Fintech Solutions Create Flexible Financing Options

Home values are hovering at near record highs. For many homeowners, their home is their most valuable asset and home equity can be a significant source of their wealth.

Homeowners can leverage the value of their home, such as in the form of a home equity loan and home equity lines of credit (HELOC). They may use their home equity funds to try to increase their property value by repairing or renovating the home to prepare it to sell. They may also use home equity funds to eliminate private mortgage insurance (PMI). But consumers often find that home equity financing can be overly complicated. A 2022 survey of U.S. borrowers indicated that approximately one-third of respondents thought getting a mortgage was more difficult than buying a car (31%), applying for jobs (29%) and applying to college (26%). 

Further, home equity loans and HELOCs are not without drawbacks. Borrowing against your home equity means the mortgage balance stays high, interest rates add costs, borrowers can find themselves owing more than their home is worth, credit scores can suffer, and, in the worst cases, homeowners could lose their homes due to missed payments. 

Those risks beg the question: Are home equity loans and HELOCs the best options?

Leveraging Home Equity Without a Loan

Because real estate professionals are often trusted sources of information for homeowners, they may face questions over financing options. Agents should always advise their clients to speak with mortgage lenders and financial experts over their personal financing matters. But technology could help them find some answers, too. Financial technology (aka fintech) companies are offering real estate professionals and consumers alternative financing options that may be worth exploring. 

For example, Unlock Technologies (a fintech company focused on helping consumers improve their financial status) has created a financing option—a home equity agreement (HEA)—that allows homeowners to leverage home equity without taking on a loan. The concept is fairly simple: Homeowners receive an interest-free lump sum of cash in exchange for a share of their home’s future value. Because an HEA is not a loan, there are no monthly payments. The qualification threshold is lower than traditional home equity loans and HELOCs, making HEAs an option for a wider population of consumers. Income requirements are also lower, so HEAs may be a better option for homeowners who are self-employed, retired or who may lack a steady income. 

HEA funds can be used for any purpose, including home renovations or repairs, consolidating or eliminating debt, education expenses or funding a business. Homeowners can access the wealth created via their home equity while retaining the title to their homes and avoiding additional debt.

Other potential benefits of Unlock’s HEAs include streamlined application and approval processes, including an online estimate feature that takes only minutes and won’t impact credit scores. Unlike reverse mortgages, HEAs are available to property owners of all ages, and applicants do not need perfect credit to qualify.

An Unlock HEA includes a home improvement adjustment, which means that homeowners who make significant improvements to their homes retain the value added from those improvements. 

An HEA is completed when one of the following scenarios plays out: A homeowner buys back their equity in one lump sum at any point during the 10-year term; a homeowner makes a partial buyout of Unlock’s investment; or, a homeowner settles Unlock’s investment when the home is sold. 

Curious how it works? Assume your home value was $600,000. You choose an “Investment Payment” of $60,000—10% of your home’s value. Your exchange rate is 2.0%, so your “Unlock Percentage” is 20% (10% x 2.0). If you sell your home later for $750,000, the Unlock Share is 20% of that $150,000 gain in value. For additional examples, check out Unlock’s Product Guidepdf.

It’s also important to point out, that fintech companies like Unlock are not lenders. In fact, Unlock is a team of finance, mortgage and real estate leaders dedicated to helping consumers create more financial flexibility.

The Benefits for Real Estate Professionals 

Home equity funds are plentiful. Current market data indicates that, as of August 2024, U.S. borrowers held $17.6 trillion in home equity collectively, with $11.5 trillion of that considered tappable. Further, U.S. mortgage data indicates that three in five homeowners have at least $100K in available equity.

Real estate professionals add tremendous value when they let clients know that they can have access to these funds, especially when home equity is used to repair or renovate homes. After all, every party in a real estate transaction benefits when top condition homes sell for market value in a competitive real estate landscape. 

In addition to funding home improvements, homeowners carrying high debt loads can access their home equity via HEAs to pay down debt and qualify for better mortgage rates when buying their next home. Also, homeowners who are looking for investment or rental properties can use HEAs to fund down payments. 

With high interest rates, growing personal debt and sky-high home equity values, homeowners are looking for alternative financing options. Innovative fintech solutions have the potential to expand beyond traditional home lending to include more people at more stages of their lives. Real estate professionals who are part of that financial transformation can build trust and relationships that benefit everyone. 

Read more on NAR

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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‘Unverifiable income’ can limit your mortgage options — here’s how to get around it

A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 

Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 

For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.

It’s a more common problem than you might expect.

About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.

In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 

“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”

For example, you may have to sustain higher-than-usual mortgage rates.

Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.

Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.

“They might also look at what kind of assets you have,” Channel said.

Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 

“You may have to jump through more hoops in order to get those mortgages,” Channel said.

For example, you may need a higher credit score or be required to provide a bigger down payment.

The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.

In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.

“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.

If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.

“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen,” Channel said.

But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.

Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.

“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said.

Read more on CNBC

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How to track housing data to know what’s coming next

Tracking live weekly housing data would have been nearly impossible just a few years ago, but now we can gather and analyze real-time housing demand data. This valuable information can significantly enhance our understanding of housing economics and what is coming next. The question is: How can we harness the data to give you more confidence when talking about the housing market?

Mortgage rates and purchase application data

One of the things I do weekly is track how forward-looking housing demand reacts to specific mortgage rates. Here’s an example of how purchase apps have acted with particular mortgage rate ranges.

When mortgage rates were running higher earlier in the year (between 6.75%-7.50%), this is what the purchase application data looked like:

• 14 negative prints

• 2 flat prints

• 2 positive prints

When mortgage rates started falling in mid-June from the yearly peak of 7.5% toward 6%, here’s what purchase applications looked like:

• 12 positive prints 

• 5 negative prints

• 1 flat print

Mortgage rates jumped from 6% to 7% and are now down just a tad from the recent peak, and this is what the data looks like:

• 5 positive prints

• 4 negative prints

Purchase applications are tracked 30 to 90 days before they impact sales data. From the information above, we can observe that sales can increase when mortgage rates approach 6%. If rates drop below 6% and remain there for a year, we can expect significant sales growth since we are starting from a historically low baseline.

Purchase application data is at levels not seen since 1995, indicating a low-growth threshold. However, we now have a clearer understanding of where we can expect to see real improvements in these data lines.

Weekly pending contracts

Now that we see how sales can grow with mortgage demand and purchase applications, let’s look at how it tracks into our weekly pending contract data. This data shows homes going into contract, which may be reflected in the sales data in the following month or even two months later, depending on when the contract is signed.

We have observed that pending contracts improved when mortgage rates dropped to around 6%. Currently, the data shows better performance compared to 2022 and 2023, which suggests that we are establishing a firmer bottom in the data trend.

Our weekly tracker also provides an overview of our inventory data to add more context to what’s going on in the housing market. Since the lows of 2022, we have seen an increase in active inventory. This is precisely what the housing market needed as we have more choices for homebuyers and less price growth.

Existing home sales data

Given the data above, it should not be surprising that the most recent existing home sales and pending home sales from the National Association of Realtors have improved. Here, we can see that pending home sales data has improved over the last two months.

I developed my data analysis to demonstrate how to identify trends early, allowing you to move beyond waiting for the existing home sales report. We can observe the demand curve in housing data months before its appearance in traditional data channels. That’s why we created the weekly tracker for you to review.

Read more at Housingwire

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What to watch for in 2025 housing market predictions

Housing is not cheap — whether you’re buying or renting. 

In October, the median sales price for a single-family home in the U.S. was $437,300, up from $426,800 a month prior, according to the latest data by the U.S. Census. 

Meanwhile, the median rent price in the U.S. was $1,619 in October, roughly flat or up 0.2% from a year ago and down 0.6% from a month prior, according to Redfin, an online real estate brokerage firm.

While it can be difficult to exactly pinpoint how the housing market is going to play out in 2025, several economists lay out predictions of what’s likely to happen next year in a new report by Redfin, an online real estate brokerage firm.

“If the housing market were going to crash, it would have already crashed by now,” said Daryl Fairweather, chief economist at Redfin. “The housing market has been so resilient to interest rates going up as high as they have.”

Here are five housing market predictions for 2025, according to Fairweather and other economists. 

Home price growth will return to pre-pandemic levels

The median asking price for a home in the U.S. will likely rise 4% over the course of 2025, a pace similar to that of the second half of this year, according to Redfin.

The 4% annual pace is a “normalization” compared to the accelerated growth last seen in 2020, said Fairweather. 

Earlier in 2024, the rate at which home prices grew slowed down to pre-pandemic levels. In other words, while prices were still rising, the speed of price growth was not as fast as it was in previous years. 

Despite predictions of growth slowing, there may still be some volatility in prices.

In fact, home price appreciation might stay flat, or less than 1%, going into the 2025 spring home buying season, said Selma Hepp, economist at CoreLogic.

But the possibility of President-elect Donald Trump enacting some of his economic policies could drive home prices much higher, said Jacob Channel, senior economist at LendingTree. 

“We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” he said. 

General tariffs on foreign goods and materials as well as mass deportations could result in higher construction costs and slower home-building activity. If fewer homes are built in a supply-constrained market, prices might grow much higher, said Channel.

Flattening rents, with more room to negotiate

At a national level, the median asking rent price in the U.S. will likely stay flat over the course of a year in 2025, as new rental inventory becomes available, according to Redfin.

“If rents are flat, and people’s wages continue to grow, that means people have more money to spend,” Redfin’s Fairweather said, as well as increase their savings.

More than 21 million renter households are “cost-burdened,” meaning they spent more than 30% of their income on housing costs, according to 2023 U.S. Census data.

A stable rental market will also give renters more strength to negotiate with landlords. In some areas, property managers are already offering concessions like one month rent free, a free parking space or waiving fees, experts say.

However, “it’s December,” Channel said. “Rent prices typically decline in the colder months of the year,” as fewer people are apartment hunting in the late fall and winter seasons.

If would-be buyers continue to be priced out of the for-sale market next year through high home prices and mortgage rates, competition in the rental market may ensue, he said.

Also keep in mind that the typical rent price you see will depend on what’s going on in your local market, Hepp explained.

For instance: Austin, Texas was the “epicenter of multi-family construction,” she said, meaning a lot of new supply was added into the city’s rental market, bringing rental costs down. The metro area’s rent prices fell by 2.9% from a year ago, CoreLogic found.

In contrast, supply-constrained metropolitan areas like Seattle, Washington, D.C., and New York City, are experiencing high rent growth of 5% annually.

A ‘bumpy’ and ‘volatile’ year for mortgage rates

Redfin forecasts mortgage rates will average 6.8% in 2025, and hover around the low-6% range if the economy continues to slow.

Yet experts expect 2025 will be a “bumpy” and “volatile” year for mortgage rates.

Borrowing costs for home loans could spike if policies like tax cuts and tariffs are enacted, putting upward pressure on inflation.

“We’re sort of in uncharted territory. It’s really tough to say exactly what’s going to happen,” said LendingTree’s Channel.

Mortgage rates declined this fall in anticipation of the first interest rate cut since March 2020. But then borrowing costs jumped again in November as the bond market reacted to Donald Trump’s election win. Since then, mortgage rates have somewhat stabilized — for now.

“Our expectation is that rates are going to be in the 6% range as we move into 2025,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, recently told CNBC.

More home sales than in 2024

Pent-up demand from buyers and sellers on the sidelines may drive home transactions next year.

“People have waited long enough,” Fairweather said.

About 4 million homes are expected to be sold by the end of 2025, an annual increase between 2% and 9% from 2024, according to Redfin.

The market is piling on with “people who need to move on with their lives,” like buyers who are getting new jobs and need homes suitable for life changes, and sellers who have delayed moving plans, Fairweather said.

While more buyers are expected to hit the market next year, the level of competition may not be as aggressive as in recent years, when bidding wars were the norm.

Other affordability factors may come into play, like rising insurance costs and property taxes, in turn slowing down competition, said CoreLogic’s Hepp.

“We’ll definitely see more buyers out there,” she said. “But I don’t see the competition heating up to the levels that it has over the last few years.”

Climate risks will bake into homes prices

The risk of extreme weather and natural disasters may anchor down home prices or slow down price growth in areas like coastal Florida, California and parts of Texas, which are at high risk of hurricanes, wildfires or other disasters, Redfin expects.

If palatable price tags have you eyeing homes in a high-risk market, be aware of potential complications.

For instance, home insurance policies in some of these markets are harder to come by, and tend to carry high price tags. The financial impact of natural disasters may also be felt in rising home maintenance and repair costs, said Redfin’s Fairweather.

What’s more challenging, “every part of the country is vulnerable” because the weather patterns are changing, she said. “Lately, there have been these atmospheric rivers in California that have caused days of heavy flooding, and those homes aren’t built for that.”

While there’s a lot of focus on Florida for hurricane risks, the state is more prepared for this natural disaster, unlike areas like Asheville, North Carolina, a mountainous city battered by the hurricane Milton earlier this year.

“We will probably see insurance increase pretty broadly because that mismatch between what homes were built for and the climate that they are going to be facing in the coming years,” she said.

See more on NBC News

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Why More Sellers Are Hiring Real Estate Agents

Putting your house for sale on your own – often called “For Sale by Owner” or FSBO – might be on your mind. But you should know that it gets complicated very quickly, especially in today’s complex market.

That’s why data from the National Association of Realtors (NAR) shows a record low number are going the route of selling on their own.

Instead, more and more homeowners are choosing to work with a real estate agent (see graph below):

And here’s why partnering with an expert is the go-to choice. Selling your home is a big deal, and while FSBO might seem like a way to save time or money, it comes with a lot of responsibilities.

The selling process requires setting the right price, navigating a growing amount of legal paperwork, and creating a solid strategy to attract buyers. And going it alone often means taking on more than you bargained for.

Let’s look at two big reasons why working with a pro can make all the difference.

1. Getting the Price Right

One of the biggest hurdles when selling a house on your own is figuring out the right price. It’s not as simple as picking a number that sounds good – you need to hit the bullseye. Price your home too high, and buyers may overlook your listing. Price it too low, and you could leave money on the table or even raise red flags about the condition of your home.

Real estate agents are experts in finding the right price for today’s market trends. As Zillow explains:

“Agents are pros when it comes to pricing properties and have their finger on the pulse of your local market. They understand current buying trends and can provide insight into how your home compares to others for sale nearby.”

With their knowledge of the local market, buyer behavior, and what homes like yours are selling for, an agent will help you make sure you set a price that’s competitive and that’ll draw in buyers. And it’s that perfectly strategic price that’ll set the stage for selling at top dollar.

2. Understanding and Managing the Paperwork

Another part of the process is dealing with a growing stack of paperwork, from disclosure forms to contracts. Each document needs to be completed accurately, and there are legal requirements to follow that can feel overwhelming if you’re not familiar with them.

This is another area where an agent’s expertise really shines. They’ve handled these documents countless times and know exactly what’s needed to keep everything on track. Your agent will guide you through the paperwork step by step, making sure it’s done right the first time and you understand what you’re signing. With their help, you can avoid unnecessary stress and mistakes that can lead to delays, legal complications, and more.

Bottom Line

Selling your house is a big decision, and having a trusted real estate agent on your side can make all the difference.

Connect with a local real estate agent so you have a pro to help with everything from pricing your home to managing the details. That way it takes the guesswork out of the process and helps you sell with confidence. 

Read more on Keeping Current Matters

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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