still qualify as a “first-time home buyer” on this go-round, at least for mortgage purposes. Since it’s been more than three years since I had an ownership stake in a house, I qualified to buy with an FHA loan — and actually, that’s how I bought last time, too.
FHA loans are backed by the federal government (specifically, the Federal Housing Administration, hence their name), and administered by standard mortgage lenders. The requirements to use one are less stringent than for conventional home loans.
While a conventional mortgage often requires a credit score of 620 or better, many FHA lenders only require a score of 500. If your credit score is at least 580, you can get away with putting down just 3.5% on a home purchase. But if you can swing a 10% down payment, your credit score could be as low as 500.
Despite these perks, I opted against an FHA loan this time — I’m buying with a conventional loan instead. Here’s why.
I’m already paying more than I want to
Mortgage loans are far from cheap these days. As of this writing, the average rate on the classic 30-year fixed home loan sits at 6.88%, according to Freddie Mac. Compare that to rates at 3% in 2021! In real numbers, if you buy a $250,000 home with 10% down at a rate of 3%, your monthly payments for the loan and the interest will be just $1,094. Swap that 3% rate for one at the current average, and you’re signing on for monthly loan and interest payments of $1,624. Ouch. And even with a credit score over 800, I’m still not saving much on a mortgage rate.
Since I’m already paying more per month (and overall) to buy a house, I decided against going with an FHA loan, because it would cost me even more. I’m putting just 10% down on my home purchase, so I will have to pay for private mortgage insurance (PMI). This protects my lender in the event I stop making payments and it must repossess and resell my house. If you buy a home with a conventional loan and less than 20% down, you’ll pay for PMI.
More: Check out our picks for the best mortgage lenders
FHA loans come with mortgage insurance, too — it’s called MIP, or a mortgage insurance premium. Like PMI, payments are collected monthly — but there’s also an upfront payment to cover at closing. But unlike PMI, if you make a 10% down payment on a home with an FHA loan, you’ll pay MIP for 11 years. If you make the standard 3.5% FHA loan down payment, however, you’re stuck with MIP unless you refinance to a conventional loan.
With my conventional loan, once I reach 20% equity in my house, I can have my PMI payments canceled by my mortgage lender. With an FHA loan, I’d be paying more for longer — or paying to refinance the loan as soon as I got to 20% equity.
I wanted to be a more competitive buyer
I’m very aware of how competitive the current market is for buyers. The supply of homes for sale (just 2.9 months’ worth in February, according to the National Association of Realtors) is too low to equalize the market between buyers and sellers, so I knew I’d have to beat out other buyers to get an offer accepted.
On the lead up to finding the right house, making an offer, and getting it accepted, I looked at several that specified “cash or conventional” in their listings. This means that sellers were only willing to consider buyers paying cash or using a conventional loan, rather than a government-backed mortgage. Unfortunately, some sellers are wary of FHA loans because of the stricter appraisal requirements.
All homes bought with a mortgage go through appraisal, but in the case of a conventional loan, that appraisal is to assess value, not condition (that’s what a home inspection is for). But FHA appraisals also serve as a safety inspection for the home, which must meet certain livability standards for the loan to be approved. I didn’t want a seller to be leery of me as a buyer because of this extra layer of scrutiny.
If you’re an aspiring homeowner, it’s a great idea to assess all your mortgage options. Depending on your credentials, income, or background, you might have access to programs that can save you money on the home-buying process. I might not be using an FHA loan this time, but I’m sure glad the option exists — anyone who wants (and has the means) to buy a house should be able to.
‘It’s not my motivation to always do something timeless,’ Kristina Crestin told me in our interview this week.
In a design landscape where we’re constantly discussing how to make interiors more ‘timeless’ or ‘anti-trend,’ it seems like a shocking revelation. The statement is especially surprising, coming from Crestin, a champion of the ‘classic’ modern farmhouse style in her HGTV series Farmhouse Fixer. Actually, her reasoning is quite freeing.
‘I get a lot of feedback from homeowners that have gone safer and more timeless with some things, but they just don’t love it as much as the places they took risks,’ Crestin explained on the home decor idea. Rather than guiding your interior design based on arbitrary ideas of what’s ‘outdated,’ Kristina recommends choosing an interior scheme based on personal taste.
Kristina Crestin with her co-host Jonathan Knight, former member of the boyband New Kids on the Block
(Image credit: HGTV)
When one is guided by personal taste, it’s easy to be drawn to current interior design trends. Crestin doesn’t necessarily think this is a bad thing. Instead, choosing where to integrate interior design trends you love requires reconfiguring where and how to spend budget. She used the analogy of buying a new wardrobe.
timeless interior design and focusing on the joy of the process. Crestin told Homes & Gardens: ‘I think people get trapped with the idea that they’re doing this once, they’re spending the money once and then they’re not going to change it for 15 years. Well, you wouldn’t address your wardrobe that way. Knowing that over time you might need to supplement some things takes the pressure off of feeling like it’s one and done. It’s more of a psychological thing.’
Design expertise in your inbox – from inspiring decorating ideas and beautiful celebrity homes to practical gardening advice and shopping round-ups.
Shop the Modern Farmhouse Edit
The modern farmhouse style, often seen on Farmhouse Fixer, perfectly strikes the balance of incorporating trendy elements, but also remaining true to timeless materials and high-quality design.
Sherpa Shams
Wheel Chandelier
Marble Coffee Table
Whether you prefer following interior design trends or opting for more classic interior design, Crestin’s ideas are helpful reminder that it’s always okay to decorate to the tune of your own drummer. If you hate it, you can always change it later.
Historically speaking, mortgage rates have remained relatively low since the Great Recession, with some fluctuation at times due to market conditions. As a result, a generation of homebuyers has become accustomed to a low 30-year fixed-rate mortgage.
But with mortgage rates on the rise, it can put a sour taste in the mouths of people trying to join the ranks of homeowners in the country. They may be thinking that they missed an opportunity to buy a home. However, it’s important to look at the history of mortgages and mortgage rates to put the current conditions into context.
The History of Mortgage Rates
The modern history of mortgage lending in the U.S. began in the 1930s with the creation of the Federal Housing Administration. From the 1930s through the 1960s, a combination of government policy and demographic changes made owning a home a normal part of American life. During this time, the 30-year fixed-rate mortgage became the standard for home mortgage loans.
When discussing the fluctuation of mortgage rate trends, analysts usually refer to the average 30-year fixed-rate mortgage. Here’s a look at the trend of these mortgage rates since the 1970s.
The 1970s
Throughout the 1970s, mortgage rates rose steadily, moving from the 7% range into the 13% range. This uptick in rates was due, in part, to the Arab oil embargo, which significantly reduced the oil supply and sent the U.S. into a recession with high inflation — known as stagflation.
As a result, Federal Reserve Chairman Paul Volcker made a bold change in monetary policy by the end of the decade, raising the federal funds rate to combat inflation. Though the Federal Reserve doesn’t directly set mortgage rates, its monetary policy decisions can still impact many financial products, including mortgages.
The 1980s
The average 30-year fixed-rate mortgage hit an all-time high in October 1981 when the rates reached 18.63%. The Federal Reserve’s tight monetary policy affected this high borrowing cost and put the economy into a recession. However, inflation was under control by the end of the 1980s, and the economy recovered; mortgage rates moved down to around 10%.
The 1990s and 2000s
Mortgage rates continued a downward trend throughout the 1990s, ending the decade at around 8%. At the same time, the homeownership rate in the U.S. increased, rising from 63.9% in 1994 to 67.1% in early 2000.
Several factors led to a housing crash in the latter part of the 2000s, including a rise in subprime mortgages and risky mortgage-backed securities.
The housing crash led to the Great Recession. To boost the economy, the Federal Reserve cut interest rates to make borrowing money cheaper. Mortgage rates dropped from just below 7% in 2007 to below 5% in 2009.
Recommended: US Recession History: Reviewing Past Market Contractions
The 2010s
Mortgage rates steadily decreased throughout most of the 2010s, staying below 5% for the most part. The Federal Reserve enacted a zero-interest-rate policy and a quantitative easing program to prop up the economy during this time following the Great Recession. This helped keep mortgage rates historically low.
The 2020s
The Federal Reserve reduced the federal funds rate to near-zero levels in March 2020, causing a drop in rates of various financial products. The effects of the fallout from the Covid-19 pandemic pushed mortgage rates below previous historic lows. The average 30-year fixed-rate mortgage hit 2.77% in August 2021.
However, with inflation reaching levels not experienced since the early 1980s, the Federal Reserve reversed course. The central bank started to tighten monetary policy in late 2021 and early 2022, which led to a rapid increase in mortgage rates. In May 2022, the average mortgage rate was above 5%. While this was below historical trends, it was the highest rate since 2018. From there, the 30-year fixed rate mortgage crept upward, reaching a high of 7.79% in October 2023 before declining to 7.1% in April 2024.
Recommended: How Inflation Affects Mortgage Interest Rates
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
Why Do Mortgage Rates Change?
As we can see from looking at interest rate fluctuations, major economic events can significantly impact mortgage rates both in the short and long term. As noted above, this has to do primarily with the Federal Reserve.
Federal Reserve actions influence nearly all interest rates, including mortgages through the prime rate, long-term treasury yields, and mortgage-backed securities. The Federal Reserve sets the federal funds benchmark rate, the overnight rate at which banks lend money to each other.
This rate impacts the prime rate, which is the rate banks use to lend money to borrowers with good credit. Most adjustable short-term rate loans and mortgages use the prime rate to set the base interest rates they can offer to borrowers. So, after the Federal Reserve raises or lowers rates, adjustable short-term mortgage loan rates are likely to follow suit.
Longer-term mortgage rates have also risen and fallen alongside economic and political events with movement in long-term treasury bond yields. In the short term, a Federal Reserve interest rate change can affect mortgage markets as money moves between stocks and bonds, affecting mortgage rates. Longer-term mortgage rates are influenced by Fed rate changes but don’t have as direct an effect as short-term rates.
Recommended: Federal Reserve Interest Rates, Explained
Can Changing Rates Affect Your Existing Mortgage?
If you have a mortgage with a variable interest rate, known as an adjustable-rate mortgage, changing rates can affect your loan payments. With this type of home loan, you may have started with an interest rate lower than many fixed-rate mortgages. That introductory rate is often locked in for an initial period of several months or years.
After that, your interest rate is subject to change — how high and how often depends on the terms of your loan and interest rate fluctuations. These changes are generally tied to the movement of interest rates, but more specifically, which index your adjustable-rate mortgage is linked to, which can be affected by the Fed’s actions.
However, most adjustable-rate mortgages have annual and lifetime rate caps limiting how high your interest rate and payments can change.
If you took out a fixed-rate mortgage, your initial interest rate is locked in for the entire time you have the home loan, even if it takes you 30 years to pay it off.
Recommended: What Is a Good Mortgage Rate?
The Takeaway
If you are in the market to buy a home, it might be tempting to rush and buy when mortgage rates drop a bit, or to put off buying until rates hopefully decrease in the future. However, choosing the perfect time to buy a home based on the ideal rate can be difficult. You’re probably better off letting your need for a home and your personal financial situation drive your decision making. (Do you have a down payment saved up? Is your debt under control?) When it’s time to buy, do your research and choose the best mortgage available for your personal situation.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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(Bloomberg) — UK house prices fell at the sharpest pace in eight months after the cost of mortgages crept higher, one of the country’s biggest lenders said, underscoring continued cost-of-living pressures on consumers ahead of a general election later this year.
Most Read from Bloomberg
The figures from Nationwide Building Society followed a scaling back of bets on Bank of England interest rate cuts this year, which pushed up the cost of home loans in markets. That’s strained the ability of people to afford to buy a property and held back a recovery from last year’s slump.
Higher borrowing costs have hurt Prime Minister Rishi Sunak’s government in the eyes of voters and reminded voters of the big jump in mortgage rates that Liz Truss triggered during her short term as premier in late 2022. The UK slipped into a recession last year, and the weak recovery so is reflected in the housing market.
“Though mortgage affordability is much better than it was last summer, it remains very stretched relative to historical norms,” said Peter Arnold, chief economist at EY UK. “A strong recovery in house prices and activity is unlikely.”
The Conservatives are defending seats in local authorities including mayors in West Midlands and Tees Valley in key local elections on Thursday. Sunak is widely expected to call a general election in the autumn.
Nationwide estimated house prices fell 0.4% in April after an 0.2% decline the month before. Economists had expected a 0.1% monthly increase. The average cost of a home is now £261,962 ($326,680), which is about 4% below the peak in the summer of 2022.
What Bloomberg Economics Says …
“The shift in the interest rate outlook was the catalyst for the change in sentiment at the start of the year, encouraging buyers to enter the market. However, borrowing costs have risen recently as investors reappraise how far the Bank of England will cut interest rates over concerns about persistent price pressures in both the UK and US. The best-buy five-year fix are above 4.1% having dropped below 4% at the start of the year. That will hit affordability.”
—Niraj Shah, Bloomberg Ecoomics. Click for the REACT.
Home prices have stagnated over the past year, up just 0.6%. That’s much less than the 1.2% gain economists had expected.
“The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year,” Robert Gardner, chief economist at Nationwide, said in a report Wednesday.
Nationwide said research it did with Censuswide found that almost half of the prospective first-time buyers looking to secure a home in the next five years have delayed their plans.
“Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it is also notable that 41% said that higher mortgage costs were preventing them from buying,” Nationwide said.
Another 55% of people said they’d be willing to buy in a cheaper area of the country or where they could get a bigger property — half willing to move more than 30 miles away.
The UK housing market has defied expectations of a sharp downturn last year, yet its recovery over the last few months has remained weak. Prospective buyers are still finding it hard to come up with the money for a deposit, while the benchmark lending rate is at a 16-year high.
BOE officials warning of lingering price pressures have pushed up two- and five-year swap rates, used to set the bulk of mortgage products. That suggests households would still be spending a higher share of their incomes on mortgage payments than they did in the decade to 2007, according to Bloomberg Economics.
Nationwide’s figures contrast with more upbeat data from the BOE showing mortgage approvals rose to the highest in 18 months in March. Banks and building societies authorized 61,325 home loans, up from 60,497 in February and the most since September 2022.
Separate data released Tuesday from HM Revenue & Customs, the UK tax authority, showed property transactions climbing for a third month to 84,200 in March.
However, a recent resurgence in borrowing costs has raised questions over whether the recovery can continue. Natwest, Santander and Nationwide all have increased mortgage rates this month in response to rising swap rates, which are used to set the bulk of mortgage products.
For the 1 million households due to refinance fixed-rate mortgages by end of the year, new loans will be pricier than the ones they are currently on.
“Buyers and sellers are starting to accept the new reality of the housing market in the face of current interest rate levels,” said Nathan Emerson, CEO of Propertymark.
–With assistance from Andrew Atkinson.
(Updates with comment and context from first paragraph.)
If you’re tired of renting, it may be time to purchase your first home. Being a first-time homebuyer is nerve-wracking, but many of the myths about buying a home just aren’t true.
You don’t need a perfect credit score, and you don’t need 20% for a down payment. Many first-time homebuyer programs, grants, and down payment assistance programs are available to help you secure the financing you need to purchase your first home.
Key Takeaways
First-time homebuyer programs and grants offer various forms of financial assistance, such as low down payment options and closing cost aid, making homeownership more accessible without needing perfect credit or large down payments.
FHA, USDA, and VA loans provide significant benefits, including lower credit score requirements and minimal or no down payment requirements, tailored to help first-time buyers with limited resources.
Additional unique programs like the HUD Good Neighbor Next Door and HUD 203(k) Rehab Loans offer further advantages, like substantial discounts on home prices and funding for renovations, specifically designed to encourage public service employees and those interested in revitalizing homes.
Federal Housing Administration (FHA) Loans
FHA loans are a suitable option for first-time buyers with poor credit, or anyone who doesn’t have 20% to put toward a down payment. These loans are backed by the U.S. Department of Housing and Urban Development (HUD).
FHA Loan Requirements
If your credit score is at least 580, you qualify for minimum down payment of 3.5%. If your credit scores are between 500 and 579, you qualify with a 10% down payment. However, you should expect to receive a higher interest rate.
Here are some of the other requirements:
Have a steady employment history of at least two years
You plan to occupy this home as your primary residence
You’re prepared to get an FHA property appraisal
You can qualify for the FHA loan program even if you filed for bankruptcy, as long as it’s been at least two years. However, you should expect to pay for private mortgage insurance (PMI). However, you should expect to pay private mortgage insurance for the duration of the FHA loan if your LTV ratio is less than 90% at the time of closing.
If it’s lower, you’ll have to pay for 11 years (unless the home loan is paid off earlier). These proceeds are used to cover the lender if the borrower defaults on the loan.
FHA loan limits vary by area. You can view the loan limits for your area here.
Energy Efficient Mortgage Program
With this program, you can roll the cost of any energy-efficient improvements into your FHA mortgage. This won’t change your minimum down payment requirements, and the money financed for the EEM package won’t affect your loan limit. You’ll need to work with your mortgage lender to determine how much of an EEM benefit you qualify for.
Fannie Mae
With Fannie Mae, you can roll the cost of any energy-efficient improvements into your FHA mortgage. This won’t change your minimum down payment requirements, and the money financed for the EEM package won’t affect your loan limit. You’ll need to work with your lender to determine how much of an EEM benefit you qualify for.
HomeReady Mortgage Program
The HomeReady Mortgage program is ideal for first-time homebuyers who have a minimum credit score of 620. The minimum down payment is 3%, and PMI is required. If your credit score is 680 or higher, you may qualify for more competitive rates.
HomePath Ready Buyer Program
With this program, you can get up to 3% of the purchase price in closing cost assistance toward the purchase of a HomePath property. To qualify, you’ll need to complete a homebuyer education course.
You’re also limited in what you can buy. This program is only for HomePath properties, which are foreclosed homes owned by Fannie Mae.
97% LTV Mortgages
This mortgage loan could be the right option for first-time buyers that don’t have 20% for a down payment. 97% LTV mortgages from Fannie Mae allow you to make a down payment of only 3%.
You can only take out a fixed-rate mortgage for this type of loan. And the home you purchase must be your primary residence and not an investment property.
Freddie Mac
Freddie Mac is another entity that offers competitive mortgage products to consumers. Their most popular program for first-time homebuyers is the Home Possible mortgage. This mortgage is ideal for low to moderate-income borrowers in underserved communities.
Home Possible Mortgages
Buyers can choose from the 95% LTV (Home Possible) or 97% LTV (Home Possible Advantage) options. This conventional loan is not backed by the federal government, but it comes with flexible terms and low down payment minimums.
Plus, you can cancel your PMI once the loan balance reaches 79% of the home’s appraised value. And even if with no credit or bad credit, you may be eligible for a mortgage with as little as 5% down.
United States Department of Agriculture (USDA) Loans
Considering a home in a rural area? You may qualify for 100% financing through the USDA loan program.
There is no required down payment with this program, and the credit requirements are much lower than what other lenders look for. You can use this tool from the USDA’s website to see if your area qualifies. There’s a 2% guarantee fee with a USDA loan, but it can be rolled into your mortgage loan and spread across your monthly mortgage payments.
Veterans Administration (VA) Loans
If you’re an active service member, veteran, or surviving spouse, you may be eligible for a mortgage through the VA Home Loan Program.
VA loans are perfect for first-time homebuyers because the upfront costs are so low. There’s no down payment required, and you don’t have to pay for PMI. There is no minimum credit score requirement for a VA loan. However, most mortgage lenders want to see a FICO credit score of at least 580.
Native American Direct Loan
If you’re a Native American veteran looking to purchase your first home, this program may help you get the financing you need. Loans come with no down payment, minimal closing costs, and no PMI.
They are also much easier to qualify for than traditional mortgages. Your home must be located on Federal Trust Land, and the mortgage is for a 30-year term at a fixed rate.
HUD’s Good Neighbor Next Door (GNND) Sales Program
Do you work in a public service role such as law enforcement, teaching, or the fire department? Then you can receive 50% off the HUD appraised value of select homes through HUD’s GNND Sales program.
The only catch is that the home must be located in a revitalization area, and you must commit to living there for 36 months. You also need to act fast because homes are only listed for sale during a seven-day window.
HUD Dollar Homes Program
First-time homebuyers should also check out Dollar Homes offered by HUD. These are foreclosed FHA properties that have been on HUD’s website for over six months. The options may be limited, but you never know when a good deal may appear.
HUD 203(k) Rehab Loans
Do you have your eyes set on a fixer-upper? Check out HUD 203(k) loans, which are backed by the FHA and give additional funding to homebuyers who want to complete renovations. Instead of taking out a second loan, you can roll the renovation costs into the mortgage.
See also: How to Buy a HUD Home (And When You Should)
Other Homebuyer Grants and Programs
You can visit HUD’s website to learn more about programs that are available for first-time homebuyers in your area. Once you’ve selected your state, you’ll be redirected to a list of programs that you may qualify for.
National Homebuyers Fund
The National Homebuyers Fund (NHF) is available for low-income homebuyers that need down payment assistance. Once you find a participating lender, the NHF will provide a grant for up to 5% of the loan amount.
You don’t have to repay the grant, but there are income requirements based on the current housing market and your location. Your lender can provide you more information and help you determine if you qualify.
Employer-Sponsored First-Time Home Buyer Programs
Some employers are now offering housing incentives to help employees with down payments and closing costs. Your employer or labor union may give you a grant that’s forgivable over time. Check with your manager to see if they offer any kind of down payment or closing cost assistance.
Local Grants to First-Time Home Buyers
There are many state or local government grants available for first-time homebuyers. And many of these don’t require any repayment if you live in your home for a certain time frame. Contact a real estate agent and check with both your state and county to learn more about what options are available to you.
Learn More
What Is a NACA Mortgage? – For over two decades, NACA has been assisting borrowers in securing affordable housing through its renowned loan program. Here is an overview of how the program operates.
Home Loans for Single Moms – Single mothers often face challenges when trying to secure a mortgage due to having just one income and no down payment. Here are several mortgage programs available for single mothers.
Purchasing a home is a milestone achievement for many, filled with excitement and the promise of new beginnings. However, the process involves navigating a maze of legal documents, negotiating contracts, and understanding zoning laws, which can vary widely from one location to another.
These complexities can quickly transform the joy of buying a home into a stressful ordeal.
Over the years, we’ve seen many individuals and families encounter unexpected hurdles during what should be one of the most exciting times of their lives.
That’s why we strongly recommend enlisting the services of a skilled real estate lawyer. In this article, we will explore the peace of mind and protection a real estate lawyer can offer, using real-life scenarios to illustrate the value they bring to the homebuying process.
The pitfalls of going solo: A cautionary tale
Let’s take the case of John and Sarah, a young couple brimming with excitement about purchasing their first home in Philadelphia.
They found a charming row house in Bella Vista, perfect for their growing family. They poured over the contract themselves, feeling confident in their ability to handle the legalese. Everything seemed straightforward.
Unfortunately, a month into ownership, a major leak sprung from the roof. The previous owner had neglected crucial repairs, and the cost of fixing the damage was substantial. John and Sarah, devastated and frustrated, discovered a hidden clause in the contract limiting their ability to recoup repair costs from the seller.
A real estate lawyer in Philadelphia could have identified this clause during the review process, potentially saving them a significant financial burden.
How a real estate lawyer protects your investment
Photo credit: Anton_Ivanov / Shutterstock.com
Peace of Mind: Buying a house is likely the biggest financial investment you’ll ever make. A lawyer ensures the process is smooth and transparent, mitigating potential headaches and legal roadblocks.
Contract Expertise: Real estate contracts are intricate documents. A real estate lawyer can decipher legalese, identify potential issues, and negotiate terms in your best interest. This includes crucial details like property disclosures, inspections, closing costs, and title insurance.
Dispute Resolution: Unexpected issues can arise during a transaction. A lawyer can advocate for you and protect your rights if disagreements emerge with the seller, lender, or other parties involved, just like a Philadelphia real estate lawyer could have helped John and Sarah spot the hidden clause and navigate the ensuing disputes.
Beyond contracts: The ongoing value a real estate lawyer brings to the table
Real estate law goes beyond just buying a house. A lawyer can also assist with:
Zoning and permitting issues
Foreclosure defense
Landlord-tenant disputes
Commercial property transactions
FAQs: Your questions answered
Photo credit: Africa Studio / Shutterstock
1. When should I hire a real estate lawyer?
Ideally, consult with a lawyer as early as possible in the homebuying process. Their guidance can save you time, money, and stress throughout the transaction.
2. What are the qualities of a good real estate lawyer?
Look for a lawyer with solid experience in real estate law, a strong reputation, and clear communication skills. You’ll also want to ensure they’re responsive and don’t take long to reply to emails and phone calls to avoid extending your closing process for longer than needed.
3. How much does a real estate lawyer cost?
Costs vary depending on the complexity of your case. Many lawyers offer flat fees or hourly rates.
4. What documents should I bring to my initial consultation?
Bring any relevant documents you have, such as the purchase agreement, inspection reports, and loan pre-approval paperwork.
5. Can I negotiate lawyer fees?
Yes, discuss fees upfront and inquire about potential discounts or payment plans.
Remember, buying a house is a significant undertaking. Don’t navigate this journey alone. A real estate lawyer can be your trusted advisor, ensuring a smooth and successful transaction. Contact us today to schedule a consultation and turn your dream home into a reality.
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Getting into gold coin investing can be a smart move for anyone looking to add some shine to their financial strategy. In this guide, we’ll give you the lowdown on different types of gold coins, how to figure out what they’re really worth, and tips for keeping your investment safe and sound.
You’ll also get the inside scoop on dealer markups, how to make sure you can cash out when you need to, and the steps to check that your coins are the real deal. Ultimately, we want to empower you with the knowledge to make informed decisions and enhance your investment portfolio with the timeless appeal of gold coins.
Key Takeaways
Gold coins offer investment diversity, with bullion coins being tied to gold content and purity, numismatic coins prized for their rarity and design, and semi-numismatic coins providing both gold value and collectible interest.
Key factors in gold coin investment include understanding premiums over spot price, ensuring liquidity and ease of resale, and selecting appropriate storage options to safeguard the investment.
Investing in gold coins entails choosing reputable dealers to prevent counterfeit risks, understanding tax implications like capital gains, and considering gold coins as a way to diversify and hedge against inflation within an investment portfolio.
The Fundamentals of Investing in Gold Coins
Gold coins, with their gleaming allure and historical significance, offer investors a tangible asset that stands the test of time. They come in various forms, each bearing unique characteristics and investment potential.
From bullion coins valued for their gold content and purity to collectible gold coins prized for their rarity and historical significance, the world of gold coins is as diverse as it is fascinating. As a form of precious metals, these coins, along with silver coins, provide a sense of security and value for investors.
Bullion Coins
Bullion coins, including bullion gold coins, are the go-to choice for those seeking straightforward exposure to gold. Valued based on their gold content and purity rather than historical and artistic considerations, a bullion coin like the Canadian Maple Leaf and American Gold Buffalo offers a direct link to the global gold market. For those interested in other forms of investment, gold bars can also be considered.
Numismatic Coins
For the history buffs and collectors, numismatic coins offer a unique allure. These coins are valued not just for their gold content, but also for their rarity, historical significance, and the artistry of their designs. Their value is less tethered to the spot price of gold, making them less susceptible to short-term market fluctuations.
Semi-Numismatic Coins
Straddling the line between bullion and numismatic coins are semi-numismatic coins. These coins offer both the gold value of bullion coins and the collectible appeal of numismatic coins. Their versatility makes them an attractive choice for a range of investors, from those seeking a straightforward gold investment to collectors looking for unique assets.
Top Gold Coin Options for Investors
There are a wide variety of gold coins to choose from, which can be overwhelming for new investors. However, some standout choices have captured the attention of investors worldwide. Let’s examine three popular gold coin options: the American Gold Eagle, the Canadian Gold Maple Leaf, and the South African Krugerrand.
American Gold Eagle
The American Gold Eagle coin, prominently displaying Lady Liberty and an American bald eagle, not only represents American heritage and freedom but also stands as a testament to the nation’s robust minting capabilities.
Introduced in 1986, these coins are struck in 22-karat gold, which includes a small alloy of copper and silver to ensure durability. Their availability in multiple denominations—1 oz, 1/2 oz, 1/4 oz, and 1/10 oz—makes them accessible to a wide range of investors, from those starting out to seasoned collectors. The blend of historical significance and investment flexibility has cemented their status as a favored option in precious metals markets.
Canadian Gold Maple Leaf
Produced by the Royal Canadian Mint, the Canadian Gold Maple Leaf is globally acclaimed for its .9999 fine gold purity, one of the highest in the market. Launched in 1979, this coin features the sugar maple leaf, a national symbol of Canada, which underscores the country’s appreciation of its natural environment and cultural heritage.
Its cutting-edge security features, like light diffracting patterns of radial lines and micro-engraved laser marks, ensure its authenticity and protect investors. The coin’s combination of high gold content and stunning design makes it not only a secure investment but also a collector’s delight.
South African Krugerrand
The South African Krugerrand is renowned for being the first gold bullion coin available to the general public, introduced in 1967 to help market South African gold. Named after the 19th-century Boer leader and the rand, the national currency, this coin features the image of Paul Kruger on one side and the Springbok gazelle on the other, celebrating South Africa’s rich wildlife and cultural heritage.
Unlike many other gold coins, the Krugerrand is minted from a gold alloy that is 22 karats, or 91.67% gold, with the remainder being copper, giving it a distinctive, more durable rose tint. This combination of affordability, durability, and cultural symbolism makes it a staple in the global gold trade, appealing to both investors and collectors alike.
Factors to Consider When Investing in Gold Coins
Investing in gold coins doesn’t just stop at choosing the right coin. It’s also about understanding the inherent factors that come with it. Let’s explore these key factors: premiums over spot price, liquidity, and storage options.
Premiums and Spot Price
While the spot price of gold is a key factor in determining the price of a gold coin, it’s not the only cost to consider. Premiums over the spot price can significantly impact the overall investment returns. Therefore, it’s essential to understand how premiums work and to be mindful of market trends.
Liquidity and Ease of Sale
One of the key advantages of gold coins is their liquidity. Gold coins are recognized worldwide and can generally be sold in any volume. However, the ease of sale can vary depending on the specific coin and market conditions.
Storage Options
Once you’ve invested in gold coins, you need a safe place to store them. Storage options range from home safes to professional vaulting services. Each comes with its own advantages and costs, and choosing the right one is crucial to the security of your investment.
How to Buy Gold Coins Safely and Securely
Investing in gold coins requires careful planning and vigilance. From choosing a reputable dealer to avoiding counterfeit coins and inspecting your purchase upon delivery, let’s explore how to buy gold coins safely and securely.
Choosing a Reputable Dealer
Purchasing gold coins from a well-established dealer is the first step towards a secure investment. A reputable dealer provides high-quality coins and offers invaluable customer support and guidance.
Avoiding Counterfeit Coins
Counterfeit coins pose a significant risk to investors. It’s crucial to understand how to identify counterfeit coins and ensure the authenticity of your purchase. From requesting documentation to conducting physical tests, vigilance is the key to safeguarding your investment.
Delivery and Inspection
The final step of your gold coin purchase is the delivery and inspection of your coins. Upon delivery, be sure to promptly inspect your gold coins to ensure they meet quality and authenticity standards.
Tax Implications and Legal Considerations
Like all investments, gold coins come with their own set of tax implications and legal considerations. From capital gains tax to reporting requirements, it’s crucial to understand these aspects to avoid legal complications and ensure a smooth investment journey.
Capital Gains Tax
Profits from the sale of gold coins are subject to capital gains tax. The rate of this tax can vary depending on the holding period of the coins and the investor’s income level. It’s essential to understand these rates and plan your investments accordingly.
Reporting Requirements
Certain gold coin transactions may be subject to reporting requirements. Be prepared to declare your holdings when necessary and ensure you comply with all applicable regulations.
Legal Ownership
Maintaining accurate records of transactions and ownership is crucial when investing in gold coins. These records not only help establish legal ownership, but are also essential for proper tax reporting.
Diversifying Your Investment Portfolio with Gold Coins
Bringing gold coins into your investment portfolio can add a unique layer of diversification. They can hedge against inflation, balance risk with other investments, and open up opportunities for both long-term and short-term investment strategies.
Hedging Against Inflation
In times of economic uncertainty, physical gold, particularly gold coins, can serve as a protective hedge against inflation. As the cost of living rises, gold coins can help maintain the value of your investment portfolio, safeguarding your purchasing power.
Balancing Risk with Other Investments
Including gold coins in your investment portfolio can help balance risk. The value of gold coins often moves inversely to other asset classes like stocks and bonds, providing a buffer against market volatility.
Long-Term vs. Short-Term Investment Strategies
Whether you’re looking for a long-term investment to weather market fluctuations or a short-term investment influenced by temporary market trends, gold coins can be a fit for your gold investing strategy, making them a viable option for gold investments.
The choice depends on your financial objectives and risk tolerance.
Bottom Line
Investing in gold coins can be a rewarding journey. From understanding the basics to navigating tax implications and legal considerations, it’s a path filled with learning and potential growth. As you progress, remember the importance of diligence, careful planning, and informed decision-making. With the right approach, you can unlock the golden opportunities that await in gold coin investing.
Frequently Asked Questions
How do I determine the authenticity of gold coins?
The authenticity of gold coins can be verified through several methods, including checking for hallmarks, weight and size measurements, and performing sound and magnetism tests. Purchasing from reputable dealers and considering third-party grading and certification can also ensure authenticity.
Can I purchase gold coins from banks?
Some banks do offer gold coins for sale, but availability can vary widely depending on the bank and the country. It’s often more common to purchase gold coins from specialized bullion dealers, coin shops, or online marketplaces.
How does the price of gold affect gold coin values?
The value of gold bullion coins is closely tied to the current market price of gold, known as the spot price. As the price of gold fluctuates, so does the value of gold coins. Numismatic and semi-numismatic coins may also be affected by gold prices, but their value is more influenced by rarity, condition, and historical significance.
Are gold coins a good option for short-term investments?
Gold coins can be a good option for short-term investments if you are knowledgeable about the gold market and current economic conditions. However, due to the premiums over the spot price and potential market volatility, gold coins are generally considered a more stable long-term investment.
How do I store and insure my gold coin collection?
Gold coins should be stored in a secure location, such as a safe deposit box at a bank or a home safe. For insurance, you can add a rider to your homeowner’s insurance policy or obtain a separate policy specifically for valuable items like gold coins. Ensure that your insurance policy covers the full value of your collection.
What impact do market conditions have on gold coin investing?
Market conditions can significantly impact gold coin investing. Economic uncertainty, inflation, and currency devaluation typically increase demand for gold, potentially raising gold coin prices. Conversely, a strong economy might lead to less demand for gold as an investment.
Is it better to invest in gold coins or gold bars?
The choice between investing in gold coins or gold bars depends on your investment goals. Coins are better for those interested in collectability and legal tender value, while bars typically have lower premiums over spot price and may be preferable for those focusing purely on the gold content and investment.
How do I sell my gold coins when I want to cash out?
To sell your gold coins, you can approach coin dealers, precious metal exchanges, online marketplaces, or auction houses. It’s important to research the current gold price and get multiple quotes to ensure you receive a fair price for your coins.
If you are a serious secondhand home decor lover, and if you live in New York City, then you know that Design on a Dime (DOAD) is one of the most highly anticipated thrifting events of the year. Founded by interior designer James Huniford in 2004, this three-day shopping experience is celebrating its 19th anniversary (they skipped 2020 due to the Covid-19 pandemic) at the Metropolitan Pavilion where 60 designers have created one-of-a-kind, shoppable vignettes using donated decor and furniture items that are being sold at an extreme discount. The pieces sold will directly benefit Housing Works, the New York organization that’s working to end the HIV/AIDS epidemic and provide support and healthcare to the unhoused.
Courtesy of Housing Works
Design firm Redd Kaihoi’s vignette from Design on a Dime 2024.
In the previous years, designophiles—both professional and recreational—have purchased amazing finds marked up to 80 percent off at this secondhand extravaganza, from gorgeous couches and statement light fixtures to breath-catching pottery and cashmere throws. Plus, these vignettes can serve as some great interior inspiration. Directly source tips from interior designers and firms like Keith Carroll, Redd Kaihoi, Shakoor Interiors, and Eclectic Home, all with a great mix of styles represented in each “room.:
wallpaper and pattern on print this year. “Rayman Boozer’s room in particular screamed House Beautiful to me,” Huniford says, explaining that Boozer opted for a range of different, highly patterned wallcoverings for his vignette.
This year, between April 25 and 27, thrifters can expect a record number of donated items to shop from out of the swiftly completed vignettes, Huniford tells House Beautiful, with even more in back stock when the first round gets shopped out. “People have really gone overboard with donations,” he explains, happily. “So in the first go round, if things get sold out, there’s that opportunity to have back stock, which I think is unusual.” Some of the brands featured at DOAD this year include Serena & Lily, ABC Carpet & Home, OKA, and West Elm to name a few, with a price range of items from $50 to $5,000.
Courtesy of Housing Works
Out of the thousands of pieces donated, Huniford gives a little peek at what types of products you can expect to find while there, and what pieces he, along with other interior designers, always love to shop for secondhand. There are exclusive pieces, like a custom desk from Steven Gambrel and a René Prou chair in Cliff Fong’s booth. Other amazing finds include a pair of galvanized metal planters in Mark Cunningham’s booth, a gorgeous coffee table in Michael Mezzano’s booth, and a blue lapis-looking mirror in Redd Kaihoi’s. “That’s just my brain on speed dial,” Huniford adds.
Huniford expects the coffee tables, the lamps, and the accessories—like pottery—to be the first to go. “Those kind of singular things make a room really special and personal and unique,” he says, are what interior designers are always on the hunt for, both at DOAD and the local thrift store.
Courtesy of Housing Works
While the sheer number of pieces donated this year was extraordinary, it’s the fact “that people are still showing up and doing it” that completely fills Huniford up with joy after these almost two decades of DOAD. Tickets are still available for purchase for opening night, which is April 25th, but entry is free for the public sale days on April 26 and 27. Even if you don’t plan on buying anything, we highly recommend stopping by for endless interior inspiration. Click through the gallery below for a peek at some of the stunning vignettes you’ll find this year.