Increase Affordability and Make More Money

Yesterday was HUGE! I wanted to find a mountain top to scream it from but there are no mountains in Boston 😉 So what happened? Jobs are plentiful, rates went up, you only need 5% down now on a multi-unit, and conventional loan limits increased. All in ONE DAY… yea, and on a Friday. Let’s break down each in a brief “why it matters”.

95% LTV on 2-4 Units

Let’s start with the best news first! Fannie Mae will be rolling out a new update on November 18th, increasing the allowable Loan-to-Value to 95% for primary purchases and rate and term refinances on 2-4 unit properties. Today you have to put 15% down on a duplex and 20-25% down on a 3-4 unit.

Now, I’m a big believer in building wealth through real estate and this is the ultimate wealth building hack! Buying a primary tri-plex as an example, live in one unit and rent out the other two to cover the mortgage. You’ve been able to do this via 3.5% down FHA, but the bulky lifetime mortgage insurance and the impossible to pass self-sufficiency test didn’t make that option too appealing. Next month, you can buy that tri-plex using a conventional loan, put 5% down and drop the mortgage insurance once you’ve built up the equity. PLUS, you can be a first time home buyer and get lower interest and mortgage insurance rates with the HomeReady program; or roll the renovation costs into the loan with the HomeStyle Renovation program. GAME CHANGING!

New 2024 Max Loan Limit (Conventional Only) Announced

This is a smaller jump from last year given the lower appreciation this year; but every little bit helps! One-unit limits in 2023 are 726,200. The new national conforming loan limit has been increased to 750,000, putting higher purchase prices in reach without Jumbo restrictions or higher rate High Balance Conventional.

Units Continental US 2024 Loan Limit

1 – 750,000

2 – 960,300

3 – 1,160,750

4 – 1,442,600

* Note: Thru the end of 2023; some restrictions will apply to the early release of the 2024 loan limits.

Stronger Jobs Means Higher Rates for Longer

A new reality hit the market on Friday as Jobs came out double expectations. Analysts predicted a 170,000 job increase. Instead what we got was 336,000 new jobs created last month, a sign that the U.S. economy is hanging tough despite higher interest rates, labor strife and dysfunction in Washington. Add that to the 9.6 million job openings and this “appears” to be a strong job market! If there was a silver lining it was that wage increases were softer than expected, with average hourly earnings up 0.2% for the month and 4.2% from a year ago, compared to respective estimates for 0.3% and 4.3%.

As rates pushed towards 8% on Friday; the market now believes the Fed is not done. Probability for a Nov 1 rate hike and/or a delayed start point for rate cuts to later in 2024 just got a little stronger.

So unless you plan on avoiding real estate all together… the 4th quarter 2023, might just give buyers incredible negotiating power and a comparatively lower rate. If the payment works, the time to buy is now in order to build wealth tomorrow!