Samuel Thompson Mortgage Broker

06/24/2025

Latest article I wrote

There are a couple of topics I wanted to cover in this: What past recessions have done to home prices Where supply and demand currently sit Where rates are headed I think these are valid concerns that people have when considering whether they should buy a house during a possible recession. What if I

03/07/2025

Plan for your upfront costs

There are two bits to this: Down payment and closing costs.

Down Payment
Here are some loan programs and the associated down payment:

VA: $0 down payment. This loan is for eligible military veterans.

USDA: $0 down payment. Rural areas with household income limits.

Conventional: 3% for first time homebuyers. 3% with income limits for non-first time homebuyers. 5% without income limits for previous homeowners.

FHA: 3.5% for all buyers. (there are loan limits. The intention for these loans is for primary residences, and discourages using this program for collecting investment properties)

Down Payment Assistance: These are usually state programs and vary state by state, but I've seen a few similarities. It comes as a second mortgage, and will cover the down payment and closing costs up to a certain amount. You'll want to factor this second mortgage into your payment if you go this route. It can be on a 30 year term with the interest rate being 1% or 2% higher than your first mortgage.

Closing Costs
A rough estimate of closing costs is 2%-4% of the loan.

These fees can be separated between lender fees, and other costs. These other costs are related to the ownership (up front taxes and insurance)

Lender Fees
Here are the lender fees you may see:

Underwriting ~$1,100

Origination Fee $X whatever the lender feels like charging.

Discount Points $X this depends on what rate you get relative to the market rate. I'd avoid this fee unless the seller is paying for it.

Appraisal ~$700

Processing ~$700

Verification of Employment ~$100

Credit Report ~$100

Flood Certificate ~$8

Mortgage Registration fee (MERS) $25

Some states require a survey fee ~$400

Lender Title Fees

These fees vary by state and loan amount. A $388,000 loan amount in Utah would have a total of about $1,794 in title fees.

Use this title fee calculator to estimate the loan policy and other fees. Just select your state and enter the loan amount. It's simple to use. It may give you two separate policies. The lender policy and the owner's policy. In most states, it's customary for the seller to pay for the owner's coverage. But the buyer will cover the lender's policy.

Other Fees
Here are the other costs you may see:

Recording fee ~$80

Transfer tax

This fee depends on the state, there are 14 states that do not charge a transfer tax.

In Florida, for example, they charge 0.7% but in Utah there isn't a transfer tax. Take that loan amount and multiply by 0.007 in Florida and you'll end up with a $2,716 charge.

Prepaid Homeowner's Insurance

Remember when we found the monthly payment for homeowner's insurance? Well you'll need to pay the annual policy in full up front. The monthly amount is really just set up to save for next year's bill.

In Utah, that bill was $1,170.

Prepaid interest

Prepaid interest depends on the day of the month you close. You'll pay interest for the remainder of the month. If you close on the 1st of the month, you'll get charged for the 30 days.

If you close on the last day of the month, you'll be charged 1 day of interest.

The daily interest is your annual rate (7% in this case) divided by 365. Then multiply that by the loan amount. That's your daily rate.

Example: .07 / 365 x $388,000 = $74.41 interest per diem.

Property taxes

You'll get charged a little bit of property taxes up front. The seller will pay for their portion of property taxes for the year, and you'll pay about 5 months worth up front.

Real Estate Agent and HOA fees

Your real estate sales agent's brokerage might have a fee. Maybe around $500, but you'll want to ask the sales agent about these fees as you decide on an agent. With the NAR settlement, we might see a case where the seller refuses to pay for the buyer's sales agent's commission. If that's the case, then you as the buyer would need to pay that commission out of pocket.

If there is an HOA on the property, and if the property charges a fee to transfer the account into your name, there could be a chance that you end up paying that HOA transfer fee. Negotiate the seller to pay for this one.

Putting it all together
Okay, I'm going to continue the example of my Ogden City Utah purchase, and show how to plan for closing costs.

I'll go with an interest rate that does not charge any discount points, and offsets the origination fee.

I'll plan on paying the underwriting, appraisal, processing, credit report, flood certificate, VOE, MERS, and lender title fees. Utah does not require surveys for purchases

The lender fee total should add up to ~$4,527

For the "Other Fees" which are more related to homeownership costs, I'll plan on paying the recording fee, Utah does not do transfer taxes, 1 year of homeowner's insurance, let's say I close on the 16th so I'll have about 15 days of prepaid interest ($74.41 x 15), ~5 months of property taxes($178.00 x 5), and let's say the seller is paying for the agent's commission and I have to pay a $500 broker fee. This home does not have an HOA.

The "Other Fees" should add up to about $3,756.15

My grand total in closing costs will be ~$8,283.15

My total cash needed at closing will be my down payment + closing costs - any seller credits negotiated. Let's say in this case the seller didn't pay any seller credits, so I'd be left with total out of pocket of about $20,283.

At the beginning of this section I mentioned closing costs would be about 2%-4%. This $8,283 total landed at 2.1% of the loan amount. But with Utah having lower homeowner's insurance, lower title insurance, lower property taxes, and no transfer taxes, you can see how it could easily get into the 4% territory in a more expensive state.

03/04/2025

Calculate your mortgage payment

Your payment is broken up into 4 parts.

Principal and interest

Property taxes

Homeowner's insurance

Mortgage insurance

Principal and Interest
Here's a calculator for you. When you enter the loan amount, the term in months (360 for a 30 year), and the interest rate, it will give you the principal and interest payment.

A question you probably have is "if I haven't spoken to a mortgage loan officer yet, how will I know my interest rate?"

I'd use this site. It's more realistic with rates. Other sites will advertise the lowest rate possible, but it comes with paying discount points.

This site also lets you know the day to day movements and trends with mortgage rates.

Property Taxes
Taxes vary property to property, depending on the state, county and city that they're in.

Zillow can make it pretty easy to find this. Just search for properties in the area that you're looking in, and the price range you're looking in. Pull up a property, then scroll through the listing. There's a section called "Public Tax History". If it's empty, just pull up another property.

Once you find that amount, divide it by 12 for the monthly payment.

Homeowner's Insurance
This also varies by city and state. Google 'average cost of homeowner's insurance in insert city and state.'

Take that amount and divide by 12 for the monthly amount.

Mortgage Insurance
If you're looking at an FHA loan with a minimum down payment, your mortgage insurance rate will be uniform.

Take the loan amount, multiply by 0.0055 and then divide by 12.

If you're looking at a Conventional loan, mortgage insurance will adjust depending on your credit score, your debt-to-income ratio, and your down payment.

For now let's use a factor of .0035.

Take the loan amount, multiply by .0035 and then divide by 12.

Bringing it all together
I'll use a real scenario for this.

I'm looking at a $400,000 purchase price. I plan on a minimum down payment, Conventional 3% down ($12,000) and a loan amount of $388,000.

If I use a rate of 7% and a 30 year term, the principal and interest payment will be $2,581.37

The annual property tax bill was $2,136 in 2023 (not as recent, but still works). After dividing by 12, the monthly payment will be $178.

Ogden Utah has an average annual rate of $1,170. Divided by 12 is $97.50.

Mortgage insurance will be the loan amount $388,000 x .0035 / 12 = $113.16 per month.

The grand total payment will add up all of these payments into one single payment. $2,970.03.

HOA
HOA will not be in your mortgage payment, but it is a cost that you'll need to budget for, and the lender will count this HOA payment against your debt-to-income ratio (DTI).

03/03/2025

I'm going to write a series of tips for first time home buyers. Starting with this one:

Know your budget

Before you talk with anyone, take a good look at your budget. If you were to buy a home today, what is a payment that you could work with? What is a payment that might stretch your budget? What is the payment that you absolutely cannot go over?

You'll need to know this beforehand, otherwise this could happen to you:

You contact a real estate agent. The agent refers you to their trusted loan officer. The loan officer takes your information and says "you're approved for $__ (fill in the blank).

You go out and look at homes for $__(fill in the blank). You find one you absolutely love. The agent helps you write an offer for $__. The seller accepts the offer for $__ and you're under contract. Congratulations!

Then you look at the Loan Estimate and you get what they call "sticker shock".

You think "I can't afford that" and you're about to call the realtor but then you, or you and your significant other start to rationalize.

"Well, we could make it work. I could pick up a second job and we could cut out __ and __"

So you stick with the contract. You buy the house. Congratulations! You're uncomfortably 'house poor' as they say.

Don't get me wrong here, I'm all for making it work if you want it badly enough, but in this scenario, the buyer is unsure if they can really make it work. They haven't gotten a second job yet, they haven't cut out __ and __ yet.

There's the saying "If you don't plan your time, someone will help you waste it". It's especially true here. If you don't plan your money, someone will help you waste it.

Loan officers have a tendency to only reveal the max approval amount. Agents tend to show you homes right around that approval amount. But unless you press the loan officer for more specific details, he/she probably won't give them to you.

02/28/2025

Rate update: PCE comes in as expected. Decent news for rates.

02/27/2025

Here's what your mortgage payment covers

02/27/2025

How China's real estate works

China's real estate market is distinct, shaped by government regulations, high urban density, and a different land ownership system. Unlike in Western countries, where homeowners typically own both their property and the land beneath it, property ownership in China has specific restrictions. This article explores the realities of homeownership in China, the structure of land-use rights, and the prevalence of apartment living over single-family homes.

You Will Never Own Land in China

One of the most defining aspects of real estate in China is that all land is owned by the state. Homebuyers do not purchase land but instead acquire land-use rights for a fixed period:
- Residential properties: 70-year land-use rights
- Commercial properties: 40-50 years
- Industrial properties: 50 years

When purchasing an apartment or home, the buyer owns only the **physical structure**, not the land it sits on. The land-use rights are initially granted to developers, who then sell housing units to buyers. While the 70-year term may seem limiting, renewals have historically been granted automatically or with minimal fees, though the legal framework for long-term extensions remains uncertain.

Land-Use Rights vs. Ownership

Unlike in countries such as the U.S., where property owners hold freehold titles, China's system is structured to retain state control over land. When land-use rights expire, the government has the authority to reclaim the land, although in practice, renewal policies have been flexible. This system ensures that land remains under state control while allowing individuals to accumulate real estate assets.

Housing Composition: Apartments vs. Single-Family Homes

China's real estate market is overwhelmingly dominated by high-rise apartments and condominiums, particularly in urban areas. The percentage of homeowners living in each type of housing is as follows:

High-rise Apartments/Condos
Major Cities (Downtown) 90-95%
Suburbs 70-85%

Townhouses & Villas
Major Cities (Downtown) 5-10%
Suburbs 15-30%

- In urban centers, over 90% of residents live in high-rise apartment complexes.
- Even in suburbs, apartments still make up 70-85% of housing.
- Single-family homes (villas, townhouses, detached houses) account for less than 10%** of residential properties, making them a luxury that only the wealthiest can afford.

Why Apartments Dominate China’s Housing Market

Several factors contribute to the overwhelming dominance of high-rise apartment living in China:
1. Limited Land Availability – With China’s massive population and high urban density, most cities prioritize vertical development.
2. Government Policies – Land-use policies favor high-density housing over single-family homes.
3. Affordability – The cost of land makes single-family homes prohibitively expensive for most buyers.
4. Infrastructure & Public Transport – Urban planning is designed around apartment complexes, ensuring efficient transportation and services.
5. Real Estate Investment Trends – Apartments are the preferred asset for investors due to their resale potential and steady demand.

Who Can Own a Single-Family Home in China?

Owning a detached home in China is extremely rare, and access to single-family residences is limited to:
- Ultra-wealthy buyers purchasing villas in luxury developments.
- Foreigners and expatriates who can afford exclusive properties in areas like Beijing’s Shunyi district or Shanghai’s Qingpu district.
- Villagers and rural residents who inherit traditional homes on collectively owned land.
- Executives and government officials who receive access to luxury housing as part of compensation packages.

Challenges for Property Owners in China

Despite high homeownership rates (around 90% in urban areas), real estate buyers face unique challenges:
-Uncertainty over land lease renewals: No clear policy guarantees land-use rights beyond 70 years.
- High property prices: Cities like Beijing and Shanghai have some of the world’s most expensive real estate markets.
- Property management and common ownership disputes: Apartment owners do not have full control over common areas and must rely on property management companies.

Conclusion

China’s real estate market consists of high homeownership rates, a government-controlled land system, and a housing landscape dominated by high-rise apartments. While many Chinese citizens own their homes, they never own the land beneath them, which makes the concept of property ownership in China different from in Western markets. Understanding the intricacies of land-use rights and market structure provides insight into how real estate functions in the country.

02/27/2025

Rate update this morning. PCE came in higher, jobless claims came in higher. Results in a slightly worse stance, but not much.

02/27/2025

The Rising Threat of Wire Fraud in Real Estate Transactions

Wire fraud continues to be one of the most significant threats in real estate transactions, costing homebuyers and industry professionals millions each year. With fraudulent wiring instructions increasingly being used to divert buyers' closing funds, the risks have escalated, requiring heightened vigilance from all parties involved.

The Scope of the Problem

According to the FBI’s Internet Crime Complaint Center (IC3), 2023 saw 9,521 reported cases of real estate fraud, a slight decline from 11,727 in 2022. However, the financial losses per incident have grown substantially. Business Email Compromise (BEC) scams, where fraudsters impersonate title companies, real estate agents, or attorneys, have been a primary tactic. These scams led to nearly $2.9 billion in total losses across all sectors, with real estate transactions being a significant contributor.

One of the most devastating fraud methods involves homebuyers receiving counterfeit wiring instructions, leading them to transfer closing funds directly to the fraudster’s bank account. By the time the error is realized, the money is often irretrievable. The average financial loss per victim in 2023 was staggering, with Alabama victims losing an average of $69,441 and North Dakota victims suffering average losses of $67,084.

How Criminals Exploit the System

Cybercriminals leverage sophisticated methods to infiltrate the real estate process. Phishing emails, compromised business email accounts, and deepfake technology are among the tools being used to deceive homebuyers. Hackers often monitor email communications between buyers and real estate professionals, waiting for the perfect moment to send fraudulent wiring instructions that appear authentic.

How to Prevent Wire Fraud in Real Estate

To mitigate risks, real estate professionals and buyers must adopt stringent security measures. Some best practices include:

Verify Wire Instructions: Always confirm payment details with the title company or real estate agent through a verified phone number before transferring funds.
Be Cautious of Email Changes: If a wire instruction changes at the last minute, treat it as a red flag and verify independently.
Use Secure Communication: Avoid sending sensitive information via email. Instead, use encrypted messaging platforms or secure portals for document exchanges.
Educate Clients and Professionals: Homebuyers should be informed about wire fraud risks early in the transaction process to prevent costly mistakes.

The Future of Wire Fraud Prevention

As fraudsters become more advanced, the real estate industry must continuously evolve to combat these threats. Title companies and mortgage lenders are investing in AI-driven fraud detection systems, multi-factor authentication, and stronger encryption methods to safeguard transactions. Additionally, consumer education campaigns are crucial in raising awareness about potential scams.

Wire fraud remains a serious issue in real estate, but with proactive measures, buyers and professionals can significantly reduce the risk of falling victim to these sophisticated schemes. By staying vigilant and prioritizing security, the industry can protect homebuyers from financial devastation.

02/26/2025

Rate update:

Flat today from yesterday. Crickets here

02/25/2025

“People are just giving their homes up to foreclosure”

My wife is from Canada. She had some friends visit, and we talked about… mortgages.

Canada’s standard mortgage is much different from the U.S.

Sure it’s amortized over 25-30 years, but every 5 years comes a renewal, where they must conform to the current interest rates.

Can you imagine buying a home at 2.5% in 2020, to then see your rate increase to 6.5% in 2025?

For a lot, that would raise the payment $500-$1,000 per month
From Reuters:

"It's a wall of mortgage renewals coming up," Bartlett said and added that this would keep many Canadians under stress way into 2025 and 2026.

From my wife’s friend: “People are just giving their homes up to foreclosure. They’re walking into the banks with their house keys and dropping them off.”

$300,000 on a 3% rate for 30 years: $1,265 principal and interest

$300,000 on a 6.5% rate for 30 years: $1,896 principal and interest

God bless America and the 30 year fixed rate mortgage.

If you need a calculator to quickly calculate a monthly payment AND closing costs, check this one out.
https://integritylending.tools/calculator

02/24/2025

Closing on a conventional loan with a 580 credit score this week.

"Anything is possible" -Kevin Garnett