When mortgage rates drop, the mantra is “no buyers left behind”

adminonDecember 16, 2022February 19, 2023Leave a Comment

As mortgage rates continue to fall, Chad Earnest's mantra with his referral partners in 2023 is: "No buyer left behind".

The Montgomery, Texas, area manager who moved from thereAmeriSave Mortgage CorporationtoCardinal Financial Companyin November launched a platform in mid-2022 to help its referral partners succeed.

He makes co-marketing investments and helps partners with their databases by looking for missed opportunities in the marketplace. The main focus is on borrowers who may be credit-constrained.

"Home buyers are traditionally the byproduct of our referral partners like real estate agents and home builders," Earnest said. "We're looking for agents who understand the importance of generating leads, and working with them."

Earnest says the traditional referral game "is difficult right now, and we have to look under every rock for qualified homebuyers who are active in the market".

A buoy for Earnest's team effort: Mortgage rates are falling, bringing borrowers on the sidelines back to the market.

Lower mortgage rates

TheMortgage Bankers Association(MBA) reported Tuesday that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (726.200 USD or less) during the week to the 20. January has fallen to 6.20%, compared with 6.23% the previous week.

Meanwhile, MBA data show that interest rates on jumbo loans (more than 726.200 USD) have dropped from 6.08% to 5.92% in the same period.

AtMortgage News Daily, conforming rates for 30-year fixed mortgages were at 6.21% Wednesday morning, while jumbo loans were at 5.72%.

"Mortgage rates fell for the third week in a row, which is good news for potential homebuyers looking ahead to the spring home-buying season," Joel Kan, MBA vice president and deputy chief economist, said in a statement. "Mortgage rates for most loan types fell last week, with the 30-year fixed rate hitting its lowest level since September 2022."

More mortgage applications

Amid lower mortgage rates, applications for home loans rose in the week to 20, according to MBA. January down 7% from the previous week.

In terms of the various products on the market, refinance applications increased 15% from the previous week, but remained 77% behind last year's pace. Kan says interest rates remain more than two percentage points higher than a year ago, offering very little refinancing incentive for most borrowers tied to lower rates.

Purchase applications increased 3% from the previous week, but were 39% lower than the same week a year ago.

"Home buying activity remains tepid, but as interest rates continue to fall and home prices continue to cool, we expect potential buyers to re-enter the market. Many have been waiting for affordability challenges to ease," Kan said.

Today, many everyday purchases and expenses are financed with loans . Whether it is a car, furniture, high-quality consumer goods or travel, loans are often used when there are not enough financial reserves of one's own. Financing from outside funds is almost always necessary for private construction projects. As helpful as a loan may be in an individual case, interest and repayment are usually a noticeable burden. This would be lower if the borrowing could be claimed for tax purposes. Unfortunately, the tax authorities generally only recognize credit costs within narrow limits. This applies to both German and Austrian tax law. In both – very similarly structured – tax systems, loan interest can generally only be claimed if the underlying financing serves to generate taxable income. This largely leaves out credit costs incurred in connection with private purchases and consumption. In this sense, interest on loans can be deducted from taxes, especially in the case of real estate financing and loans for professional purposes. In the following, we provide an overview:

How borrowing costs can be deducted for tax purposes:

1.) Credits in the case of rented real estate

In the case of rental real estate, loans are usually used to generate rental income. Since the income is taxable, the interest on the loan is also tax-deductible. It does not matter whether the loan is used to finance the construction of rented accommodation or the maintenance (modernization or renovation) of the property. reorganization). In the case of mixed-use buildings (owner-occupied and rental), financing costs can usually only be deducted in proportion to the rental portion – unless it can be proven that the financing was used exclusively for rental purposes.

2.) Loans for owner-occupied real estate

In Germany, borrowing costs for owner-occupied properties are generally not tax deductible. In Austria, there was previously an exception in that loans for housing creation and renovation could be taken into account for tax purposes as part of the special expenses deduction. Both interest and redemption payments could be deducted. However, this rule only applies to pre-1. January 2016 loans taken out. The special expenses deduction remains possible for these loans until 2020.

3.) Loans for professional purposes

If a second home in another city is needed to reach a job, the related loan costs are recognized. This applies not only to credit costs in the immediate context of housing, but also to moving, brokerage, rental and renovation costs incurred in the further context.

In order to be tax deductible, car loans must also be used for business purposes and not just to travel between home and work. Typically this is true for self-employed individuals and freelancers who work in the field. If the vehicle is used for both business and private purposes, the business portion must be proven (logbook).

Self-employed persons and freelancers are also allowed to pay credit costs related to the financing of their office and business equipment (office furniture, IT, technical equipment, etc.).) claim.

Those who no longer wish to manage their assets themselves are best off delegating the task to an asset manager. In Germany there are numerous financial service providers active in the field of individual asset advice and management. However, in order to find the right company, one should first obtain a few quotes and consider things that will make the selection easier.

What forms of asset management are available?

Many banks offer so-called standardized asset management to their clients. This means that as a client, you have no influence on how your assets are invested in this option. The only vote is on whether assets should be invested more conservatively or more riskily. Asset managers would then take care of the management without the client being involved in the process. In the case of individual asset management, as offered by JRC Capital Management, the customer can specify precise guidelines as to how the assets are to be invested. This type of asset management often requires a very large amount of assets. Investment sums from 500.000 euros is the entry level for individual asset management. However, there are also asset managers who manage portfolios individually even for smaller amounts. In general, the more you want to invest, the greater the influence you have on the investment strategy.

What are the costs of asset management?

In most cases, the manager charges a total flat fee, which is based on the volume of invested assets and risk profile. The more you invest, the lower the fees, which range between 2.0% p.a and 0.8% p.a can move.

How does asset management work?

Every asset manager has his own strategies to invest the money of his customers as profitably as possible. When selecting an asset management company, it is therefore important that the client is informed in detail about the investment strategy. Because if one does not agree with this, one should leave the fingers of it.

Depending on what has been agreed with the asset manager, the latter will invest the client's money in accordance with the risk profile. The investment is made on the capital markets, that is, it can be invested in securities, funds or other stock market products, as these still promise very high returns. Some asset managers, such as JRC Capital Management, also focus on trading foreign currencies.

What distinguishes good asset management?

In principle, you should only let your assets be managed by someone who has experience in the field of asset management and has already had success in this area.
Since asset manager is not a protected job title, one should not be blinded by this expression, because in principle everyone can call himself so. It is therefore important to find out in advance about the asset manager and his or her experience.

If an asset manager does not have a license for financial portfolio management issued by BaFin, he or she is not allowed to manage client portfolios that include securities. You should stay away from such managers and entrust your money in principle only licensed asset managers.

It all depends on the feeling

Leaving the management of one's own assets out of one's hands is not easy for everyone. Therefore, this important task should only be entrusted to someone you trust. If you do not want to invest your own time in managing your investments from now on, you should seek information from various asset managers. A personal meeting is advisable, because there you can immediately find out whether the chemistry is right.

Lower mortgage rates

More mortgage applications

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