How Homeowners Build Generational Wealth

Homeownership can be a pathway to building generational wealth — in fact, owning a home is so closely linked to long-term stability that it’s been one of the few life goals that’s just as common today as it was 50 or even 100 years ago.

But how does homeownership help families build wealth? What makes real estate a transgenerational tool to achieve financial security?

Numerous studies have shown that owning a home is not merely a personal goal, but a financial goal that can have a multigenerational impact. There’s more than one way that homeowning can benefit individuals and families when it comes to financial security:

Homeownership as an Investment: As property values increase, so does the value of the homeowner’s equity. This equity can be used for future investments or passed down to the next generation.

Forced Savings: Not only are mortgage costs typically less per square foot than rent, but they also help build your equity each month — in other words, you are making payments toward your future financial health.

Tax Benefits: Homeowners can leverage deductions for mortgage interest and property taxes. These deductions can reduce your taxable income, which can often result in a lower tax bill.

Stability: Owning a home can offer families a sense of permanence and belonging within a community, which can lead to better mental health and well-being.

Passing Down Wealth: As the value of a home appreciates, it can become a substantial asset that can be inherited by loved ones. It can be sold to fund other investments or continue as the family home where a new generation of memories can be made.

While a house can become a foundation for building generational wealth, it’s important to consider the potential challenges and financial barriers that can arise. Additionally, it’s important to weigh the pros and cons carefully and explore all your financing options.

Get in touch if you’d like to discuss your mortgage options or other loan opportunities.

When You Should (Not) Refinance

Refinancing is common practice for homeowners, and it’s often a smart financial move.

It can lower your payment, reduce your interest rate and more. But when it’s not the right time to refinance, it can be an unnecessary effort or even result in extra costs.

When should you think about refinancing, and when should you think twice? Here’s a quick guide to help answer these common questions:

What are the perks of refinancing?

  • It can change your payments and interest rate. If your credit score has improved significantly, for example, refinancing could result in lower costs.
  • Refinancing can also allow you to get a shorter/longer loan term than your previous mortgage or switch from a variable-rate to a fixed-rate loan according to your financial needs.
  • Cash-out refinancing can give you immediate access to funds for home improvements or large purchases.

When should I think twice?

  • If you plan on moving in the next few years. Refinancing involves closing costs (typically 3-6% of the loan amount), so you’ll want to stay long enough to make them worth it.
  • If the cost outweighs what you’d save. Even if saving money isn’t your primary goal, minor advantages may not be worth the cost of refinancing in some cases.
  • If you’re close to paying off your first mortgage. This is especially true if you refinanced a 30-year loan and got another 30-year loan, for example.

How can I prepare to refinance my mortgage?

  • Review your options and current rates. Compare their pros and cons with your current mortgage.
  • Calculate closing costs. For example, you should subtract closing costs from any savings from lower monthly payments to determine the actual amount you could save throughout the loan’s duration.
  • Check whether you can improve your finances to get better loan offers (e.g., increasing your credit score).

Have any questions about refinancing your mortgage? Get in touch today.

What to Know About Property Liens

For both homebuyers and homeowners, understanding how property liens work is important. In fact, they could impact your ability to buy a specific house or make a home cost more.

Fortunately, finding out if a property has a lien against it isn’t too hard — nor is settling a lien once one is in place.

Here are common questions and answers about property liens to help cover the important facts.

Q: What is a lien? 

A: A lien is a claim against a home or other asset (boat, car, etc.). It means the owner owes an entity money, and unless the debt is settled, the debtor can seize the asset to cover the unpaid balance. There can also be tax liens against the property when the owner doesn’t pay their taxes.

Q: Can you still buy a home if it has a lien? 

A: You can buy a home that has liens against it, but there are risks. Most importantly, a lender won’t give you a loan until the lien is settled.

Q: Should you avoid a home with a lien against it? 

A: If your dream house has a lien against it, you will need to settle the lien before buying it. You could pay the liens off yourself as part of the purchase or, in many cases, the seller can use the sale profits to settle them before closing.

Q: Are there ways to protect yourself? 

A: It’s a good idea to work with a title agency with buying a home. They will be able to do a title search and identify any liens against a home you’re interested in. You can also purchase title insurance, which protects you if any unknown liens surface later on.

There are other topics you’ll want to familiarize yourself with before becoming a homeowner. Get in touch today for more guidance.

Prequalification Versus Preapproval

When you start researching to buy a home, you’ll see the terms “mortgage prequalification” and “mortgage preapproval” thrown around a lot.

While they sound similar, they aren’t the same — and they serve different purposes in your homebuying journey.

Thinking of making an offer soon? Here’s what you need to know about prequalification versus preapproval and when they’re needed.


Getting prequalified can give you a rough idea of how much you can potentially borrow, which makes it ideal for the initial stages of your home search. It’s a relatively quick and easy way to figure out what your budget should be and learn more about what financing options are available to you.

You’ll need basic details like your income, price range and credit score. This information is quickly screened, which makes the process faster and simpler than preapproval.

Many sellers will also accept prequalification in your offer, and it is often mentioned as a minimum requirement for offers. But it may be less appealing if the seller gets offers with preapproval letters.


A preapproval is much more official and involves a thorough verification process. You’ll need to provide more information regarding your finances and employment, including important documents like tax returns. The lender will also do a hard credit check, which can impact your credit score.

It’s optimal to obtain a preapproval letter before you make an offer. It’s not necessary to obtain prequalification until you’re seriously considering a specific property for sale, but it’s best to start gathering the information you’ll need beforehand so you can receive your letter in a more timely manner.

Preapprovals give sellers more confidence, as it shows you’re serious about the purchase and financing isn’t an issue for you.

Ready to get started? Reach out today.

Mortgage demand rises 2.2% as interest rates decline slightly

Mortgage applications rose 2.2% last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week one year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

Mortgage applications to purchase a home rose 3% for the week, but they were down 41% from a year ago. Some potential buyers may now be venturing back in, hearing that there is less competition and more negotiating power, but there is still a shortage of homes for sale and prices have not come down significantly.

Rates are still twice what they were at the beginning of the year, but they eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with a 20% down payment.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8% of loans last week, down from the range of 10% and 12% during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.

Fed officials see smaller rate hikes coming ‘soon,’ minutes show

Federal Reserve officials earlier this month agreed that smaller interest rate increases should happen soon as they evaluate the impact policy is having on the economy, meeting minutes released Wednesday indicated.

Reflecting statements that multiple officials have made over the past several weeks, the meeting summary pointed to smaller rate hikes coming. Markets widely expect the rate-setting Federal Open Market Committee to step down to a 0.5 percentage point increase in December, following four straight 0.75 percentage point hikes.

Though hinting that less severe moves were ahead, officials said they still see few signs of inflation abating. However, some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated. “The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”

The minutes noted that the smaller hikes would give policymakers a chance to evaluate the impact of the succession of rate hikes. The central bank’s next interest rate decision is Dec. 14.

The summary noted that a few members indicated that “slowing the pace of increase could reduce the risk of instability in the financial system.” Others said they’d like to wait to ease up on the pace. Officials said they see the balance of risks on the economy now skewed to the downside.

Focus on end rate, not just pace

Markets had been looking for clues about not only what the next rate hike might look like but also for how far policymakers think they’ll have to go next year to make satisfactory progress against inflation.

Officials at the meeting said it was just as important for the public to focus more on how far the Fed will go with rates rather “than the pace of further increases in the target range.”

The minutes noted that the ultimate rate is probably higher than officials had previously thought. At the September meeting, committee members had penciled in a terminal funds rate around 4.6%; recent statements have indicated the level could exceed 5%.

Over the past few weeks, officials have spoken largely in unison about the need to keep up the inflation fight, while also indicating they can pull back on the level of rate hikes. That means a strong likelihood of a 0.5 percentage point increase in December, but still an uncertain course after that.

Markets expect a few more rate hikes in 2023, taking the funds rate to around 5%, and then possibly some reductions before next year ends.

The post-meeting statement from the FOMC added a sentence that markets interpreted as a signal that the Fed will be doing smaller increases ahead. That sentence read, “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.“

Investors saw it as a nod to a reduced intensity of hikes following four straight 0.75 percentage point increases that took the Fed’s benchmark overnight borrowing rate to a range of 3.75%-4%, the highest in 14 years.

When will the hikes end?

Several Fed officials have said in recent days that they anticipate a likely half-point move in December.

“They’re getting to a point where they don’t have to move so quickly. That’s helpful since they don’t know exactly how much tightening they’re going to have to do,” said Bill English, a former Fed official now with the Yale School of Management. “They emphasize policy works with lags, so it’s helpful to be able to go a little bit more slowly.“

Inflation data lately has been showing some encouraging signs while remaining well above the central bank’s 2% official target.

The consumer price index in October was up 7.7% from a year ago, the lowest reading since January. However, a measure the Fed follows more closely, the personal consumption expenditures price index excluding food and energy, showed a 5.1% annual rise in September, up 0.2 percentage points from August and the highest reading since March.

Those reports came out after the November Fed meeting. Several officials said they viewed the reports positively but will need to see more before they consider easing up on policy tightening.

The Fed has been the target lately of some criticism that it could be tightening too much. The worry is that policymakers are too focused on backward-looking data and missing signs that inflation is ebbing and growth is slowing.

However, English expects the Fed officials to keep their collective foot on the brake until there are clearer signals that prices are falling. He added that the Fed is willing to risk a slowing economy as it pursues its goal.

“They have risks in both directions, if doing too little and doing too much. They’ve been fairly clear that they view the risks of inflation getting out of the box and the need to do a really big tightening as the biggest risk,” he said. “It’s a hard time to be [Fed Chairman Jerome] Powell.”

Buyer Guide: Starter vs. Forever Homes

Is there a difference between the right house for your current situation versus your ideal home for life?

There’s usually a big difference for most buyers, and it’s a good idea to consider both options carefully.

When deciding between a starter and a forever home, there’s a lot to think about beyond your budget. This quick breakdown can help you get started:

What are the main differences between a starter home and a forever home? 

Starter Homes:

  • Have lower upfront costs. This means lower mortgage payments, but refers to upkeep and utilities costs as well.
  • Require compromise. If you divide the features you’re looking for between “must have” and “would be nice,” a starter home lacks most “would be nice” features.
  • Need less commitment. It’s easier to sell the home in less than 10 years should you need to.
  • Are a stepping stone. They can be renovated to grow with you, become a rental property, or be sold to help finance a new home later.

Forever Homes:

  • Cost more. You can expect higher home prices, mortgage payments and monthly living expenses.
  • Check all your boxes. The home should have the features and space you’ll need long term.
  • Are high-commitment. Selling in less than 10 years is more likely to result in financial losses, which can be limiting.
  • Let you establish yourself. You’ll have more time to gain equity and plant firm roots in your community.

When is considering both options important?

Exploring both options is especially important if:

  • You haven’t lived in the area for at least a year. You might want to remain flexible while you familiarize yourself.
  • You’re at your budget’s limit. Could you comfortably cover your expenses for a few months if something disrupted your income? If you aren’t certain, a starter home might be worth exploring.
  • Your future plans aren’t set in stone. Having a consistent vision of the future is important so you don’t end up paying for amenities and space you don’t need.

Still not sure what to do? Let’s discuss your thoughts and questions together.

Using Gift Money for Your Down Payment

Gift-giving season is upon us — and did you know that you can potentially use gift money to help cover your down payment?

You most certainly can. However, there are some limitations and a few bases you’ll need to cover so your gift money is properly accounted for. Here are a few things to know:


There’s no maximum dollar amount of gift money that can go toward your down payment. But there might be a minimum borrower contribution depending on your loan, so we’ll double-check whether this applies to you.


You’ll need to provide proof of where your gift money came from. If possible, ask the donor to gift it in a manner that has a paper trail, e.g., a bank transfer or check.

If you receive a check, it’s best to deposit it in person so you can obtain a receipt. Make sure your gift money is deposited into the account you’ll be using for your mortgage.


There are certain rules for who can give you money toward your down payment, but they differ depending on your loan type.

Typically, any immediate family member, spouse or fiance is acceptable. Reach out if you’re unsure who can contribute gift money toward your loan.


A gift letter provides more information on the donor as well as written confirmation that they do not intend for you to pay the money back. Your letter should include key information such as:

  • Their name(s), address and contact information.
  • Their relationship to you.
  • Exact dollar amount.
  • The date it was gifted or transferred.

Signed confirmation that the money given does not need to be repaid.

Have questions about the right way to use gift money for your down payment? Let’s chat.

How do construction loans work?

Building your home from the ground up can be extremely rewarding. You get to have a lot more control over your property’s design and construction, and starting from scratch can be an adventurous passion project.

But how can you finance both the property purchase and construction? Do you need one loan for the land and another for the house? Will a standard mortgage work?

Here’s a quick rundown of your main options.

What are construction loans?

Construction loans can cover the cost of raw land, building permits, construction and other expected financial obligations between purchasing land and building a home. They typically include a completion time limit of 12 months, though buffer limits for both budget and construction time can vary.

Most construction loans can be divided into two main categories:

1. One-Time Closing Loans

Often called construction-to-permanent loans, these are actually two loans conveniently bundled into one closing appointment.

You start with a construction loan, paying only interest throughout the building process. Once construction is complete, your balance converts into a mortgage, which you’ll pay back monthly just like any other conventional mortgage loan.

There are various loan terms and rate types (adjustable or fixed) for one-time closing loans to fit your plans and needs. One of the most appealing benefits of a one-time closing loan is that the merged process can help decrease your closing costs.

2. Two-Time Closing Loans

A two-time loan includes two loans with separate closings. This means you can potentially use separate loan options to seek out better interest rates, but you’ll have additional closing costs.

Though the variety of options can be financially advantageous for some borrowers, others may find the process of qualifying and applying for two different loans difficult depending on their circumstances.

Financing your dream home can feel complicated, but it doesn’t have to be. Get in touch today to discuss your options.