In a previous blog post we addressed that no matter which candidate wins, there will be a change in the rates and the way we do business in this country. Trump ran as the Republican Party candidate, on a platform of traditional conservative policies mixed with a more modern populist approach. He has recently broadly stated his three biggest initial focuses will be immigration, health care and jobs. Knowing now what changes might be fast approaching can help you and your family plan for what will serve you best. At Fellowship Home Loans we have been studying up on potential impacts and we are here to discuss any ideas or concerns you might have.
Increase in Rates
First, let’s take a look at the various directions the Trump presidency could lead us. To start, rates will be going up. This is not directly because of Trump however. The Fed has been gearing to increase rates since about six months ago. Seeing that they have yet to do it means it will happen very soon. The Fed has a meeting in December and rates are likely to be increased then.
For those of you with home mortgage loans, student loans, car loans, or credit card loans, now would be the time to consolidate or refinance your debt as much as possible. You may regret holding off if you wait until 2017 to do this.
While rates will be rising regardless, they may go up at a sharper rate under a Trump presidency. They could go up further, faster. Additionally, it’s likely that regulation will decrease. Right now the market is considered overregulated. This means as a buyer, you are currently less likely to qualify for a loan.
The number of hoops that a potential borrower must go through to qualify is simply higher than they need to be and many families find themselves unable to find a suitable home loan. A loosening of these guidelines will open the doors for more people who want to become homeowners. At Fellowship Home Loans, we welcome this change and advocate for streamlined processes and responsible borrowing for all of our customers.
Where does this leave you?
Whether you are in the market for a loan or not, it’s a wise time to reevaluate your finances. The inevitable increase in rates coming up means NOW is the time to refinance or consolidate if you need to. Also, if you currently qualify for a loan that you will need to get in the future we recommend going through the loan process now before the Fed hikes the rates up. Your loan will be more expensive if you wait.
If you do not currently qualify for a loan, you may soon. In this case, we encourage you to begin looking at your finances and talking with someone about how to prepare for loan qualifications in the near future. We have plenty of expertise in this area and are here to lend advice.
Since Trump has a Republican majority in both the Senate and Congress, it is extremely likely that there will be a major tax cut in 2017. To what degree he will cut taxes is uncertain and hard to predict since his policy on the issue changed multiple times during the campaign. Trump’s most recent plan nearly mirrored what the House Republicans had announced in June 2016.
Aside from a cut, Trump has proposed changing the seven existing tax brackets to three, affecting a broad range of households in the US. Other tax proposals brought up by Trump include eliminating the head of household category, and also doing away with personal exemption. This plan might get some pushback, as it actually increases taxes in certain situations with single parent households, large families, and upper-middle income single people.
If Trump can create a strong surge of countrywide economic growth it would really help the housing situation. In states that voted red, most of which are suffering stagnant economics, this is a signal of hope. Homebuyers in blue states, where the economies are generally healthier, may be more anxious about how the future might impact their housing situation.
Lastly, Trump mentioned changes to be made to the student loan system. He proposed issuing a cap on federal student loan payments at 12.5% of borrowers’ income for a max of 15 years. This is more generous than the current options that student borrowers have, and might help those who are embarking on a career change or are just entering the job market to have some breathing room as they search for a job.
While these changes might sound daunting or hard to conceptualize in words, there is no need to be fearful. It is important not to make rash decisions out of haste. We want to help you get on track and feel secure financially. Loan officers are standing by for any questions you might have. Please don’t hesitate to call, that’s what we are here for!