Property Taxes on the Chopping Block 🪓👀

We’ve officially turned the corner — mortgage rates have (finally) peaked, and the cold weather is (hopefully) behind us! 🙌 Now, everyone say a little prayer that I didn’t just completely jinx us... because if it snows again or rates jump, I’m blaming myself! 😂

It was a refreshingly good week in the mortgage world, and we’re here to break down all the latest and greatest updates! Let’s go!!

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Read time: ~5 minutes

Rates ended LOWER compared to last week, and volatility was LOW. Rates are in the high 6 range for most loan types without paying discount points. Paying discount points can get you in the mid 6's.

Market Stabilizing = Lower Rates!

The past few of weeks have been full of sleepless nights, thanks to the market’s crazy volatility. As you all know, Nick and I monitor the market obsessively, sometimes down to the minute. But it’s all intentional. Staying closely connected to market movements allows us to advise our clients on when to lock or float, helping them secure the best possible outcome. After all, buyers already have enough on their plates with everything happening in the world!

Thankfully, this past week finally brought some much-needed calm, and rates have started drifting lower! The big reason? A change in tone from President Trump regarding Fed Chair Jerome Powell. It was just over a week ago, Trump had a tense exchange with a reporter:

Reporter: Powell says he won't leave even if you ask him to.
Trump: Oh, he’ll leave. If I ask him, he’ll be out of here... I'm not happy with him. If I want him out, he’ll be out of there real fast. Believe me.
Reporter: Are you trying to remove him?
Trump: Yeah, next question.

The markets did NOT like that answer and rates quickly spiked to their highest levels in response to what was clearly an open feud with Powell.

Fast forward to this week: Trump reversed course, stating, "I have no intention of firing him (Jerome Powell)." 

Whether someone at the White House urged Trump to pivot or he simply recognized the market fallout on his own, doesn’t really matter. What matters is that he backed off—and the mortgage market responded positively, with rates steadily drifting lower 🙂

Property Taxes on the Chopping Block 🪓👀

They say two things in life are certain: Death & Taxes.

Let’s be honest here — no one enjoys paying taxes. But we get why they exist: they fund important things like the military, highways, police, and the court system — stuff we all rely on and couldn’t really manage on our own.

I’m not someone who usually complains about taxes. I get it. I pay my fair share of taxes like every other law-abiding citizen. Hell, I just wrote a big check to my accountant with a smile on my face. 🙃 But there’s one tax that has always rubbed me the wrong way: property taxes.

Think about it. You work hard, earn your paycheck, and pay taxes on it. Then you save up, buy a house (and pay taxes when you buy it). Then, even though you own that house, the government keeps coming back year after year asking for more money. And it’s not like the bill stays the same either — property taxes usually go up over time, even if your home is falling apart.

It’s a tough pill we’ve all just gotten used to swallowing. Until now...

Across the country, some states are looking at ways to either get rid of property taxes or at least cut them way down. This is mainly because home prices — and tax bills — keep climbing. States like Florida, Pennsylvania, and North Dakota are pushing for big changes. But the big problem is: how do you replace all that lost money? Some ideas on the table include raising sales taxes, using money from oil and gas, or raising income taxes instead.

We have to realize though, this is a slippery slope: if property taxes go away, it could seriously hurt things like schools, police, and fire departments that rely on that money. Plus, switching over to higher sales or income taxes could end up hurting lower- and middle-income families the most. Some states, like Wyoming and Montana, have already pulled back their bigger plans and are just making small tweaks for now.

In Pennsylvania, there’s even a proposal to completely get rid of property taxes by 2030. But no one really knows yet how they’ll make up the $23 billion they’d lose.

Here’s our take:

Getting rid of property taxes altogether sounds nice — but it’s probably not realistic. Property taxes make up about 73% of the money that local governments need to function. Wiping that out completely would be almost impossible.

Instead of elimination, we think the better (and more realistic) path is to reform the system and make it more fair for everyone. Because we all know, if we continue down this current path, our taxes and insurance will soon be more than our actual mortgage payment!

Another Major Shift in Student Loans 🤦‍♀️

I went back and forth on whether to bring up student loans again — it feels like we’ve been discussing them nonstop over the past month. But with yet another major announcement just released, I knew it was important to share. As you know, the COVID-era forbearance has officially ended, and monthly student loan payments have resumed. Now, there’s another important update: the return of collections on defaulted student loans. Since March 2020, no federal student loans were sent to collections — but that’s about to change.

Starting in May, the Department of Education will begin collecting on defaulted loans once again, officially ending the five-year pause. This means the government will resume withholding tax refunds and garnishing wages to recover the unpaid debts.

This is huge, especially considering the significant impact student loans have on everyday consumers. If you or your clients have student loans, now is NOT the time to bury your head in the sand. Many have been fortunate that delinquent loans have not been actively reported for the past five years — but that grace period is now over.

Below is a quick look at how a delinquent student loan can negatively affect a credit score:

Can You get a Mortgage with a Federal Student Loan in Collections?

In most cases, no, you cannot get an FHA loan if you have a federal student loan in collections. FHA loans — along with other government-backed loans like VA and USDA — require borrowers to be free of any delinquent federal debt. When applying for an FHA mortgage, you must disclose any delinquent federal obligations, and typically, the collection account will also appear on your credit report.

So, how can you fix it?

• Rehabilitate the Loan: You can enter a loan rehabilitation program. This requires making nine on-time monthly payments to bring your loan out of default. Important to note: you cannot prepay to speed up the process either. So, rehabilitation could delay your home purchase by at least nine months! 😭

• Consolidate the Loan: You may be eligible to consolidate your defaulted loan into a new Direct Consolidation Loan. This pays off the old defaulted loans and creates a new one, bringing your status back into good standing much faster than rehab.

• Pay the Loan in Full: And of course, the simplest (but not always the easiest) option — just pay the full balance and clear the debt completely.

Instagram Reels from the Week

Two Ways We Can Help

1. Let’s collaborate – schedule a zoom meeting

2. Tough deal?  Let us help!

Don’t hesitate to reach out if you need anything at all. Have a wonderful week!