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For many individuals and families, owning a home is a lifelong dream. However, with rising real estate prices, some may find themselves seeking financing beyond the conforming loan limit. In this instance, you’d need to apply for a jumbo loan. So whether you’re planning to buy a new construction home in Sioux Falls or a home in Harrisburg, let’s break down what a jumbo loan is in South Dakota, the 2023 conforming loan limits, and what’s needed to qualify for this type of loan.

What is a jumbo loan?

So what are jumbo loans in South Dakota? They are large loans that exceed the loan limits set by the FHFA for conforming loans. Jumbo loans allow borrowers to finance homes that exceed the conforming loan limit (CLL), making it possible to buy high-end properties that may not be otherwise affordable.

If the loan amount needed is more than the CLL, you’ll need a jumbo loan. Because of the larger loan amounts, jumbo loans typically carry stricter requirements and higher interest rates than conforming loans. Lenders may require a higher down payment, a lower debt-to-income ratio, and a stronger credit score to qualify for a jumbo loan in South Dakota.

What is the jumbo loan limit in South Dakota?

In South Dakota, the conforming loan limit is $726,200 across all counties. For example, the conforming loan limit in Minnehaha County is $726,200, so any mortgage that surpasses the loan limit designated for your county by even one dollar is classified as a jumbo loan.

As a reminder, the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the home price. So, if you were to put $100,000 down on a $780,000 home in Minnehaha County, the loan would be $680,000, which is under the conforming loan limit for this area. In this case, your loan wouldn’t be considered a jumbo loan.

For more information on the conforming loan limit in your county, use the FHFA map.

What are the requirements for a jumbo loan in South Dakota?

Borrowers must meet stricter requirements to qualify for a jumbo loan than they would for a conforming loan. The specific requirements can vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan.

Higher credit score: When it comes to receiving a jumbo loan, credit score requirements are typically more stringent than for conventional mortgages. It’s possible that some lenders may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It’s essential to have a strong credit profile and a solid financial history to increase your chances of being approved for a jumbo mortgage.

Larger down payment: When buying a higher-priced home, buyers will typically need to make a more substantial down payment. While borrowers seeking traditional mortgages may be able to find programs that allow for down payments as low as 3%, those seeking a jumbo loan should expect to put down a minimum of 10%, and in some cases, as much as 30%. If a lender allows for a down payment of less than 20%, the borrower will need to pay for private mortgage insurance (PMI).

More assets: To qualify for a jumbo loan, lenders require borrowers to demonstrate that they have sufficient liquid assets or savings to cover at least one year of loan payments. The exact amount of assets needed can vary depending on the lender and the size of the loan, but having more assets can increase the chances of approval and potentially lead to better terms and interest rates.

Lower debt-to-income ratio (DTI): When applying for either a conforming loan or non-conforming loan, lenders will review your debt-to-income (DTI) ratio to assess your financial behavior and creditworthiness. The DTI ratio is calculated by dividing your total monthly debt payments by your gross monthly income. For conforming loans, some lenders may accept a DTI as high as 50%. However, for jumbo loans in South Dakota, borrowers are typically required to have a DTI under 43%, with a preference for a ratio closer to 36%. Maintaining a lower DTI can demonstrate financial stability and improve your chances of being approved for a jumbo loan with favorable terms.

Additional home appraisals: Your lender may require a second home appraisal for a jumbo loan, in addition to the standard appraisal, to get a second opinion on the property’s value. This is especially true in counties with limited comparable property sales. The second appraisal helps lenders ensure that they are providing funds for a property that is worth the loan amount or more.

Source: redfin.com

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Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].

Q1. Cheryl from Bend, Oregon writes: Greetings Brian, I’m hoping you can clear something up for me. A little over two years ago I decided to start looking into buying a house but I didn’t know much about how to do this. When I first talked to a couple of agents, I quickly figured out that I needed to save a much bigger chunk of cash for a down payment than I thought at first. Two years later, I’m close to having the money for a down payment and closing costs. During that time, I did a little more research and learned about home inspections, appraisals, and a few other things. I also kept hearing that it’s a seller’s market and the sooner I could make the purchase, the less I’d have to pay. Now, when I’m close to making an offer, I’m hearing that it’s switching to a buyer’s market. I’d like to know what that means to me today? I’ve asked a couple of agents but got different answers. How do you explain it?

A1. Hello Cheryl, the difference between a seller’s market and a buyer’s market is a question that a lot of people should be asking right about now. It’s been a strong seller’s market for several years but there are clear signs the market is shifting to favor buyers. But as always, real estate depends on the local market and even local neighborhoods. Although there is a general shift towards a buyer’s market, it is happening by different degrees in different locations and you can be certain there are some locations bucking the trend.

At first thought, quite a few people think a buyer’s market means prices are coming down and low-ball offers will be accepted. Probably not at most locations. For instance, in a hot market like Seattle, it means that prices are no longer going up as fast as they have been for many years. It also means that neighborhoods that a few months ago saw bidding wars as soon a s a house went on the market are no longer seeing bidding wars or at least not as many multiple offers and not for significantly more than the asking price. However, due to a pent up demand, sellers in hot markets can still expect to quickly find a buyer at a fair market price.

The best way to understand how significant the shift from a seller’s to a buyer’s market is for your location is by understanding the key drivers:

  • A booming local economy. The national high employment for the past several years was an important factor driving the overall national seller’s real estate market. However, this is still a local issue depending on prevailing local wages. When most new local jobs pay minimum wage, there will be a bigger surge in the rental market compared to the seller’s market. There will be spill over from the rental market that can drive some prices up slightly but mostly, a once slow sales market only begins seeing more active buyers. As we’ve already seen, high wage markets such as technology have much more affect driving rapid price increases supported by bidding wars. But there are exceptions. For instance, a few years ago North Dakota had an explosive wave of temporary high wage jobs in the oil exploration and drilling industry. Home prices sky rocketed 5X, 10X, 15X, and even higher compared to previous prices. With the oil boom gone, home prices in North Dakota are already declining (according to Zillow).
  • Interest rates trending downward or upward have a big impact real estate markets. Interest rates determine the size of a buyer’s monthly mortgage payment and therefore how big of a loan they can qualify for. The lower the interest rate, the more buyers that can qualify for a loan. Buyers can offset this somewhat with a higher down payment which means a small loan but higher down payments mean few buyers. The way sellers counter higher interest rate is first by stabilizing prices and eventually by lowering prices to attract buyers (hence a buyer’s market). Many markets are currently becoming stable as rising interest rates push buyers out of the market.
  • Short term changes in interest rates have short term impacts on real estate markets. Interest rates are expected to mostly remain stable for the next several months, which should mean most real estate markets will be stable. Interest rates change daily and weekly. There is still a pent up demand to buy houses. People who can qualify and lock in a mortgage during a temporary rate drop can jump back into the market to keep it stable. However, the interest rate is generally trending higher which means fewer and fewer buyers will be in the market. This will create more and of a buyer’s market over time.
  • Inventory is the other big driver. Real estate is very much about supply and demand. As the economy has grown, there has been much more demand for houses than there has been supply. Locally, a new housing development brings more supply onto the market. In today’s markets, new homes coming onto the market are also having a stabilizing effect. A stable market is a balanced market that favors neither the buyer nor the seller. A significant amount of inventory coming onto the market can create a buyer’s market. To forecast your local trend over the next nine months to a year, research how many new building permits have been applied for and how many new homes are currently under construction.
  • Sellers of existing homes also impact inventory. There are sellers that have been on the sideline waiting to see how much their home will become worth before putting it up for sale. With prices stabilizing, these people are more likely to jump into the market. Often these people time the market wrong. If too many come on the market, inventory will grow and it will lead to a buyer’s market.

Cheryl, the economy, interest rates, and inventory all work in tandem. In all probability we have already passed the top of the sales peak. The U.S. economy is fully employed. There may be some wage growth and people shifting to higher paying jobs but very few additional people will become employed (stable or decreasing buyer demand). Full employment greatly increases consumer demand for credit cards, cars, and homes. The increased demand to borrow money will continue to increase interest rates. Higher interest rates put the brakes on increasing home prices which have now reached the maximum affordable price. Inventory of houses for sale will increase. Having passed the top of the sales peak, the trend should be towards a buyer’s market over the next 3, 6, and 9 months. For the most part, buyers can expect listing prices to remain stable, no more bidding wars, and negotiating the final sales prices, terms, and conditions will once again become normal.

Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].

Please leave your comments about this Q&A or send us your own.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News

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Source: realtybiznews.com

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[Editor’s note: This is an excerpt from the conclusions from the category product review series for the small landlord property management software sector. The full conclusions can be found here. Originally published in the Geek Estate Mastermind.]

the process of using technology to enhance the leasing and operation of real estate assets for owners for a fee

The property management software sector continues to capture my imagination as consolidation spawns (eg RealPage’s acquisition of Buildium, the REA acquisition of Managed, and CoStar acquisition of Cozy).

It’s obvious: As property management efficiency improves, the services marketplace grows, costs are driven down, and professional management becomes an increasingly appealing proposition. There are more property management options than ever before — and the options are better than ever before, too — that serve landlords in entirely new ways. A rent guarantee is the latest customer win, but it won’t stop there.

This is a sector poised for huge growth. Below are a few of the major players defining the category:

Doorstead: Full-service management that provides guaranteed rental income. Learn more.

Knox Financial: Helps sellers turn their current home into an investment property delivering passive income while empowering lifestyle freedom. Learn more.

Great Jones: With over $20 million in funding, it now operates in nine markets across Florida, the Carolinas, and the Midwest. Learn more.

Hemlane: An all-in-one rental management platform that operates in all 50 states. The company is the exclusive property management partner to the California Association of Realtors and partner to Roofstock. Founded in 2014. Learn more.

Loftium: Guarantees rent to the owner, and places a renter in the unit that agrees to oversee a mother-in-law unit or apartment as a short-term rental in exchange for a discounted rent. Learn more.

Mynd: The firm manages a portfolio of over 9,000 units and closed a $20 million Series B in 2018. Learn more.

Onerent: Managing more than 9,000 doors, they recently launched Onerent 360—home warranty, maintenance, and improvements all within one monthly management fee. Learn more. (Geek Estate Mastermind member)

Source: geekestateblog.com

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Are you a transactional agent, or are you transformational? On today’s podcast, Aaron Amuchastegui and co-host Paul Morris interview Parnell Quinn to discuss the value of relationships in real estate. Hear how Parnell drastically increased repeat business by building better relationships with clients, contractors, and the community. Other interview topics include real estate PPC ads, how to handle under-performing agents, and the differences between commercial and residential real estate.

Listen to today’s show and learn:

  • About Parnell Quinn [4:22]
  • Parnell’s start in real estate [5:15]
  • Covid’s impact on small-town commercial real estate [6:55]
  • How local Realtors can give developers real value [8:12]
  • The value of relationship building [10:27]
  • The difference between transactional and transformational relationships [16:28]
  • What to do if you’re not a relationship builder [18:34]
  • Parnell’s favorite sources for real estate leads [20:40]
  • Advice on running PPC ads for lead generation [24:50]
  • How to handle under-performing agents [31:00]
  • Parnell’s opinion on selling commercial and residential real estate [38:02]
  • Parnell’s advice for real estate agents [44:25]
  • A great event for learning and business growth [48:22]
  • How to connect with Parnell Quinn [49:04]
  • How to connect with Paul Morris [50:05]

Parnell Quinn

Originally from Denver, Parnell’s family started vacationing in Grand County in the early 1970s. Up for a Christmas vacation in 1979…or so the kids thought…on Christmas morning his parents asked them if they liked the house we were staying in. The four of them said “yes” and the next thing he knew, the moving truck pulled into the driveway and they were home!

Parnell attended Middle Park High School and wasn’t too far from home when he went to college in Durango. But shortly after graduation he headed to Japan. After a year there, he came back to Fraser and started working with his dad in his real estate office.

In 1994, he put on his backpack again and this time headed to Australia. He got word that his older brother was getting married and came back for the wedding. Driving over the pass and seeing the Fraser Valley, he knew he was home…for good.

He said, “When we were kids, we used to joke that the Fraser Valley is like the song Hotel California, ‘You can check out any time you like, but you can never leave’.”

Parnell has raised his three children here. He chose to get involved with the Fraser Town Government because after living here for all but 10 years of his life, he felt a calling to help guide the community’s future so that his children and their children will continue to call Fraser their hometown.

Related Links and Resources:

Thank You Rockstars!
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
-Aaron Amuchastegui

Source: hibandigital.com

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Are you questioning whether having kids is right for you? We understand your hesitation. In today’s world, it’s not a shock when people decide to forego parenthood and pursue different life paths or family structures. Between monetary concerns, mental health considerations, personal values, or lifestyle choices, there are many reasons why some decide that having children isn’t for them (or even their potential little ones). 

1. Kids Can Be Annoying

Photo Credit: Shutterstock.

One user shared, “Kids are annoying AF. Also, in this Economy, I can’t afford [anything]. How tf am I supposed to have a kid as well??” 

2. You Should Really Want Them First

Photo Credit: Shutterstock.

One Redditor shared wisdom: “Better to want kids but not have them than to have them and not want them. You don’t need reasons not to want kids. You better have really good reasons to have kids.”

Another user asked, “Why should I have really good reasons for having kids?”

“Because having a kid is a life-changing responsibility. For life. That’s not a quirky little decision of ‘Yeah, why not?’” one user replied.

Another commenter added, “That doesn’t mean it requires a really good reason. You just have to be a responsible adult that wants a kid.”

One Redditor concluded, “So you don’t need a good reason; you just have to be good at parenting.”

3. Kids Are a Lot of Work

Photo Credit: Shutterstock.

 A user commented, “Too loud, too sticky, too smelly, too dependent, incomprehensible beings, I lack patience. I like the quiet; I like my sleep. I like my child-free life.” 

4. Kids’ Medical Concerns Add Up

Photo Credit: Shutterstock.

One user elaborated on his reasons and posted, “I can’t afford them, and I know my genes are volatile. My offspring would be almost guaranteed to inherit my medical issues.”

5. You Have Childhood Trauma

Photo Credit: Shutterstock.

One user added, “Childhood trauma makes the idea of raising a child unthinkable. Also, an inability to work normal hours and provide for a child.”

6. You Don’t Like Kids

Photo Credit: Shutterstock.

One Redditor elaborated, “I don’t like kids. Nope, they’re not cute. They cost a lot. I hate loud noises. I am not a morning person. So, no to waking up early to prepare food for kids. I don’t have enough patience.

“I can’t even be responsible for myself most times; why would I want to bring another human? I prefer my solitude. I won’t be able to function as a human mom. I’m a dog mom, but that’s good enough for my caring nature.”

7. Kids Are Expensive

Photo Credit: Shutterstock.

One user posted, “Tons of $$$.”

Another user calculated, “Based on statistics, it takes around $300 000 to raise a kid until 18 without any emergencies, and this was like 4-5 years ago. It’s probably like 50k more now.”

8. Having Kids Can be Selfish

Photo Credit: Shutterstock.

“More important question: why should you want to have kids? There’s literally no unselfish reason to do so,” one Redditor commented.

Another user answered, “No reason to get rude towards people who do want kids.”

The OP responded, “Not being rude. It’s just a fact.”

Another user asked, “I’m curious: why do you think it’s selfish to want to have kids?” 

The OP answered, “I don’t think that….. It’s a fact. People, the majority of the time nowadays, have children as an accessory to their own lives. You are neglecting the fact that they are bringing a whole human into this world. To make an entire soul(s) endure the ups and downs of life on earth just to fulfill your own personal feelings of having a child is nothing but selfish.

“So again, I ask? What reason is there… outside of selfishness on their own decision… to have one? I’m genuinely curious as to a reason why a person should that is beyond their own decision to do so.”

9. You Don’t Want Them to Suffer on Earth

Photo Credit: Shutterstock.

One Redditor shared his frustration, “I am mad this is the planet I’ve been stuck on, So I occasionally feel like I would not want to be responsible for another human having to experience what this life is like sometimes.”

Another user countered, “Earth is beautiful, though.”

10. You Don’t Want to Pass On Health Issues

Photo Credit: Shutterstock.

One user shared, “A rare genetic condition runs in the family; it has been found in my sister and me too, it s-cks, and I don’t want to pass it down, and even if I don’t, I have a sick mom, I know how hard it is on the child. I don’t want to be the sick mom to another kid.

“I’m autistic, very sensitive to noise, textures, and smells, and will go crazy if I can’t have quiet/alone time. So I wouldn’t be a good mom, and I’d end up traumatizing the kid. I’m terrified of what pregnancy and giving birth do to a woman’s body.

“That doesn’t mean I’ll never decide that I want a baby. But I’d be irresponsible for that.” 

11. You Don’t Think Life is Worth While

Photo Credit: Shutterstock.

One user posted, “This world we live in is horrible; I hated going to school for the first 21 years of my life. I hate that all I have to live for is working to be able to afford to live. Why would I subject someone to live this life in this world? Also, I think people forget that their kids will eventually be grown—and often, parents fall short when teaching morals or how to be a good person; I know my parents didn’t teach me things I wish they did. What if they turn out to be a killer or [sexually abuse others] no matter how hard I try to be a good parent? Yeah, it’s a no. If I ever decide I want a child, I’ll adopt a teen or something.” 

12. You Don’t Like Pregnancy and Childbirth

Photo Credit: Shutterstock.

One user shared, “Pregnancy and birthing. Even if I was a millionaire and could afford kids and all their expenses, I could not birth them. I don’t want my [body] ripping down to my [butt]. Then there’s always a chance of dying. And you could go through all of that, and your kid may just die anyway. Not worth the pain.”

13. You’ve Lost Interest in Children

Photo Credit: Shutterstock.

One Redditor also shared, “Lost interest after 30. I’m not in good health to have kids. There is stuff I want to do that I couldn’t do when I was younger. I didn’t have the money to travel anywhere where I wanted to take up expensive hobbies. Plus, there are plenty of children in foster care that need a home if there is a small chance I change my mind.”

Do you agree with the others’ perspectives in this article? Share your comments below!

Source: Reddit.

These are 10 Things That Completely Destroyed The Love in a Relationship

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There’s no question that relationships can be confusing, but here are some of the top things to avoid if you want to keep your relationship healthy!

10 Actors and Actresses People Refuse to Watch Ever Again

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We all have a favorite actor or actress, but most of us have a least-favorite as well. Check out this list of actors and actresses people never want to see performing again!

Top 10 Worst Human Inventions of All Time

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Some inventions are world-changing, and some of them, well, they change the world in the wrong ways. Here are some of the worst inventions Redditors could think of.

10 Famous Celebrities Who Look Like They Smell Terrible

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We’ve all had moments of hygiene faux pas—but these celebrities just look like they don’t take care of themselves at all.

10 Terrible Fads People Are Glad Died Out

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Every fad has its time in the limelight, but some of them come and go faster than others; and some just need to die out right away. Check out this list of fads of which people were happy to see the last.



About the Author



Source: financequickfix.com

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Although you likely hear these terms used interchangeably, tax credits, tax deductions, and tax adjustments all have different meanings and outcomes. Deductions and adjustments reduce your taxable income, whereas tax credits directly reduce the amount you owe to the IRS, dollar for dollar.

Source: moneyunder30.com

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Backpacking and camping are awesome frugal activities. It costs nothing to take a hike. It costs a bit more to camp overnight, but even that can be done inexpensively. While browsing the web for camping stuff, I stumbled upon a great list of frugal suggestions that were originally posted to the Usenet group rec.scouting on 03 December 1994!

According to the original poster:

These low-cost equipment/ideas/fixes for Scouting and camping in general [were] originally found on a F-Net Scouting board and [were] reposted on Fidonet on Nov 11/92 by Steve Simmons. The file evidently originated with BSA Troop 886 in the USA.

This list is HUGE. Here are my favorite ideas:

  1. Channel lock pliers make good pot holders.
  2. Nylon rope can be used as shoe laces.
  3. Use a large zip lock plastic bag, filled with air, as a pillow.
  4. A plastic bottle makes a good latrine for cold weather camping. (You don’t
    have to ‘go’ very far from your sleeping bag). Keep it just outside the tent flap.
  5. Carry several pieces of lumber cut into two-inch squares to summer camp and
    use these to level platform, tent, and cot.
  6. Old shower curtains make great ground tarps.
  7. Waterproof matches by dipping them in nail polish.
  8. Waterproof matches by dipping in melted paraffin.
  9. Make fire starters by filling paper condiment cups with saw dust and pouring
    paraffin into the cup.
  10. A length of chain and a piece of coat hanger bent into an S-shape will allow
    you to hang your lantern from a tree limb.
  11. Keep batteries in prescription bottles.
  12. Prescription bottles also make good match safes.
  13. In fact, prescription bottles (or 35mm file containers) make good storage places for small items of all sorts.
  14. A frisbee will add support to paper plates when the plate is placed inside
    the frisbee.
  15. Laundry lint makes good tinder.
  16. Keep the water in your canteen cooler by wrapping the canteen in foil.
  17. When it comes time to pack up at the end of a camp, a wet toothbrush, face
    cloth and bar of soap wrapped in foil won’t dampen the other things in your
    kit.
  18. To prevent batteries from wearing down if a flashlight is accidently nudged
    on while you’re traveling, put the flashlight batteries in backwards.
  19. To protect your feet from blisters, smear soap on the inside of your inner
    sock at the heel and underneath the toes. Carry along a bar of soap and,
    when you feel your feet become tender, give it a try.
  20. To keep mosquitoes away rub the inside of an orange peel on face, arms and
    legs.
  21. Wrap fishing gear in foil to keep line from tangling and hooks from rusting.
    By lining the compartments of a tackle box with foil, you can prevent rust
    damage to plugs and other equipment.
  22. To remove musty smell from canteen, put three teaspoons of baking soda into
    the canteen with a bit of water. Swish it around and let sit for an hour,
    then rinse out the canteen.
  23. An empty plastic soda bottle, cut off to a convenient height, will work as a
    camp bowl. You may want to sandpaper the cut to smooth the edge.
  24. Save inner cardboard tubes from kitchen and toilet rolls, stuff with waste
    paper and use as fire-lighters.
  25. Use zip-lock bags for mixing foods, be sure it is closed tight and the top
    is held shut before shaking or kneading.
  26. Duct tape can be used to repair most everything on a trip. Use it to patch
    tents, mend poles, hold up schedules, patch torn shoes, hold poles for
    mosquito nets to cots, etc.

If you like these, check out the entire list.

Source: getrichslowly.org

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I mentioned my little brother earlier because he was taught his son that two pairs of shoes equals one iPod. (Remember that they’re moving, and his wife is packing sixty pairs of shoes.) He just called to chat. I told him I was busy, but he offered me another story and gave me permission to print it.

His wife used to work at Nordstrom. While there she took advantage of the employee discount. A lot. In fact, she spent over $10,000 on clothes during that period. (Meaning $20,000 retail price, I think.)

Even when the family didn’t have any money, she’d come home with clothes. My brother would call her on it, but she’d deny that they clothes were new. “Come on,” he’d say. “I know what’s in your closet.” One day he complained to her about the new clothes she was wearing, and she claimed they were old, when he pointed out that there was a price tag still dangling from whatever it was she was wearing.

After that, she started to be more subtle about bringing home new clothes. She’d buy them, stash them in her trunk, and then sneak them into the closet. My brother didn’t discover this for a while, though. He only found out because one day they had to take her car to a family Christmas gathering. He went outside to put some food in the trunk, and there were several Nordstrom bags full of clothes. He was not pleased. He began to refer to these mysterious new clothes as “trunk clothes”.

A few months ago, my brother managed to convince his wife to get rid of some of her clothes. She filled two bins full of goods to take to a consignment shop. But she never took them. They just sat around for a while, taking up space. Recently she moved the bins to a storage shed. She’s trying to make room to clean out her closets for real.

Today her mother came to help her clean. My sister-in-law wants to keep all of the clothes, but her mother won’t let her. “Fine,” my sister-in-law said. “I’ll take them to Goodwill.” (Goodwill is a thrift store — I’m not sure how universal they are.)

“You can’t take them to Goodwill,” my brother told her. “You need to take them to a consignment shop. You need to get some money for them. Especially if they’re trunk clothes.”

“That’s too much of a bother,” his wife said, glowering at the use of the phrase ‘trunk clothes’.

“Then you need to itemize each piece of clothing so that we can claim it on our taxes.”

“What does that mean?” she asked, so my brother explained. But that didn’t sound any better to her. “I’m not doing that. You do that,” she said. But my brother refused, so she said, “Fine, I’ll just give them away.”

“You cannot give them away,” he told her. “That’s TEN THOUSAND DOLLARS.”

My brother laughs when he tells this story. Though he’s frustrated, he’s not angry. He knows that his wife has a spending problem, and it bugs him, but he also sees the humor in the situation, which is one of his special gifts. I, too, once had a spending problem, but I certainly never spent $10,000 on trunk clothes. It was on computers. And books.

Source: getrichslowly.org

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FOMC ends meeting with rate hike

The Federal Reserve’s Federal Open Market Committee (FOMC) concluded their two day meeting this afternoon with a written statement that declared they raised the target range for the nation’s benchmark interest rate–the federal funds rate–by a quarter point to 0.75%-1.00%.

It was a nearly unanimous vote, with only one dissent from Minneapolis Fed President Neel Kashkari. This is the third time during this tightening cycle that they have raised rates.

Click here to get today’s latest mortgage rates (Aug. 9, 2023).

The decision came as no surprise to anyone who had been paying attention to recent events, as it was virtually guaranteed that they would take action at this meeting. A strengthening labor market and inflation numbers coming in around the Fed’s target of 2% were among the reasons most Fed officials felt the current economic environment was ready for a rate increase.

Ahead of the meeting, there had been a lot of speculation about how the Fed’s dot-plot, which shows where Fed officials believe rates will be in the future, would change. In the end, a quicker tightening path was not reflected in the dot-plot. Instead, it was left mostly unchanged from the previous meeting, as was most of the written statement.

Janet Yellen Press Conference

Fed Chair Janet Yellen met with reporters shortly after the written statement was released for a question and answer session that lasted about an hour. From the Fed Chair’s tone, there really wasn’t much to the rate hike decision. When asked what message the Fed wants to send to consumers, she responded by saying, “The simple message is the economy is doing well.”

Market Reaction

All of the major U.S. market indexes spiked up after the written statement was released. The yield on the U.S. 10-year yield (the best market indicator of where mortgages rates are going) actually went in the opposite direction, falling several basis points, putting at -.10% on the day.

The drop is due to the fact that many investors had been concerned that the Fed would come out with a more aggressive policy path. But with the Fed reaffirming their position of only two more rate hikes this year, bonds got some relief, causing yields to decline. That means that despite the increase in the federal funds rate, mortgage rates are falling today.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

The seemingly unstoppable rally in homebuilding stocks may face a few potential roadblocks ahead.

In recent months, the group has been notching record after record, posting their best first half in almost a decade. Homebuilders even rose during the pandemic, stumbling just briefly in 2022, before regaining traction. The cohort is also outperforming the broader market — up more than 50% year-to-date versus the S&P 500’s 18% gain. 

Still, analysts warn to watch for factors that could threaten the sector’s growth.

“Builders are in the business of building shelter capacity,” said Carl Reichardt, a homebuilders analyst a BTIG. “Shelter capacity right now is very low. So the headwind to the group is if shelter capacity that isn’t bought by the homebuilders increases.” 

So far, new homes being built by companies like D.R. Horton Inc. and Lennar Corp. have been snatched up by buyers. The activity has helped drive up each firm’s shares by more than 40% year-to-date.

However, their fortunes could diminish somewhat if dynamics in the existing home market shift, according to Reichardt, who added that a drop in rental prices could entice potential homebuyers into short-term leases instead of splurging on new houses.

A dip in interest rates could also disrupt housing market dynamics, he noted. The Federal Reserve’s aggressive monetary policy tightening campaign has dissuaded homeowners from moving, leading prospective buyers to seek new homes. That’s sent existing-home sales lower in nearly every month since the start of last year. 

Rates Mystery

Eventually, the central bank will start to cut rates. While the timeline of that easing remains unclear, a decline in borrowing costs could reinvigorate existing homeowners to place their homes back on the market, introducing more inventory.

“Ironically, if rates went significantly lower from here, it could juice demand a little bit, but you also might have a lot of competition coming in from the resale side of things,” Oppenheimer & Co. analyst Tyler Batory said.

Some builders, including D.R. Horton and KB Home, target first-time homebuyers who would feel the effects of any financial burden. While the U.S. labor market has remained resilient, a wave of layoffs could dent the number of homebuyers, according to Batory. Additionally, the resumption of student loan payments might leave consumers with less cash on hand for big purchases like a house, he said.

According to a report from Redfin last month, first-time homebuyers need to earn 13% more than a year ago to afford the average US starter home. Another report from the real estate brokerage showed that the average U.S. homebuyer’s monthly mortgage payment is up almost 20% from a year ago as rates remain elevated.  

Investors are being vigilant by seeking protection against declines in the group. Based on open interest, SPDR S&P Homebuilders ETF and iShares U.S. Home Construction ETF had the first- and third-largest put-to-call ratios, respectively, among exchange-traded funds with active options trading on Friday, according to data compiled by Bloomberg.

Of course, there’s always risks, said Batory, but all things considered, “It’s going to be fine. I think you have a multi-year earnings growth story.”

Source: nationalmortgagenews.com