Latest news with #mortgage
Yahoo
5 hours ago
- Business
- Yahoo
Is Dave Ramsey's Home Buying Advice Realistic For The Average Homeowner?
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Dave Ramsey is known for his no-nonsense approach to personal finance, including bold guidelines about how — and when — to buy a home. His long-standing advice is clear: never take out more than a 15-year mortgage, and never let your mortgage payment exceed 25% of your take-home pay. But as housing prices and interest rates climb, can the average person still afford a home if they follow Ramsey's rules? Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – TikTok user @simemedia recently laid out what Ramsey's home-buying rule looks like in today's market. Using national housing averages and ideal borrowing scenarios, he walked viewers through the numbers — and the outcome raised eyebrows. As @simemedia explains, the average U.S. home now costs around $350,000. A 15-year mortgage on that amount, assuming excellent credit – a 780+ score – would come out to just under $3,000 per month — before factoring in insurance, utilities, or maintenance. Now factor in Ramsey's second rule: the mortgage payment should be no more than 25% of take-home pay. Take-home pay is what's left after taxes, so to comfortably afford a $3,000 mortgage by Ramsey's standard, a buyer would need to take home $12,000 per month. That equates to an annual gross income of about $190,000 — putting the buyer in the top 6% of earners nationwide. Trending: This Jeff Bezos-backed startup will allow you to . To test the advice further, @simemedia ran the same scenario using Mississippi, the state with the lowest average home prices — around $180,000. That would bring the 15-year monthly mortgage payment down to roughly $1,600. Following the 25% rule, a buyer would need to take home $6,400 a month, or earn about $95,000 per year before taxes. That's still well above the national median household income of $80,610, according to the Census Bureau. In other words, even in the cheapest state in the U.S., the average household would fall short of affording a home under Ramsey's advice is rooted in avoiding financial risk. A 15-year loan saves thousands in interest compared to a 30-year one, and the 25% rule ensures homeowners don't stretch their budgets too thin. But critics like @simemedia argue that the rules, while ideal, are increasingly out of reach for many buyers, especially younger or first-time homeowners. Some financial experts recommend treating Ramsey's rules as goals rather than rigid requirements. Choosing a longer-term mortgage or targeting a more affordable home could make homeownership more achievable, while still maintaining reasonable financial safety. Ramsey's advice aims to help people build wealth responsibly, but strict adherence might not be realistic for the average homeowner in today's economy. As always, the best approach is one that reflects your personal financial situation, and if needed, includes input from a financial advisor. Read Next: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – , which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. Image: Shutterstock Send To MSN: 0 This article Is Dave Ramsey's Home Buying Advice Realistic For The Average Homeowner? originally appeared on Fehler beim Abrufen der Daten Melden Sie sich an, um Ihr Portfolio aufzurufen. Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten
Yahoo
8 hours ago
- Business
- Yahoo
I bought my 'forever home' with 3 other people. Here's how we manage our finances.
Austin Mark and his husband decided to buy a house with another couple in 2024. Buying a house together allowed all four people to get more bang for their bucks. Here's how they split their mortgage payment and manage their finances. This as-told-to essay is based on a conversation with Austin Mark, 39, who bought a house in July 2024 with three other people — his husband and another couple, Nate and Stephanie. Business Insider has verified Mark's home ownership. His words have been edited for length and clarity. My husband Bryan and I moved from Chicago to the West Coast 14 years ago. We decided to move back to Chicago last year, and our friends Nate Hanak and Stephanie Strother asked if we wanted to purchase property together. They're the only people on the planet who we could imagine doing it with. We have a very balanced relationship with them. We hear a lot of people tell us they've always wanted to buy a big house with their friends, and we've also heard a lot of people say we're absolutely crazy. When we decided to proceed, we started having Zoom calls frequently to ensure everybody was on the same page. Conversation one was, "Let's talk about finances." We wanted to have all of our personal finances on the table so that we knew what everyone was comfortable with. It was helpful to have a really open and honest conversation about where everybody was at. In July 2024 we found a multi-unit building that we all liked. The house was around $800,000. Each couple split the down payment 50/50, and we decided to put down 40% of the total home value. We wanted to put down more to lower our monthly payments since mortgage rates were so high. The 40% down brought us to a place where neither couple would see a significant increase in their monthly housing costs before and after buying the house. For our monthly payments now, instead of each couple paying half of the mortgage every month, we actually switch off. One couple pays the whole mortgage for the whole building every other month. It all breaks down to being the same, but it definitely simplifies things. Not everything is bundled together, though. We decided to separate our taxes and insurance. With what we are each paying, we never could have found something similar separately, even if each couple had something half the size of this house. If you buy a house with other people, it's important to treat it as a business as much as it is a living situation. We had gone through the process with a lawyer of talking about creating an LLC and then ultimately decided that it wasn't necessary because we don't intend to rent any parts of our house. Our operating agreement lays out the terms of how finances are split. The wording of our operating agreement includes all of the legal stuff that you would find in any agreement among business partners purchasing property. We have HOA meetings just like we would if we didn't know each other before doing this. We take care of things by voting. Anything to do with our individual units, like a personal aesthetic choice, is with each couple's own money. We split anything that has to do with common areas or the yard. It's a very old building, so we did run into a plumbing emergency not long after purchasing the building. We split the cost of the sewer line clean out. The property has very large trees on it, so we also paid an arborist to come and clear up the trees and split that evenly. The building at present has four kitchens, four full baths, two half baths, and six bedrooms. Each couple has a primary unit with an identical footprint, and then we have a secondary unit that's pretty different. Stephanie and Nate have an attic unit, and my husband and I have the basement unit. The two primary units have the same footprint, but they look completely different. Mine has all dark wood trim and a very old Chicago prairie style, while theirs is much lighter and a bit more modern. Their attic unit has a really cool skylight, and they like how bright and open it is, while I like playing video games in the basement. The fact that we're not sharing kitchens and bathrooms makes it really easy to feel like we're living our own lives and not in each other's space. We refer to it as the "forever home," which might have been a joke at first, but since we've gotten in here, it does feel like it's a very long-term living solution. We have a ton of space. If anybody ends up having kids, there's room to grow within the building already. Because the apartments are separate, it doesn't feel at all like we're roommates. Read the original article on Business Insider Sign in to access your portfolio
Forbes
10 hours ago
- Business
- Forbes
Privatizing Fannie And Freddie: Rationales And Credit Impacts
An American flag at a residential home in Discovery Bay, California, US, on Thursday, Nov. 7, 2024. ... More Mortgage rates in the US increased to the highest level since July. Photographer: David Paul Morris/Bloomberg All week, markets and politicians been dissecting the President Trump's proposal to privatize Fannie and Freddie. As they support 70% of the U.S. mortgage market, it is important to consider the credit markets impacts and risks for the U.S. These are still hard to work out until the rationale becomes clear, beyond removing the FHFA as conservator. Since their creation, the two main GSEs have been quintessential mixed-ownership corporations. In 1938, FNMA was established as a standalone company in the New Deal. It was acquired in 1950 by the entity that became the U.S. Department of Housing and Urban Development with two classes of shares: preferred, held by the U.S. Treasury, and common, non-voting, held by a network of mortgage lenders. In 1968, Fannie was reorganized and split into a successor FNMA and Ginnie Mae. The successor FNMA was listed on the New York Stock Exchange and chartered to purchase, bundle and sell residential mortgages as securities (RMBS). GNMA became part of HUD. Its function: to guarantee payments on securitizations backed by mortgages issued under programs by U.S. government departments like HUD, Veterans Affairs and Agriculture. FHLMC was created in 1970 along lines similar to FNMA—publicly traded, earning guarantee fees on loan portfolios, with HUD oversight—but its client network is smaller banks and credit unions rather than large banks. Originally, FHLMC was owned by the Federal Home Loan Banks, but under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 it became independent. In 1995, FHLMC diversified into making markets in subprime mortgage collateral. In 2008, Fannie and Freddie suffered material losses on their combined mortgage portfolio of USD 1.5 TN. They were bailed out, delisted from the NYSE on July 7, 2010, placed under FHFA's conservatorship, and began trading on OTC markets the next day. The stock of both institutions remains publicly investible alongside their residential mortgage-backed securities and corporate bonds. So there must be more to the current proposal than giving American investors access. The Big Beautiful Bill will shrink the U.S. tax base if it passes the Senate. Could privatizing these mortgage giants fill the gap with new, incremental tax revenues? It is hard to say without a concrete deal structure in place. However, the mortgage giants already pay taxes on operating income, as well as paying federal, state and local taxes on securities' earned interest. So the motivation to privatize is not obviously tax-related. It may have more to do with the U.S. Treasury currently owning the GSE preferreds as well as warrants on 80% of common stock. If pricing on a future IPO were to hit or exceed the target, the U.S. government could reap a one-time, massive windfall. Arranging banks would profit handsomely as well. A USD Trillion IPO (Chairman Pulte's estimate) could generate fees in the range of USD 40 to 70 Billion. That's plenty of incentive for a successful initial offering. But for most Americans, what matters more is what happens in the aftermarket. First, what would be the go-forward impact on rates for homebuyers? The more common theory is that the replacement entities, being purely profit-driven and maybe facing higher funding costs, would drive up rates—and up again as supply shrinks. A minority viewpoint says rates will go down as privatization drives innovation. The reality is—we can predict given a concrete exit plan, but without one, we just can't know. Second, and intimately linked, is the status of the U.S. guarantee. This decision would impact the entire credit market ecosystem starting with borrowers, whose numbers would shrink as government support goes away. If the new entities were to retain U.S. support in some form, the impacts on bank market microstructure and the competitive playing field are less clear; but don't expect the status quo to continue. Would a distributed ecosystem form anew, or would intense, uneven competition transform the U.S. bank market where only giants survive? Related to the status of the guarantee is how potential backlash could impact the U.S. government rating, which Moody's just downgraded to Aa1. Would global bond investors view sudden withdrawal as a default, regardless of the legal definition? And in this same point, will GNMA and its guarantee continue? The answer directly impacts home affordability for veterans, rural homeowners and disadvantaged groups. Third, are the potential changes to the GSE's current information disclosure regime. This question is not yet debated in the media but it should be. The go-forward disclosure package could have the greatest impact on aftermarket performance. Bonds are most active in the capital structure of GSEs today. Their required bond disclosures comply with the very best practices in the world that were created in the U.S. public securitization markets. Will the disclosures continue? Will the public have access to them after the IPO? Or will the financial position of the new players become more opaque as information disclosures lag changes in financial performance? We have seen this movie before in the GFC. It did not end well. Fourth, the operational impacts of privatization are unclear. Will the 30-year fixed rate model made in the 1930s continue or gradually be replaced by loan structures benefitting borrowers less and lenders more—floating rate indices, shorter and longer maturities, different funding formulas? Will a forward-settled market replace the To Be Announced market that FNMA and FHLMC currently use? The TBA market today allows sellers to fund their origination pipelines and buyers to lock in prices before transaction specifics are settled because the guarantee equalizes the potential risk between offerings. The cost benefits, which can be quite substantial, may disappear if the guarantee goes away. Fifth are what Donald Rumsfeld called unknown-unknowns. If the first four categories of unknowns are known (with the possible exception of #3), news unfolding daily shines a light on impacts we have not yet thought of. Was Moody's downgrade of FNMA a reflection of recent past performance, or does it also anticipate future shocks to the organization? Does the introduction of an anti-crime unit with AI fraud detection technology materially impact how ? WASHINGTON, DC - FEBRUARY 27: William Pulte, nominee for Director of the Federal Housing Finance ... More Agency testifies at a hearing of the Senate Banking Committee on February 27, 2025 at the Dirksen Senate Building in Washington, DC. When FHFA Director Bill Pulte says, 'what we're trying to do…is take cost out of the system and get homes so they can be affordable again,' is he referring to the current interest rate levels or foreshadowing a collapse in prices? These scenarios have drastically different economic consequences. Finally, when President Trump says, 'the U.S. will keep its implicit GUARANTEES,' the key word seems to me to be the one in small caps: implicit. Equities are story paper, but bonds are based on contracts; and it is hard to assign a financial value, positive or negative, to implicit support.
Telegraph
11 hours ago
- Business
- Telegraph
‘My wife wants a fixed mortgage. Should she pay for our overspend if rates drop?'
If you have a conundrum that you want answered in a future column, email moralmoney@ All our letters are genuine, but writers are anonymous. Dear Sam, My wife and I are arguing about whether we should get a fixed rate or variable rate – we have a joint mortgage and we can't agree. Should I be able to insist that I am compensated when I am proved right and we end up overpaying our mortgage because she is too scared to track the Bank of England Bank rate? I believe (and so does every other expert on the subject) that interest rates will fall over the next two years, but my wife would prefer to lock us into a fixed rate for two years, so we know what to budget for. I strongly believe this will end up costing us hundreds of pounds that we could avoid by tracking the headline interest rate as it falls. Even if it did rise, we can afford our repayments. If she insists, I feel she should have to compensate me for the over payment of interest – that way her over-cautious nature doesn't rob me and she will have consequences for playing it too safe. – Anonymous Dear reader, You're not the first couple to fall out over money and you certainly won't be the last. It's completely understandable to feel frustrated when you believe logic, data and expert opinion are on your side, but your partner doesn't share your outlook. Financial decisions, especially big ones such as choosing a mortgage, often tap into deep-seated emotions like risk tolerance, fear of the unknown, a need for control. No economic forecast can completely override those very human instincts. You clearly feel confident about the future of interest rates and your ability to weather short-term fluctuations. Your wife, on the other hand, prioritises predictability and peace of mind. Neither position is inherently wrong, just different. What's becoming dangerous is the idea that one of you must 'win', and that the 'loser' should pay a price for their view. My personal interest in how men and women often think and behave differently around finance leads me to mention the gendered dimension here. This is a typical husband/wife dynamic you are displaying, and taking a moment to acknowledge that and respect the 'why' of your gendered positions may be useful. In general, women tend to value security and predictability in financial decisions, especially where household stability is concerned. Men, on the other hand, are often more comfortable with calculated risk and can lean toward competitiveness – wanting to be proven right, to optimise every opportunity, or to beat the system. These traits aren't universal, but they do reflect broad tendencies that might help explain the emotional weight behind each of your positions. Marriage is not a zero-sum game and framing your disagreement in terms of compensation risks damaging the emotional partnership that sits behind the financial one. You're not business partners striking a deal. You are life partners navigating uncertainty. If your wife chose a fixed rate and interest rates did fall, she'd already carry the emotional burden of seeing that her cautious approach came at a financial cost. Adding financial penalties would turn a shared decision into a battleground of blame. Instead, I encourage you to take a step back and reconsider the purpose of the conversation. Is it about being right, or is it about feeling safe and secure as a couple? You say you can afford repayments even if rates rise, which suggests your argument isn't about financial survival, but about principle. That's valid, but it's also an invitation to find common ground, not a chance to 'win'. You could propose a compromise product: some lenders offer 'tracker with a cap' deals, which follow the base rate but protect against extreme rises. Alternatively, you could consider splitting the mortgage into two parts (some lenders allow this) where one part is fixed and the other tracks. This way you each have a stake in the outcome and no one is left feeling overridden. Even if that's not possible with your lender, the exercise of seeking middle ground may be more valuable than the marginal gain of saving a few hundred pounds. What's really at play here is fear, not just fear of rising interest rates, but fear of being dismissed or not heard in the relationship. You're both trying to protect your future just through different means. So rather than seeking compensation, seek understanding. Ask your wife what she needs to feel secure. Share what you need to feel respected and listened to. And remember, it's often the conversations behind financial choices, not the choices themselves, that shape the long-term health of a relationship. In the end, if you can come to an agreement that reflects both your risk profile and her desire for certainty, you'll not only save yourselves some money – you'll save yourselves a lot of emotional interest too. Good luck, – Sam
Associated Press
a day ago
- Business
- Associated Press
CMHC releases results for first quarter of 2025
OTTAWA, ON, May 30, 2025 /CNW/ - Canada Mortgage and Housing Corporation (CMHC) today released its Quarterly Financial Report showing strong first quarter results despite a volatile economic environment due to global political factors including rising trade tensions. For the three months ended March 31, 2025, we insured 10,030 transactional homeowner units, an increase of 37% over 7,295 in Q1 2024 supported by decreasing interest rates which lower the cost of borrowing as well as a mortgage rule change, which now allows 30-year insured mortgage amortization. CMHC continues to see strong multi-unit residential volumes, which totaled $14,171 million in the first three quarters of 2025, up from $13,861 million during the same period last year – a 2% increase. The increase continues to be largely driven by the MLI Select product which allows for longer amortizations and higher loan to value, accessibility, and climate compatibility. In Q1, CMHC insured $10,476 million for MLI Select, an increase of 11% over $9,474 million during the same quarter of 2024. CMHC also delivers housing programs and initiatives on behalf of the Government of Canada. An initial $2.63 billion for the Canada Greener Homes Loan Program was fully committed due to high demand. The program received a top-up in Q1 2025 for CMHC to deliver an additional $600 million in interest-free loans for a total of nearly $3.23 billion, supporting 15,000 to 24,000 more homeowners. 'We will continue to assess the impact that economic factors could have on housing affordability, our financial outlook and our financial results. We are fully committed to being an organization Canadians can count on.' – Michel Tremblay, Chief Financial Officer and Senior Vice-President, Corporate Services Additional highlights for the three-month period ending March 31, 2025: The full Quarterly Financial Report is available online. CMHC plays a critical role as a national convenor to promote stability and sustainability in Canada's housing finance system. Its mortgage insurance products support access to home ownership and the creation and maintenance of rental supply. CMHC research and data help inform housing policy. By facilitating cooperation between all levels of government, private and non-profit sectors, it contributes to advancing housing affordability, equity, and climate compatibility. CMHC actively supports the Government of Canada in delivering on its commitment to make housing more affordable. Follow us on X (formerly Twitter), YouTube, LinkedIn, Facebook and Instagram. SOURCE Canada Mortgage and Housing Corporation (CMHC)
