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# A Half-Point Fed Hike — and How To Start a Real Estate Portfolio From One Small Condo
- URL: https://www.mortgagemomradio.com/a-half-point-fed-hike-and-how-to-start-a-real-estate-portfolio-from-one-small-condo/
- Published: 2022-12-14T21:00:00.000Z
- Updated: 2026-09-04T20:54:54.000Z
- Description: The Fed slowed from three-quarters of a point to a half, and Debbie explains why that’s the good news. Then her favorite advice she’s ever given: buy the smallest place you can live in, keep it when you move up, and let a tenant carry it.
- Author: Deborah Marcoux
- Tags: Podcast, Mortgage Mom Radio, #episode-backfill

Mortgage Mom Radio • “BREAKING! Fed Increased Rates By .50%” • Live show from Wednesday, December 14, 2022 • 46 minutes • Hosted by Debbie Marcoux, NMLS #237926

The Federal Reserve raised rates a half point on the afternoon of December 14, 2022 — smaller than the three-quarter-point hikes that came before it, and Debbie's read is that the size of the step is the real news. She explains which of your debts reprice within about 30 days, why mortgage rates had actually come down from their peak, and why a slow market is the best negotiating leverage a low-down-payment buyer will ever get. Then she gives the advice she says is her favorite of her whole career: buy the smallest place you can comfortably live in, keep it when you move up, and let a tenant carry it.

## Key takeaways

- **A half-point hike after a run of three-quarter-point hikes is the signal.** Debbie's hope on air: a quarter point at the next meeting, then a hold. That would mean inflation is coming down and things are normalizing — a light at the end of the tunnel.
- **Know which debts move immediately.** Credit cards, home equity lines, adjustable student loans and short-term car loans are tied directly to the Fed and reprice within about 30 days. If you owe $5,000 on a card with a $150 minimum, expect that minimum to be higher next month.
- **Mortgages are not.** They follow mortgage-backed securities and the bond market — what investors do with their money. Rates had already come down from a peak around **7.5%** to roughly the **mid-to-high sixes** on conventional and the **low sixes** on FHA and VA, and could be bought down into the high fives.
- **Home equity lines had climbed to 9–15%.** The Fed's rate was near zero at the start of 2022\. If you drew on a line that year and haven't checked the rate since, log in and look — Debbie's warning was that people fall out of their chairs.
- **This is when a low-down-payment offer gets taken seriously.** With fewer buyers competing, Debbie was seeing sellers hand over two to three percent in credits — enough to buy the rate down or cover closing costs. In a multiple-offer market, the zero-down VA, 3.5%-down FHA and 5%-down conventional buyers are the ones who lose.
- **The portfolio ladder:** buy the smallest place you can comfortably live in with a minimum down payment, live there at least a year, then buy the next one up with another minimum down payment — and keep the first as a rental. Repeat. The tenant offsets the debt, and you budget for vacancies and repairs from day one.
- **Self-employed and hoping to buy next year? Talk before you file.** How you file your 2022 return determines whether you qualify. File it wrong and you can put yourself another twelve months out from being a homeowner with one click.

## Chapters

- 00:50The Fed raised a half point instead of three quarters
- 03:20What it means if you carry a HELOC or credit cards
- 05:00Why mortgage rates don't follow the Fed
- 06:40Where mortgage rates actually stood that week
- 07:40Why this was a good moment to negotiate with sellers
- 11:10Six weeks out: what she hoped the next meeting would bring
- 15:40Sellers handing over two to three percent in credits
- 17:00When the frenzy comes back, this window closes
- 18:00Why low-down-payment buyers get taken seriously right now
- 20:50Q&A: real estate or stocks in 2023?
- 23:40Buy small, keep it, buy the next one
- 25:20Q&A: how soon can you buy a second home?
- 26:40The 12-month occupancy rule and when exceptions are made
- 27:40Why the next purchase has to be a move up, not a move sideways
- 28:40Budgeting for a rental you actually keep
- 32:40Self-employed? Talk before you file your 2022 return
- 36:00Recap: which debts reprice next month
- 37:40Consolidating a low first mortgage with an expensive line
- 40:00Pull your statements and run the blended rate
- 42:00Last show of 2022, and what she expects from 2023

## Questions answered on this show

### “Is it better to invest in real estate or stocks in 2023?”

Debbie answers this one with a disclaimer first: she is not a financial advisor and does not work in stocks, so she can't compare them for you. What she will say is what she knows. Real estate is a long-term investment. It doesn't matter as much where or when you buy — it matters when you sell. Buy something with as little down as you can, live in it long enough to save the next down payment, then buy the next property and keep the first as a rental. Do it again. She's clear about who *doesn't* fit this: quick flips are for people with cash, rehab budgets and flipping as their actual job. She isn't one of them and doesn't pretend to be — she does mortgages for a living. For an ordinary person working an ordinary job, real estate is for the long haul.

### “How soon can you buy a second home after buying your first?”

The working rule is twelve months. When you sign your note and disclosures on an owner-occupied loan, you're representing that you intend to occupy the property, and guidelines let you finance one owner-occupied property within a twelve-month period. A second one inside that window needs an exception — and exceptions do get made when something genuinely outside your control happens, like buying in Seattle and then being transferred to California. If you're buying six months later in the same city you already live in, you need a good reason: a one-bedroom condo, a marriage, and a baby on the way is the kind of reason an underwriter can work with. The other half of the test is that the new home has to make sense as a move *up*. One-bedroom condo to another one-bedroom condo is a lateral move and usually doesn't fly. Condo to a bigger condo, condo to a townhome with a garage and a yard, townhome to a single-family — that's the progression.

## This week's numbers (week of December 14, 2022 — averages, not quotes)

- Fed move: **+0.50%**, down from three-quarter-point increases at the previous meetings
- Conventional 30-year fixed, owner-occupied single family: down from a peak around **7.5%** roughly 30 days earlier to the **mid-to-high sixes**
- Government loans (FHA and VA): **high fives to low sixes**, and conventional could be bought down into the high fives with points
- Home equity lines of credit: Debbie was seeing a range of **9% to 14–15%**, against a Fed rate that was near zero at the start of 2022
- Seller credits: buyers were routinely getting **two to three percent** from sellers toward a rate buy-down or closing costs

*Your rate depends on FICO score, property type, loan balance, and loan purpose. These are national conforming averages for context, not a quote.*

### Run the blended rate before you assume you're stuck

Call [844-935-3634](tel:8449353634) (844-WE-LEND-4), [start an application](https://www.mortgagemomradio.com/apply/), or use the [mortgage calculators](https://www.mortgagemomradio.com/tools/). Get the weekly rate rundown in the [newsletter](https://www.mortgagemomradio.com/newsletter/).

Full transcript (lightly edited for clarity) 

*Auto-generated captions cleaned for readability. Commercial breaks, licensing recitations and repeated housekeeping have been trimmed; licensing information appears at the bottom of this page.*

### A half point, not three quarters

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, I'm the Mortgage Mom, and today — Wednesday — the Federal Reserve announced that they are increasing interest rates once again, but this time by a half a percent instead of three quarters of a percent.

This is not great news, obviously, because none of us want to see rates go up. But it is positive news that they are starting to slow down the increments. Hopefully we start seeing rates taper off, and maybe at the next meeting they only bring it up a quarter, which means we can see a light at the end of the tunnel.

It's good news, but it isn't great if you've got an equity line of credit, credit cards, or any lending attached directly to the Fed's rate — you're going to see your interest go up and your minimum payments increase. The goal here is that at the next meeting maybe they only take it up a quarter, and the meeting after that they hold steady. That's my hope, not my guess. I'd have to watch the next couple of weeks, read the news, see how inflation is coming along, before I'd give you a prediction.

### Why mortgage rates don't follow the Fed

Catherine notes that student loan rates went up — and yes, everything is going up. If you shopped for a car loan in 2020 or 2021 and you're shopping today, you'll see those rates have gone up significantly. Student loans, anything short-term, is affected by the Fed's rate.

I mentioned in a previous episode that mortgages are *not* directly tied to it, the way an equity line, a credit card, a student loan or a car loan is. Our rates are tied to mortgage-backed securities and the mortgage bonds. So we don't necessarily go up or down when the Fed moves — it's more about what investors in the market are doing with their money. If they feel that longer-term notes, mortgage-backed securities and bonds are a better, safer place for their money, we see mortgage rates move.

And mortgage rates have actually come down quite a bit from their highest level. We had capped out at about seven and a half percent, and we're now looking at the mid to high sixes on a conventional loan and low sixes on an FHA — which makes it very easy to buy that rate down, pay points, and get yourself into the high fives.

Many of you already have a rate because you refinanced or purchased in 2020 or 2021, so hearing “high fives” might sound terrible to you. Those are actually really good rates, and below where the average has been over a 20-year period. We're in a very good place. That reprieve made things more affordable if you need to refinance, pay off debt, or buy.

### Why this is a good moment to be a buyer

You're also having a much easier time negotiating with sellers right now, because a lot of buyers have gone into a holding pattern. Fewer buyers, more homes, sellers negotiating quite a bit more. Getting the money you need to buy points and bring the rate down to an affordable level is very doable right now. If you've been thinking about buying and put it on hold, you might want to start looking again, because you've got more inventory and more sellers willing to negotiate.

I have been seeing some of the most incredible deals come across my desk. Clients easily getting two to three percent in credit from a seller, which they can put toward a rate buy-down, or toward closing costs so they only have to bring their down payment. And getting some price knocked off the listing on top of it.

Here's something a lot of people haven't heard: in down markets, investors and first-time buyers do their best when things are low and everyone else has put things on hold — but they keep moving forward. Remember that the next time the Fed comes out and says they're *reducing* that rate. That's going to start a frenzy. Every buyer who's been on the fence comes out of the woodwork, updates their pre-approval, and hits the streets. That creates demand, which means sellers stop negotiating, stop giving closing cost credits, stop helping you buy the rate down — and we're quickly back to a seller's market.

So this is a fantastic time, especially for first-time buyers with lower down payments. If you're a vet using VA with zero down, an FHA buyer at three and a half percent, or a conventional buyer at five percent down: when there's a lot of demand and multiple offers on a home, a seller picks the offer they think will close — and that's usually the biggest down payment, maybe cash. You have less chance against somebody with twenty or thirty percent down. Right now, there's a lot of inventory and sellers will take you seriously. Your down payment isn't the concern. They want a buyer and they want to be sold. There are some really good deals for the taking. So get your pre-approval done and get yourself ready.

### Q&A: real estate or stocks?

Michael asks: *“Is it better to invest in real estate or stocks in 2023?”*

I'm going to be totally honest with you: I'm not a financial advisor, I'm not a stockbroker, I don't work in stocks, so it's very hard for me to answer that. What I can tell you is that real estate is a long-term investment. It's something you get into for the long haul. It doesn't matter where you buy or when you buy — it matters when you sell.

If you buy it, you want to hold it. Create a portfolio. Buy something with as little down as you possibly can, live in it as long as you need to in order to save up the next down payment, then go buy the next, bigger property with a minimum down payment again — and hold on to the first one. Make it a rental. Live in the second while you save for the third. Buy the third, move into it, hold on to the second. Now you've got two rentals and your primary. Keep doing it. This will absolutely pay off for you.

Many people have done very well on quick flips — those are investors with big money down, putting money into rehab, turning around a fast flip. They know what they're doing, it's their business. I'm not that person. I do mortgage loans for a living. I get up, I get dressed, I go to the office and I work a job, just like you. I'm not out looking for a house that hasn't been renovated in thirty years. So if you're a normal person like me and flipping isn't what you do for a living, real estate is for the long haul, and I absolutely suggest you create yourself a portfolio.

By the time you're ready to retire you could sell one and cash out, or live in one, or look at a reverse mortgage — there's so much you can do with real estate. It's a tangible asset. You can put renters in it, or your kids. I've said on a lot of shows: instead of putting money into college savings accounts and similar vehicles, I'd be buying property, putting a tenant in it, and letting the tenant make the payment. By the time your baby is 22, 24, 30, getting married and ready to move out, you've already got something well below market that you bought years ago — and you can rent it to them for what they can afford. That's me personally, not investment advice.

### Q&A: how soon can you buy a second home?

Nora asks: *“How soon can you buy a second home?”*

I'm going to answer this as buying a home, living in it, and then buying another home and moving into that one — both purchases using minimum down payments.

The banks are really looking for you to commit to an owner-occupied residence for twelve months. When you sign your disclosures and your note, they're asking that if you say you're going to occupy the property, your intention is to occupy it — and they typically want to see twelve months. The guidelines say you can finance one owner-occupied property within a twelve-month period, so a second owner-occupied purchase inside twelve months requires an exception.

Exceptions can be made. Say you purchase a home in Seattle and then find out you're being transferred to California — that's beyond your control, you didn't see it coming, and banks will make exceptions for that. But if you buy in Phoenix for your primary residence and six months later you want to buy another property in Phoenix for your primary residence, we're going to need a pretty good reason. For example: you bought a one-bedroom condo, you and your husband just got married, and now you're pregnant and you need a second bedroom. That's a reason an underwriter could work with.

The good hard and fast rule is twelve months. And you need the next property to make sense as a move up. If you start with a one-bedroom condo and you want to buy another one-bedroom condo, that doesn't usually fly — that's a lateral move. One-bedroom condo to a two-bedroom condo, you're moving up. Condo to a townhome with a garage and a little yard, great. Townhome to a single family, fabulous. A lot of it is common sense.

### Budgeting for the rental you keep

I can't push you toward this enough. The more real estate you can own, the better — when you can put a renter in the property and let them offset the mortgage every month, it starts handling itself.

But you do have to be prepared. When you have a rental you're responsible for the property. If something breaks, you need the cash to fix it for your tenant. So budget as you collect rent: put a little aside every month for repairs, and for vacancies — somebody moves out and it sits for a month or two. Set money aside for carpet, paint, and the improvements you'll need before the next tenant.

Don't rent out a property and buy another one if you're stretching pennies thin and the rent barely covers the mortgage. Let's talk about the budget first: how much do you need to rent it for, and is this something you can afford? Let us run your debt-to-income ratios and figure out whether you're the right candidate. There's a very good chance you are — and maybe it's just asking a bit more in rent so the budget works.

This is my favorite advice I've ever given. If every single person I'd given it to had listened, you'd all be in an amazing place right now. So take it to heart: buy the smallest place you can afford and be comfortable in. If you're single, buy a one-bedroom condo — you don't need a full-size house. Then a two-bedroom. Then a three-bedroom. Then a townhome. Then a single family, and bigger single families from there. Ask yourself: what's the cheapest thing I can buy, what can I get into with a minimum down payment, and can I live there at least a year? Make yourself a game plan. It's chess moves. And don't be scared of the market right now — you can get amazing deals, and the minute everybody hears that things are turning and rates are coming down it's going to be a frenzy. Talk to your friends, your family, your neighbors, and count how many say “we're waiting right now.” The more times you hear that, the bigger your opportunity to buy today.

### Self-employed? Talk before you file

It's December of 2022, and January of 2023 is two weeks away — which is when you start thinking about filing your 2022 tax returns. If you're self-employed and you want to buy a home next year, you need to talk to us about how you should be filing those returns. That's the best way to get yourself qualified. If you don't know and you don't have a game plan and you file them wrong, in one day, with one click of a button, you can put yourself another twelve months out from becoming a homeowner.

### Which debts reprice next month

Let's recap. If you have an equity line of credit, credit card debt, or short-term adjustable loans, all of those are directly connected to the Fed's rate, and you are going to see those minimum payments increase. If you owe five thousand dollars on a credit card and your minimum payment was a hundred and fifty dollars, expect that minimum to be more expensive next month.

So what does that mean? You've got to get those credit cards paid off. You've got to get any debt paid off that you can. And if you have a mortgage of $200,000 and an equity line of $100,000, we've got to look at consolidating that for you.

Say you owe $200,000 on your first mortgage at three percent, and you've got a $100,000 line of credit at 9, 10, 12, 14 percent — and trust me, I've seen a range of 9 to 14 and 15 on these lines. There's a very good chance you'd do much, much better consolidating those two loans into one fixed rate on a 30-year fixed, and we can always buy that rate down into the high fives.

2022 has been the year of the home equity line of credit. That's the direction people went to get cash, because they had such a low rate on the first mortgage and didn't want to touch it. At the beginning of 2022 the Fed's rate was almost at zero. It has gone up so much since then that if you haven't checked your line lately, I would highly urge you to pull your statement or log into your account and find out what you're actually paying. I have a feeling it's way higher than you think, and I have a feeling you might fall out of your chair.

Same with credit cards. Pull the statements, log in, look at the rate on the money you owe. If you own a home and have equity, even if your first mortgage rate is low and a refinance would raise it, take all of that debt — the lines, the cards, the mortgage — and blend it to see what you're actually paying in interest right now. There are a ton of you who would benefit from a refinance today.

If you don't know how to do that work, let my team do it. Email us copies of your statements — the Nordstrom statement, the Capital One statement, the Bank of America statement, the equity line statement, the mortgage statement. We will *show* you the math. Here's what the rate would be if you refinanced and paid it all off, here's what the payment would be, here's what you're paying today across everything, and here's your blended interest rate today. If your blended rate today is better than a brand new mortgage, then we leave it be. We do nothing. We're not looking to lie to you — we're showing you the numbers so you can decide.

### Last show of 2022

This is my last show of 2022\. I'm taking the last couple of weeks of the year off for the holidays to enjoy time with my family, so happy holidays and happy New Year to all of you.

I'm excited to see what 2023 brings. I have really good feelings about the market, interest rates, our economy and inflation. Remember it's all hard work — we've all paid for it. We've felt the increases in the credit cards and the minimum payments and the lines of credit, the pain at the gas pump, in our food, in our utilities. And the good news today is not that they raised the rate by another half a percent; nobody likes hearing that. The good news is that it was a half and not three quarters. That means things are turning around.

My prediction is that by the end of 2023 we see rates down a bit and lots of people out shopping and buying homes. So get yourself ready, get ahead of the herd, and be out there looking before it turns into a seller's market and you've missed your window.

To reach us it's 844-935-3634, that's 844-WE-LEND-4\. To know when I go live, text the word MOM to the same number — one text a week. Head over to mortgagemomradio.com for the tools and the contact form, and the show is on podcast as well. Happy holidays from my family to yours. I'm going to miss you all for the next two weeks. We'll see you in 2023.

Debbie Marcoux is licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, NMLS ID #237926, and additionally licensed in AZ (0941504), FL, GA, HI, ID, IL, NV, NC, OR, TN, TX, and WA. Rates and figures discussed were current as of the air date of December 14, 2022, reflect national conforming averages, and are not an offer of credit or a rate quote. Debbie Marcoux is not a financial advisor; consult qualified professionals about your individual situation.