rural

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The controversial Freddie Mac second lien purchase pilot has gained conditional approval by the Federal Housing Finance Agency.

This proposal, which Freddie Mac officials posited as an alternative to cash-out refinancings in a high interest rate environment, generated concern from opponents that it puts the government-sponsored enterprise in an area served by the private market.

During the comment period, which ended on May 22, the FHFA received 150 letters.

“The thoughtful engagement from public stakeholders confirmed the value of a transparent process for evaluating potential new Enterprise products and informed the parameters of the conditional approval,” said Sandra Thompson, the FHFA’s director, in a press release and accompanying statement.

“The limited pilot will allow FHFA to explore whether this closed-end second mortgage product effectively advances Freddie Mac’s statutory purposes and benefits borrowers, particularly in rural and underserved communities.”

Among the limits FHFA established are a $2.5 billion maximum in loan purchases, over an 18-month period. The individual loan limit is $78,277, which FHFA said corresponds to subordinate lien thresholds established in the qualified mortgage definition.

The first mortgage must have 24 months’ seasoning and it has to be for the borrower’s primary residence.

After the 18-month period ends, the FHFA will analyze the data to determine whether the objectives of the pilot were met. Any potential increase to the volume limit or extension of the duration, or conversion to programmatic activity would be treated as a new product that is subject to public notice and comment and FHFA approval.  

The accompanying statement reaffirmed a belief that even many opponents held, that Freddie Mac is able to do this under its charter.

Furthermore, the limits ensure that private capital is not crowded out. It also extends the ability to obtain second mortgages to underserved markets.

The early reaction has been mixed. Christopher Whalen, whose Whalen Global Advisors, submitted a comment letter opposing the program, said most people in the industry expected the Biden Administration to go forward despite the substantial public opposition.

“Like the changes made by the FHFA to the [loan level pricing adjustments] grid, the impact of this change will be modest for the enterprises and negative for consumers,” Whalen said in an emailed comment. “Low-income borrowers are far better served in the FHA/VA/USDA market,” referring to the three government-guaranteed mortgage programs.

The U.S. Mortgage Insurers also opposed approval of the pilot, but took a conciliatory tone in its statement.

“While today’s announcement includes important limitations to the pilot, further clarifications should be provided including on how loan-to-value ratios will be calculated, information about applicable debt-to-income limitations, a specific exclusion for ‘piggyback loans,’ and additional details on capital and pricing treatment,” the statement from Seth Appleton, president, said. “USMI recommended that any future expansion of an approved product be subject to additional public notice and comment, and we are pleased that Director Thompson included this policy as part of FHFA’s conditional approval.”

On the other hand, the Community Home Lenders of America, welcomed the move.

“CHLA thinks this is an important product given that skyrocketing interest rates have made getting a refinance unaffordable,” Scott Olson, its executive director, said in a statement.

The Mortgage Bankers Association, which asked the FHFA to do more analysis before going ahead with the program, said it appreciated the regulator’s detailed responsiveness to its comment letter.

The process “produced a pilot rollout that is limited in size and duration, mitigates the impact on the private-label securitization market for second liens, focuses on borrowers with lower loan balances, and will encourage participation by smaller lenders that do not have easy access to liquidity for closed-end seconds,” MBA President and CEO Bob Broeksmit said in a statement.

“MBA and its members will remain engaged with FHFA and Freddie Mac to monitor the results of the pilot and ensure that it remains available to lenders of all sizes and business models and avoids disrupting the developing private-label securitization market for second liens,” Broeksmit continued.

Source: nationalmortgagenews.com

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Purchasing a home is one thing, but purchasing a luxury home is a project at a different level. And if you’re planning to take out a $700,000 mortgage — one that’s just shy of the 2024 conforming loan limit of $766,550 — you’re going to need some pretty serious income to repay that debt. We’re talking about an annual income of around $180,000 – $200,000.

When it comes to qualifying for a mortgage, it’s more than just income that matters — and there’s no one-size-fits-all answer to the question, “What income do I need for a $700K mortgage?” That said, there are some important rules of thumb around how much of your income should be spent on a mortgage that can help you determine what’s appropriate for your income — and other factors that mortgage lenders look at during the qualification process.

Income Needed for a $700,000 Mortgage

Again, there’s no set income level required for a $700,000 mortgage — but a mortgage that large is likely to have a hefty monthly payment, which means you’ll need some decent cash flow to be able to make it work.

One rule of thumb states that your housing costs should be no more than 30% of your gross monthly income — that is, your income before taxes or any other deductions. We can use this rule to estimate how much income you need to make a $700,000 mortgage payment feasible.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

How Much Do You Need to Make to Get a $700K Mortgage?

Let’s start by using a mortgage calculator to get a rough estimate of how much money per month a $700,000 mortgage will cost.

To create an example, we’ll assume the property value is $750,000, and that you start out with a $50,000 down payment. While your interest rate will vary depending on factors like market conditions and your credit score, we’ll put it at 7.00%, which is fairly typical as of the second quarter of 2024.

Plugging those numbers into the calculator, you’ll see that the estimated monthly payment comes out to about $4,657 per month. To make our 30% rule above even simpler, we can multiply that total by three to get a low-end ballpark income that’s appropriate for a payment that large. That figure comes to around $170,000 per year. Keep in mind, though, that this figure doesn’t include taxes and insurance, which can add an appreciable amount to that monthly bill. And if you’re putting down a smaller down payment, you’ll also have to pay private mortgage insurance (PMI). Add all that to the mix and you’re looking at an annual income requirement that is closer to $180,000 – $200,000.

For many Americans, that income requirement probably sounds pretty hefty: Per the most recent Census data from 2022, the median household income in the United States is $74,580. (Of course, exact income and cost-of-living figures vary by state.) Still, such a large loan may be within reach for some households — though it’s not just income that matters.

Recommended: The Best Affordable Places to Live by State

What Determines How Much House You Can Afford?

Income is obviously an important part of what qualifies you for a mortgage. After all, lenders are interested in your being able to repay the loan over time. However, your ability to earn enough money to support the payment is only one factor that goes into their overall assessment. While each lender has its own specific requirements and criteria, they all look at similar factors.

What Mortgage Lenders Look For

Some of the factors lenders consider when qualifying a borrower for a mortgage include:

•   Income

•   Job stability

•   Credit history and credit score

•   Existing debt

•   Existing assets, such as bank and investment accounts

•   Money available for down payment

To verify all this information, your mortgage loan officer will likely ask for documentation including your tax returns, W-2s, pay stubs, bank statements, and potentially more. Speak with your loan officer directly to learn exactly what you’ll need to submit as part of the mortgage preapproval process.

What Is a Good Debt-to-Income Ratio?

Let’s take a closer look at one very important part of your mortgage application: your debt-to-income (DTI) ratio. This important measurement is expressed as a percentage, and shows lenders how the debt you already carry compares to your available monthly income. It’s calculated by dividing your monthly debts over your gross monthly income.

While, again, specific requirements vary, most lenders require a DTI of 36% or lower, though in some cases borrowers can be qualified with a DTI of up to 50%. Generally speaking, though, the lower your DTI, the better; even if you can qualify with a higher amount of debt, it’ll be more difficult to make your monthly payments.

$700,000 Mortgage Breakdown Examples

As we’ve seen above, in order to qualify for a $700,000 mortgage loan, you’ll likely need a household income of at least about $180,000 per year — although again, whether or not you qualify will depend on many factors aside from your income, like your credit score and existing level of debt.

One way to get a good sense of how much house you can afford at your current income level is to use a home affordability calculator. If you toggle the “advanced” settings, you can also include costs like homeowners insurance and property taxes along with your income and existing debts. The calculator will spit out an estimate of how much house you can afford given all these circumstances — but remember, again, that this is only an estimate and not a guarantee.

Pros and Cons of a $700,000 Mortgage

Like any financial product (and anything in life), a $700,000 mortgage has both drawbacks and benefits to consider. Here are a few to keep in mind.

Pros of a $700,000 Mortgage

•   Home appreciation may pay for the amount you spend in interest and prove a worthwhile investment

•   Home ownership offers stability

•   If you make timely payments, your mortgage could reflect positively on your credit history — and boost your credit score over time

Cons of a $700,000 Mortgage

•   A mortgage is still a form of debt, and you will pay for the loan in the form of interest

•   When you own your home, you’re responsible for any and all maintenance and repairs — which isn’t true for those who rent

•   Depending on your interest rate, you may end up paying far more than the original home price over the loan’s lifetime

How Much Will You Need for a Down Payment?

There’s an old rule of thumb that states you should save up at least 20% of the home’s purchase price for a down payment. On a property listed for more than $700,000, that would come out to at least $140,000 — a pretty sizable chunk of change to save up!

However, these days, even conventional loans allow some first-time borrowers to put down as little as 3.00% on their home purchase — which, in this case, comes out to a far more reasonable $21,000. There is a caveat to be aware of, though: Borrowers who put down less than 20% will likely be required to pay PMI, which can add a few hundred dollars a month to your mortgage payment. Still, for those who have the cash flow to support this additional cost, it can be a worthy trade for earlier access to homeownership.

Can You Buy a $700K Home With No Money Down?

Some mortgage programs do allow borrowers to take out a mortgage with no money down — though you may have to meet certain eligibility requirements to qualify. For example, government-backed loans from the U.S. Veterans Administration (VA) and U.S. Department of Agriculture (USDA) loans don’t have a minimum required down payment, though these are only available to service members, veterans, and their families or to those looking in designated rural areas, respectively.

Is a $700K Mortgage With No Down Payment a Good Idea?

Even if you do qualify for a $700,000 mortgage with no down payment, it may not be the best idea financially speaking. Along with potentially being on the hook for the additional expense of mortgage insurance, you’ll start out with very low equity in your new investment, and your monthly payments may be substantially higher than they would be otherwise.

Can You Buy a $700K Home With a Small Down Payment?

Short answer: Maybe! As we’ve discussed, your ability to qualify for a mortgage is multifactorial, and the size of your down payment is only one of the many pieces mortgage lenders will consider. If the rest of your application is solid, a lender may qualify you for a $700,000 mortgage with a down payment as low as 3.00% ($21,000) if you’re a first-time homebuyer. Again, though, the only way to know for sure is to actually apply.

Can’t Afford a $700K Mortgage With No Down Payment?

If you’re not yet in financial shape to afford a $700,000 mortgage, or the process of saving up a down payment is getting you, well, down, there are steps you can take to get ready to make the purchase.

Pay Off Debt

It may be one of the most common tips to qualify for a mortgage — but it’s for good reason. Having even a small amount of debt can seriously impact your buying power, so paying off what you can and lowering your DTI can go a long way toward making a larger mortgage possible.

Look into First-Time Homebuyer Programs

If you’re a first-time buyer, it’s worth looking into first-time buyer programs that may be able to help you with your down payment or qualify you for a mortgage when you might otherwise not. One of the best-known first-time homebuyer programs is the FHA mortgage, which is backed by the Federal Housing Administration and may help you qualify even with a lower credit score.

Build Up Credit

Along with lowering your overall debt, building up your credit score can also help you qualify for a lower interest rate — which, over the course of a 30-year loan, can translate to big savings. Even a percentage point difference could save you thousands of dollars in the long run, so taking the time to repair or strengthen your credit today may be a well-placed effort.

Start Budgeting

If you don’t yet have a budget, the time before you purchase a home is a great time to start one. After all, homeownership usually comes with its own slate of expenses, from repairs to maintenance items and more, so ensuring you know where your money is going will help you prepare to meet those financial needs. (And, in the meantime, you may find some areas where you can make cuts that will make the upfront expenses, like your down payment, more feasible.)

Recommended: Refinance Your Mortgage and Save

Alternatives to Conventional Mortgage Loans

While conventional mortgages are the most common — and one of the most affordable options for those who qualify — there are different types of mortgage loans to consider. For example, as discussed, if you’re a first-time homebuyer, you may be able to qualify for an FHA loan from the Federal Housing Administration, which helps buyers qualify with lower credit scores than a conventional loan requires.

USDA and VA loans are also viable options for those looking in rural areas or who are (or are married to) service members or veterans.

Mortgage Tips

Need more mortgage help? Visit a home loan help center to study up on everything from amortization to escrow.

The Takeaway

While it takes a higher income to qualify for (and successfully pay off) a $700,000 loan, for many borrowers, it’s within reach — especially once you’ve found the right lender. Getting a mortgage doesn’t only depend on your income. There are multiple factors in play and learning the right mix could land you in a new home.

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.

FAQ

How much income do I need for a $700K mortgage?

While there’s no one set income level that will automatically qualify you for a $700,000 mortgage, using the rule of thumb that your housing payment should be no more than a third of your gross monthly income, you’ll likely need somewhere between $180,000 and $200,000 per year to qualify, depending on other factors like your interest rate.

What is the monthly payment on a $700K mortgage?

Specific payment amounts depend on a wide range of factors including the interest rate you qualify for, the property taxes in your location, and the size of your down payment. In an example where you’re purchasing a $750,000 home with a $50,000 down payment at a 7.00% interest rate, your monthly payment would be close to $4,700 before insurance or taxes.

Can I afford a million-dollar home if I make $100K?

Again, how much money you make is only one factor that qualifies you for a mortgage — no matter its size. That said, because of the size of the monthly payment of a large mortgage, a $100,000 salary likely wouldn’t be enough to get you into a million-dollar home.

Photo credit: iStock/DMP

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

SOHL-Q224-1843070-V1

Source: sofi.com

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Maryland family closes on dream home with a 3.4% mortgage rate — paying $1K a month less than the market rate

With house prices and mortgage rates hovering at painful highs, many Americans have tossed aside their dreams of homeownership — but are they missing a trick?

The Sutton family in Northeast Maryland recently secured their dream home with a mortgage rate of around 3.4% — which was roughly half the average 30-year fixed mortgage rate at the time of purchase.

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How did they beat the home buying odds? They used something called an assumable mortgage — a special type of home loan where the buyer essentially takes over the seller’s mortgage.

The young family shared their story with NBC News. By going down the assumable mortgage route, the Suttons not only managed to avoid the stress and fees associated with qualifying for a conventional mortgage, but they also saved themselves about $1,000 to $1,500 a month by taking on the low interest rate.

Here’s how assumable mortgages work and how to determine if one might be right for you.

What is an assumable mortgage?

An assumable mortgage is a type of home loan where a qualified buyer can take over (or assume) a seller’s mortgage terms, including the existing balance, repayment period and interest rate.

These loans can be appealing for both buyers and sellers, particularly those, like the Suttons, looking to capitalize on lower mortgage rates of the past. But they do also have their limitations and are bound by strict regulations.

Christopher Sutton admitting he’d “never heard of” assumable mortgages before his realtor suggested one is unsurprising.

Assumable mortgages are a relatively niche product today, but they were immensely popular back in the 1980s, when mortgage rates lingered in double-digit territory for years and many lenders (including conventional banks) accepted the practice.

Since then, the majority of lenders have restructured their loan terms (in line with regulatory and market developments) to prohibit the practice. Today, conventional loans are no longer eligible for assumption. They must be paid in full — and a new one issued — whenever a property is sold or transferred to a new owner.

There are three exceptions, where home loans are assumable:

  • FHA loans: These loans are backed by the Federal Housing Administration and are popular with first-time buyers and those with lower incomes who may not qualify for a conventional loan. Like conventional loans, borrowers still have to qualify under all FHA terms, including credit and employment standards.

  • USDA loans: These loans are intended for low-income borrowers in rural areas. They’re backed by the U.S. Department of Agriculture and don’t require any down payment.

  • VA loans: These loans are offered to active or retired members of the U.S. military.

The Suttons assumed an FHA loan in order to secure their dream home in Maryland.

Read more: ‘You didn’t want to risk it’: 80-year-old woman from South Carolina is looking for the safest place for her family’s $250,000 savings. Dave Ramsey responds

Things to be wary of

To successfully assume someone else’s mortgage, you need to cover all of the equity already built up in the house. So, if the seller bought the home for $200,000 and paid off $50,000 in principal, the buyer would have to bring $50,000 to the table (a bit like a down payment) and qualify to assume the remaining mortgage.

This worked out for the Suttons because the previous owner of the house had only made about 18 months of mortgage payments before relocating to Florida for work, meaning they had not built up a ton of equity that the Suttons would have to match.

“It was just one more of those stars that had to align for this to work,” the family’s realtor, John Gatsoulas from REMAX, told NBC News.

It’s also important to consider the property value before assuming a mortgage. If the home has appreciated significantly since the seller first bought it, the original home loan that you assume may not cover your costs.

So, if you assume a mortgage for $350,000, but the house is now worth $500,000, you’ll need to pay the $150,000 difference out of pocket. You may be able to secure financing to cover that cost, but second mortgages are typically expensive, hard to qualify for and not really suitable for families, like the Suttons, seeking assumable mortgages for their affordability.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Source: finance.yahoo.com

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Delaware is a state full of rich history, stunning coastlines, and unique cultural experiences. From the historic streets of New Castle to the serene beaches of Rehoboth, Delaware’s attractions draw visitors year-round. Famous for its lack of sales tax and the storied legacy of the DuPont family, Delaware stands out in many ways. But what else is Delaware known for? Whether you’re looking to buy or rent a home in Dover, move into an apartment in Milford, or you’re just passing through, you’ll quickly discover that this state has much more to offer than meets the eye. In this article, we’ll explore what makes Delaware unique and why so many are proud to call it home.

1. First state

People know Delaware as the “First State” because it ratified the U.S. Constitution first on December 7, 1787. This historic moment is celebrated annually with various events and educational programs. Dover, the state capital, hosts many of these celebrations, attracting history enthusiasts from around the nation.

2. Scrapple

Scrapple is a beloved Delaware dish made from pork scraps and cornmeal, seasoned and fried to perfection. People often enjoy it as a breakfast item, with eggs and toast. The Apple Scrapple Festival in Bridgeville celebrates this unique food with tastings, cooking contests, and exciting activities.

3. DuPont legacy

The DuPont family has played a pivotal role in shaping the Delaware’s economy and culture. Starting with the establishment of gunpowder mills in the early 19th century, the DuPont Company evolved into one of the largest chemical companies in the world. Visitors of Delaware can spend a day exploring the original DuPont Company powder yards and workers’ community. The family’s influence extends beyond industry, with significant contributions to education, healthcare, and the arts in Delaware.

4. Beaches and boardwalks

Delaware’s coastline is famous for its beautiful beaches and bustling boardwalks. Rehoboth Beach, known as the “Nation’s Summer Capital,” attracts visitors with its charming boardwalk and lively atmosphere. Bethany Beach offers a quieter, more relaxed vibe, perfect for a serene getaway. A popular event for locals is the annual Sea Witch Festival in Rehoboth Beach, featuring a parade, costume contests, and fun activities.

Delaware is a haven for shoppers, thanks to its lack of a state sales tax. The Christiana Mall near Newark is a major shopping destination, featuring over 150 stores, including high-end retailers and popular brands. Additionally, outlets in Rehoboth Beach offer great deals on designer goods, drawing bargain hunters year-round. Downtown Wilmington and Dover also provide unique shopping experiences with local boutiques and specialty shops.

Fun facts Delaware is famous for

  • The Delaware Memorial Bridge: This bridge, spanning the Delaware River, is one of the longest twin-span suspension bridges in the world.
  • Historic celebration: The state is home to the longest-running uninterrupted Fourth of July parade in the nation, held annually in the town of Smyrna since 1777.
  • Tax haven: Delaware is known for its business-friendly laws and is home to more than 1 million corporations, including over 60% of the Fortune 500 companies, due to its favorable tax policies and corporate laws.

6. Horseshoe Crabs and Shorebirds

Delaware Bay is known for its unique ecological phenomenon involving horseshoe crabs and migratory shorebirds. Each spring, thousands of horseshoe crabs come ashore to lay their eggs. This event attracts a variety of shorebirds, especially the Red Knot, which feeds on the crab eggs to fuel its long migration. This natural spectacle is crucial for bird conservation and attracts biologists and bird watchers worldwide.

7. Nemours Children’s Health System

Founded by Alfred I. du Pont, Delaware is home to the renowned Nemours Children’s Health System. The Nemours/Alfred I. duPont Hospital for Children in Wilmington is a leading pediatric care facility. It provides specialized medical treatments and comprehensive healthcare services for children. The hospital’s state-of-the-art research programs contribute significantly to pediatric medicine advancements. Families from across the region seek care at this world-class institution.

8. Punkin Chunkin

Punkin Chunkin is a uniquely Delaware event where teams compete to launch pumpkins as far as possible using homemade contraptions. Categories include air cannons, catapults, and trebuchets, showcasing engineering creativity. The competition is held in the rural areas of Sussex County, offering a festive atmosphere with food vendors and live music.

9. Air Mobility Command Museum

The Air Mobility Command Museum at Dover Air Force Base showcases the history of military airlift and refueling aircraft. This museum is a must-visit for aviation enthusiasts and history buffs featuring over 30 aircraft, including the iconic C-5 Galaxy. Interactive exhibits and simulators provide an immersive experience for visitors. Additionally, the museum hosts special events, such as vintage aircraft fly-ins and educational programs for the community.

10. Bombay Hook National Wildlife Refuge

Bombay Hook National Wildlife Refuge is a haven for wildlife and nature lovers. Located along the Delaware Bay, it spans 16,000 acres of tidal salt marsh. The refuge is home to diverse bird species, making it a prime spot for birdwatching. Visitors can enjoy scenic drives, walking trails, and photography opportunities. The refuge plays a vital role in preserving Delaware’s natural habitats.

11. Delaware Art Museum

The Delaware Art Museum in Wilmington is renowned for its collection of American art and illustrations. It features works by Howard Pyle, a native of Wilmington and a prominent illustrator. The museum’s Bancroft Collection includes British Pre-Raphaelite art, offering a unique perspective. Special exhibitions and community programs make the museum a cultural hub in Delaware.

12. Fenwick Island Lighthouse

The Fenwick Island Lighthouse, built in 1858, stands as a historic landmark on the Delaware-Maryland border. This iconic structure served as a critical navigational aid for boats traveling along the Atlantic coast. Over the years, it has attracted numerous visitors offering them a glimpse into the life of 19th-century lighthouse keepers and the evolution of coastal navigation technology. Today, it’s preserved as a cherished landmark, embodying the heart of Delaware’s coastal communities.

Jenna is a Midwest native who enjoys writing about home improvement projects and local insights. When she’s not working, you can find her cooking, crocheting, or backpacking with her fiancé.

Source: rent.com

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Installing residential solar panels in sunny Colorado tends to be less expensive than in other states, due to lower average energy consumption and smaller average solar installations. Eco-friendly policies in this state also make solar a good way to save on electricity bills long-term.

The typical cost for an average-sized solar panel system in Colorado is $28,933 before incentives, and as little as $20,253 after the federal solar tax credit. This total is based on the state’s median dollar-per-watt cost of installing a solar system and average residential system size, which was a low 9.3 kWs in the second half of 2023.

Typical cost of home solar system before federal solar tax credit

Typical cost of home solar system after federal solar tax credit

Median cost per watt

Average system size

Source: EnergySage, a solar and home energy product comparison marketplace founded in 2012. Data is from the second half of 2023.

The median cost per watt of installed capacity, $3.10, is one of the more expensive options in the U.S. But the average system size in Colorado is on the lower end at 9.3 kW. This may be influenced by Colorado net metering rules that specifically allow net metering for systems under 10 kW. Average monthly consumption of electricity is also relatively low in Colorado, with the average household consuming 572 kWh of energy per month, according to EnergySage

.

Interconnection upgrade costs

Some Colorado customers have found that their local power grid won’t support interconnecting solar panels to the utility grid without costly upgrades. For example, Xcel Energy, Colorado’s largest utility company, told a homeowner he’d need to pay $7,000 for a new transformer to get his solar panels connected to the grid because his neighborhood’s system couldn’t support another solar installation, The Colorado Sun reported.

“Interconnection is really important,” says Mac Scott, communications director for Colorado Solar & Storage Association (COSSA). “Homeowners have run into being responsible for upgrades required to make renewable energy possible. Somebody could get to the end of this investment and find out that there is an unexpected cost.”

The good news is that Senate Bill 218

, which was recently signed into law, provides funding to help qualifying large retail utilities — including Xcel Energy — make interconnection upgrades. It also limits customer charges for these upgrades to $300 or less for systems that are 25 kWs or smaller.

Net metering in Colorado

Colorado’s net metering agreement offers one-to-one credit when you sell back solar energy to the grid for residential systems up to 10kWs. Net metering is a billing convention that gives you credit for excess power your system produces during the day, which can be applied to electricity costs during dark or cloudy times of day when your system is using more power than it’s producing. One-to-one net metering means you get 1 kW of credit toward your electric bill for every 1 kW your solar panels generate. This policy, designed to encourage people to go solar, makes it easy for residents with solar to keep electricity bills as low as possible. Not all states offer net metering, much less one-to-one net metering.

In Colorado, if you produce more electricity than you use, you could end up with a negative net usage balance for electricity and credits on your account. These credits roll over indefinitely until you terminate service with your utility, at which point any remaining credits are lost.

As more solar panels are installed in Colorado, net metering agreements may change.

Tax incentives and rebates in Colorado

Colorado Solar For All

A $156 million grant from the Environmental Protection Agency called Colorado Solar For All allows income-qualified candidates to apply for and receive access to solar power. The structure of the plan and application process is still in development at the time of publishing.

Local rebates and incentives

Colorado also has a variety of locally administered rebates and incentives, some of which residents can apply for through Energy Smart Colorado. The available incentives vary based on location. In the Roaring Fork Valley, for instance, residents can get rebates for 25% of a project’s cost, or up to $2,500, for both residential solar panel systems and storage systems.

However, many utilities don’t participate in Energy Smart Colorado. To cover your bases, it’s worth asking your utility provider if it offers incentives or rebates. You can also search the Database of State Incentives for Renewables & Efficiency (DSIRE) , a project maintained by the North Carolina State University, to find out about benefits.

Energy storage in Colorado

Solar batteries, which allow you to store the electricity your home generates, add substantial cost to a solar panel installation. Since Colorado has one-to-one net metering, batteries might not save you much on your electric bill. But they can provide backup power in the event of an outage, which can be especially useful in remote areas with harder-to-access power utility lines.

Colorado’s average installed battery cost ranges from $16,575 to $22,425 before the federal tax credit kicks in, according to 2024 EnergySage data. This can add many years to the payback period for your solar panel system.

The state of Colorado offers a 10% tax credit toward the purchase price of energy storage systems like battery backups. It is applied the point-of-sale, so your battery storage installer will typically apply the discount when you pay.

Frequently asked questions

Source: nerdwallet.com

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LOS, Processing, Non-QM, IT Tools; Private Equity, Manufactured Homes, and Freddie/Fannie

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LOS, Processing, Non-QM, IT Tools; Private Equity, Manufactured Homes, and Freddie/Fannie

By:
Rob Chrisman

Fri, Jun 14 2024, 11:51 AM

“In Florida earlier this week we celebrated with a couple of adult beverages: Metamucil and Ensure.” Every state has its quirks, and every state is made fun of by those in other states. Human nature, right? Here in Chicago, the restaurant scene is on fire, but White Sox fans aren’t happy about the team having the worst record in the majors. While the nation’s fastest-growing cities continue to be in Sun Belt states, new population estimates show that some of the top gainers are now on the outskirts of metropolitan areas or in rural areas. For example, to the west of Chicago, Rockford has become one of the top real estate markets in the nation! And with a hot real estate market usually comes increased lending. What originator can’t learn from hearing another top producer, especially when they love what they do? Today The Mortgage Collaborative’s Rundown (noon PT) will feature Austin Lampson who was just highlighted as one of the top 5 female loan originators in the country in 2023 and have been in the top 1 percent of loan originators since 2014! (Today’s podcast is found here, and this week’s are sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, cybersecurity, technology, and other services to the mortgage industry. Hear an interview with Loan Atlas’ Craig Strent on building your origination business based on non-Realtor referral sources.)

Software, Products, and Services for Lenders and Brokers

Transform your mortgage operations with Dragon9 Partners, a leading IT solutions firm with years of hands-on experience in mortgage origination, sales, and servicing. Whether you are a small, medium, or large Lender/Broker, our expert team understands the intricacies of the mortgage industry and is dedicated to delivering innovative technology solutions tailored to your needs. Whether you are looking to streamline your origination process, boost sales efficiency, or enhance servicing operations, we offer comprehensive IT consulting services to drive your success. Partner with us to leverage cutting-edge technology, improve customer satisfaction, and achieve operational excellence. Let Dragon9 be your trusted technology partner in navigating the complexities of the mortgage landscape. Contact us today to learn how we can help you achieve your goals. The first 3 responses will receive a free cybersecurity readiness assessment.

Does your client’s debt-to-income ratio (DTI) hinder their financing options? Castor Financial’s Non-QM loan programs can help. Castor’s unique blended income approach considers various assets, including retirement funds, stocks, and even checking accounts, as qualifying income streams and can be combined with W2 or Bank Statement income streams. And there’s no minimum asset value required. Self-employed borrowers can leverage both personal and business bank statements. Additionally, non-occupying co-borrowers can be added to strengthen applications. Let Castor Financial empower you to unlock financing opportunities for your clients. Visit us for more information.

Registration for the 2024 Loan Vision Innovation Conference (previously the Loan Vision User Conference) is now open! With a focus on innovation, growth, and doing more with less, our new and improved annual conference is taking place in Chicago, Illinois from Monday, September 23rd – Wednesday, September 25th. This conference will deliver highly recognized names in mortgage banking as our speakers, enhanced social networking events, and a fresh agenda for both executives and users and will be aimed at redefining industry standards and setting a new benchmark for excellence. If you’re interested in sponsoring this event, please contact Haleigh Heilman. To learn more about this conference, register, and book your hotel, please visit here.

“Mortgage Brokers! Looking ahead, we are thrilled to present a myriad of exciting growth opportunities. Kind extends an invitation for you to participate in our monthly broker connect, where you will have the invaluable opportunity to gain insights from esteemed industry experts and leaders. This will encompass a comprehensive discussion of the latest market trends and developments within Kind and the mortgage industry at large. Mark your calendars for Wednesday, June 26th, at noon PST (3 PM EST), during which, you will have the privilege of hearing from our very own Kind Ambassadors, including Glenn Stearns – CEO & Founder of Kind Lending, Delfino Aguilar – Chief Production Officer of TPO, & Krish Dhokia – Chief Marketing Officer. The perspectives and knowledge they bring to the table are bound to be invaluable to you and your business. Take a moment to register here.”

Want to soak up some sun instead of being stuck in the office this summer? Make sure your pipeline keeps churning with wemlo® processing support. Processors at wemlo, who support a variety of loan products and lenders, hustle behind the scenes so your business never skips a beat. Plus, lining up wemlo processing support is a breeze. Simply book a 1:1 call, set up your profile, go over the processing agreement, meet your pod (1 manager and 2 processors), and start submitting loans. Ready to trade office hours for beach hours? Enjoy peace of mind knowing your business is in good hands: book your wemlo demo today!

What’s the real cost of your mortgage LOS? Your institution strives to provide a smooth, intuitive application journey that keeps borrowers engaged from start to finish, lowering abandonment rates and promoting portfolio growth. But behind the scenes, issues such as maintenance burdens, resource-intensive tasks, and escalating operational costs may be hindering your ability to effectively support borrowers. Not to mention legacy technology rife with latency issues and excessive vendor integrations, which cause further friction and stress. A holistic examination of your current system is essential to fully understand your total cost of ownership and increase efficiency, improve the borrower experience, and boost ROI. Take the MeridianLink® Mortgage LOS Impact Assessment to see how your mortgage LOS stacks up.

Private Equity Companies and What They Own

Manufactured housing makes up a noticeable portion of the stock in several states. (Yes, I realize that there are varying degrees of manufactured housing, some being very “high end” and some not.) Like doctor and veterinary practices, private equity funds are buying up communities. The Private Equity Stakeholder Project (PESP) and Manufactured Housing Action (MHAction) released the Private Equity Manufactured Housing Tracker, a first-of-its-kind tool monitoring private equity and hedge fund ownership of manufactured housing communities in the U.S.

“Manufactured housing is a vital source of affordable housing for the over 21 million Americans who live in them, many of whom are on fixed incomes. Since the early 2000s, institutional investors such as private equity firms have increased their presence in the manufactured housing market. In 2020 and 2021, they accounted for 23 percent of all manufactured home purchases, up from 13 percent between 2017 and 2019… Residents at corporate-owned communities have reported rent increases of as much as 60 percent after private equity-owned landlords took over their parks. Michigan has the second highest number of private equity-owned manufactured housing parks in the U.S., with 109 parks (33,115 lots). Other states in the top three are Florida and Texas.

Three of the four largest private equity firms in the U.S. own manufactured housing portfolios: Apollo Global Management (Inspire Communities), Blackstone (Treehouse Communities), and The Carlyle Group… Almost half (49 percent) of the private equity-owned parks identified for this tracker were financed by Fannie Mae or Freddie Mac. In contrast, Fannie Mae or Freddie Mac financed just 9 percent of all the manufactured home parks in the U.S.

The Private Equity Stakeholder Project (PESP) is a nonprofit organization with a vision to bring transparency and accountability to the private equity industry and empower impacted communities. Follow PESP at pestakeholder.org and on X/Twitter @PEstakeholder.

Freddie Mac’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2024-7 announces updates pertaining to: Builder forward commitments, Warranty of completion alternatives, First-generation homebuyer mortgages, Flood insurance premium used when calculating the housing expense-to-income and debt payment-to-income ratios. Custom and lender-paid mortgage insurance, and Community land trust mortgages.

As a follow up to Freddie Mac’s April 15 Industry Letter about the treatment of buyer agents’ commissions paid by property sellers or their agents, please read this FAQ .

To stay competitive in the current housing market, it’s vital for lenders to be open to new property types and the new borrowers they may attract. One market with high potential, especially in affordable areas, is properties with accessory dwelling units (ADUs). Freddie Mac allows borrowers to include rental income from an ADU in an amount up to 30 percent of the total stable monthly income used to qualify their mortgage application when the income is generated from a subject 1-unit primary residence. Learn more, view ADU Benefits.

In June, Fannie Mae’s Selling Guide has been updated to add Special Feature Code 887 for loans delivered using a standby commitment, updates the glossary definition of closing costs, expands timeframes for completion of counseling and eliminating Form 1017, retires the requirement for a completed Form 2200 at loan delivery, and other miscellaneous updates. View Fannie Mae Announcement SEL-2024-04 for more information.

Fannie Mae expanded the time allowed to complete housing counseling to qualify for the $500 LLPA credit for HomeReady® and HFA Preferred™ purchase loans. Starting June 5, borrowers can now complete housing counseling from a HUD-approved agency within 12 months prior to loan closing. Visit Fannie Mae’s housing counseling webpage to learn more.

Effective with applications on or after June 7, Pennymac aligned with Freddie Mac Bulletin 2024-6 regarding expanding eligibility for attorney opinion of title letters: Penny Mac Announcement 24-54.

Halcyon officially announced it is integrating with Fannie Mae’s Desktop Underwriter® (DU®) validation service. Learn more about how Halcyon is solving one of the biggest pain points in origination and post-closing. It’s time to switch from the 4506 to Halcyon’s Tax Transcript solution.

Capital Markets

The Fed doesn’t love you. Or maybe I should say that the Fed is “bond-supportive,” as bad news for the economy has become good news for the central bank. A day after Federal Open Market Committee officials voted unanimously to keep the benchmark federal funds rate range at a two-decade high range of 5.25 percent to 5.5 percent, first reached last July, those same officials were indubitably happy yesterday to see initial applications for U.S. unemployment benefits jump (+13k) to the highest level (242k) in nine months. A tight job market, highlighted again in May’s employment data, has been the main driver of caution amongst Fed members about cutting rates before inflation is consistently lower.

Policymakers signaled on Wednesday that they expect to cut rates only once this year, compared to the three reductions that were forecast in March. There is some chatter that price increases slowing in May are a sign that stubborn inflation numbers in the U.S. earlier this year may have been a blip rather than a trend.

Fortunately, for those who dislike volatility, the market is on board with the idea that the Fed will maintain interest rates at current levels. That is a departure from the recent hope-springs-eternal mindset investors had that the Fed would act in a more dovish fashion to tame inflation over the course of this tightening cycle. After we learned Wednesday that a key measure of consumer prices cooled in May to the slowest pace in more than three years (core CPI also slowed more than expected to 3.4 percent year-over-year), data released yesterday showed producer prices unexpectedly dropped in May (0.2 percent) by the most in seven months, a reading that should boost the Federal Reserve’s confidence that inflation continues to moderate. The report will factor favorably in the PCE Price Index, which is the Fed’s preferred inflation gauge.

In addition to the PPI news, a solid 30-year bond yield helped Treasury prices climb yesterday. We know that when prices rise, rates fall, and mortgage rates in the U.S. fell for a second straight week. The average for a 30-year fixed rate was 6.95 percent, down from 6.99 percent last week, Freddie Mac reported yesterday. For context, average 30-year conforming interest rates have only exceeded 7.02 percent on 120 market days in the past 20 years, per Optimal Blue.

May import and export prices led off today’s calendar. (Forecasts were for respective declines of 0.3 percent and 0.2 percent after increases of 0.9 percent and 0.5 percent in April.) Later today brings the first look at June Michigan sentiment (expected to increase), and two Fed speakers are currently scheduled: Chicago President Goolsbee and Governor Cook. We begin Friday with Agency MBS prices better by .125-.250 from Thursday’s close, the 10-year yielding 4.19 after closing yesterday at 4.24 percent on the pleasing news that lower inflation could provide a steppingstone for the Fed to lower rates, and the 2-year at 4.67.

Employment

“Evergreen Home Loans is proud to announce our recognition by Experience.com as a Top 10 Mortgage Company in the Medium Division category for the 2023 Top Performers in Customer Satisfaction! This prestigious honor underscores our commitment to delivering exceptional home loan experiences. Additionally, several of our outstanding loan officers have made the Top 1 percent list for Customer Satisfaction: Cathy Pizzini, Dylan Langei, Kendra Graybeal, Melissa Foster, Nicole Walker, and Siara Jay. These achievements highlight the dedication and excellence of our team. If you’re passionate about providing top-notch customer service and want to join a supportive, dynamic work environment, Evergreen Home Loans is the place for you. Explore current opportunities here. Join us and make a difference every day!”

Home lending leader Mark Allen has joined the eastern United States team of employee-owned USA Mortgage. Allen was recruited to USA by Jim Bromwell, who recently came on board as regional manager. Allen, active in the industry since 2000, will focus on growing the lender’s market share throughout the New England states. “As a 100 percent employee-owned company, USA Mortgage creates a true alignment internally where everyone is invested in its success. Joining Jim’s team also allows me to be part of a group that aligns with my values and reflects a shared passion for the industry,” commented Allen. “Additionally, USA leadership is committed to investing in future growth, specifically New England.” Founded in St. Louis in 2001, USA has offices in 34 states and is licensed in 49 states plus the District of Columbia. To initiate a confidential conversation about joining USA, contact us here.

On the heels of the MBA Secondary in NY and almost 100 client meetings, the AmeriHome team wants you to know that they are listening. Based on client feedback, AmeriHome will focus on developing the products and services that its clients need. To enable that, AmeriHome is hiring in several key areas, including underwriters and a Salesforce Admin! Check out the Careers page for details on all open jobs.

Are you a Retail production team or company looking to be acquired or interested in a “capital partnership” to help drive your organization’s scale across 50 states? A 49-state licensed mortgage lender with a large servicing and strong capital base, seeking to expand retail footprint by partnering with large production teams or regional mortgage banks interested in a capital partnership. The goal of the relationship is to leverage back-office mortgage functions (e.g., secondary, technology, compliance, operations, and licensing) to provide you with long-term production growth opportunities. If you are a strong retail loan origination team feeling limited by management, or an independent mortgage lender looking for new options for your team, we offer a compelling alternative to standard “branch” offerings. Confidential and serious, email Chrisman LLC’s Anjelica Nixt.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Even in a hot real estate market, it’s possible to learn how to buy a house with no money down. The trick is, you need to know where to look.

Zero down home loans aren’t available everywhere and to every borrower, but if you do qualify and can find an area with a zero down mortgage, homeownership could be much more attainable.

Here’s exactly what you need to know about how to buy a house with no money down.

Can You Buy a House With No Money Down?

You can buy a house with no money down with certain loan programs in certain areas. There are more homeowner resources to help you buy a home than you may realize.

And first-time homebuyer qualifications can be more flexible than you know. Here’s where to look for and what to expect on a zero down mortgage.

💡 Recommended: Learn more about first-time home buyer programs.

How to Buy a House With No Money

Of all the things you need to buy a house, a down payment holds many buyers back.

But there are a few avenues you can take to buy a home with no money down.

•   Buy a home with a VA or USDA loan, which are no down payment mortgages

•   Receive assistance for your down payment or closing costs from a state or local program or a family member

•   Receive a lender credit

•   Ask for a seller concession

USDA Loan

A USDA loan requires no money down and is intended for buyers in rural areas. There are two ways the U.S. Department of Agriculture loans money:

•   single-family housing direct loans

•   single-family housing guaranteed program

The direct loans are issued by the USDA and come with a 33-year term for low- and very low-income households. (Very low-income applicants may stretch the repayment term to 38 years.)

The guaranteed program is run through approved lenders with a 30-year fixed rate for low- to moderate-income households.

The USDA eligibility site shows eligible areas and income limits.

VA Loan

A loan guaranteed by the U.S. Department of Veterans Affairs is a zero down payment mortgage with low interest rates for qualified veterans, active-duty service members, certain reservists and National Guard members, and surviving spouses of those who died in the line of duty or as a result of a service-related injury. Most borrowers pay a one-time funding fee, which can be rolled into the loan.

Lenders can be more flexible with credit scores, mortgage amounts, and debt-to-income ratios.

💡 What credit score do you need for a VA loan?

Down Payment and Closing Cost Assistance Programs

Many city and state agencies offer different mortgage types and down payment assistance to buyers, especially low- to moderate-income homebuyers, first-time homebuyers, veterans, and people buying in federally targeted areas.

The terms vary. Sometimes the assistance for a down payment is in the form of a second mortgage that is repaid over time. Other terms include deferred payments that are only due if the property is sold, loans that are forgivable if the property is occupied by an owner for a specified amount of time, and even grants.

HUD, the U.S. Department of Housing and Urban Development, steers homebuyers to city, state, and nonprofit programs that offer down payment assistance.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Down Payment Gift From a Family Member

A down payment gift from a family member can also help you buy a house with no money down. The main thing to remember about a down payment gift from a family member is that the money must be properly documented with a gift letter. Your lender will likely provide a template to make sure you have all the crucial elements included.

Lender Credits

Lender credits are what you get when you agree to pay a higher interest rate in return for some money that the lender contributes toward your closing costs. The more lender credits you receive, the higher your rate will be. With some lenders, you can cover your closing costs entirely with lender credits. This is a common practice when refinancing a loan.

Seller Concessions

One strategy real estate agents have used is to ask for a credit from the seller, to be contributed toward the buyer’s closing costs. Making an offer above asking price in tandem with the seller concessions makes this option more palatable for sellers in a competitive housing market.

💡 Need more help? Head to the Home Loan Help Center

The Takeaway

Learning how to buy houses with no money takes some research, but could be well worth your time. With a VA or USDA loan, down payment assistance, gift money, or lender credits, it is possible to obtain a no money down mortgage.

Qualifying first-time buyers can still catch a break with a conventional mortgage loan from SoFi by putting just 3% down.

SoFi offers fixed-rate loans and a team of mortgage loan officers to answer all your mortgage questions.

Get pre-qualified for a home loan in minutes.

FAQ

Can cash gifts be used as a down payment?

Yes, but certain rules must be followed for the gift to be documented by the lender, usually in the form of a gift letter.

Are there any homebuyer grants?

Sometimes. They’re usually reserved for first-time buyers, veterans, or people buying homes in federally targeted areas. You might start a search for assistance with your state housing finance agency or HUD and then look for city and county programs.

What are down payment assistance programs?

Down payment assistance programs help homebuyers afford down payments and sometimes closing costs as well. This is done in the form of grants and loans and can vary by location.

What credit score do I need to buy a house with no money down?

For a zero down mortgage backed by the USDA or VA, lenders are advised to look at a borrower’s situation case by case. Approved USDA loan lenders usually require a minimum credit score of 640, though the department itself doesn’t have a credit score requirement.

Most VA loan lenders will want to see a credit score above 620, but again, the VA does not have a minimum credit score. Applicants may qualify with a score below 620 when debt, income, and the ability to shoulder future mortgage payments are given a close look.

Down payment assistance programs often require a minimum credit score of 620.

Photo credit: iStock/Paperkites

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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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Source: sofi.com