March 31st, Monday Market Update and Mindset Call with Nikki, Cari and Angie

This is a BIG one!! Be sure to tune in and listen!!

Mortgage interest rates remain in the mid to high 6's with significant changes coming to FHA mortgage eligibility that will impact non-permanent residents. 

Starting May 25th, only US citizens and permanent residents will qualify for FHA loans, while temporary residents with work visas must explore alternative financing options.

• Mortgage rates holding in mid-to-high 6% range with potential to move lower later this year
• Major FHA policy change eliminating eligibility for non-permanent residents effective May 25th
• Alternative options include Fannie Mae and Freddie Mac loans requiring higher credit scores (680+)
• US citizens living abroad face challenges with automated underwriting systems
• Tariffs may potentially help lower mortgage rates by increasing treasury demand
• Q1 ending provides opportunity to reassess business goals and make necessary adjustments

Find me on Facebook - Angie Gerber and Nikki Erickson or Kevnick Group, and on Instagram and TikTok @mortgagesfromMNtoAZ where I share regular updates and answer your mortgage questions.

Chapters

• 1:10 Mortgage Rate Market Update
• 2:33 Critical Changes to FHA Eligibility
• 5:36 US Citizens Living Abroad
• 8:35 Understanding Tariffs Impact
• 11:43 End of Q1 Goal Assessment
• 15:40 Closing Encouragements

Transcript

Speaker 1: 0:35

Nikki, you're up, awesome. Well, happy Monday. As usual. We have mortgage interest rates in the mid to high sixes again this week. We saw some improvement this morning from last week's kind of end of the week slump a little bit and we moved a little bit higher on the mortgage interest rates. But we are seeing we're still holding firm into that mid to high six range.

Speaker 1: 0:58

This week we get the jobs report on anticipated number of job creations for the month and it looks like we're going to be right around 105,000 as predicted and which will kind of help mortgage interest rates in a way because we'll see those job creations. We are most likely going to see that inflation number increase slightly from 4.1 to 4.2. But when you keep in mind that the current inflation is 4.14, to get rounded up to 4.2, it's not going to take much of an increase in order to bump that up. Shouldn't affect the market too much from an interest rate standpoint. But going into the remainder of the year and into kind of just this spring to summer market, there's definitely a concentration on putting pressure on getting those mortgage interest rates low, the tariffs that are coming in and if they are more of a longer term tariff, if these tariffs are going to stay in place. That's actually going to help drive those treasuries down and drive the availability of those treasuries, and so what will happen is that it will help us to push those mortgage interest rates down and hopefully get into the, you know, low six, high five range at some point, you know, before the summer. So that's kind of the goal. That's what really the talk has been about, you know, with Scott Pesent from the treasury and kind of just trying to figure out how to help the housing market from that standpoint.

Speaker 1: 2:18

With that being said, biggest change I want to talk about in the housing market is changes to FHA mortgages. I did a TikTok on this already. It is available to share. It's gotten quite a few comments and shares and questions etc. So I'll be doing some follow-up TikToks based on the questions that people are asking regarding the changes.

Speaker 1: 2:37

But FHA has now changed their policy to eligible borrowers that are able to lend on FHA mortgages. Currently, right now, you can get an FHA mortgage if you are legally in the United States and you are a non-permanent resident. So in other words, you don't have a permanent status here, you're temporarily in the United States and you're here on a work visa or a EAD, which is a work employment authorization documentation, something of that nature, where it establishes your presence within the United States and you are here on a temporary basis, you are eligible to purchase a primary residence with an FHA mortgage. As of May 25th, that temporary status, or the available funds for FHA mortgages for temporary status, is going away, so they will only be lending to permanent residents or US citizens. The reason for that is because Trump signed an executive order that directs federal funds to be used in general, federal funds in general to be used towards US citizens first, permanent residents second, and not to be used towards people that towards individuals that are here on a temporary status. As far as benefits go, fha took that to mean that they are federally funded and therefore they are not allowing lending to temporary residents. With that being said, right now Fannie Mae and Freddie do have eligibility for individuals who are in the United States on a temporary status. They don't go into a huge amount of specifics as to what they will allow and what they won't allow, but in general, they do have some opportunity for people to lend through Fannie and Freddie as opposed to FHA.

Speaker 1: 4:24

Now, as a reminder, the big difference between FHA and Fannie is going to be the amount of down payment required, credit history and credit score requirements. So Fannie and Freddie are going to have higher credit score requirements and different down payment requirements than FHA. Fha, you know, you can usually get down to a 580 credit score, three and a half percent down, and you can use down payment assistance with it, etc. On the Fannie and Freddie side, usually it can be as low as 3% down, but you're going to want to need a credit score normally above a 680. And you're going to have other different down payment assistance options available with Fannie and Freddie. So it's a huge change to FHA lending and it's you know, when FHA does make these changes, they tend to make them on a more permanent basis than just for this administration. So keep in mind that there are still alternatives. However, it is going to be a change to how we're lending and a change to your status within the country and whether or not you can obtain a home or purchase a home.

Speaker 2: 5:26

That's a lot, that's a big one.

Speaker 1: 5:28

It is a big one. Yes, yes, and I also found out kind of that ties to this US citizens who are living abroad and working abroad. So in other words, if you are a US citizen and you live in Germany, let's just say, and you work in Germany, you are allowed to purchase a home in the United States. However, you are required to do it not using Fannie and Freddie. The reason for that is because Fannie and Freddie doesn't care if you're living and working abroad, but they do have restrictions on their automated underwriting system. So if Fannie and Freddie have an automated underwriting system that brings a client through an underwriting process and then validates that underwriting to make sure the borrower is who they say they are, the data that we do have, that's public information, is consistent with who they are and then also rates their credit score and their underwriting capacity, and we use that automated underwriting system to lend on Fannie and Freddie loans.

Speaker 1: 6:30

When you have a client who is living and working abroad, that foreign address is not compatible with their automated underwriting system. So when that happens, they therefore cannot be put through the automated underwriting system and have to be what's called manually underwritten. Well, there's a lot of limitations on being able to complete a manually underwritten loan for Fannie and Freddie, so therefore it automatically bumps that person most of the time to an FHA lending process or something that we call a non-QM or non-qualified mortgage lending process, where we don't rely on that automated underwriting. So it's really interesting to see kind of just the different aspects of how people are living, what they're doing with, you know, on their everyday lives, and how that's now affecting the mortgage lending piece in the way that we used to do things, in the way that we're being directed to do things now.

Speaker 2: 7:18

Yeah, it's a lot to keep up on, and this is a perfect example of I say it all the time and I'll continue to say it business partners matter, knowing Nikki, and if not Nikki, your lender better be at this quality or better, because there's a lot going on, and I'll tell you there's a lot of lenders out there that don't take the time to understand this, to educate themselves and to even get out on TikTok or out on social media or send out email blasts to all their partners to let them know what's going on, because it's quite yeah, it's changing at a rapid pace.

Speaker 2: 8:00

I mean, this is a really big call and I'm going to put it out there on my YouTube channel and on social media as a must listen to, because this is something that we need to know, and I just again appreciate you, nikki, showing up and bringing all this vital information to us and we can pass on to our clients. And I wanted to circle back to the tariffs quick. So, as an agent, if I want to really be able to explain this or understand this more, what resources or where should I go to get, like, where do you go or where should I go to get a really good understanding how I can best pass this information along, because that's a really great, great news, and how do we as agents articulate that better out into the public and to our clients or prospects?

Speaker 1: 8:50

There are some influencers out there that are going to have more factual information than what you'll find on a CNN or an MSNBC or some of these news stations that are going to be either right or left winged. It's really hard to disseminate between what's actually fact and what's actually an opinion. It's really hard to disseminate between what's actually fact and what's actually an opinion. And when you look at the money and you look at, you know what's the resulting income from, for example, these tariffs. That income that results in it is going to be more of a long play for the government in general and there's all these opinions as to what it's going to do and you know what the tariffs are going to do on a long-term basis. I think what the concentration is in a lot of the like, a lot of the social media that I listen to, a lot of the things that come across that I've kind of tapped into have. Basically there's this kind of idea out there that, oh, you should buy a car now so that when the tariffs go in on April 2nd you're not paying more for that car, and there's no evidence that that you know that is actually going to happen, where that car is going to cost you more, you know, after April 2nd than it did today, and so I think the same thing is happening with housing. People are going oh my gosh, that house is going to cost me more, that interest rate is going to cost me more once these tariffs are in place versus prior to these tariffs being in place, and I think that there's just an idea of like this. There needs to be more patience out there.

Speaker 1: 10:06

Home prices are going up. They always have been. We have appreciation. Home prices have always gone up. So it's one of those things where we have to really be disseminating against what's factual and what we know to be historical as far as appreciation goes, and what is happening as a direct result of tariffs, et cetera.

Speaker 1: 10:26

What we're going to see is different volatile fluctuations in interest rate, absolutely, but the general idea that homes are going to become more expensive because of tariffs is just, you know that's you could say, you could say that, but the reality is is that there's so many factors that go into it, including just general appreciation and and what people can afford and and things of that nature, and supply and demand and all these other factors that work into it. So it's kind of just again easing that fear and saying, okay, if they do have questions, let's not talk about the fear that comes along with what could happen. This is where we're at right now and this is what home prices are doing right now, et cetera, and it doesn't matter really what you tie it back to. The reality is that it's a ton of different factors going into something like that.

Speaker 2: 11:08

Love it, Yep. Remind us where do we go to follow you and get all this up-to-date information throughout the week.

Speaker 1: 11:15

Yep, so I'm on Facebook, obviously under Nikki Erickson. I am also have my Kevnick Mortgage or Kevnick Group page on Facebook. If you were to find me on Instagram or TikTok, it's at mortgages from MN to AZ, so I am, that's kind of where I have all of my stuff and, like I said, all my TikToks are shareable. Everything from that standpoint, if you do have comments, I'll answer those comments, et cetera, and kind of go from there and do the best that I can.

Speaker 2: 11:40

I love it. Thank you so much for showing up the way you do yes so real quick. I just want to speak to you agents as well. It is March 31st, which means we are at the end of the first quarter, so I really encourage you if you did that business plan back in October or November or the end of the fourth quarter, if it's not in front of you, pull it out of your drawer and let's take a look at it and see where you're at on goal. Are you on goal? Did you even forget what your goal was? I've seen that happen more times than you would believe, so I want you to take this opportunity to look at where you're at and think about what you need to start doing, what you need to stop doing and what you need to continue doing in order to reach your goals.

Speaker 2: 12:28

A lot of people think it's saying yes to a lot of stuff, and if that's you and you're one of those people that are just piling it on and saying yes and yes, it's really the top one to three percent of people will tell you they got there because of what they said no to, saying no to in order to open up the space so that you can really go after your goals and show up for yourself and show up for your goals. And if you have family and people that are depending on it, then it's really there's got to be a line drawn in the sand, a hard one. So like, let's drive in concrete, let's take a chainsaw or you know whatever, and just cut it out and really get this, get this figured out and get your goal in front of you and take the steps to start finding it and really digging in and give yourself some grace if you're not there and you're not close and you forgot about it. Or you need to just recalibrate. Take this time to do that. Like, just take a moment, look at it. If you need to adjust it, adjust it. Cut the gross feelings and the guilt and the shame or oh, I should have done this or I didn't do this or I didn't do that, because that energy is not going to get you anywhere. You can't change what you did yesterday or this last first quarter, just like you can't change what time you got up this morning. What you can do is take this moment in this time and make decisions, make different decisions and then back it with different disciplines and habits and behaviors, and what you do today will start shaping your tomorrow. So I think it's just really important, as we wrap up quarter one, to look at how we can really kill it and show up and just stop on quarter two and go get your goals Absolutely Perfect. Good, that's great, all right.

Speaker 2: 14:24

Well, as usual, nikki's here. Find her on social media, ask her questions. Look her up. I'm here. Find me on social media. Angie Gerber, I'm here and happy to help get you on goal, get you on point, get you some quick things. It's usually just a quick tweak or adjustment to your plan and to what you're doing that can really quantum leap your results. So you don't have to go at it alone. Yes, you have to do the work alone, but you shouldn't do it alone. You have to do it yourself, but you shouldn't do it alone. Yes, you have to do the work alone, but you shouldn't do it alone. You have to do it yourself, but you shouldn't do it alone. All right, well, thank you all for showing up and if you're listening to the recording of the podcast, drop a note below or reach out to us. We're here and happy to help. Have a good week everyone. Thanks Bye.