Mortgages Can Be Complicated, but We Have You Covered.

After a relatively quiet week without much market-moving data last week, we’ve started the week with a bit of volatility that’s positively impacted mortgage rates. Reports of Chinese startup DeepSeek’s efficient AI model have sent tech stocks significantly lower while investors flock to trade Bonds which typically offer safer returns. This has helped mortgage rates drop slightly for now. The Federal Reserve concludes its first meeting of 2025 this Wednesday, setting the tone for monetary policy in the year ahead. While markets aren't expecting a rate cut at this meeting, Fed Chairman Jerome Powell's press conference will be closely watched for signals about the timing of potential cuts later this year. Finally, we have our Personal Consumption Expenditures (PCE) report on Friday, which the Fed primarily cites to monitor the rate of inflation. Last Week's Mortgage Rate Recap Rates Were Steady Mortgage rates improved slightly early in the week before settling into a narrow trading range. This initial improvement came as bond traders increased their investment in mortgage-backed securities, providing some welcome relief to the 10-year Treasury yield, which had touched 4.81% in early January. We also saw headlines on Thursday that President Trump will demand that interest rates drop immediately during a speaking appearance at the World Economic Forum. It's worth remembering that the Federal Reserve maintains its independence and bases decisions on economic data—particularly employment figures and inflation metrics—rather than external pressure. This Week's Mortgage Rate Forecast Rates Could Be Volatile The Federal Reserve's first meeting of 2025 takes place Tuesday and Wednesday. While analysts broadly expect the federal funds rate to remain unchanged, eyes and ears will be locked into Powell's Wednesday afternoon press conference. Although we're unlikely to hear explicitly about short-term plans, any hint of a shift in the Fed's stance on inflation and economic growth could influence mortgage rates. At the end of the week, we’ll also get the PCE inflation report, which is famously the Fed’s favorite tool to measure the rate of inflation. Core PCE is expected to remain unchanged at 2.8%. In more immediate news, the stock market has dropped significantly because of news that Chinese AI startup DeepSeek created an AI model similar to ChatGPT which runs more efficiently while delivering results similar to that of ChatGPT. When stocks drop, traders typically buy up bonds, which could make rates drop early in the week. Finally, Trump explicitly highlighted housing growth as a key economic goal in his second term. We dove into the policies outlined by Trump to share how the housing market could evolve as these policies take shape. Check out this blog for an unbiased review to stay ahead of the curve this year.

If you're planning to buy a home in 2025, there are several important factors to consider and steps to take that will help ensure your success. Various trends will influence home affordability and your ability to purchase the home you want without stretching your budget. So, what can we expect regarding mortgage rates? Will there be an increase in available homes on the market next year? Additionally, there are specific actions every homebuyer should start taking now to prepare for 2025. Let’s break it down to help you navigate this market with confidence. Will Mortgage Rates Drop in 2025? The questions asked by homebuyer and real estate agent is where mortgage rates are heading in 2025. Although nobody has a crystal ball, many reliable experts predict them to drop over the course of the year. If you're planning to buy a home in 2025, there are several important factors to consider and steps to take that will help ensure your success. Various trends will influence home affordability and your ability to purchase the home you desire without stretching your budget. How much mortgage rates drop will depend on ever-shifting market factors such as inflation, unemployment, wage growth, economic growth, and the possibility of a recession. Sourcing data from reputable sources such as Fannie Mae, the Mortgage Bankers Association (MBA), HousingWire, and MBS Highway, it’s expected that rates will drop slightly next year but remain in a range between 5.75% and 7.25%. These figures are dependent on the economic factors previously mentioned, and it could take until the second half of the year to see rates in the low end of that range. Mortgage rates can directly impact your overall budget; check out this home affordability calculator to learn more. If you want to buy in 2025, it’s important to connect with a UMortgage Loan Originator as early as possible to take advantage when market opportunities arise. More Homes and More Buyers on the Market in 2025 Housing inventory, specifically a lack thereof, has been one of the main drivers of the housing market these last 3 years. Throughout the year, we’ve seen inventory numbers steadily rise to highs not seen since the summer of 2020. As of the end of November, we have 27% higher single-family housing inventory than this time last year. This rise is expected to continue to increase in 2025, and it’s partly due to the forecast that rates will drop slightly across the year. According to Mike Fratatoni, Chief Economist and SVP for Research and Business Development at the MBA, “mortgage rates at this level should support homebuyer demand and gradually reduce the lock-in effect, thereby increasing the inventory of existing homes and supporting higher purchase origination volume in 2025.” More sustainable inventory is great news for homebuyers. Not only does this mean more options to shop from, but it also gives more negotiation power for many homebuyers to get an asking price that works for their financial picture. How to Prepare to Buy a Home in 2025 Buying a home is a big commitment, but there are plenty of things you can start doing now to put yourself in the driver’s seat when it comes time to buy in 2025. Below are a few strategies that will help you be one of the strongest buyers on the market next year. Start Saving for a Down Payment: A higher down payment will help you secure the lowest possible mortgage rate and can significantly lower your monthly mortgage payment. It’s possible to buy with as little as 3% down for conventional loans (and 0% down for a VA loan), but a higher down payment will open up more possibilities. Build and Maintain a High Credit Score: Like with a higher down payment, a higher credit score will be key to getting you the lowest possible mortgage rate. Building credit is easier than you might think: make sure you pay all of your monthly debts on time and, if possible, keep balances as close to $0 as possible. Read this guide for more credit-building tips. Get a Mortgage Pre-Approval: Your golden ticket in the homebuying process is a mortgage pre-approval. This will give you an accurate estimate of your buying power and will show sellers and listing agents that you’re a serious buyer. Fill out this form to start your free pre-approval today! The Importance of Working With a Local Expert It’s looking like the 2025 housing market will bring some balance that should make affordable homeownership more accessible. However, the best way to ensure a sensible home purchase in 2025 is to work with local mortgage and real estate experts who can help you navigate the ebbs and flows of the market. A knowledgeable real estate agent in your area will understand home prices by neighborhood and the areas where home prices appreciate the most. This expert guidance will help you spot deals, avoid overpaying for a property, and ensure that your home is an investment that grows your financial power over time. When you work with a UMortgage Loan Originator, you’ll gain a partner who will help you maximize the wealth-building benefits of homeownership. Throughout your homebuying process, your LO will learn more about you to make sure your mortgage matches your short- and long-term financial goals. Even after you’ve closed your loan, your LO will stay in touch to share refinance opportunities that will ensure you have the lowest possible mortgage payment and can use the equity you’ve earned to grow your financial portfolio. If you’re ready to start preparing to buy a home and unlock financial freedom through homeownership, follow this link to get connected with a UMortgage LO today!

Buying a home just got a little easier (and more affordable)! Starting in 2025, Fannie Mae and Freddie Mac are expanding their appraisal waiver programs, which allow buyers to skip the traditional appraisal process. The updates mean buyers can qualify for waivers with loans up to 90% loan-to-value (LTV), and new inspection-based waivers will push that threshold to 97%. That means if you’re putting as little as 3% down, you could save time, hassle, and hundreds—if not thousands—of dollars. These programs have already saved buyers billions in fees and the upcoming changes promise even bigger benefits. Whether you’re a first-time buyer or simply looking to save, here’s what you need to know about how these new guidelines can help. What’s an Appraisal Waiver, and Why Should You Care? An appraisal waiver replaces the need for a traditional home appraisal with a high-tech, data-driven valuation. Instead of scheduling an appraiser to inspect the property (and paying hundreds of dollars), the waiver uses public records, historical data, and algorithms to estimate the home’s value. This innovation isn’t just convenient—it’s a big money-saver. Freddie Mac’s ACE (Automated Collateral Evaluation) program has already saved buyers $1.63 billion in fees, and Fannie Mae’s Value Acceptance has topped $2.5 billion in savings. Plus, skipping the appraisal can shave weeks off your closing timeline, which is especially helpful in competitive markets where speed matters. How This Helps Save Homebuyers Thousands Appraisals are, in most cases, an essential part of the homebuying process. By determining the true market value of a home, buyers can be protected from overpaying for a home. However, in highly competitive markets, things like appraisal gaps can cost borrowers thousands of dollars if multiple offers bring the asking price above the appraised value. By expanding the eligibility for waivers, Fannie Mae and Freddie Mac are making it easier—and cheaper—for more buyers to get into their dream homes without having to worry about those potentially costly appraisal gaps. This is a game-changer for first-time buyers or anyone on a tight budget. Not only does it reduce upfront costs, but it also speeds up the timeline to close, helping you secure your new home faster. And with billions of dollars already saved, it’s clear these programs deliver real value. Whether you’re buying your first home or upgrading to your forever home, these expanded waiver options could save you time, money, and stress. What’s New in 2025? Big news: Starting in 2025, the eligibility for appraisal waivers is expanding. Loans with up to 90% LTV will qualify for standard appraisal waivers, up from the previous cap of 80%. Even better, inspection-based waivers—like Freddie Mac’s ACE+ PDR program—will allow loans with up to 97% LTV, so buyers with as little as 3% down can avoid appraisals entirely. Here’s how it works: With an inspection-based waiver, a quick on-site review of the property replaces the traditional appraisal. It’s faster, cheaper, and just as reliable. For buyers, this means fewer hoops to jump through and more money in your pocket to put toward your new home. If you want to use these benefits to expand your homebuying horizons in 2025, get connected with a UMortgage Loan Originator today to start your homebuying journey!

Plenty of homeowners find themselves waiting for mortgage rates to drop before hitting the housing market. While there’s much more that goes into homeownership preparedness than a low mortgage rate, there are multiple ways to lower your rate without having to rely on market movements. Between temporary and permanent rate buydowns, you can lower your monthly mortgage payment by lowering your interest rate either temporarily or permanently. Although they sound similar, there are plenty of differences between the two types of rate buydowns and several factors that might make one better for specific homebuyers than another. Below, we’ll outline the benefits and major differences between rate buydowns to help you understand what might be best for your unique circumstances. Permanent Rate Buydowns Permanent rate buydowns are a strategy where homebuyers pay additional upfront fees (commonly referred to as points) to their lender in exchange for a reduced interest rate over the entire term of the loan. Unlike temporary rate buydowns, which only offer reduced rates for a set period, typically at the beginning of the loan, permanent buydowns provide lasting savings by prepaying a portion of the interest upfront. This investment offers stability and predictability, as borrowers can budget for lower monthly payments over the entire loan term, particularly advantageous in a rising interest rate environment. Determining whether a permanent mortgage rate buydown is right for you depends on various factors including your financial situation, short and long-term future plans, and market conditions. Homebuyers prioritizing long-term savings and stability, especially if they plan to stay in their home for an extended period, may find permanent buydowns appealing. However, it's essential to weigh the upfront cost against potential long-term savings. Temporary Rate Buydowns Temporary rate buydowns allow homebuyers to secure a reduced interest rate for a specified period at the beginning of the loan term. Unlike permanent rate buydowns, temporary buydowns provide short-term relief by lowering initial monthly payments. While temporary rate buydowns provide immediate relief with reduced initial payments, they return to the original rate after the specified period. Because of this, the interest rate reduction can be particularly beneficial for borrowers with budget constraints, those expecting their income to increase in the future, or those who plan to refinance after a short period. Temporary rate buydowns can be paid by buyers, but there are certain situations where homebuyers can use seller concessions or specific offers from builders to earn reduced mortgage payments for the first year or first couple years of their loan. Rate buydowns are a great option for homebuyers looking to reduce their monthly mortgage payment for either a temporary or permanent period. While the two sound similar, they have different costs associated and aren’t always the best option for every buyer. If you have any questions about what kind of rate buydown might be right for you, feel free to reach out for a free consultation!