Welcome to 2024

Happy New Year, All!

What a year it was in 2023.  In this year’s relay (state) race, 2022 passed the baton to 2023 who showed no signs of slowing down.  The 2023 residential Real Estate sector was equipped with hot appreciation, loads of competition, NAR lawsuits, new legislation, new lending guidelines (as always), a new 23 year high in interest rates, and a plethora of intrigue and interest.  As we move into 2024 there are a few new and common themes that every buyer/seller, homeowner, and real estate professional called to guide these individuals should know; especially those living in Dane and its surrounding counties.

  • Rates expected to go down in 2024 – If you have worked with us in the past, you’ve heard this before. In December however, the federal reserve confirmed this expectation when the announcement was made that their intent is to instate 3 rate cuts. Inflation leveling out and 2024 being an election year also play contributing roles.  Fun Fact: 2000 was the most recent election year where interest rates did not finish lower than they started.  Before that was 1980.
    • Question to ask yourself when preparing to buy a home: Did my loan officer suggest or “quote” a rate that included a rate buydown?  If the answer to that is yes, you may pass go and consider a new lender.  It is in very select scenarios that it makes financial sense to pay more money in order to obtain a lower interest rate when rates are expected to come down in the near future.  If you are being sold an interest rate; you are often being sold a poor solution motivated by a paycheck as opposed to your best interest. 
  • The Key to Successful Home Ownership is Affordability – the WI housing affordability index showed that affordability fell by 8.6% year over year (YOY) in the most recent data report.
    • Question to ask yourself when preparing to buy a home: Has my loan officer discussed a plan to help me more comfortably afford this home? If the answer to that is no, you may pass go and consider a new lender.  In October 2023, the average mortgage rate hit a new 23 year high.  This along with the fact that the average American carries $21,800 in non-mortgage debt may certainly contribute to a decreased sentiment around the ability to afford owning a home.  Your ability to afford the home you are purchasing will increase dramatically if you are working with a lender who is willing to assess the key areas of your finances that contribute to maximizing affordability.  Those items would include: Your credit score, analyzing debts outside of the proposed mortgage, suggestions for use of available assets to build wealth, education on the right time to buy, suggestions for a loan structured to benefit you beyond the initial purchase, and several others.  The “Win this home regardless of the long term affects” strategy’s/products produce remorse, while thorough education and guidance create a positive home buying experience.
  • Not all loan products are created equal – There are a number of different loan products available in both Dane County and many cities surrounding it. Several of which often yield the lowest interest rates and overall monthly payment available in the market.  As we move into 2024, you should recognize that a “guaranteed to win” type of product may come at the hefty cost of affordability.
    • Question to ask yourself when preparing to buy a home: Has my loan officer discussed more than one product/solution with me?  If the answer to that is no, you may pass go and consider a new lender.  Being presented with one singular option/worksheet is often an indication of the amount of time you are worth to your loan officer.  More often than not, any lender you speak with offers more than one loan product.  If you have been presented with only one mortgage option, you are likely being sold on the best option for them; not for you.
  • Payment Reduction for Homeowners with an FHA Loan – In March of 2023 The Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), implemented a 30 basis point reduction to the annual mortgage insurance premiums (annual MIP) charged to homebuyers who obtain an FHA-insured mortgage. If you or your client closed on the purchase of your/their home with an FHA mortgage between September 2022 and March 2023, they are a good candidate to refinance and take advantage of the lower annual mortgage insurance premium (MIP).

  • Proposed legislation to restrict hedge fund investors – In December, a bill was introduced in Congress talking about institutional investors that own single family investment properties. If passed, the bill would prohibit these companies from acquiring single family homes.  It would also require these investors to unload those properties over a 10-year period.  A bill of this nature signed into law could lead to a number of outcomes, increased inventory being one of them.

If the past two years in real estate have taught us anything, it is that the landscape of buying or selling a home has become increasingly more delicate in achieving a successful outcome.  If you are in need of a mortgage advisor who holds your success as their top priority, we would be honored to play a role in your transition to life’s newest chapter.  Until then, we wish you and your loved one’s good health, prosperity, and a great start to the New Year.

 

All our best,

Tyler and Austin Quartullo

 
Austin & Tyler Quartullo
Co-Team Leaders/Loan Originators, NMLS# 1997438
P: (608) 440-2939  C: (262) 210-1937 or (262) 210-7852
quargroup@boemortgage.com
Greater Madison, Wisconsin Area
www.boewisconsin.com