Monday, May 9, 2022

The Fed Takes Action

This past week, the Federal Reserve hiked the Fed Fund Rate by .50%, the largest rate increase in 22 years. Let’s discuss what other action the Fed took, how the market reacted and what to look for in the week ahead. “I would like to first speak to the American people. Inflation is much too high, and the Fed understands the hardship and is moving expeditiously to bring down inflation.” Fed Chair Jerome Powell – May 4, 2022. How does the Fed move to bring down inflation? Raise rates and tighten monetary conditions. And this started last Wednesday when the Fed raised the Fed Funds rate by .50%. In a separate measure, the Fed will also begin shrinking its enormous $9T balance sheet of Treasuries and mortgage-backed securities (MBS). It is important to remember that this hike in Fed Funds Rate has no direct effect on home loan rates. Oddly enough, the measures the Fed is taking to lower inflation help preserve the value of long-term bonds like MBS. If the Fed is successful in bringing down inflation, it will help long-term bond prices improve and long-term rates remain relatively stable. The lift to the Fed Funds Rate will immediately impact all short-term loans, like auto loans, credit card debt, and home equity lines of credit. Increasing these rates is expected to slow consumer demand, which in effect will slow price increases. Powell gave the market comfort when he said there was “a good chance to have a soft landing”. Meaning the Fed can continue to raise rates more and slow demand without pushing the economy into a recession. How much more will the Fed hike rates? The Fed Chair signaled they are likely to raise rates by another .50% in both June and July. Of course, making these moves will depend on the incoming data. This means we should continue to expect high-interest rate volatility around key economic reports like inflation, GDP, and the labor market. “Beginning on June 1, principal payments from securities held in the System Open Market Account will be reinvested to the extent that they exceed monthly caps.” FOMC announcement on balance sheet reduction. The balance sheet reduction announcement means the Fed will be buying fewer bonds going forward. This is the opposite of what the Fed did through Quantitative Easing where they purchased $120B worth of Treasuries and MBS every month. It is not yet truly clear what will happen to home loan rates once the process in June commences as the Federal Reserve has only once shrunk the balance sheet for a limited amount of time back in 2018. “It’s a strong economy and nothing about it suggests it’s close to or vulnerable to a recession. We have a good chance to restore price stability (lower inflation) without a recession”. Jerome Powell. These words initially provided some comfort to both stocks and rates, but come Thursday, after sleeping on it, interest rates crept higher with MBS prices hitting 11-year lows and the 10-yr Note yield touching 3.09%. Despite the Fed Chair saying the Fed is not considering a .75% rate hike, the markets finished the week assigning a very high probability the Fed will hike by .75% in June. Bottom line: Home loan rates are at an important juncture. While MBS attempt to stabilize, there is a real threat they can go another leg higher and fast. If you are considering a purchase transaction, now is the time to lock. Source:

Thursday, September 30, 2021

Landscaping for Curb Appeal


 First impressions go a long way. This is applicable to not only when you meet someone new, but also when somebody sees your house for the first time. Regardless of whether it’s a friend or colleague coming over to visit or a prospective buyer looking at a property you’re trying to sell, the importance of curb appeal shouldn’t be underestimated.

You might think that it takes a lot of work and money to update the curb appeal of your home, but that doesn’t have to be the case. It’s possible to significantly increase the curb appeal of your home and your property just by changing your landscaping. Here are a few ways that your landscaping can change up the look of your property and give your overall curb appeal a significant boost.


Adjusting Existing Landscaping

It doesn’t take a lot to turn around your existing landscaping and dramatically increase your curb appeal. Depending on the state that your trees, shrubs, and other plants are in, it may just be a matter of trimming everything back and taking the time to shape some of the more unruly growth you’ve got going on. Trim down bushes and create a more uniform texture, cut back overgrown limbs, get vining plants under control, and otherwise reign in your existing growth so that it looks much more manicured.

Once you’ve got your current growth under control, consider adding some accents to your landscaping. This can come in the form of colored mulch or gravel beds to add more definition to some of your flowers or plants, fountains or other features to provide a bit of contrast, and possibly even removing a few plants or moving potted plants to a new area to ease up on crowding and create a bit more symmetry in your yard. Even if you don’t make major changes, these little accents and changes can still make a big difference.


New Landscaping Additions

If you want to make bigger changes, consider adding more plants to your yard that will accentuate what you’ve already got there. Put in additional bushes or shrubs of similar types to what you’ve already got on your property to help fill out areas that seem a bit thin in coverage. Add sod to create more uniform ground coverage so that the various clovers, creepers, and other plants don’t distract from the look of your home. Put in some flowering annuals if most of your landscaping contains plants that don’t really flower to add splashes of color to break up all the green. Just look at what you’ve already got and think about how you might improve it.

Of course, it’s important to remember that sometimes a bit of contrast can really help your landscaping as well. Don’t be afraid to add flowers or other plants that don’t seem to go with everything else if you find something that you really want to stand out. If you take the time to come up with a landscaping plan that will be visually striking, it will really get people’s attention the first time they see your home.


Give Your Landscaping a Boost

Depending on what you have in mind, there are a number of ways that you can change up your landscaping through DIY projects. In some cases, though, you may need to bring in a landscaping pro to make more significant changes to your home’s landscaping. Not only will a professional be able to tackle larger projects more quickly, but they may also be able to offer suggestions on the specific shrubs, plants, and other landscaping choices that you add to your property.


Beatrice Rauch

Loan Officer - NMLS#390883


Florida State Mortgage Group, Inc.

1512 E Broward Blvd, #204A | Fort Lauderdale, FL 33301

Office: 954-359-3000 - Cell/SMS: 954-410-1960 

Florida Licensed Mortgage Lender - NMLS#393326 | BETTY@FSMG.MORTGAGE


Wednesday, July 28, 2021

Why Morgan Stanley is convinced the housing market isn’t in a bubble


Written by: Ethan Wolff-Mann   Yahoo Finance- Senior Writer

Why Morgan Stanley is convinced the housing market isn’t in a bubble

High demand for housing combined with low inventory has heated up the market – boosting property values and leading some to wonder if we’re in bubble territory.

But Morgan Stanley analysts say no.

“We have strong conviction that we are not experiencing a bubble in US housing,” Morgan Stanley strategist Vishwanath Tirupattur wrote in a note to clients this week.

Tirupattur and the Morgan Stanley team admit that the “US housing is on a hot streak,” pointing out that prices have increased 12.2% over the past year based on the S&P Case-Shiller index.

"That amounts to an increase of $35,000 in the median selling price for homes from just a year ago and marks the fastest pace of increase since 2006," Tirupattur wrote.

The hot real estate market and hot stock market may be evoking memories of bubbles for some. Even Treasury Secretary Janet Yellen said this week that interest rates might have to rise from the current near zero level to prevent overheating. And even uttering “2006,” Tirapattur writes, carries a lot of baggage when it comes to housing, as that was the trigger that imploded the economy 15 years ago.

But Tirapattur says it’s not a bubble and not really like 2006 at all, and there’s a good reason to think so based on the data. This time is different, the bank says.

Today’s  hot market s based off of one key thing after all – big demand and little supply – which puts the sector on “a sustainably sturdy foundation,” in Morgan Stanley’s view. “We are not at all suggesting that home price appreciation will maintain its current torrid pace. Home prices will continue to rise, but more gradually.”

Two different types of risk

According to Tirapattur, there's a misunderstanding about the cause of the financial crisis, and that it wasn't just about lending to people with low credit scores. "We think it was more about the type of credit they had access to,” he wrote.

There are two types of risk, borrower risk and product risk; borrower risk is based on a consumer’s creditworthiness – using metrics like credit score and debt to income ratio. Product risk, on the other hand, is more about providing mortgages with higher risks of default, "even controlling for those borrower characteristics."

Some of the mortgages that have product risk are ones structured in ways that can make payments vary significantly, like mortgages with introductory periods, teaser rates, and balloon payments – which have a higher risk of default. “Product risk increased significantly more than borrower risk during the pre-GFC housing boom,” the analysts write.

“The affordability products were inherently risky because they effectively required home prices to keep rising and lending standards to remain accommodative so that homeowners could refinance before their monthly payment became unaffordable,” Tirapattur explains. “When home prices stopped climbing, these mortgages reset to payments that borrowers could not make, leading to delinquency and foreclosure. As foreclosures and the subsequent distressed sales piled up, home prices fell further, creating a vicious cycle.”

Back in the lead-up to the Global Financial Crisis, product risk was rising far more than borrower risk, Morgan Stanley analysts say, with affordability products comprising around 40% of the mortgage market between 2004 and 2006. "Today their share is down to 2%,” Tirapattur notes.

On top of that, other metrics like credit requirements and leverage are improved. Before the crisis, the US housing market value was around $26 trillion in 2006 with mortgages equalling around $11 trillion. Today, the mortgage debt is only $1 trillion more and the value of the market has jumped to $33 trillion. For Morgan Stanley, "these changes give us confidence that the current system of housing finance is healthy and on a sustainable footing."


Posted by:

Betty Rauch – Loan Originator –  NMLS #390883

Florida State Mortgage Group, Inc. – NMLS #393326   954.410.1960


Thursday, July 15, 2021

Smart Kitchens, Smart Faucets

So-called “smart” devices are increasingly popular, adding new features and functionality to just about every room in your home. One room that you might not consider for a smart upgrade is the kitchen, but you should. There are a number of sensors and connected devices that can transform your kitchen into something special. One great option that’s often overlooked is the addition of a smart faucet to your sink. 

While smart faucets aren’t as well known (yet) as other smart home add-ons such as smart lighting and smart thermostats, they can have a significant impact on how you use your kitchen. Not only can you turn the faucets on and off in different ways, but you can also have your smart faucets automatically save you money on your water bill. If you’re wondering whether a smart faucet might be a good addition to your home, read on for more info on just how these faucets can help you. 

Smart Faucet Controls 
One big advantage to smart faucets is that there are multiple ways to control the flow of water. In addition to standard handles or levers, many smart faucets contain features such as touch panels and motion sensors that allow you to turn the water on and off with little to no contact with the faucet itself. This adds convenience to using the sink in general, and can help keep your kitchen area clean if your hands are dirty or covered with batter or other substances that you wouldn’t want to clean off of everything later. 

Depending on the model, some smart faucets can also be controlled remotely using apps or voice controls. In most cases, you can even pair the apps on your smartphone with digital assistants such as Alexa and the Google Assistant. This lets you control the faucet using Amazon Echo and Google Home devices, turning the water on and off as needed while doing prep work or otherwise getting things ready for the water.

Smart Water Usage
Another big benefit of smart faucets is the way that they help to control your water usage. The water-saving features of smart faucets help prevent wasted water by cutting off the flow when you aren’t actually using the sink. This keeps you from accidentally leaving the water running when you’re doing something that takes too long and can also help prevent drips and other problems that might occur when you don’t close a valve all the way.

Some smart faucets also let you track your water usage over time via their connected apps. This can make you more aware of how much water you’re using in the kitchen and may help you to ratchet back on your usage over time. Eliminating unnecessary water use will save you money and help the environment as well, and the awareness of how much water you’re using is a big part of cutting back on that unnecessary use. 

Installing Your Smart Faucet 
For the most part, installing a smart faucet is a lot like installing any other faucet. Depending on the faucet model, its smart features will be powered either by batteries or a nearby outlet; if the faucet is outlet powered, you’ll need to make sure that there’s a source of power close enough to hook the faucet up for it to work properly. Once installed, some smart features may require additional setup, especially if you plan to use the faucet with external devices such as an Echo or Google Home. 


Thursday, June 17, 2021

Do you want to jump into the U.S. housing market?

Blog posted by: Betty Rauch - Loan Originator - Florida State Mortgage Group, Inc. “Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence…Those who remember the housing bubble of 2006-2007 may be nervous watching U.S. housing prices soar now. But the previous bubble was fueled by speculative buying, which we do not think is the case today.” J.P. Morgan -Insights Report Article Written by :Joe Seydl -Senior Markets Economist Apr 13, 2021 Conditions are favorable for investing in the sector and, still, for buying a home. Dan Alter, Executive Director, Mortgage Solutions, J.P. Morgan Private Bank Over the last year, we’ve seen the real estate market evolve from largely dormant to red hot in a number of areas—and several important factors point to a continued increase in home prices. Mortgage rates have risen, but are still historically low. Home construction still falls short of meeting demand. Remote work is likely to keep suburbs attractive. And very importantly, Millennials—the largest generation in U.S. history—are expected to keep buying homes. Whether you are a homebuyer, an investor, or both, now may be a good time to consider buying U.S. real estate—for personal use or strategically—within your portfolio. Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be be better than 12 months hence, especially if you are looking in the suburbs or the U.S. South. Investors—consider making an allocation to the U.S. housing sector. Since 2008, the shortage in construction of new homes has been so extreme that there is now a lack of homes available for sale. It will take time to reverse this supply shortage. We expect the current construction cycle, already heating up, to continue for years. The homebuilding sector currently seems reasonably priced: It’s trading at a 2x discount relative to its 10-year average P/B ratio versus the S&P.1 But note that publicly traded homebuilders are not the only companies likely to benefit. We suggest you also look into companies tied to home improvement and other aspects of robust construction activity.
What will fuel the U.S. housing market? Four forces that recently helped revive U.S. housing are likely to help keep it humming: government support, suburban bliss, a flight to the South and all those Millennials ready for the family stage of life. 1. Government support The Federal Reserve and the Biden administration both support the U.S. housing market. The U.S. housing revival might have started sooner, except that the Federal Reserve hiked interest rates aggressively in 2017-18, raising the cost of borrowing and depressing demand. Now, the Fed is on the side of housing strength: Mortgage rates are still low, though rising, and it is widely expected that the Fed will be very slow to raise interest rates. Indeed, we think the Fed’s next rate-hiking cycle won’t begin until sometime in late 2023. We acknowledge that since the start of the year, the 30-year mortgage rate has risen from an all-time low of 2.65% to 3.25%, according to Freddie Mac as of March 24, 2021. But we’re not concerned that rates are likely to stifle the housing recovery anytime soon.2 Although mortgage interest rates are rising, they are still below the effective rate at which buyers were financing home purchases and fueling the housing market at the end of last year. Homebuilders say that mortgage rates would need to rise to around 3.8% (with a low of 3.5% and a high of 4.25%) before they would start to choke off housing sales, according to a survey done by ISI recently.3 Rates are not there yet! As long as inflation is well behaved, we think the move higher in long-term rates will be at a slower pace from here. To further understand our view on interest rates, take a look at our latest thought leadership, Worried about inflation? We’re not.
Why we think the increase in long-term rates will remain slow Comparing the 30-year yield with the Federal Funds rate, treasury bond yields appear to have already priced in inflation expectations Source: Federal Reserve Board. As of March 31, 2021. Meanwhile, the Biden administration has an accommodative policy toward housing. In its infrastructure and tax bill, which may pass sometime later this year, the administration is aiming to set aside several hundred billion dollars for affordable housing construction over the next five to 10 years. 2. Suburban bliss People are moving out of cities into surrounding suburbs. Movement began during the pandemic lockdowns, as people, fearing COVID-19, wanted to flee city congestion and small apartments. Remote work during the pandemic made it more possible to live farther away from urban centers. Now, almost half of office workers and employers appear to agree: Two to three days of working from home may be ideal. This new norm may keep the demand for suburban housing to remain strong.4 Long-term housing in cities such as New York offer good value. However, we do not expect a rapid bounceback after the COVID-19--inspired lockdowns and remote work adjustments. If you are not in it for the long haul, you may want to temper your expectations regarding near-term appreciation. 3. Flight to the South Already underway before the pandemic hit, the “flight to the South” greatly accelerated during the COVID-19 crisis. We believe it is likely to continue. The issue: Big cities in the Northeast and the West Coast are expensive, and their state and local taxes, already high pre-pandemic, are likely to get more onerous in the virus’s wake. Business is booming in the U.S. South Business is booming in the US. This chart tracks the year over year change in number of new business applications by region comparing the distinct spike in the South from 2015-2019 and 2020. Source: Census Bureau. As of December 2020.
4. Millennials Who will keep buying homes? Millennials! They not only form the largest generation in U.S. history, but also have plenty of scope to become homeowners. Indeed, their move into homeownership has only just begun. Millennials have driven the household formation rate (the rate at which they establish homes of their own) from a low of 600,000 in 2010 to 1.5 million today. This generation is expected to maintain a “household formation” pace of 1.5 million to 1.75 million annually after the COVID-19 crisis has passed.5 This is not a housing bubble Those who remember the housing bubble of 2006-2007 may be nervous watching U.S. housing prices soar now. But the previous bubble was fueled by speculative buying, which we do not think is the case today. Indeed, today: Leverage ratios remain low6 Home buying has been rational (thus far), as most mortgage lending is to those with high FICO scores, and credit quality has remained strong relative to 2006-077 Construction activity should power on, as high home prices make new construction attractive, especially when there is a shortage of inventory8 We can help Bottom line: We expect U.S. housing to remain an important source of strength for investors over the next several years. Of course, there are potential risks: Interest rates and price inflation could go higher than expected. However, we think these risks will be manageable. So if you are looking to enhance your portfolio—or are thinking you might like to buy a home—we suggest you speak with your J.P. Morgan team. We can help you assess whether an investment in real estate might align with the goals you have set for you and your family.
Source: Keeping Current Matters June 2021

Monday, June 7, 2021

RefiNow and Refi Possible available summer 2021


Blog Posted by Betty Rauch - Loan Originator NMLS#390883
Florida State Mortgage Group, Inc.  NMLS#393326
Written  by:  Aly J. Yale -The Mortgage Reports Contributor

It’s about to get easier for low-income homeowners to refinance. 

Thanks to a new initiative from the Federal Housing Finance Agency (FHFA), certain low-income borrowers will soon be eligible for reduced-cost refinances that guarantee a lower interest rate and monthly payment.

According to the agency, the option will save borrowers anywhere from $100 to $250 per month, on average. That’s a total savings of $1,200 to $3,000 per year.

How RefiNow and Refi Possible work

The new refinance option is dubbed RefiNow by Fannie Mae and Refi Possible by Freddie Mac. It targets lower-income borrowers with conforming mortgages, who could benefit from lower interest rates and payments but haven’t been able to refinance because of the upfront cost.

RefiNow will be available from June 5 for Fannie Mae-backed loans. Refi Possible starts in August 2021 for Freddie Mac-backed loans.

Those who qualify would see their monthly mortgage payment reduced by at least $50 and their interest rate lowered by 50 basis points (0.50%) or more.

Those who qualify would see their monthly payment reduced by at least $50 and their interest rate lowered by 0.50% or more.

For example, if your current interest rate is 3.5% and you qualify for Fannie Mae’s RefiNow program, your new interest rate would be 3.0% or possibly lower. 

Some borrowers could also receive a $500 credit to cover the home appraisal. And the adverse market refinance fee — which charges 0.50% on loans of $125,000 or more — may be waived.

With a typical refinance, these types of waivers and guaranteed reductions are not available. Any reductions in rate or payment are directly tied to the borrower’s qualifications — their credit score, debt-to-income ratio, home equity share, and more.

With RefiNow and Refi Possible, low-income homeowners will have a unique chance to refinance with guaranteed savings and reduced upfront costs.

Potential savings for homeowners 

The potential savings of the RefiNow and Refi Possible programs could be huge.

According to the FHFA, it should be around $100 to $250 per month on average. But depending on the borrower, it could be larger or smaller, too.

Here’s an example: Say you took out a $200,000 loan at a 5% interest rate in January 2018. The loan came with a $1,073 monthly payment. Since it’s been three years, you’ve paid down your balance slightly, and you currently have about $188,000 left on the loan. 

If you qualified for the program, you could refinance into a new, 30-year loan with an interest rate of 4.5%.

That would reduce your monthly payment to $952 per month — a difference of around $120 or, over the course of one year, more than $1,440 saved. 

That, of course, doesn’t include the savings from the appraisal waiver ($500) and the adverse market fee.

The adverse market fee charges 50 basis points (0.50%) of all loan balances over $125,000. So for a $188,000 loan, you’d pay $940.

That means refinancing will become much more affordable for homeowners who qualify to have the fee waived.

RefiNow and Refi Possible eligibility

To qualify for the new low-income refinance program, you’ll need to have a loan that’s guaranteed by either Fannie Mae or Freddie Mac.

If you’re not sure whether your loan falls into this category, use Fannie and Freddie’s lookup tools.

Other requirements for RefiNow and Refi Possible include:

  • Your income must be at or below 80% of the area’s median income
  • You must not have missed any mortgage payments in the last six months and no more than one in that last 12 months
  • Your current loan-to-value ratio can be no larger than 97%
  • Your debt-to-income ratio can be no higher than 65%
  • Your credit score must be 620 or higher

Your home also must be a single-family, one-unit property that you occupy as your primary residence (no investment properties or multi-family homes/duplexes).

When will the new refinance programs be available? 

Fannie Mae’s RefiNow program will be available starting June 5, 2021 to homeowners with existing mortgages backed by Fannie Mae.

Freddie Mac’s Refi Possible will be available in August of this year for homeowners whose current mortgages are backed by Freddie.

Not sure whether your home loan is owned by one of these two agencies? You can find out using Fannie Mae’s lookup tool and Freddie Mac’s lookup tool.

Make sure you use both lookup tools if you’re unsure, because either agency may have bought your loan after it closed.

Why is FHFA targeting low-income borrowers? 

Refinancing has been hugely popular in the past year, especially with mortgage rates hovering near historic lows. But according to FHFA, lower-income homeowners didn’t have the same opportunities to refinance their homes.

“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by refinancing,” said Mark Calabria, FHFA director.

“This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”

“It’s a very homeowner-friendly move that should help people stay in their homes and give them more financial breathing room.” –Jeff Taylor, Co-founder, Mphasis Digital Risk

The program can also help lower-income families struggling due to the pandemic by freeing up cash flow and reducing their monthly financial burden.

It could even help down-on-their-luck borrowers keep their homes in some cases.

“The money saved by refinancing can be used to help those who have experienced a job loss or some financial impairment since the start of the pandemic,” said Jeff Taylor, co-founder of Mphasis Digital Risk and a board member at the Mortgage Bankers Association.

“It’s a very homeowner-friendly move that should help people stay in their homes and give them more financial breathing room,” he says.

Should you wait to use RefiNow or Refi Possible? 

There’s no way to perfectly time your refinance, but for lower-income borrowers, the FHFA’s new initiative just may be worth the wait.

With the guaranteed rate cut, reduced monthly payment, and waived fees, the savings could be significant.

If you’re worried about interest rates rising, you could consider applying for your refinance now and choosing an extended rate lock. This would allow you to lock in today’s historically low rates as you wait for summer to roll around.

You can also speak to a loan officer or mortgage broker for more specific advice. They can guide you on the best move for your financial situation.


Refinances- contact Betty Rauch    954.410.1960   Apply.SFL

The Fed Takes Action

This past week, the Federal Reserve hiked the Fed Fund Rate by .50%, the largest rate increase in 22 years. Let’s discuss what other actio...