Category: Interest Rates (Page 1 of 34)

Your Assets Can Now Help You Qualify for a Mortgage

August 17, 2026 / Tom Bonetto / 0 Comments

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?

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.

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.

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

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…

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?

July 15, 2026 / Tom Bonetto

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

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

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…

Kevin Warsh Signals a New Era at the Federal Reserve

June 18, 2026 / Tom Bonetto

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.

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.

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.

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…

Should You Give Up Your 3% Mortgage Rate? 5 Questions Every Homeowner Should Ask Before Deciding to Stay Put

June 9, 2026 / Tom Bonetto

Over the past several years, one phrase has become increasingly common among homeowners: “I’d love to move, but I can’t give up my mortgage rate.”

It’s an understandable concern.

Millions of homeowners purchased or refinanced their homes when mortgage rates were at historic lows, and many now enjoy rates in the 2% to 4% range.

When current mortgage rates are significantly higher, it’s easy to feel as though moving simply isn’t an option.

While a low mortgage rate is certainly valuable, it shouldn’t be the only factor driving a major life decision.

A home is more than a loan attached to a piece of property. It’s where you raise a family, work remotely, entertain friends, pursue hobbies, and build your future.

Sometimes homeowners become so focused on the rate that they lose sight of the bigger picture.

If you’ve been considering a move but feel stuck because of your current mortgage, here are five important questions worth asking before deciding to stay put.

Does Your Current Home Still Meet Your Needs?

When many homeowners purchased their current home, their lives looked very different than they do today. Perhaps you were newly married, had young children, worked in an office every day, or simply had different priorities than you have now.

Fast forward a few years, and your situation may have changed dramatically. Maybe your family has grown.

Perhaps your children are teenagers who need more space. You may now work remotely and need a dedicated home office. Or maybe you’re approaching retirement and would prefer a single-story home that better suits your future needs.

One of the biggest mistakes homeowners make is allowing a mortgage rate to dictate their lifestyle.

While a 3% mortgage is attractive, it doesn’t create an extra bedroom, shorten your commute, provide a larger backyard, or place you in a neighborhood that better fits your goals.

Ask yourself a simple question: If interest rates were exactly the same today as they were when I bought my current home, would I still want to move?

If the answer is yes, then your desire to move may be based on legitimate lifestyle needs rather than market conditions. The reality is that homes should support your life, not the other way around.

How Much Equity Have You Built?

Many homeowners underestimate how much equity they’ve accumulated over the past several years. Between principal reduction and home appreciation, some homeowners are sitting on a substantial amount of wealth without fully realizing it.

That equity may create opportunities that didn’t exist when you purchased your current home. A larger down payment on your next property could significantly reduce the size of your new mortgage.

stack of coins in front of a porcelain house

In some cases, homeowners are able to put down enough money to avoid mortgage insurance, lower their monthly payment, or purchase a home that better fits their needs without dramatically increasing their housing expense.

I’ve had conversations with homeowners who initially assumed moving was financially impossible because of today’s rates. After reviewing their equity position, they discovered they had far more flexibility than expected.

Equity can also provide options beyond simply purchasing another home. Some homeowners use their accumulated equity to pay off other debt, create an emergency fund, or improve their overall financial position while making a move.

The key is understanding your numbers before assuming that a higher mortgage rate automatically makes moving a bad financial decision.

Have You Compared Payments or Just Interest Rates?

This may be the most important question on the list.

Many homeowners focus almost exclusively on the interest rate itself. While rates certainly matter, the monthly payment often matters more.

A homeowner might look at a 3% mortgage and compare it to a 6.5% mortgage and immediately conclude that moving doesn’t make sense. But that comparison only tells part of the story.

What if the homeowner has enough equity to make a much larger down payment?
What if they are moving to an area with lower property taxes?
What if they can negotiate seller-paid closing costs or a mortgage rate buydown?
What if their income has increased significantly since purchasing their current home?

All of these factors can influence the overall financial impact of a move.

attentive young couple packing stuff while relocating in new flat

I’ve seen homeowners assume their payment would increase dramatically, only to discover that the actual difference was far less than they expected.

I’ve also seen situations where a homeowner’s payment did increase, but the benefits of the new home justified the additional expense.

The lesson is simple: don’t compare interest rates in isolation. Compare the entire financial picture.

Could Your Current Home Become an Investment Property?

For some homeowners, the decision isn’t necessarily between staying and moving. Sometimes there is a third option.

Depending on your financial situation, you may be able to keep your current home and convert it into a rental property while purchasing another primary residence.

This strategy allows some homeowners to retain their existing low-rate mortgage while continuing to benefit from potential rental income and future appreciation.

Of course, becoming a landlord isn’t the right choice for everyone. Rental property ownership comes with responsibilities, risks, and additional financial considerations.

Some homeowners prefer the simplicity of selling their current home and moving on.

real estate investment and currency exchange concept

However, for those who have sufficient equity, stable finances, and an interest in long-term real estate investing, keeping a low-rate mortgage on a rental property can be an attractive wealth-building strategy.

The important thing is understanding that you may have more options than you initially think.

Before automatically assuming your current home must be sold, it’s worth discussing all available possibilities with your mortgage professional and financial advisors.

What Is the Cost of Waiting?

When people talk about moving, they often focus on the cost of taking action. Far fewer people consider the cost of doing nothing.

Waiting can be the right decision in some situations. But waiting is not free.

If your current home no longer fits your needs, every year spent delaying a move may mean another year of compromise. If you’re commuting farther than you’d like, working in an inadequate home office, or living in a space that no longer supports your family, those costs may not appear on a spreadsheet—but they’re still real.

There are also financial considerations. No one knows exactly where mortgage rates, home prices, or inventory levels will be in the future. Waiting for the “perfect” market environment can sometimes result in missed opportunities.

Many homeowners who delayed purchases in previous years because they expected rates to fall or prices to decline discovered that markets don’t always move as predicted.

The goal shouldn’t be to perfectly time the market. The goal should be to make a housing decision that aligns with your family’s needs and long-term financial objectives.

The Bottom Line

A low mortgage rate is a valuable asset. There’s no question about that. But it should be viewed as one piece of a much larger puzzle.

Before deciding that you’re permanently locked into your current home, take time to evaluate your lifestyle needs, your equity position, your monthly payment options, and your long-term goals. The best housing decision is rarely based on a single number.

The key is making the decision based on a complete analysis rather than allowing one factor—your current interest rate—to make the decision for you.

As with most financial decisions, clarity comes from understanding all of your options. And sometimes, what appears to be a mortgage rate trap may simply be an opportunity to take a closer look at the bigger 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 Return of Negotiation: 7 Things Home Buyers Can Ask For in Today’s Housing Market

June 1, 2026 / Tom Bonetto

close up shot of scrabble tiles on a table

For much of the past several years, home buyers found themselves in an extremely competitive environment.

Multiple-offer situations were common, sellers often received offers above asking price, and buyers frequently felt pressured to waive contingencies and accept unfavorable terms just to win a contract.

Today’s market is different.

crop anonymous person calculating profit on smartphone calculator near banknotes

While housing inventory remains limited in some areas, many markets have become more balanced, creating opportunities for buyers to negotiate terms that may not have been available just a few years ago.

One of the biggest misconceptions among buyers today is that they still have no negotiating power.

In reality, homes are often staying on the market longer than they did during the peak of the housing frenzy.

Sellers are increasingly motivated to attract qualified buyers, especially when a property has not generated significant interest during its first few weeks on the market. This shift has opened the door for buyers to ask for concessions that can improve affordability and reduce upfront costs.

Closing Costs

The first item buyers should consider negotiating is seller-paid closing costs. Closing costs can add thousands of dollars to the amount needed at settlement.

Depending on the loan program and the seller’s motivation, a seller may be willing to contribute toward these expenses.

This can help buyers preserve cash reserves for emergencies, home improvements, or future financial goals.

Rate Buydowns

A second opportunity involves mortgage rate buydowns. Many sellers are willing to provide a credit that can be used to lower a buyer’s interest rate.

Whether structured as a temporary buydown or a permanent reduction in the rate through discount points, this strategy can significantly reduce the monthly payment.

In some cases, negotiating a rate buydown may provide more value than negotiating a lower purchase price.

Repairs

Third, buyers should not hesitate to request repairs following a home inspection.

During the height of the seller’s market, many buyers waived inspection contingencies entirely.

Today, buyers often have greater leverage to request repairs related to health, safety, or major system deficiencies. Even if the seller is unwilling to complete the repairs, they may agree to provide a credit at closing to offset future repair costs.

Home Warranty and Personal Property

A fourth negotiation point is a home warranty. While a home warranty does not replace homeowner’s insurance, it may help cover the repair or replacement of certain household systems and appliances.

For first-time buyers in particular, having a warranty during the first year of ownership can provide additional peace of mind and protection against unexpected expenses.

Buyers should also consider negotiating for personal property that may be valuable to them.

Appliances, patio furniture, storage sheds, security systems, and even certain pieces of furniture can sometimes be included in the purchase contract.

Sellers who are preparing for a move may welcome the opportunity to leave behind items they would otherwise need to transport or dispose of.

Closing Timelines

Another overlooked opportunity is negotiating the closing timeline. Flexibility can be valuable to both parties. Some sellers may need additional time to move, while others may want a faster closing.

Buyers who can accommodate a seller’s preferred schedule may find the seller more willing to provide financial concessions or accept other favorable terms.

Sometimes the strongest negotiation tool is not price but convenience.

The Purchase Price

Price reductions remain an important part of the negotiation process as well.

If a home has been on the market longer than competing properties or if recent comparable sales support a lower value, buyers may have a legitimate basis for submitting an offer below the asking price.

The key is to support the offer with market data and avoid approaching negotiations as a contest between buyer and seller.

Be Proactive and Have a Plan

Perhaps the most important takeaway for today’s buyers is that successful negotiations require preparation and strategy.

Every transaction is unique, and the strongest negotiating position often comes from understanding both the local market and the seller’s specific circumstances.

Buyers who work with experienced real estate and mortgage professionals can identify opportunities that align with their financial goals while creating a win-win outcome for all parties involved.

real estate concept with key and house models

In Conclusion

The housing market may not be as favorable to buyers as it was during previous downturns, but it is certainly more negotiable than it was just a few years ago.

By understanding the concessions and terms that may be available, buyers can improve affordability, reduce risk, and make more confident homeownership decisions.

In today’s market, negotiation is no longer an exception—it is becoming an important part of the home-buying strategy once again.

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…

Your Assets Can Now Help You Qualify for a Mortgage

The New Calculation Can Make a Big Difference

You Can Combine Assets With Other Income

Investors Have a New Opportunity, Too

Here’s an Example for an Investment Property

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

Conventional Financing Isn’t Always the Only Answer

Your Balance Sheet Could Be More Powerful Than You Think

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

Kevin Warsh Signals a New Era at the Federal Reserve

Who is Kevin Warsh?

His First Meeting and Press Conference

A New ‘Task Force’

Communications

The Balance Sheet

Economic Growth

In Conclusion

Should You Give Up Your 3% Mortgage Rate? 5 Questions Every Homeowner Should Ask Before Deciding to Stay Put

Does Your Current Home Still Meet Your Needs?

How Much Equity Have You Built?

Have You Compared Payments or Just Interest Rates?

Could Your Current Home Become an Investment Property?

What Is the Cost of Waiting?

The Bottom Line

The Return of Negotiation: 7 Things Home Buyers Can Ask For in Today’s Housing Market

Closing Costs

Rate Buydowns

Repairs

Home Warranty and Personal Property

Closing Timelines

The Purchase Price

Be Proactive and Have a Plan

In Conclusion

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Starlight Mortgage

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