Mortgages Can Be Complicated, but We Have You Covered.

Last Updated: March 11th at 12:16pm ET On March 4th, President Donald Trump announced new tariffs, imposing a 25% duty on nearly all imports from Mexico and Canada and increasing tariffs on Chinese imports to 20%. While tariffs on items protected by the United States–Mexico–Canada Agreement (USMCA) have been delayed until April, understanding their potential impact on the homebuying process could help you avoid unexpected costs when purchasing a home or helping your client buy their home. Many economists believe that these tariffs will have a noticeable impact throughout the housing economy, including housing costs and mortgage interest rates. While these changes could affect home prices and mortgage rates, understanding their impact can help you make informed homebuying decisions and ensure that you’re taking the most affordable route possible to buy a home. Why is President Donald Trump Imposing Tariffs on Canada, China, and Mexico? The Trump administration has cited several reasons for these tariffs, including boosting U.S. manufacturing, addressing trade imbalances, and increasing revenue for the U.S. Treasury. Increase U.S. Manufacturing: Trump has cited his primary reason for imposing these tariffs as bringing more business manufacturing back to the U.S. In his address to Congress, he said, “If you don’t make your product in America… you will pay a tariff, and in some cases, a rather large one.” Balance the Budget: Contrary to common belief, tariffs are paid by American companies importing goods, not by foreign governments. These payments go to the Federal Reserve and would help reduce the national deficit. Prevent Flow of Illicit Drugs into the U.S.: Trump has referenced the illicit flow of fentanyl into America as a reason for tariffs on its North American neighbors and China. How Tariffs Will Impact Home Prices & Construction Costs Home builders heavily rely on imported goods like building materials and appliances to minimize building costs. Here’s how these tariffs will impact homebuilders and subsequently homebuyers looking to build a home. Homebuilders Rely on Imported Goods A recent report by John Burns Real Estate Consulting (JBREC) showed that homebuilders import 31% of sawmill wood products, with 73% of those imported products coming from Canada. Builders also import 73% of small appliances for new homes, with 67% of those imports coming from China. The 25% tariff on goods imported from Canada & Mexico and 20% tariff on goods from China will directly impact the cost of timber, steel, aluminum, small & large household appliances, and building hardware. Trump’s Plan to Offset These Costs To help offset rising costs, the administration has taken steps to increase domestic timber production, including an executive order aimed at expanding logging operations. On Saturday, March 1st, Trump signed an executive order focused on the immediate expansion of American timber production. It directly cited increased forest management, wildfire risk reduction, and reduced regulations that might slow down timber production. As of March 6th, there have been no additional announcements regarding domestic production of other building materials. Will Tariffs Affect Mortgage Interest Rates? The implementation of tariffs on imported goods will have greater economic impacts than the cost to build a home. This can be seen directly through volatility in the stock market as Trump proposes and delays tariffs against China, Canada, and Mexico. Slower Economy Leads to Lower Mortgage Rates Tariffs can create uncertainty in the stock market. When stocks become volatile, investors often shift money into U.S. Treasury bonds, causing bond yields to drop. Since mortgage rates tend to follow the 10-year Treasury yield, this could lead to lower borrowing costs. Risk of Increased Inflation While tariffs might help lower mortgage rates by slowing consumer spending, they can also contribute to inflation by increasing the cost of goods. The Federal Reserve closely monitors inflation trends when setting interest rate policies. During a Q&A session at an economic forum on March 7th, Jerome Powell, Federal Reserve Chair, said, "In a simple case where we know it's a one-time (price hike), the textbook would say look through it," when asked if tariffs would have inflationary effects. "Uncertainty around the changes and their likely effects remains high," continued Powell. "As we parse the incoming information, we are focused on separating the signal from the noise. As the outlook evolves, we do not need to be in a hurry, and we are well positioned to wait for great clarity." How Homebuyers Should React to Tariffs While tariffs will have an impact on the cost to buy a new home, there are plenty of things that homebuyers can do to protect themselves from inflation and grow their financial portfolio. Buy When You’re Ready Rather than trying to time mortgage rate changes, it's often best to buy when you're financially prepared. Mortgage rates are volatile; they can gradually increase and decrease every day. Home prices fluctuate too, but when you look at the average price of houses sold in the U.S. over the last decade and beyond, the lines largely just go up. Graph displaying average sales price of new homes, average sales price of all homes sold, and median sales price of all homes sold in the U.S. dating back to 1960. Historically, real estate is one of the safest investments you could make. Beyond the price of your home appreciating over time, you’ll also have stable monthly mortgage payments, receive several tax benefits that will help lower your tax bill, and earn equity with every mortgage payment that can be leveraged in the future. Consider Existing Homes on the Market Instead of New Builds As building costs increase, it might make more sense to consider homes that have already been built and lived in. In many cases, they’re more affordable than new builds and offer more negotiation power when it comes to price, closing costs, and repairs. Considering things like construction delays and building codes, you can typically move into an existing home sooner—typically within 30-60 days after closing. And of course, we have to mention the unique charm that comes with older homes. Touches of craftsmanship like crown molding, hardwood floors, and intricate stone & ironwork add plenty of personality to a home that’s much more expensive to replicate in a new build. Work With Mortgage & Real Estate Professionals You Trust As always, the best way to protect and grow your financial health through homeownership is to work with mortgage & real estate professionals you trust. A UMortgage Loan Originator will walk you through all your loan options, shop rates with you, and, after you’ve closed on your mortgage, help you continue to leverage the wealth-building benefits of homeownership. If you’re ready to start exploring your pathway to homeownership or are curious how you can leverage the equity you’ve built through the home you own, fill out this form to find a UMortgage Loan Originator near you!

Mortgage rates dipped slightly again last week, despite some volatility in the bond market. The 10-year Treasury yield dropped to 4.1%, climbed back to 4.3% on Friday, and then dipped again to start this week. As headlines focused on tariffs, investors shifted money from stocks into bonds. A weaker-than-expected jobs report on Friday initially pointed to lower rates, but Federal Reserve Chairman Jerome Powell’s comments on economic confidence kept bonds from rallying further. This week could bring more volatility as two major inflation reports and job openings data hit the market. With the Fed keeping a close eye on employment trends, a weaker labor market could push mortgage rates lower. If Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) shows a decline in job openings, we could see downward pressure on rates. Last Week's Mortgage Rate Recap Rates Dipped Slightly Despite ups and downs in the bond market, mortgage rates continued their gradual decline. Friday’s BLS jobs report showed the labor market continued to soften with the unemployment rate barely rising to 4.1%. The big question now is whether the economy can sustain current trends amid government layoffs, reduced consumer spending, and slowing residential construction. This Week's Mortgage Rate Forecast Rates Could Be Volatile This week is packed with pivotal data that could bring some volatility and give us a glimpse into potential economic trends for the months ahead. The Job Openings and Labor Turnover Survey (JOLTS) will be released tomorrow morning; as government jobs are eliminated, eyes will be fixed on the private sector to see if they can keep the employment scales balanced. It’s important to remember that government jobs were a significant contributor to job growth data in 2024. While it’s less pivotal, we also have our Consumer Price Index (CPI) and Producer Price Index (PPI) inflation reports coming on Wednesday and Thursday, respectively. The market expects to see headline and core inflation continue to drop slightly closer to the Fed’s target. Mortgage rates move every day. Make sure to stay in touch with your UMortgage Loan Originator throughout the week for periodic updates to make sure you or your clients lock in the best deal possible.

The USDA is making it easier for homebuyers to finance manufactured homes by expanding its manufactured housing provisions nationwide starting March 4, 2025. This update means more affordable homeownership options for moderate- to low-income buyers, especially in rural areas. Here’s everything you need to know about this change and how it could help you achieve homeownership without breaking the bank. What is a Manufactured Home? A manufactured home is a factory-built home that meets the U.S. Department of Housing and Urban Development (HUD) construction standards. Unlike mobile homes built before 1976, manufactured homes are permanently attached to a foundation and must meet modern safety and energy efficiency regulations. They’re a great option for buyers looking for an affordable, high-quality home in rural and suburban areas. What is a USDA Loan? A USDA loan is a government-backed mortgage designed to help homebuyers in eligible rural and suburban areas purchase homes with 0% down payment. These loans are part of the U.S. Department of Agriculture’s mission to promote homeownership in communities where conventional financing options may be limited. What Are The New USDA Manufactured Home Guidelines? Previously, USDA loans had strict limitations on financing manufactured homes. The new expansion introduces the following key changes: Existing manufactured homes are now eligible if they meet certain safety and quality standards. Single-wide and double-wide manufactured homes are now approved nationwide. Financing is now available for energy-efficient manufactured homes in nonprofit land-lease communities and on Tribal lands. Homes must meet updated eligibility criteria, including being built after January 1, 2006, and being permanently placed on an approved foundation. The dealer approval process has been simplified, making it easier to buy a home from a USDA-approved seller. How to Qualify For a USDA Home Loan To qualify for a USDA loan on a manufactured home, buyers must meet these requirements: Minimum credit score of 580 Primary residence only (no second homes or investment properties) Property must meet USDA eligibility criteria, including foundation and age requirements Income limits apply based on location and household size Homes must not have been previously installed in another location How It Benefits Homebuyers The USDA Manufactured Home Program Expansion makes homeownership more accessible by increasing affordable housing options. Here’s why this change is a big deal for buyers: More choices: You can now finance existing manufactured homes instead of just new ones. Affordable payments: With 0% down and low mortgage insurance, monthly payments remain budget-friendly. Low Private Mortgage Insurance (PMI): The 0.35% PMI keeps your monthly payment low. Increased flexibility: Buyers can purchase in land-lease communities, Tribal lands, and more rural areas. Faster approval process: A streamlined dealer approval process speeds up home financing. This expansion is a major step forward that’s making homeownership more accessible for families who might not qualify for conventional mortgages. If you’re interested in exploring your eligibility and homebuying opportunities in your area, fill out this form or get connected with a UMortgage Loan Originator near you!

Homeownership comes with plenty of financial benefits. Understanding these benefits and how to take full advantage of them can help you keep more of your money in your pockets. Among those benefits are tax advantages such as Home Mortgage Interest Deduction. This permits homeowners to deduct interest paid on loans secured by their primary or secondary residence. These loans include mortgages used to purchase, build, or substantially improve a home, as well as second mortgages & certain home equity loans. If you’re unsure whether you qualify, contact your UMortgage Loan Originator! They can either find the answer for you or connect you with a tax professional who can provide accurate guidance. What Types of Loans Qualify For The Home Mortgage Interest Deduction? There are strict guidelines regarding the types of loans that qualify for this tax deduction. More broadly, it can be split into two categories: home acquisition debt and home equity debt. Home Acquisition Debt: These are your most typical mortgages. Specifically, loans that fall into this bucket include loans that are used to buy, build, or substantially improve a home. Home Equity Debt: These include loans secured by your home. Not all home equity debt qualifies; the loan proceeds must be used to substantially improve the residence. So, if you used a HELOC or a cash-out refinance specifically to fund a home improvement project, you most likely qualify. If the funds are used for debt consolidation or other personal expenses, you may not qualify. While the type of loan determines qualification, that’s not the only box that must be checked before eligibility is confirmed. The type of home secured by the loan also plays a part. Primary Residences: If you reside in the home which you’d like to deduct interest paid from, you must reside in the property for at least 51% of the year. Second Homes: This is where it gets a little more complicated. Second homes can be considered something like a vacation home or potentially a rental property, if it passes certain specifications, which we’ll detail below: Second home not rented out: If you have a second home that you don’t hold out for rent or resale to others at any time of the year, you can treat it as a qualified home. You don’t have to use the home during the year. Second home rented out: If you have a second home and rent it out for part of the year, you must also use it as a home during the year for it to be a qualified home. You must use this home for more than 14 days or more than 10% of the number of days during the year that the home is rented, whichever is longer. If you don’t use the home long enough, it’s considered a rental property and not a second home and therefore does not qualify. How Much Mortgage Interest Can You Deduct? The amount of interest you can deduct depends on when the mortgage was taken out and its purpose: Mortgages Taken Out Before October 14, 1987: All interest paid is fully deductible, as these are considered "grandfathered" debts. Mortgages Taken Out Between October 14, 1987, and December 15, 2017: Interest is deductible on the first $1 million of mortgage debt ($500,000 if married filing separately). Mortgages Taken Out After December 15, 2017: Interest is deductible on the first $750,000 of mortgage debt ($375,000 if married filing separately). Suppose you entered into a binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and purchased the residence before April 1, 2018. In that case, the higher limit of $1 million applies. How to Deduct Mortgage Points from Taxes Did you buy down your interest rate when you purchased your home or refinanced? Those points might be tax deductible. Points are upfront fees paid to the lender to secure a lower interest rate on your mortgage. So long as the loan qualifies based on the guidelines outlined above—such as the loan being for your primary residence and the points being a standard practice in your area—they can be deductible in the year paid. If these conditions aren't met, the points may still be deductible but spread out over the life of the loan. To claim the Home Mortgage Interest Deduction, follow the following steps: Itemize Deductions: Instead of taking the standard deduction, you must itemize your deductions on Schedule A of your tax return. Maintain Accurate Records: Keep detailed records of all mortgage interest payments. Your lender will typically provide a Form 1098, which reports the interest you've paid during the year. Complete Schedule A: Enter the deductible amount on the IRS’s Schedule A form, linked here, to reduce your taxable income. By properly utilizing your Home Mortgage Interest Deduction, you can save a substantial amount of money over the life of your loan. Want to know more ways to save as a homeowner this tax season? Check out our complete guide here. In all cases, confirm first that you meet the eligibility requirements before filing your taxes—consulting with your UMortgage Loan Originator or a tax professional if clarity is needed. The information in this blog was sourced from IRS publication 936. Refer to the publication at https://www.irs.gov/publications/p936#en_US_2024_publink1000229990 for more information.