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🌖 Good evening, housing pros! In Part 1, we covered the big-picture policy moves—emergency declarations, federal land auctions, and zoning fast-tracks.

Now in Part 2, we’re getting into the dollars and cents: the closing costs your clients wrestle with, how new mortgage products could reshape the game, and why multigenerational financing may become the norm.

Let’s break down what’s on the table and what it means for you and your business. 👇

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Part 2

Now to the wallet and the worksheet: costs at the closing table, how loans are structured, and how families are qualifying together.

4️⃣ 💵 Lowering Closing Costs—PMI, Title, Credit, “Junk Fees” (with Real Math)

• Closing costs often average $6,000+ and rose 36% between 2021–2023.

• The Trump administration has signaled interest in trimming “junk fees.”

PMI example

• PMI = 1.85% of loan amount annually.

• On a $500,000 loan, PMI = $9,250/year (~$771/month).

• P&I at 6.50% ≈ ~$3,160/mo → with PMI ≈ ~$3,931/mo.

• Eliminating PMI = savings of ~$771/month until 20% equity.

Other fees under scrutiny

• Appraisal, underwriting, credit reports, title add-ons, courier/doc prep.

• CFPB has flagged these as unnecessary or inflated.

5️⃣ 📜 Mortgage Product Design Levers—40-Year Terms, ARMs, and Piggybacks

• 40-Year Mortgages: FHA already uses 40-year mods for distressed borrowers; some non-QM lenders offer 40-year fixed/IO today.

• ARMs: ~8–10% of new apps; modern ARMs (5/6, 7/6, 10/6) are fully underwritten with caps.

• Analyst view: “Today’s ARMs are not inherently riskier when structured properly.”

• 80/10/10 Piggybacks: Widely offered now to avoid PMI and jumbo caps.

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6️⃣ 👨‍👩‍👧‍👦 Mortgages for Multigenerational Households

• Fannie Mae HomeReady®: Allows income from household members not on the loan to help qualify.

• Freddie Mac Home Possible®: Considers non-borrower household income as a compensating factor.

• FHA Loans: Permit non-occupying co-borrowers (e.g., parents helping children).

• VA Loans: Allow extended family co-residency if one borrower is eligible and occupies.

• Portfolio/Jumbo: “Multigenerational” products with flexible DTI/occupancy.

• ADU income: Fannie/Freddie allow rental income from ADUs to count toward qualifying.

Why it matters

• Pew Research: 18% of Americans now live in multigenerational households.

• With affordability stretched, pooling resources is often the only path—and lenders are adjusting to today’s reality.

7️⃣ 🔄 “Rate Transfer” & Assumption Concepts—Unlocking the Lock-In Effect

• Millions are “locked in” by sub-4% rates. Options under review:

  • Porting: Seller carries old rate to new home.

  • Assumable conventional loans: Buyer takes over seller’s balance and rate.

  • Blended structure: Assume part of seller’s loan and add a new second for the rest.

  • Agency support: GSEs create standardized assumption/porting programs.

• (Barron’s: complex, but “not impossible” if agencies and investors align.)

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AND THAT’S A WRAP!

That wraps Part 2. In Part 3: construction-cost levers, mortgage spreads, and the future of Fannie/Freddie (8️⃣–🔟).

See you on the next one,

—Tim & Julie Harris
Harris Real Estate Daily

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