The Future of Home Loans

It’s newspaper
time, and home loans are entering an uncertain era. That’s today’s story. Let’s dive into it. Hey there, I’m Clayton Morris. I’m the founder
of Morris Invest. I’m a longtime real
estate investor. And today we’re going to talk
about some news of the week, and of course the presidency
in the United States has shaken up a lot of things. But one area that I’m really
focused on, of course, is the home sector and
home loans and our ability to get loans and mortgage rates
and what this is all going to mean for us going forward. Well, the front page of the
Wall Street Journal this week with this story, home
loans enter uncertain era and really talking about
the remaking of US politics likely to upend the
nation’s mortgage market, and they say there are
two key reasons why, rates and regulations. So one of the things that
we know from a Donald Trump presidency is that he
would like to roll back portions of the Dodd-Frank Law. The Dodd-Frank law, many
lending institutions believe and many investors believe that
it’s inhibiting to us, that we can only get a certain
number of– like, if we wanted to by a number
of rental properties, we can only get a
certain number of them with using a conventional loan. We’re only allowed in certain
areas, I think, up to 10 under our own name with like
a local bank down the street. Really, so that means
I have the ability to find great rental
properties, and you’re only going to let me buy 10 of
them under my own name? That makes no sense. So that’s part of the
Dodd-Frank regulation. There are many, many other
layers to Dodd-Frank, of course. It’s incredibly onerous,
and it was obviously put in place after
everything that happened during the
2008, 2009 crash in order to keep us more stable. But in the end, it’s
really inhibited I think a lot of growth
for investors, our ability to lend money, our
ability to borrow money, and our ability to
expand our portfolios of rental properties. It’s been difficult for people. I really had to find
creative ways around it. So obviously this
piece talking about how much of the Dodd-Frank
law would Donald Trump and his administration
attempt to repeal or roll back? So that’s why these mortgage
numbers right now are entering this uncertain era. One of the other key– so
that’s the regulation piece– is the rates and mortgage rates. Right after he was–
became President-elect, we saw this big surge in
the bond market, which had been flagging for a while. But we also saw a surge
in mortgage rates. Now we’re still really
historically low for mortgage rates,
but we did see a spike, and it jumped up like a
percentage, like one point. So already we’re seeing some
shifts in rates and ability for people to actually
get home loans. So this all is tied to the
recovery of the housing market right now, and the housing
market is troubled. We’re– a lot of people think
that in some of those areas that California,
New York, Miami, Chicago we’re sitting
in a bit of a bubble, that home values have
skyrocketed and mortgage rates are so low and people are able
to get loans on million dollar homes that they technically
probably couldn’t afford if it was even one point higher. Think about that, right. If their mortgage
rate with interest was like one or even two points
higher instead of 3% interest, maybe 5% interest,
they might not even be able to borrow that
money on that house. That’s how close they are
to being able to afford that larger valued property. And so this article
pointing out that we’re seeing perhaps a shift now, and
if those mortgage rates go up, what does that mean to the
value of those ridiculously overpriced homes right now? Are we going to see
some moderation here, and could we see a
bit of a correction and therefore some
bubble problems in areas like the east– I’m sorry on the east coast
and on the west coast. Could we be headed
for some problems? People being priced
out of their homes, not being able to afford
the place they live in. So that’s why we’re entering
this uncertain era right now. And I thought that this piece
was particularly interesting. So the bottom line the
moral of this story is that by before
the end of 2016 or early 2017, if we’re going to
be seeing rates heading higher and you’re thinking
about buying that home or buying that rental property,
get those mortgages now before rates start to go
up a little bit higher and before we even know what’s
going to happen with Dodd-Frank in the next few years. So that’s my advice. Take it with a grain of salt.
But one good thing could come of this is a rollback
of Dodd-Frank and our ability perhaps to
get more access to more money in order to fuel our
economy and to buy more rental properties,
because after all that’s what we’re all about here. We’ve got a lot of great
playlists here on the channel. Go over and check
out our other videos. We talk about buy
and hold real estate, DIY if you’re one
of those people that likes to get your hands
dirty and get out there and hang drywall and buy rental
properties yourself and do all the work yourself, we have
some great playlists and videos on that as well. And please don’t
forget to subscribe. See the little icon right here? Just go ahead and tap
on a little bubble and subscribe to our channel. We publish videos multiple times
a week all focused around buy and hold real estate. My name is Clayton Morris. Go out there, take action, and
become a real estate investor. We’ll see you next time.

6 thoughts on “The Future of Home Loans

  • You better be careful with what Trump does on Dodd- Frank, he was talking about his friends getting access to more capital not the avg home investor and home owner. And he said it on national television.

  • Real Estate prices will fall first then the earning will effect the stock market to change! As it has happened in 2007 and 1990.

  • DODD Frank is there to provent people from buying what they can not afford and it is great that way i can buy what they cant afford yayy

  • Hey guys I really like your videos! Thank you for helping me become more well informed and less afraid of jumping into real estate investing.

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