Uncategorized

Annaly Capital Management plans to be more of a contender in the market for servicing rights as it brings on nonbank giant Rocket Mortgage to help it subservice and recapture loans. "We expect it to increase our competitiveness in purchasing new MSR," said David Finkelstein, the company's chief executive, investment officer and director, during an earnings call in which the real estate investment trust reported weak results relative to some consensus estimates.His comment suggests the market for servicing rights could heat up as a result of the partnership set to start in December if it puts Annaly, which has been ranked the largest mortgage real-estate investment trust in the business, in an advantageous position.Whether it will or not depends in part on the company's financial position.The company generated just $0.05 in earnings per common share under generally accepted accounting principles during the third quarter on nearly $82.4 million in net income. Its EPS adjusted for nonrecurring items represented earnings available for distribution was $0.66.The GAAP number was significantly lower than the Standard & Poor's IQ consensus mean of $0.82 but the earnings available for distribution nearly matched estimates that it would report $0.67 for that figure.In comparison, the adjusted or normalized figure for Annaly's EPS was $0.68 in the second quarter of 2024 and $0.66 in the third quarter of last year. Under standard accounting principles, Annaly generated losses of $0.90 and $1.21 in these respective periods.Revenue at Annaly was $13.4 million. This was significantly lower than the $407.23 million consensus estimate. Annaly's revenue was $53.56 million the previous fiscal period and $384.41 million in the third quarter of last year.Annaly's revenue equates to net interest income with realized gains and losses on rate swaps deducted.Real estate investment trust earnings under standard accounting principles reflect fluctuation in the market valuations of their investments, so this often differs from their EAD, which is considered a key number for them because they must distribute at least 90% of their income.Servicing valuations have affected some mortgage companies' third-quarter earnings, as interest rates fell during the period."Lower rates adversely impacted MSR values for the quarter by $0.06 per share," Chief Financial Officer Serena Wolfe said during the company's earnings call. Falling rates typically hurt the value of mortgage servicing rights, but whether they do now depends on several factors, including whether the drop exposes loans with a lower coupon rate to prepayment incentives or not.Mortgage rates that impact MSR values have stabilized since the third quarter, and companies like Annaly and Mr. Cooper continue to see reason to invest in them, with the latter recently agreeing to buy a large portfolio from the recently rebranded Flagstar.Companies who like mortgage servicing rights as an asset but don't want to take on operational responsibilities for them like Annaly are in a more advantageous position right now, Finkelstein said during his company's call."Competition in the subservicing market should benefit financial participants like Annaly," Finkelstein said.When asked whether that has impacted pricing for subservicing, Ken Adler, head of MSRs and portfolio analytics, said, "There's been a contraction in the share of overall mortgage servicing rights handled by subservicers, and that's created a lot of competition in the market."In addition to the Rocket subservicing agreement, Annaly's business accomplishments during the quarter included six non QM securitizations totaling $3.3 billion through its Onslow Bay correspondent unit, the largest nonbank sponsor in private residential credit.The company also added $560 million in additional warehouse lending capacity during the quarter and more recently, it has diversified its sources of it in line with an industry trend that's led in part by Mr. Cooper."Post quarter-end, we implemented an additional MSR warehouse facility for $300 million, adding to our substantial availability," Wolfe said.Finkelstein indicated that the company is being cautious about liquidity, leverage and duration exposure given the interest rate environment and potential for volatility in an election year and has no immediate plans to change its capital position."We feel like we have greater resources now to be able to make investments in things like technology as well as broadening the correspondent channel," he said.As of early afternoon, Annaly's stock was near starting levels close to $19.50. It had fluctuated after the release of earnings between roughly $19.45 and just above $19.60.The company is a favorite of billionaire investor Bill "the Bond King" Gross, who has recommended it as a defensive stock, according to Bloomberg. Annaly invests in mortgage-backed bonds as well as servicing rights and other residential assets.

Another fintech has been quietly growing in the mortgage space, looking to solve the age-old “buy before you sell” conundrum.A major challenge for prospective move-up buyers these days is unloading their old property while securing a new residence.Exacerbating the issue is a continued lack of for-sale inventory, coupled with waning affordability thanks to high home prices and mortgage rates.This can make it difficult to float two mortgage payments while finding a buyer for their old home.Enter Calque, which partners with local mortgage lenders to ensure the home loan piece is solved.Calque’s Trade-In MortgageThe Austin, Texas-based company actually offers two products to make it easier to buy and sell a home at the same time.Their so-called “Trade-In Mortgage” allows home sellers to gain access to their home equity ahead of time without needing to sell first.This second mortgage acts as a bridge loan, freeing up liquidity so you can make a stronger offer.And it comes with a guaranteed back-up offer where Calque will buy your old home, allowing you to submit cash-like offers.This gives buyers increased purchasing power in a number of different ways, whether it’s an increased down payment, larger cash reserves, or the ability to pay off other high-cost debt.It can also make the buyer more competitive in a housing market that continues to be plagued by low inventory.If you find yourself in a bidding war, coming in with a larger down payment can help you win the property over other bidders.Even if competition isn’t strong, a larger down payment may allow you to make a low-bid offer, as the seller will favor an offer with more money down.In addition, you can offset the cost of a higher mortgage rate on the replacement property by putting more money down.A few months back, a friend of mine sold his old home with a super cheap mortgage and used the sales proceeds to pay down the new high-rate mortgage.While this was a good solution to cut down on his interest expense, it didn’t lower his mortgage payments, which still amortize normally despite the extra payment.This means he’ll either need to request a loan recast to lower future payments, or he’ll need to wait for a good opportunity to apply for a rate and term refinance.The Trade-In Mortgage allows you to apply a larger payment on the new home upfront before you sell your old one.As a result, you won’t necessarily need to refinance or complete a recast since lower monthly payments will be reflected by the smaller loan amount.You may even be able to get a lower mortgage rate thanks to a lower loan-to-value ratio (LTV), and/or avoid private mortgage insurance (PMI) in the process.And you can use some of the money from the bridge loan to fix up your old home so it sells for a better price!Calque’s Contingency BusterRecently, Calque rolled out a “lighter” buy before you sell option known as “Contingency Buster.”It allows home buyers to achieve the same basic result without taking out a second mortgage.In the process, they can make offers without home sale contingencies and exclude the old mortgage payment from their DTI ratio.As long as your lender is approved to work with Calque, you can make a non-contingent offer on a new home while not worrying about having to qualify for two mortgages.It’s hard enough to afford one mortgage, so attempting to float two at the moment is likely a deal-breaker for most.Like the Trade-In Mortgage, Contingency Buster leverages the company’s Purchase Price Guarantee (PPG).It’s a binding backup offer put in place that will only be employed if your current home doesn’t sell within 150 days.The agreed-upon price will likely be below-market, with the sample calculator on their website displaying 70% or 80% of estimated value offer.So obviously you’d still want to sell your home on the open market to a buyer other than Calque.How Much Does Calque Cost?There are three possible fees depending on which program you choose.This includes a $2,000 flat fee paid to Calque, along with 1% of the Purchase Price Guarantee amount.For example, if they offer to buy your old home for $600,000, it’d be $6,000 + $2,000, or $8,000 total, taken from your sales proceeds.If you needed the bridge loan to access your equity ahead of time via the Trade-In Mortgage program, there’s also a $550 flat fee. And the interest rate is apparently 8.5% on that loan.So you’d be paying some interest until you closed on the new home and were able to pay off the bridge loan with the proceeds.Those simply using the Contingency Buster would only owe the $2,000 plus 1% of the offer price. This seems to be the case whether they sell the property on the open market or not.Is This a Good Offer?Whenever I come across programs like this, I try to determine if they’re a good deal or not.Ultimately, many prospective home buyers can’t buy a new home without it being contingent on the sale of their old home.It’s just impossible for a lot of folks to carry two mortgages from a qualification standpoint.Even if they could, there’s also the uncertainty of the old home being stuck on the market and continuing to carry that cost.So from that perspective, this alleviates those problems and concerns. But as noted, there are costs involved with the program.And the biggest potential cost is selling your home for just 70% or 80% of its value. While the other fees are reasonable sounding, selling for a 20-30% haircut isn’t great.In other words, Calque could be beneficial, but you’d still want to sell your old home to a third-party buyer for top dollar (or as close to it as possible).Otherwise you could be leaving a ton of money on the table. And it kind of defeats the purpose of using the program to begin with.For me, this means understanding upfront how easy it’d be to sell your current home and at what price to avoid any unwanted surprises.Lastly, you’d need to use a mortgage lender who is approved to work with Calque. So you’ll also need to ensure this lender is competent and well-priced! Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)

Mortgage rates maintained their upward movement this week, as economic strength led to further volatility. The 30-year fixed-rate average came in higher for the fourth week in a row, climbing up to 6.54%, according to Freddie Mac's weekly Primary Mortgage Market Survey. The average took a 10 basis point jump from 6.44% seven days earlier.   In late September, rates flirted with the 6% mark, falling as low as 6.08%. In spite of the recent upturn, the 30-year average is currently still more than a full percentage below 7.79% recorded a year ago.The 15-year fixed-rate mortgage, likewise, rose for the fifth straight week, coming in at 5.71%. In the prior survey, the average sat at 5.63%, while a year ago, it landed at its highest over the past 12 months at 7.03%. Recent economic data, including a hotter-than-expected jobs report, contributed to elevated rates of the last few weeks, putting a halt to their descent on the heels of the Federal Reserve's policy moves last month. Many had anticipated the Fed's rate cut would lead to further declines in mortgage interest rates. "Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative," said Freddie Mac Chief Economist Sam Khater, in a press release."This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy." Movement of 10-year Treasury yields, which influence the direction of rates, likewise rose over the last seven days. The 10-year yield had leveled off to 4.08% on the afternoon of Oct 17, but accelerated to 4.2% this Thursday. Current political developments are also behind some of the recent volatility, according to Chen Zhao, economic research lead at Redfin. "Investors in the bond market are particularly worried about the possibility of increased government debt after the election," Zhao said in a statement."They're concerned that one party could end up controlling both the White House and Congress, which would increase government spending more. That concern, along with strong economic data, is pushing up 10-year Treasury yields and mortgage rates," she added.The latest increase in rates threw cold water on lending activity over the past month, with the Mortgage Bankers Association reporting new application activity slowing to its slowest since August this week. Housing researchers continue to see opportunity in the numbers despite the uncertainty, with recent robust demand for home tours and other buyer services pointing to interest, Redfin reported. Many hopeful homeowners continue to sit on the sidelines in expectation of a return to lower rates, representatives of the brokerage said. "Despite the current rate volatility, rising housing inventory levels and easing home-price growth remain positive developments for prospective buyers this fall," MBA President and CEO Bob Broeksmit concurred in an issued statement. Other industry rate trackers showed similar movements over the past week, with Zillow reporting a 6.52% average Thursday morning for the 30-year fixed rate, which reflected a weekly 6 basis point rise from 6.46%.Meanwhile, the 30-year conforming fixed average at product pricing engine Optimal Blue's rate tracker was 6.66% as of Thursday morning, up from 6.43% a week ago.

The nation's largest home builders enjoyed healthy profits this summer as the market for existing properties remained ice cold. Declining mortgage rates benefitted builders through September and they reported higher net income in the third quarter compared to their performance the same time last year. Three major companies however reported smaller new home orders between July and September, compared to spring activity. Price tags for new homes also wavered on an annual basis. Many home builders with mortgage operations continue to offer buydowns and price cuts, but the sector's largest companies are pursuing differing strategies to attract borrowers. "Overall market dynamics remain competitive," said Robert T. O'Shaughnessy, executive vice president and chief financial officer at Pulte Group, in an earnings call Tuesday. "As such, we expect incentives to remain elevated for the remainder of the year."Taylor Morrison Home Corp. chairman and CEO Sheryl Palmer on Wednesday meanwhile said her company wrapped its lowest quarter of incentives in two years.Builder stocks this week took a slight tumble following earnings reports. The S&P Homebuilders Select Industry Index also dipped slightly but remains lofty following a summer rally and a housing market still seriously inventory-starved. The following are some earnings figures from the industry's largest companies. This list will be updated. 

A Chicago area mortgage lender that emerged victorious in a redlining complaint last year may now settle those claims with a federal regulator. Attorneys for Townstone Financial and the Consumer Financial Protection Bureau wrote this week they've entered into settlement negotiations and believe a resolution is likely. The filing Tuesday in an Illinois federal court signals a potential end to the CFPB's case over alleged discriminatory remarks made during a Townstone radio show as far back as 2014.A representative for the CFPB declined to comment Thursday. Townstone President and CEO Barry Sturner, and attorneys with the Pacific Legal Foundation representing Sturner and the company, didn't immediately respond to requests for comment.The CFPB in its original complaint points to derogatory comments by Sturner and other radio hosts between 2014 and 2017, including referring to Friday to Monday in the predominantly African American South Side of Chicago as "hoodlum weekend." The Equal Credit Opportunity Act and Regulation B complaint cited Townstone's lending statistics during that time, in which just 1.4% of its 2,700 applications came from African Americans in the Chicago area. It also did not employ a Black loan officer among its 17 originators. The CFPB amounted Townstone's statements and practices as redlining African American neighborhoods.A U.S. District Court judge last year dismissed the CFPB's complaint, ruling the ECOA claim only applied to mortgage applicants and not prospective borrowers. In July a federal appeals court reversed that decision, stating the CFPB has the authority to apply the ECOA to prospective applicants. The parties have since re-litigated the case in the District Court. Attorneys for defendants in a September joint status report indicated a First Amendment defense, suggesting the Bureau is chilling Townstone and Sturner's speech. They were scheduled to file a motion to postpone expert discovery by Friday. Tuesday's joint motion to stay the proceedings pending settlement negotiations asks for a 90 day halt. Townstone, founded in 2002, has active origination licenses in five states, and has three sponsored mortgage loan originators according to Nationwide Multistate Licensing System records. Feds have stepped up redlining enforcement in recent months. New Jersey-based OceanFirst Bank in September agreed to provide $15 million in financial assistance over discrimination accusations by the Department of Housing and Urban Development and the Department of Justice. Fairway Independent Mortgage Corp. last week also agreed to pay $10 million in a redlining settlement with the CFPB and Department of Justice, for allegedly discouraging Black consumers from applying for mortgages in Alabama. That resolution brought the total amount of relief secured by the DOJ's Combating Redlining Initiative to over $150 million.

New-home sales in the U.S. jumped to a more than one-year high in September as customers responded to more incentives from builders and a drop in mortgage rates. Sales of new single-family homes increased 4.1% last month to a 738,000 annualized rate, government figures showed Thursday. The median estimate of economists surveyed by Bloomberg called for 720,000.The boost may be short-lived. After dropping to a two-year low last month, borrowing costs have climbed again on expectation that the Federal Reserve will take a more gradual approach to interest-rate cuts in coming months.  "The increase in new home sales in September was probably supported by the fall in mortgage rates last month," Ruben Gargallo Abargues, an associate economist at Capital Economics, said in a note. "Rates have rebounded since then, however, which lends support to our view that new home sales will not rise much further."By region, sales in the South climbed last month to the fastest rate since April 2021. Purchases also picked up in the Northeast. Meantime, the median sales price was little changed from a year ago, at $426,300. Still, prices remain almost 30% higher than at the end of 2019.With housing affordability gauges near historic lows in the country, builders have been offering incentives such as discounts or mortgage-rate buydowns to help sell homes. This week, Atlanta-based builder PulteGroup Inc. said during its quarterly earnings call that the need for more sweeteners will continue for the rest of the year. Builders are working to sell off inventories that are hovering near records after ramping up construction during the pandemic recovery. The supply of new houses rose 0.4% in September to the highest level since 2008. The industry is already looking ahead to the crucial spring selling season. An index of builder sentiment published by the National Association of Home Builders reached the highest level in four months in October, fueled partly by the prospect of lower mortgage rates.New-home sales are seen as a more timely measurement than purchases of previously owned homes, which are calculated when contracts close. However, the data are volatile. The government report showed 90% confidence that the change in new-home sales ranged from a 10.6% decline to a 18.8% gain.Separate data Thursday showed weekly jobless claims fell back to levels seen before two hurricanes hit the Southeast. And business activity expanded at a solid pace through most of October on resilient services demand.

The top five cities with the highest mortgage delinquency rates had an average delinquency rate of 16.66% in the second quarter, according to data from WalletHub. The average change in mortgage delinquency rate between the first quarter and second quarter of 2024 in these top five cities is -5.88%.Read more about the 20 cities with the highest mortgage delinquency rates. Rank City Mortgage delinquency rate in Q2 2024 Change in mortgage delinquency rate: Q2 2024 vs Q1 2024 20 Louisville, KY 11.22% -5.12% 19 Birmingham, AL 11.38% -7.73% 18 San Antonio, TX 11.96% -7.27% 17 Garland, TX 11.96% -3.19% 16 Houston, TX 12.00% -5.40% 15 Norfolk, VA 12.23% -9.99% 14 Tulsa, OK 12.29% -4.20% 13 Fort Worth, TX 12.30% -7.71% 12 Greensboro, NC 12.45% -7.95% 11 New Orleans, LA 12.60% -5.66% 10 Memphis, TN 12.67% -6.87% 9 Lubbock, TX 13.21% -7.39% 8 Baltimore, MD 13.33% -4.90% 7 El Paso, TX 13.42% -5.59% 6 Corpus Christi, TX 14.16% -3.19% 5 Newark, NJ 14.39% -4.30% 4 Philadelphia, PA 14.61% -5.53% 3 Baton Rouge, LA 14.87% -3.93% 2 Detroit, MI 16.15% -5.72% 1 Laredo, TX 23.27% -9.94%

Boston Mayor Michelle Wu reached a compromise with business leaders to help advance a proposal aimed at protecting homeowners from a sharp spike in property taxes. The deal announced on Wednesday seeks to stabilize Boston's tax system, which relies heavily on commercial property revenue and has been thrown off balance by the slump in office demand. KEEP READING: Property tax revenue surges by almost 9% from last yearWu's plan involves implementing a temporary hike in commercial property taxes to help keep the city budget afloat. Without the measure, the average homeowner faces a 28% increase in their quarterly tax bills, she said earlier this month. Business leaders initially pushed back against the proposal, arguing higher taxes would deepen the pain for the commercial real estate market, which is grappling with a nationwide slump in office demand. Commercial property values in Boston have fallen 7% in the current fiscal year, reflecting high vacancy rates in older and lower-quality office buildings amid the persistence of pandemic-era remote and hybrid work policies.In response to those concerns, Wu revised the plan, limiting how much the city can shift the tax burden onto commercial properties and shortening the duration of the temporary tax increase to three years, from five years previously."This compromise acknowledges the crisis facing the commercial real estate sector, and as we look ahead, we must work together to encourage economic growth," Tamara Small, chief executive officer of commercial real estate development association NAIOP Massachusetts, said in a statement. READ MORE: 20 states with the highest property taxesThe Massachusetts House of Representatives approved the tax shift in late July — days before the end of the formal legislative session — after Wu agreed to similar adjustments that would ease the impact for businesses. The Senate had yet to follow suit, sparking criticism from Wu, who has said Boston residents should blame the chamber if their taxes increase. The revamped proposal still requires approval from the Boston City Council, both chambers of the legislature and Governor Maura Healey. 

Bloomberg News The new chief of the Basel Committee on Banking Supervision is urging the world's top economies to "lock in" the latest version of the group's international standards "as soon as possible."In a speech delivered Wednesday afternoon in Washington, D.C., Erik Thedéen, chair of the committee and governor of Sweden's Sveriges Riksbank, defended the merits of global cooperation and warned countries not to "succumb to short-term or specific interests.""The work to fix the banking system fault lines exposed by the [global financial crisis] is not done," Thedéen said. "We need to lock in the financial stability benefits of implementing the outstanding Basel III standards in full and consistently, and as soon as possible."Thedéen delivered his remarks at the Institute of International Finance, held as banking and finance officials from around the world gather in Washington, D.C., for the annual meetings of the International Monetary Fund and the World Bank Group. The speech also comes at a time when the future of the Basel committee's latest set of rules is in doubt.Known as the Basel III endgame in the U.S., these standards — agreed upon by the committee in 2017 — establish minimum thresholds for risk-weighted capital requirements. They dictate how much Tier 1 equity banks must maintain to offset their credit, market and operational risks. The U.S. implementation of the rules has ground to a halt in light of staunch opposition by the banking industry to the proposed framework set out by the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency last year. The agencies have since agreed upon a revised set of changes, but are at an impasse over whether to finalize those standards as is or reopen the notice and comment rulemaking process.As the U.S. process stagnates, other prominent jurisdictions have put the brakes on their own implementations. The Bank of England and the European Central Bank have both paused their processes while they await a resolution in the U.S. This delay has led officials from Europe's top economies to second-guess the European Union's commitments. Last month, finance ministers from Germany, France and Italy urged the continent's governing body to consider revisions that would help the "competitiveness" of their domestic banks.Thedéen warned against this type of policymaking, arguing that attempting to "unlock" economic gains by watering down regulatory oversight is shortsighted."As with other areas of economic policymaking, any perceived short-term gains are usually more than offset by longer-term pain," he said. "Shaving off a few basis points of capital will not unlock a wave of new lending, but it will weaken your resilience."Thedéen took the helm at the Basel Committee in June, replacing outgoing Chair Pablo Hernández de Cos, the former governor of the Bank of Spain who had held the position since 2019. Wednesday's remarks were Thedéen's first as chair. During the speech, he said that the Basel III standards were the "cornerstone" of the international regulatory world's response to the global financial crisis of 2008. He added that, despite the recent headwinds, the Governors and Heads of Supervision — the committee's oversight body — have unanimously reaffirmed their commitments to implementing the framework. The Basel Committee's agreed upon policies are nonbinding and come with the expectation that member organizations will have to make some adjustments to the standards to fit within their own legal and regulatory frameworks. Still, Thedéen said, the accords establish a floor for bank oversight, which he said is crucial to dealing with emerging threats in an increasingly interconnected financial world."A global compromise — however imperfect it may appear to some — is preferable to a free-for-all framework," he said. "Internationally active banks then have a common minimum regulatory baseline which they can manage their business around. Supervisors are able to better assess the relative resilience of their banks across jurisdictions. The scope for regulatory arbitrage is reduced. Level playing fields are enhanced."

With mortgage rates surging higher again, somewhat unexpectedly, a thought came to my mind if you’re currently home shopping.A couple years ago, I threw out the idea to adjust your maximum purchase price lower when looking for a property.That post was driven by the many home sales that were going way above asking at the time. In other words, a home may have been listed for $600,000, but eventually sold for $700,000 in a bidding war.That was all to do with a very hot housing market, driven in large part by a combination of record low mortgage rates and very low for-sale supply.Today, we still have relatively low inventory, but the cheap mortgage rates have come and gone.And now that they’re so volatile, you may want to input a higher rate into your mortgage calculator to ensure you don’t get caught out.Mortgage Rates Are Highly Volatile Right NowAt the moment, mortgage rates are super unpredictable. While they had enjoyed a very good 11 months, falling from as high as 8% to nearly 6% in early September, they’ve since reversed course.The 30-year fixed was nearly back into the high 5% range before the Fed cut rates and a better-than-expected jobs report arrived.Sprinkle in some doubting about the Fed’s pivot and the upcoming uncertainty regarding the election outcome and home buyers are now facing a rate nearly 1% higher.Per MND, the 30-year fixed has risen from a low of 6.11% on September 17th to 6.92% as of October 23rd.Talk about a rough month for mortgage rates, especially since many expected the Fed’s rate cutting campaign to be accompanied by even lower mortgage rates.It’s a good reminder that the Fed doesn’t control mortgage rates, and that it’s better to track mortgage rates via the 10-year bond yield.Also, those yields are driven by economic data, not what the Fed is doing. By the way, the Fed makes moves based on the economic data too. So follow the economic data for crying out loud!Anyway, this recent move up serves a great reminder that mortgage rates don’t move in a straight line. And to expect the unexpected.Err on the Side of Caution By Inputting a Higher Mortgage RateIf you’re currently looking to purchase a home, it’s generally a good idea to get pre-qualified or pre-approved upfront.That way you’ll know if you actually qualify for a mortgage, and at what price point, including necessary down payment.The thing is, these calculations are only as good as the inputs. So if your loan officer or mortgage broker puts in overly favorable numbers, it could skew the affordability picture.In other words, you almost want to ask them to put in a mortgage rate that is 1% higher than today’s market rates.That way you can absorb a higher payment if rates happen to worsen during your property search, which can take months and months to complete.If rates happen to fall during that time, wonderful, it’ll just be the icing on the cake. Your expected monthly PITI will be even better than expected.But like those bidding wars that took place, which resulted in higher asking prices, unexpected spikes in rates should also be anticipated.And if they are, you might look at properties that are more within your price range, as opposed to homes that only work if everything is just right.Given that homeowners insurance and property taxes are also on the rise (with just about every other cost), it can pay off to be prudent with your proposed home buying budget.Adjust the Mortgage Rate on the Property Listing PageIf you’re using a site like Redfin to browse listings, there’s a handy mortgage payment calculator on each listing page.It provides default amounts based on typical down payments, mortgage rates, property taxes, and homeowner insurance.Let’s say that interest rate is 6.77% today, which is pretty reasonable given current market rates.If you click on the little pencil icon, you can change it to anything you want. You can also select a different loan type while you’re at it.Once you do, it tends to save your inputs, so when you look at other properties, the rate you selected earlier should apply to other homes.This can give you a faster, perhaps more realistic estimate of the monthly payment, instead of a rate that might turn out to be too good to be true.So you could put in 7.75%, or maybe 7.50%. That way if rates go up, or you qualify for a higher rate thanks to some loan-level price adjustments, you won’t be caught off guard.You’re basically playing it more conservatively in case pricing worsens, which is the prudent approach.While you’re at it, you may want to review the other inputs to ensure they are reflective of your proposed loan.Are you really going to put 20% down on the home purchase, or just 3% to 5%?Overestimating these costs instead of potentially underestimating them can help you avoid being house poor. Or worse, missing out on your dream home entirely due to inaccurate estimates. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)