May 2023

MAY NEWSLETTER68% APPRECIATION IN 10 YEARS | LLPA'S | RECIPE OF THE MONTH68% APPRECIATION IN 10 YEARS

Middle-income Homeowners Gained More Than $120,000 in Wealth Over the Past Decade From Home Appreciation, According to NAR

A new housing report by the National Association of Realtors® reveals middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68% in the last 10 years. The report, Wealth Gains by Income and Racial/Ethnic Group, speaks to the value agents and Realtors® bring to consumers when helping buy and sell homes that build generational wealth. NAR released the report during its 2023 Realtor® Broker Summit as the association commemorates Fair Housing Month.

"This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life," said Lawrence Yun, NAR's chief economist. "A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter."

Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners who were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19 may have paid off an even larger amount of their mortgage.

LOAN LEVEL PRICE ADJUSTMENTS IN THE NEWS

What are Loan Level Price Adjustments?

Loan Level Price Adjustments (LLPAs) were introduced by Freddie Mac and Fannie Mae almost 15 years ago. They have been around so long they are de rigueur; all mortgage lenders factor LLPAs into mortgage rates every day. LLPAs are fees charged by lenders to borrowers to compensate for risks associated with the loan. These fees vary based on factors such as credit score, loan-to-value ratio, and property type.

Think about loan level price adjustments as you would insurance premiums, say, on your car. Riskier drivers pay higher premiums; safer drivers pay lower premiums. So it is with mortgage loans. Fannie Mae and Freddie Mac collect LLPA premiums based on every individual loan’s characteristics. The higher the risk, the higher the LLPA premium. It’s really that straightforward.

Loan Level Price Adjustments recently made the news as Fannie Mae and Freddie Mac imposed a change in January 2023 which takes effect May 2023.

SO, WHAT HAS CHANGED?

In a nutshell, the penalty or "cost" of having a lower credit score has gone down. It still costs more to have a lower score. For instance, if you have a score of 659 and are borrowing 75% of the home's value, you'll pay a fee equal to 1.5% of the loan balance whereas you'd pay no fee if you had a 780+ credit score. But before these changes, you would have paid a whopping 2.75% fee. On a hypothetical $300k loan, that's a difference of $3750 in closing costs.

If you really want to geek out and learn all about LLPA's and the changes that take effect May 1, read this article.

RECIPE OF THE MONTH: VEGGIE SESAME NOODLES

This recipe is healthy and easy to prepare—perfect for bringing to get-togethers! It’s vegetarian/vegan and easily gluten free. It makes a great side dish for graduation parties, pot-lucks, etc. Enjoy!INGREDIENTS:

• 8 ounces soba noodles or spaghetti noodles of choice
• ¼ cup raw sesame seeds
• ⅓ cup reduced sodium tamari (or soy sauce, just be sure it’s reduced sodium or it will taste too salty)
• ¼ cup toasted sesame oil
• 2 tablespoons lime juice (about 1 medium lime)
• 1 teaspoon grated fresh ginger
• 2 cloves garlic, pressed or minced
• ½ teaspoon red pepper flakes, to taste (scale back or omit if sensitive to spice)
• 2 ½ cups thinly sliced red cabbage (about 10 ounces or ¼th medium cabbage)
• 3 whole carrots, peeled and then sliced into ribbons with vegetable peeler (about 1 ½ cups)
• 1 red bell pepper, sliced into very thin strips
• 1 bunch green onions, chopped
• ½ cup chopped cilantro
• Optional: 2 cups shelled edamame, steamed

DIRECTIONS:

1. Cook the soba noodles according to the package directions. Once they’re done cooking, drain them in a colander and rinse them well under cool water. Transfer the drained noodles to a large serving bowl and set aside.
2. Meanwhile, toast the sesame seeds in a small skillet over medium heat, stirring often (keep an eye on them, as they can burn quickly). Once they’re fragrant and turning golden, transfer them to a small bowl so they don’t burn. Set aside.
3. In another bowl, combine the tamari, sesame oil, lime juice, ginger, garlic and red pepper flakes. Whisk until blended. Set aside.
4. To assemble, add the cabbage, carrots, bell pepper, green onions, cilantro and optional edamame to your bowl with the noodles. Drizzle in the dressing. Add all of the sesame seeds, and use tongs to toss until the mixture is fully combined. Serve immediately, or refrigerate for later. This salad is best consumed within a couple of days, but it will keep for up to 5 days.

About FiveFour Real Estate

FiveFour Real Estate is the one-stop shop for those who are ready to take their home or investment to the next level. Our name FiveFour derives from 5.4%: the average annual home appreciation rate in the US over the last 50 years. We know that your real estate investment is one of the largest and most important purchases of your life. With that in mind, our focus and strategy revolves around you.

Thinking of Buying or Selling?  Know someone who is?We are NEVER too busy for your referrals!

OUR PROMISE TO OUR CLIENTS

This could be one of the largest and most important financial decisions you will make in your lifetime, and you deserve an experienced partner that understands the intricacies of Colorado real estate.

We promise to always keep you informed about the rapidly changing market and educate you throughout the entire process. We promise to protect your best interests and treat your home or investment like it’s one of our own. We promise to work our hardest to find the perfect home for you and your family with as little stress as possible.  

We value your trust and hope to continue supporting you in your lifetime even after your sale or purchase is complete. This goes beyond real estate to us, it’s the beginning of a lifelong friendship.

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