Fed up

Plus, Good, better, best place to sell + Stars, they're just like us

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  January 29, 2022 | Issue #27

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Good morning! This week we're talking about the Fed, the best places to sell a home and the importance of seasoning. Fed up Kiersten Essenpreis for Money The story of the housing market — and really of the entire economy — is changing fast. This week, the policymakers at the Federal Reserve signaled they are likely to raise the federal funds rate, i.e. the short term interest rate that banks charge each other, in March. (Technically, they wrote, "the Committee expects it will soon be appropriate to raise the target range for the federal funds rate" — which is actually pretty direct for the notoriously evasive Fed.) The federal funds rate impacts everything from how much borrowers pay for student loans to how much Americans earn on the cash they have sitting in savings accounts. But nowhere is the power of this rate more apparent than in the mortgage market. Already, the very idea of a rate hike has sent mortgage rates up dramatically. The average rate on a 30-year fixed-rate mortgage now sits at 3.55%. Around this time last year, rates hit a record low of 2.65%. Higher rates make the same house more expensive. The monthly mortgage payment on a $300,000 loan would be about $150 higher today than at the low. So far, that isn't stopping people from buying. "History demonstrates that potential homebuyers who are on the fence will often enter the market at the start of rate increase cycles," explained Sam Khater, Freddie Mac's chief economist, in a statement. As Money's lead mortgage reporter Leslie Cook explains in her latest story, far fewer homeowners are going to find a mortgage refinance attractive today than did a few weeks ago — but about 6 million borrowers should still seriously consider it. Why is the Fed doing this? One word: inflation. For more on the impact of the Fed hiking rates: Why the Fed's Interest Rate Hike Probably Won't Stop Stocks From Rising From our sponsor The home loan experience designed for you. Presented by  Detroit-based Rocket Mortgage, the nation's largest home mortgage lender and part of Rocket Companies (NYSE: RKT), enables the American dream of homeownership and financial freedom through its obsession with an industry-leading, digital-driven client experience. In late 2015, it introduced the first fully digital, completely online mortgage experience and in 2020, closed $320 billion dollars of mortgage volume across all 50 states. Start your home buying journey with numbers you can trust. Apply for a mortgage online with Rocket Mortgage. NMLS #3030 Good, better, best While rising rates are making it tougher to refinance, it is still a really great time to sell a home. Supply remains low and demand high across the country. On a national level, sale prices rose close to 20% last year. Nevertheless, some markets offer more opportunities for sellers than others. That's why we're so excited to launch Money's first list of The Best Places to Sell a Home in 2022. It's a spinoff from our popular, annual look at Best Places to Live. We're sharing the top 5 here. Check out the full list and find out if your hometown made the list. Stars, they're just like us Tina Gallo. Courtesy The Noble Black Team, Douglas Elliman Judging by their prolific real estate pursuits, it can sometimes seem like there is never a bad time for celebrities to sell (or buy) homes. But, like everyone else, stars' plans change. A change of plans is apparently driving John Legend and Chrissy Teigen's decision to sell a pair of penthouses in New York's Nolita neighborhood. The couple spent a total of $16.7 million on the apartments in 2018 and 2020. They originally planned to combine them into one massive unit — complete with an insane, 3,300-square-foot private roof terrace. "We've realized that because of work and everything, we're really mostly going to be in Los Angeles, so we're going to focus our home-building energy and renovation energy on what we're doing in L.A.," the singer told the Wall Street Journal. Asking price? $18 million. Salt generously Rangely García / Money This week we published a guide to buying your first home. One of the lesser known tips? Season your assets. When you apply for a mortgage, lenders like to see that the money you'll need for a down payment has been in your account for at least 60 days. To prove this you'll need to show at least two-months of bank statements and explain any usually large deposits. This process is called seasoning your assets, and it helps prove to lenders that the money is yours and not coming from a fraudulent source. This means, if you're planning on using money from investment accounts or receiving a gift from a family friend, it's a good idea to consolidate those funds before you start your home search. In general, lenders don't want to see  any changes in your finances right before you take out a loan. A writer for Realtor.com recently admitted  that she learned this the hard way when her lender had lots of questions about an old bank account she closed when buying her first home. They even asked about the $25 a month plan she took out to finance a new iPhone. Happy hunting, P.S. Share your favorite home buying tips with me on Twitter @samsharf or via email at sam.sharf@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this e-mail or send them to the Money Moves subscription page. Money's Essential Home Buying Resources: Winter 2022 On the hunt? Check out Money's Mortgage Calculator, see The Best Mortgage Lenders and look at the latest mortgage rates Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips Key question: How much house can I afford?

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