The Conversation South Florida Buyers and Sellers Are Having Right Now

Brian Faeth of Universal Home Lending joined Beth and Beth of Home Sweet Home Florida Living for a weekly podcast conversation about the current rate environment, what buyers should actually focus on when comparing lenders, how seller concessions can be deployed strategically to lower payments, and why waiting on the sidelines has its own cost that most buyers never calculate.

Where Rates Are and How They Got Here

Conventional rates are hovering around seven percent at the time of recording, roughly a half point higher than three months prior. Earlier in the year rates were trending toward the high fives with genuine optimism building about the direction things were heading. Geopolitical uncertainty around Iran, oil price volatility, and inflationary pressures reversed that momentum and produced a steady climb to where things sit now.

Brian is direct that nobody predicted the current environment with confidence and nobody should claim certainty about where things go from here. The Fed has acknowledged inflation in the market and made moves accordingly. There is talk of a potential secondary rate cut before the end of the year but that is not a guarantee that translates directly to lower mortgage rates. The bond market and mortgage rates operate independently from the Federal Funds Rate and buyers who are waiting for a Fed announcement to trigger a rate drop are misunderstanding how mortgage pricing actually works.

Why Shopping Rates Is Not as Simple as Comparing Numbers

One of the central themes of this conversation is the difference between shopping a rate and building a loan strategy. Brian's position is that no lender should quote a rate without first pulling credit and understanding the full financial picture. A rate quoted without that information is not an honest quote. It is a number designed to win attention.

The factors that actually determine a borrower's rate include credit score, income, debt-to-income ratio, down payment amount, loan amount, and property type. A borrower with excellent credit putting twenty percent down on a conventional loan is going to access a meaningfully different rate than the same borrower putting five percent down. Those differences are not interchangeable and a rate comparison across lenders only means something when every lender is working from the same complete financial picture with the same loan structure.

When buyers shop rates across multiple lenders without giving each one the full picture they end up comparing scenarios that are not actually the same thing. A quarter point difference in rate between two quotes may reflect nothing more than one lender assuming a stronger borrower profile or a different down payment structure than the other.

Brian also notes the timing risk. In the current environment rates are changing daily and sometimes moving significantly within a week. Shopping for weeks and then returning to complete an application can mean a completely different rate environment than when the original quote was given. Rate shopping has diminishing returns in a volatile market.

What Customizable Loan Programs Actually Mean

A significant advantage of working with a mortgage broker over a direct bank lender is the ability to shop across multiple wholesale lenders rather than being limited to a single institution's product set. Brian and his partner Mike have relationships with approximately twenty or more lender partners depending on the loan type. That means the ability to place FHA loans with lenders who price them most favorably, conventional loans where the terms are most competitive, and DSCR or investment products with partners who specialize in those structures.

Large retail banks offer whatever their current program is on any given day. A broker can survey the market and place the loan where it produces the best outcome for the specific borrower's specific situation. That flexibility is genuinely valuable and it is the difference between a customized loan strategy and a cookie-cutter product.

The Rate Buydown Strategy in the Current Market

Rather than simply accepting the market rate a seller-funded rate buydown is one of the most effective tools available to buyers right now. Instead of asking a seller to reduce the purchase price buyers can negotiate seller concessions applied toward buying down the interest rate.

A one-zero buydown reduces the rate by one percent for the first year. A two-one buydown reduces it by two percent in year one and one percent in year two before settling at the note rate in year three. The seller essentially prepays a portion of the buyer's interest for the early years of the loan.

The strategic rationale is that many buyers and analysts expect rates to improve within the next year or two. A buydown that reduces the rate during the period before refinancing becomes viable provides meaningful monthly payment relief during exactly that window. Whether rates actually improve is not guaranteed but the buydown creates a hedge against the current rate environment at the seller's expense rather than the buyer's.

Brian's framework for deciding between a buydown and a simple price reduction depends on the buyer's cash position, their DTI, and the overall loan structure. Sometimes the best move is negotiating seller concessions toward the buydown. Sometimes a direct price reduction makes more sense. Sometimes having extra cash makes putting more down the smart play to access a better rate tier. The right answer is different for every file and requires looking at the whole board rather than optimizing a single variable.

On ARM Products in the Current Environment

Beth raises the question of adjustable-rate mortgages after her children used a ten-year ARM to buy in Atlanta at a meaningfully lower rate than the thirty-year fixed. Brian's response is nuanced and worth understanding.

ARM products can make sense in specific situations. For investment properties with strong cash flow considerations and for borrowers with a clearly defined and realistic short holding period the ARM math can work. But Brian's current position is that the rate differential between ARM products and thirty-year fixed rates in the current environment is often not large enough to justify the uncertainty of an adjustable rate. When the spread is less than a half point the predictability of a fixed rate is worth more than the modest savings of the ARM.

The exception he acknowledges is when a direct bank offers an aggressive ARM as a loss leader to attract deposit relationships. In those cases the economics may be different. But comparing a bank ARM to the wholesale market requires making sure the comparison is genuinely apples to apples. Context matters.

His broader caution about ARM products comes from experience watching borrowers who planned to move or refinance before the rate adjusted and then found themselves still in the loan when the fixed period ended. Plans change. Life happens. The cost of refinancing out of an ARM that stayed longer than expected is a real consideration that borrowers do not always factor in when the initial rate difference looks attractive.

Why Waiting Is a Decision With a Cost

The consistent theme from both Brian and Beth is that buyers treating a purchase decision as something that should wait until conditions are perfect are paying a cost they are not accounting for.

Home prices in Broward and Palm Beach counties are still increasing. Not at the pace of recent years but still moving upward at roughly two and a half to three percent annually. Every month a buyer waits is a month of appreciation that goes to the current owner rather than to the future buyer. If rates drop enough to bring significant buyers back into the market prices will accelerate further as that demand meets still-limited inventory.

Renting while waiting is also not free. The rent payment going to a landlord is equity building for someone else. The mortgage interest deduction available to homeowners is a tax benefit renters do not access. The forced savings of principal paydown does not happen while renting. These are real financial differences that the simple rate comparison does not capture.

Brian summarizes it this way. If you were not in the market when rates were in the high fives and you are not in the market now, what specific conditions would actually trigger you to buy? Because if the answer is rates have to be dramatically lower the price you pay for that lower rate may be a significantly higher purchase price in a more competitive market with less negotiating leverage.

The Team Approach and What It Means for Buyers

Beth closes with what may be the most practically valuable insight of the conversation. From the moment a buyer begins working with their lender and their realtor everyone is effectively on the same team for the duration of the transaction. The lender, the agents, the buyer and seller all need to be aligned and working toward the same closing. That requires communication, trust, and genuine partnership rather than parallel processes that occasionally intersect.

Brian proactively communicates with the listing agent and the buyer's agent about what the loan needs, when seller concessions might make the deal work, and what the timeline looks like. That communication does not happen because a protocol requires it. It happens because the relationship that produces a smooth closing is built on people actually talking to each other throughout the process.

Universal Home Lending is hosting Thursday Lunch and Learn sessions beginning in October. The first is October fifteenth and is designed specifically for real estate investors and realtor relationships covering the transition from hard money to permanent financing. Watch for emails and social media posts for details.

Reach out to Brian Faeth at Universal Home Lending to build a customized loan strategy for your specific situation.

Sources

ConsumerFinancialProtectionBureau.gov
FannieMae.com
MortgageNewsDaily.com
FederalReserve.gov
Investopedia.com