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Category: Interest Rates (Page 1 of 34)

Ask for Seller Concessions or a Rate Buydown — Not Just a Lower Price

If you’re shopping for a home right now, you have more leverage than you’ve had in years — and how you use it matters.

Roughly 42% of listings are cutting their price. Active inventory is near ~1.17 million homes, the highest since late 2019, and up about 5–6% from a year ago.

Listing prices have been declining year over year for 36 weeks. Mortgage rates are in the mid 7% range (roughly 7.49% at the time of this article).

Sellers are more open to negotiation. Buyers who only ask for a smaller sticker price may be leaving better options on the table.

A price cut isn’t always the best ask

A modest drop in list price can feel like a win. But depending on your loan, it may not change your monthly payment much — and it doesn’t always help with closing costs. Seller concessions (credits toward closing costs) and rate buydowns often do more for your real monthly budget.

roll of american dollar banknotes tightened with band

Closing-cost credit: Reduces cash you need at the table. Useful if you’re tight on reserves or want to keep more money for moving, repairs, or an emergency fund.

Temporary buydown (e.g., 2-1): Lowers your payment in the early years while you settle in, refinance later, or grow income.

Permanent buydown (points): Can lower your rate for the life of the loan when the numbers work.

Sometimes the smartest offer is to keep the price closer to list and ask the seller to fund a credit or buydown that improves your payment or cash-to-close.

Why this works in today’s market

Sellers still care about net proceeds and the “sold” story. A modest price cut plus a targeted credit can get you under contract without forcing them into a deep discount. With so many homes already cutting price, you’re not being difficult by asking — you’re being practical.

How to talk about it with your agent and lender

1. Ask your lender to run side-by-side numbers: price cut vs. credit vs. buydown.

2. Decide what matters more for you — lower payment, less cash at closing, or both.

3. Have your agent present the ask as a path to a clean close, not a hardball tactic.

4. Get pre-approved so sellers know your financing is real when you negotiate.

Next step

If rates above 7% have you hesitating, don’t assume the only lever is “wait for a lower list price.”

Ask about seller concessions and buydowns.

Call me anytime to keep the conversation going, ask questions, or run numbers.

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Should I Wait for Mortgage Rates to Drop Before Buying a Home? – Navigating Home Buying in a Mid-6% Interest Rate Market

There’s a lot of energy right now in the media and the real estate world around one question: How do you navigate buying and selling homes (primary residences, second homes, or investment properties) when interest rates are in the mid-6s?

person holding a key

The most common version of that question is: “Should I wait for rates to come down?” The underlying assumption seems plain — lower rates mean lower cost on the loan…but it’s truly not that simple.

I’ve covered this topic before in podcasts and blog posts, but the conversation keeps coming up, so I want to dig into it with a real-world example and some clear numbers.

A Quick but Important Disclaimer

The interest rates I use below are samples only. I am not advertising them, not suggesting they are available today, and not inviting anyone to call me expecting these exact rates. They are simply tools to illustrate how to evaluate the decision of waiting versus buying now.

I’m also using a conventional conforming 30-year fixed loan (Fannie or Freddie) with an 80% loan-to-value ratio, so there is no mortgage insurance in the example. The principles hold either way.

Why the Interest Rate Alone Is Not the Full Story

Most people focus almost exclusively on the rate. That’s understandable, but incomplete.

black smartphone on black table

When I evaluate the true cost of a loan, one of the most important numbers I look at is the principal balance remaining at years 5, 7, and 10 (sometimes year 3 depending on the situation).

Why? Because it is near a statistical certainty that the average loan in the United States is retired—through sale or refinance—somewhere between years 7 and 10. Very few people take a 30-year mortgage all the way to term.

During those early years, the vast majority of each payment is interest. Lenders know this. Most of the public does not.

If we accept that the loan will likely be refinanced or paid off in that window, then the remaining principal balance becomes a critical part of the overall cost equation.

The question is not simply “What is my payment for the next few years?” It is “How do I own this home in the shortest effective duration possible?”

A Concrete Example

Let’s assume a $500,000 home with 20% down—a $400,000 loan.

  • Buy today at a sample rate of 6.75%. Five years later, the remaining principal balance is approximately $375,503.

Now suppose your gut tells you rates will drop by half a percentage point within a year to 6.25%. You wait.

In that year, the home appreciates 3% (I’ll address appreciation in a moment), so the new purchase price requires a loan of about $412,000.

  • Buy one year from now at 6.25%. Five years after that purchase (six years from today), the remaining principal balance is approximately $384,549.

From a principal-balance perspective alone, you would have been better off buying today at the higher rate.

What About Home Appreciation?

Across the country, the best current estimates for national average home-price appreciation this year land somewhere in the 1.5%–3% range. Prices have been relatively stable and continue to rise in many markets.

Are there neighborhoods where values are flat or declining? Absolutely—especially certain pockets inside large metropolitan areas. That is why you need a strong real estate agent who can speak in numbers, not just anecdotes. Ask them:

  • What has this specific property or neighborhood done historically?
  • What do the data suggest for the next 12 months?

Historically, year-over-year depreciation is rare, but it can happen. Even if you believe values will decline, a competent lender can run the same model with a negative appreciation assumption so you can see the math clearly.

Other Costs That Often Matter More Than the Rate

Waiting for rates also means giving up the negotiating environment we have today. Inventories have improved. The market is slower. Sellers are more willing to offer concessions. Competitive bidding is far less intense than it was a few years ago.

a person holding a key

Here’s a practical tip many buyers overlook:

If a seller offers, say, $10,000 in concessions, in many cases, the smarter move is not to use that money to buy down the rate. Instead, have the seller cover a large portion of your closing costs, take a slightly higher rate from the lender (which generates a lender credit), and then use the net cash advantage to increase your down payment or shorten the term while keeping the payment roughly the same.

If you still believe rates will fall later, this approach can leave you in a stronger position to refinance. The decision is nuanced. A blanket “I’m waiting for rates to drop” is, in many (if not most) cases, a costly gut-level choice rather than an analytical one.

happy couple holding and showing a house key

What You Should Do Next

Mortgage and real-estate decisions are subtle. They require a team that can run the numbers.

  1. Work with a real estate agent who can discuss both experience and data on current values, historical performance, and reasonable expectations for the next year.
  2. Work with a lender who can build simple but solid models that incorporate rate scenarios, appreciation (or depreciation), remaining principal balances, closing-cost credits, and term options.

If your lender cannot or will not do that kind of math, find one who will. In a higher-rate environment, the analytical work becomes more important, not less.

When rates were 2.75%, the risk profile was different. Rates in the mid-6s still demand clear-eyed analysis alongside gut feel.

Let’s Talk

I hope this discussion helps you think more clearly about the true cost of waiting.

If you’re trying to figure out whether a particular house or refinance makes sense in this market, do contact me. I’m happy to run the numbers, walk through the trade-offs, and help you see the full picture.

Reach out to me directly—I’d love to talk strategy and explore how we can best take advantage of market conditions to help you succeed.

As always, you can set up an appointment with me here…

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Your Assets Can Now Help You Qualify for a Mortgage

close up shot of scrabble tiles on a white surface

When you apply for a mortgage, most people naturally think about their paycheck. How much do I earn? What does my tax return show? How much income can the lender use? But what if your income doesn’t tell the whole story about your financial strength?

close up shot of a pocket watch

A new Freddie Mac guideline change creates an important opportunity for borrowers who have substantial savings, investment accounts or other eligible assets.

In certain situations, those assets can now be converted into qualifying income for a mortgage. In other words, the lender may be able to look at not only what you earn, but also what you’ve accumulated.

Turning Assets Into Qualifying Income

The concept is often called “asset depletion” or “asset-based income.” The idea is relatively simple: instead of requiring you to actually withdraw money from your investment accounts every month, the lender calculates a monthly income amount based on a portion of your eligible assets.

For example, suppose you have $1,000,000 in eligible assets. Under the revised Freddie Mac calculation, a simplified example would divide that amount by 180 months, producing approximately $5,556 per month of qualifying income.

You aren’t necessarily required to spend $5,556 each month. The calculation simply allows a portion of your assets to be recognized as income for mortgage qualification.

The New Calculation Can Make a Big Difference

This is where the change becomes particularly interesting.

question marks on paper crafts

Freddie Mac previously used a 240-month calculation for this type of asset qualification. The new 180-month calculation means the same amount of assets can produce roughly 33% more qualifying income. For example, $1 million of qualifying assets would have produced about $4,167 per month under a 240-month calculation.

Under the new 180-month calculation, that becomes approximately $5,556 per month. That’s an additional $1,389 per month of qualifying income without the borrower having to earn another dollar from employment.

You Can Combine Assets With Other Income

Perhaps the biggest benefit is that asset-based income doesn’t necessarily have to stand alone. It can potentially be combined with other qualifying income sources.

Imagine a borrower earning $5,000 per month from employment who also has $1,000,000 in eligible assets. If the assets generate approximately $5,556 per month under the applicable calculation, the borrower could potentially have more than $10,500 per month in qualifying income before considering other applicable income sources and underwriting requirements.

a hand holding a magnifying glass near wooden table

This can make a meaningful difference for someone whose traditional income alone isn’t enough to qualify for the home they want.

Investors Have a New Opportunity, Too

The change is particularly noteworthy for real estate investors.

The revised Freddie Mac guidelines expand the use of accumulated assets as income to investment property transactions, creating a conventional financing opportunity that wasn’t previously available under this particular asset-based approach.

That’s significant for an investor who has substantial assets but whose traditional income doesn’t support the additional mortgage debt they want to take on.

Here’s an Example for an Investment Property

Let’s say an investor wants to purchase a $600,000 rental property and has $1.5 million in eligible investment assets.

After accounting for the funds required for the purchase and other applicable requirements, suppose $1,200,000 remains available for the asset-income calculation. Dividing $1.2 million by 180 produces approximately $6,667 per month in qualifying income.

7 unit property

That income could potentially be combined with the borrower’s employment income and eligible rental income to help qualify for the mortgage.

The exact maximum loan-to-value, reserve requirements and qualifying income will depend on the transaction and the automated underwriting results, but the important point is that investment property borrowers now have another conventional option to explore

This Could Be Especially Valuable for Retirees and High-Net-Worth Borrowers

Consider someone who has spent decades building a retirement portfolio but doesn’t have a large traditional monthly income.

Maybe they receive Social Security, a pension or investment income, but their taxable monthly income doesn’t accurately reflect their financial resources. A borrower could potentially have hundreds of thousands—or even millions—of dollars in retirement and investment assets while appearing to have relatively modest monthly income.

Asset-based qualification provides another way to look at that financial picture. Of course, not every asset qualifies, and there are specific documentation, accessibility and underwriting requirements, so the actual calculation must be reviewed on a case-by-case basis.

Conventional Financing Isn’t Always the Only Answer

heap of banknotes beside hourglass

It’s also important not to assume that Freddie Mac’s new approach will automatically be the best option for every borrower.

There are Non-QM and other specialized mortgage programs that have offered asset-based qualification for years, and some may use shorter asset-depletion periods that produce substantially more qualifying income. The tradeoff can be higher rates, different down-payment requirements or other program restrictions.

The right question isn’t simply, “How much can I qualify for?” It’s “Which financing strategy makes the most sense for my overall financial goals?” That’s where comparing multiple options becomes important.

Your Balance Sheet Could Be More Powerful Than You Think

The biggest takeaway is simple: your mortgage qualification isn’t necessarily limited to your paycheck. 

If you’ve accumulated significant savings and investments, those assets may be able to help you qualify for a mortgage—even when your traditional income doesn’t tell the entire story. And because the revised Freddie Mac rules can be used in conjunction with other qualifying income and can now extend to investment properties, this creates another tool for homebuyers, retirees and real estate investors.

If you have substantial assets but have been concerned that your income may not be high enough to qualify, it’s worth having a mortgage professional look at the entire picture before assuming you can’t qualify.

Reach out to me directly—I’d love to talk strategy and explore how we can utilize these new regulations to help you succeed.

As always, you can set up an appointment with me here…

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

2026 Mid-Year Mortgage Market Update: What Went Wrong and Where Are We Headed?

Mid Year Update Podcast

Six months into 2026, it’s time for a reality check.

Mosaic Mike Nelson

In this candid mid-year podcast hosted by Mike Nelson, I’m joined by Paul Gusiff (Southern California real estate veteran) to compare our January predictions against today’s market.

Rates climbed higher than expected, inflation proved stickier, and global events—especially tensions in the Middle East—shook up the bond market.

We break down the numbers on unemployment, Fed policy, home appreciation, and the new Fed Chair’s impact, while sharing real-world insights from the trenches.

Despite the challenges, we see a few reasons for optimism: motivated buyers, meaningful seller concessions (including rate buydowns into the 5% range), and a stable environment where well-priced homes are still moving.

Here’s the link: https://open.spotify.com/episode/78PRfZ4I84xQugabPsfGhX

Podcast Picture

This is a critical window for first-time buyers and anyone looking to build generational wealth through real estate.

If you want honest, transparent analysis and practical advice for your next move—tune in now.

Reach out to me directly—I’d love to talk strategy and explore how we can best take advantage of market conditions to help you succeed.

As always, you can set up an appointment with me here…

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Kevin Warsh Signals a New Era at the Federal Reserve

The Federal Reserve entered a new chapter this week as Chairman Kevin Warsh held his first post-meeting press conference following the June Federal Open Market Committee meeting.

While the Fed left interest rates unchanged, the real story was not the rate decision itself.

heap of banknotes beside hourglass

Instead, it was Warsh’s vision for how the central bank will evaluate economic conditions, communicate with markets, and make policy decisions in the years ahead.

Who is Kevin Warsh?

Warsh is no stranger to the Federal Reserve. He previously served as a member of the Federal Reserve Board of Governors from 2006 to 2011, where he played a significant role during the Global Financial Crisis.

Before joining the Fed, he worked in investment banking and later became a respected voice on monetary policy, financial markets, and central bank governance.

Throughout the years, Warsh has often argued that the Fed should be more disciplined, less political, and more focused on its core mission of maintaining price stability.

His First Meeting and Press Conference

In his first major appearance as chairman, Warsh made it clear that he believes the Federal Reserve has become too dependent on backward-looking economic indicators.

Traditional measures such as inflation reports, employment surveys, and economic revisions often tell policymakers what happened months ago rather than what is happening now.

Kevin Warsh

According to Warsh, relying too heavily on historical data can cause the Fed to react too late to changing economic conditions.

One of the central themes of the press conference was the need for more forward-looking analysis.

Warsh repeatedly emphasized that businesses, investors, and consumers make decisions based on expectations about the future, not solely on past events.

He suggested that monetary policy should similarly incorporate more real-time information and predictive indicators that can identify economic trends before they appear in official government reports.

You can watch that press conference here…

A New ‘Task Force’

To accomplish this goal, Warsh announced the creation of five separate task forces that will review major areas of Federal Reserve operations.

These groups will focus on Fed communications, the central bank’s balance sheet, economic data sources, productivity and employment trends, and the Fed’s inflation framework. Their purpose is to determine whether existing practices remain effective in a rapidly changing economy.

people sitting around the conference table

Perhaps the most intriguing task force issue will be the one examining the Fed’s use of economic data.

Warsh questioned whether some of the surveys and statistical methods currently relied upon by policymakers are outdated.

He noted that many government data series are heavily revised after their initial release, while private-sector businesses increasingly utilize real-time information to make decisions. The review will explore whether the Fed can incorporate more timely and accurate indicators into its decision-making process.

Communications

Warsh also signaled a significant shift in how the Federal Reserve communicates with financial markets. For years, the Fed has relied heavily on “forward guidance,” providing markets with clues about the likely path of future interest rates.

Warsh has long been skeptical of this practice and suggested that excessive guidance can distort market behavior and create false confidence about future policy decisions.

During his first meeting as chairman, he moved quickly to reduce the emphasis on detailed forecasts.

close up of us federal reserve symbol on currency

This philosophy was reflected in his decision not to provide his own interest-rate projection in the Fed’s widely followed “dot plot.”

By declining to submit a forecast, Warsh sent a message that policymakers should remain flexible and responsive to incoming data rather than locking themselves into predetermined policy paths.

Markets may find this approach uncomfortable initially, but Warsh believes it will ultimately improve the quality of monetary policy decisions.

The Balance Sheet

Another area of review will be the Federal Reserve’s enormous balance sheet. Since the financial crisis and the pandemic, the Fed has accumulated trillions of dollars in Treasury securities and mortgage-backed securities.

Warsh has previously expressed concerns that such large-scale asset holdings may distort financial markets and blur the line between monetary policy and fiscal policy.

While he is not proposing immediate changes, he clearly wants a fresh evaluation of the long-term role of the balance sheet.

a hand holding a magnifying glass near wooden table

Economic Growth

Warsh also emphasized that productivity growth deserves greater attention from policymakers.

Traditional economic models often focus heavily on inflation and unemployment, but he argued that technological innovation, capital investment, and productivity improvements can significantly influence economic growth and inflation pressures.

A better understanding of these forces may allow the Fed to make more precise policy decisions while supporting long-term economic prosperity.

Underlying all of these proposed changes is Warsh’s belief that the economy is evolving faster than the tools used to measure it. Supply chains, artificial intelligence, data analytics, labor markets, and consumer behavior have changed dramatically over the past decade.

He believes the Federal Reserve must adapt accordingly or risk making decisions based on incomplete or outdated information. The task forces are intended to challenge assumptions and identify areas where modernization is needed.

In Conclusion

Whether one agrees with Warsh’s approach or not, his first press conference left little doubt that he intends to leave his mark on the institution.

Rather than simply managing the Fed’s existing framework, he appears committed to reexamining many of its foundational practices.

If his efforts succeed, the Federal Reserve could become more proactive, more data-driven, and more focused on anticipating economic developments rather than reacting to them after the fact.

For investors, borrowers, and mortgage professionals alike, that may prove to be one of the most important policy shifts of the coming decade.

If you’d like to discuss how the new Fed Chair might impact your situation, don’t hesitate to reach out to me, as it would be my pleasure to help in any way!

As always, you can set up an appointment with me here…

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

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