The following program, the ENT , mortgage and Realty Show is paid for in full by ENT mortgage, L L C and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, L L C, and not W T M J or Good Karma Brands.
Speaker 2:Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Net Mortgage and Realty. And now here's Brian and David Wickers. Welcome
Speaker 1:To the Aced Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with Academic Realty Advisors and also the majority owner of Academic Mortgage, along with my son David, who's our senior loan consultant, one of our fabulous senior loan consultants. Also one of our managing owners and our chief client Experience Officer. Hey, by the way, David, I was , uh, stopped by a closing on , uh, Friday and even though neither one of us was involved in it, this happened to be senior loan consultant , uh, Brad Kramer, both the home buyer , the home buyer's , parents who were the ones that said, you gotta call these people and click on the blue button@anet.com. Yeah . And their real estate agent could not have been happier. Sung our praises up and down for making the home buying process for this first time home buyer , smooth as silk. Nice.
Speaker 2:Especially
Speaker 1:Loved how we communicate things. So, David, thank you for designing an excellent customer experie experience.
Speaker 2:Come on. It's all on Brad for that success.
Speaker 1:Hmm . We have good systems, a
Speaker 2:Team effort.
Speaker 1:Take a little credit. Alright . If you've got a question or a comment, you can call or text us on the Old National Bank talking text line , which is 8 5 5 6 1 6 1 6 20 Old National Bank. Get old. And remember, you can grab a podcast of Today Show, or any of our past shows wherever you normally get your podcast. So David, the market was waiting with bated breath on Friday morning as, and has, as has become my habit for the last 24 years. I too dutifully tuned in Yep . To C N B C at 7:30 AM
Speaker 2:Me too
Speaker 1:Central time to find out how many jobs did this great economy create in September, because , uh, jobs are one of those things where if people get 'em, they tend to spend money.
Speaker 2:Right.
Speaker 1:And if they spend money, or if you have more people with jobs spending more money, they tend to buy things. And that affects the demand side of the equation and the supplied demand , uh, economic , uh, what do you call that principle? Core principle. Yep . Yep . And that can tend to make things cost more because there's more demand that's called inflation. And that's what we've been trying to fight. That's why mortgage rates are high. And so the market was cruising into Friday thinking, you know what? We think that the economy is gonna create 170,000 new jobs in September. And what did the number come in at son ?
Speaker 2:The num Yeah. The number was 336,000 new jobs created in the month of September. Or almost double the number. You just, the ,
Speaker 1:That market
Speaker 2:Participants were forecasting almost double.
Speaker 1:Yeah. And so the collective interest rate markets called the bond markets clutch their chest initially, like cad , Zoox , will this, you know, employment market, will this job market ever cool off? And frankly, folks, you know, that's one of the things that the Federal Reserve hopes happens is that the job market does cool off so that there aren't so many people with new jobs spending money and stoking inflation. Well, the good news, the only good news , or let me ask you, did you see any good news in the report before I say what I saw?
Speaker 2:Uh, I know what you saw. It was that earnings. Mm-hmm.
Speaker 1:<affirmative>
Speaker 2:Has tapered that . That's right. That if that either at these new jobs or current jobs in the surveys, the number came in at 0.2 month over month, which if you then turn that into an annual number, it means wages are rising at about 2.4%. Hey, hey, hey, that's a lot. That looks a lot like the fed's inflation target of 2%. Because again, to what you just said, if people receive money from work, earn money, and then go spend it, that has upward pressure on prices. But that, but that , uh,
Speaker 1:That component, that labor cost component is as tame as it has been in a long, long time. Yes.
Speaker 2:Now,
Speaker 1:I , I was on W B B M News Radio seven 80 in Chicago on the noon business hour this last week on Wednesday. And former W T M J , uh, radio guy Rob Hart, does the noon show down there. Yeah. And so he is like, Brian, what , what is it gonna take for rates to come back down? And I said, it's really simple. We need more data that shows that inflation is tame. Oh, David, when are we gonna get the next inflation reading?
Speaker 2:Uh, Thursday, the C p I Consumer price index, the for all its flaws, it is the headline number that markets pay attention to. That comes out Thursday at 7:30 AM central. And
Speaker 1:So last week we reported that there was a different inflation measure that came in nice and cool. Uh, the P c e personal consumption expenditures, which is what the , look
Speaker 2:At you . Yeah. Come on, look
Speaker 1:At me. Come on. <laugh> . Uh , which is what the Fed likes to look at, that came in at 0.2 month over month mm-hmm . <affirmative> and , and , and the market said, okay, we like that, but show us more. Well, now we get this big jobs report, which is dragging us in the wrong direction. Okay. Uh, so what do we need for rates to turn around and come back down? We need more economic data that points to less inflation. Mm-hmm.
Speaker 2:<affirmative>.
Speaker 1:And when we get a more than one data point, you know, maybe it's gonna take five or six.
Speaker 2:It's a little, I'm gonna say it's a little scattershot right now. Right. Exactly what you said. It was like last week. Yay. We're we're mo moving forward. And then this Friday it was like, oh , well, we kinda haven't moved forward. It's , uh, one step forward, two steps back, sometimes
Speaker 1:Two steps back. Alright . So that put , uh, as of the end of Friday , uh, with 25% down, if you're buying the median sales price house, which was $315,000 in southeastern Wisconsin, you could snag , uh, a , uh, a seven point a 5% 30 year fixed rate. Uh , that has an A P R 7.72. But when we come back, lemme tell you what we could do for a first time home bar . You're listening to the Academic Mortgage and Realty Show on AM six 20 W T M J
Speaker 3:Home buying advice from the guys who know it best. This is the Accu Mortgage and Realty Show with Brian Wicker on W T M J. Welcome
Speaker 1:Back to the Acade Mortgage and Realty Show. Uh , the second show of October. And David, we were talking about yeah. Jobs report not good for mortgage rates, but , uh, in addition to some of the luckiest people in the real estate market being downsizing boomers, we talked about that last week. Yeah.
Speaker 2:Uh ,
Speaker 1:Because they've had such a run up in home value appreciation and therefore equity that when they're now selling their four bedroom , three bath house or whatever it is, and going to downsize and buy that condo, they're almost cash buyers or pretty, they don't need much of a mortgage or maybe no mortgage at all. So they're kind of in the sweet spot. The other thing that if you're wishing you could be this, it would be a first time home buyer in Wisconsin. And the reason is we have some special 30 year fixed rate mortgage money just for Wisconsin properties and Wisconsin residents . And instead of having to pay the going market rate of 7.5% with let's say a 7.77 a P r David, what can we offer some, but not all first time home buyers in Wisconsin.
Speaker 2:Almost a full percent lower of what you said. You said seven and a half a p r 7.7. Yep . That this special money, you're talking about 6, 6 2 5, and an A p r probably of around , well , it depends if you have P M I or not. So let's say an A P R around 6.9.
Speaker 1:Okay. And so the, the P m i , the reason why the P M I , uh, uh, increases the annual percentage rate versus the interest rate is because the cost of monthly private mortgage insurance , uh, is counted in the annual percentage rate calculation, just like it's interest. Alright. So David, what does it take in order to say, Hey, I can, I can get at this great first time home buyer money?
Speaker 2:Yeah. So a key is the definition of first time home buyer, which is that anyone borrowing the money must not have owned a property within the last three years. Uh, so you can regain your first time home buyer status also . Yeah .
Speaker 1:So maybe somebody got divorced and they've been renting for four or five years, or moved from
Speaker 2:Moved from outta town too. I see that
Speaker 1:As well. Okay . Yeah . Okay. Right. So either way you can regain your first time home buyer status. So go and then what's the other thing?
Speaker 2:But the other key component is income. And not just the income that we list to have you qualify, but also any income for anyone who will be residing in the home. So for example, in Milwaukee County, that income limit is just under a hundred thousand dollars. So everyone in the house for one to two people's gotta be less than $99,900. And I think to myself, why couldn't they have just rounded up the other a hundred
Speaker 1:Thousand
Speaker 2:Or the other
Speaker 1:Calculation? Yeah. Yeah .
Speaker 2:Okay. But hey, you got you, you significant other and a kiddo , uh, hey, you can have as much as $114,000 of total household income. That is the key. But again, in the craftsmanship of mortgage lending, that's, that's why the ACU net , you know, approach drills down on those details because, Hey, dad , you just said if we're good at finding the best loan program for you home buyer , we can get you almost a full percentage lower than a un garden
Speaker 1:Variety.
Speaker 2:Thank you.
Speaker 1:Yeah. And there, there are shades in between. Last week we and shared a story , uh, Brad Kramer, senior loan consultant, where , uh, his clients didn't quite fit into that supremely best , uh, basket, but they were in the second best, which was still a lot better than regular. So, so we like to pride ourselves on being crafty craftsmen and really knowing our way around our products to find, find people the most efficient, is that the word I wanna say? Most efficient execution on their , um, mortgage. Now , um, well,
Speaker 2:Wait. Can can I say it another way? Yeah . So like, we , this is not it. Also , uh, so the difference in your payment could be, let's just call it a hundred dollars, right? If we get the smarter, cheaper, lower rate money, maybe that allows you to stretch for another 5,000, another 10,000 in purchase price. It's not just necessarily about payments. We want to get you best rate, lowest payment, but also, can we also help you get the payment and the size house that you want as well?
Speaker 1:That's right. I think there's, there's also a purchase price limit. What is it? Like 418,000? We can look that up on the next
Speaker 2:Break. 4 81 .
Speaker 1:Oh 4 81. Okay.
Speaker 2:That's a lot of house. And
Speaker 1:That's right. And so again, the , the other good news is that you can have as little as, are you ready? 0% down. And, and again, the structure of that is that we provide a , uh, mortgage equal to 97% of the purchase price in the first form of a first mortgage and a 30 year fixed rate, and then a companion 10 year fixed rate at the same rate as the first 6.625. And in fact, people can actually borrow their closing costs as well. Right . I
Speaker 2:Had a client do exactly that. They, they arrived to closing. This was two Fridays ago . They went to closing and received $40 when they bought their house.
Speaker 1:Now the , the next thing I want to talk about here , um, as, as we do our last segment before the news, is the market is cooling down a little bit in southeastern Wisconsin. I've got the data , uh, for September home sales. And , and so it is , are
Speaker 2:You , wait, wait, wait. We bash on headlines all the time. Cooling down. Are you That's true . Are you ? Uh ,
Speaker 1:It's
Speaker 2:Relative. The hook on this one
Speaker 1:A little bit. I I have a couple of, I have a couple of nuggets of good news , uh, from the data from September from the multiple listing service . We're gonna share that when we come back. You're listening to the ANet Mortgage and Realty Show on Wisconsin's radio station, W T M J, getting you into the home of your dreams. Here's more of the ACU Net Mortgage and Realty Show with Brian Wicker on W T M J . We're back and thanks for tuning into today's show, David. Not every transaction is facilitated by a member of the National Association of Realtors. Um, but in order to get into multiple listing service
Speaker 2:Where
Speaker 1:All the data resides, at least mm-hmm . <affirmative> the most readily available data, that's what has to happen. And there are people that are still selling , uh, without real estate agents. And, and if they need help , uh, with closing services , uh, we can hook 'em up with our affiliated title company. They do a nice job when, when that circumstances arises. But
Speaker 2:Fa a lot of times
Speaker 1:The vast majority of transactions
Speaker 2:Of family, like I , I , we've, I've , that's, I would say the most common example is maybe your buying from your uncle or the, you know , estate of grandma. That's the one that I always think of.
Speaker 1:Well, yeah, that comes up a lot. But I just had talked to somebody, a neighbor of a good , uh, client and friend of mine. Uh , the elderly couple had moved out of the house and so they were putting the for sale, the family was putting the for sale sign in the yard and they were just marketing it on Facebook. Um , marketplace, you know, they wanted, they wanted to go for sale by owner . So Anyw who , um, what I wanted to now turn to is September. Numbers. September for , this is for the five county Milwaukee metropolitan area, according to multiple listing service , uh, which I'm a member through AC at Realty Advisors. Alright, so , uh, deemed reliable by the way, but not guaranteed. Alright , so the median sales price in September was down a little bit. It was $315,000 compared to 3 27. And this is condos and single family homes combined. It was 3 27 as the median sales price in August. That does not mean that values drop .
Speaker 2:No.
Speaker 1:It means that the mix of homes changed. Yep . Uh , maybe we had more four bedroom homes than two bedroom homes. Something like that. By the way, the September median sales price was still up 5.6% or 17,000 American dollars compared to September of the year before now, and you're not gonna be surprised by this, David, 'cause you work in the mortgage industry, the number of home sales was down 22% or 427 fewer sales. Uh, the total number of happy buyers and sellers was only 1,502 , uh, for the month of September in that five county Milwaukee area. And if you want to compare it to August, September was also 292 less than August. Now what about listings? This is one of my good news nuggets. Mm-hmm.
Speaker 2:<affirmative>,
Speaker 1:Remember I just said we had 1,502 sales. Well, there were 1,898 , uh, new listings that's darn near 400 more listings than sales. How well do you think of that?
Speaker 2:I mean, takes, takes a little bit of the pressure off, right? Um,
Speaker 1:Well, and I think from our little microcosm here at Academic Mortgage, we had more applications in September. We're gonna close a lot more loans in October than we did in September. And I think that's because there are more homes for sale. That's just my, you know, little observation of tying together or a string of
Speaker 2:Tax . Well , which means that, which means that the hungry buyers who have been waiting to snap up more listings are doing so.
Speaker 1:That's right. Oh , you know what? I gotta look up on this next break as I'm gonna look at the , um, number of days on market. But I can share with you , uh, 'cause you know what , I think I did that for my radio appearance on W B B M , uh, the average days on market in the Chicago , uh, market. You wanna guess you had your hand up
Speaker 2:Higher. I mean, not , not as tight .
Speaker 1:56 days. Whew . 56 days. That's like eternity. So , uh, while we're on break and we're doing the news, I'm gonna look up the actual number of days. So I'm a little bit more specific, but go ahead.
Speaker 2:I , uh, so, and I don't know what to think of this statistic, but I was just looking. I went on the W r A website and pulled up Southeastern Wisconsin and you know, in August it , in this year it's was the same number of home sales as 2014. You know, oh
Speaker 1:Well
Speaker 2:It's 20 . I dunno if anyone looks back and says 2014. I don't know about that. You know, it's all as we do, we compare it to pre c Ovid 2019 as well as last year. But also , um, the, the supply and demand remains the pain point. The key difference between this year and nine years ago is , uh, me is all of the millennials who continue to
Speaker 1:You . Okay . I thought you meant you personally have influenced the market. No,
Speaker 2:Is , and I
Speaker 1:Do happen to have
Speaker 2:20 , we're all nine years older. Yeah.
Speaker 1:Uh , that's right. 2018 , um, home sales this September compared to September, 2018, we're only off by 15% or 339 close . Oh wait, that's listings , uh, 17% or 307 sales. So it's not a great, the market is shrunken. And as Glen Kelman, the c e o of Redfin, the big national publicly traded , um, real estate brokerage said last week , uh, in an interview, this isn't gonna change for a while . No. You know, don't expect , um, you know, things to all of a sudden snap back. Well,
Speaker 2:But as we, as we demonstrate every week, that doesn't mean we have lots of winners. We have lots of successful buyers. Oh yeah . Um , you just have to be ready and you gotta put your best foot forward, which I would say in any market, like even if you weren't co even if it was totally flipped, I would say, why would you be less than the best version of yourself? 'cause you're, you know, you're trying to win a house. Yep .
Speaker 1:Alright , so when we come back, I've got the, how much did , uh, what percentage of buyers paid over asking, that's the other, Hmm . I'm gonna call it a positive nugget for home buyers that I'm gonna share. But right now it's time to turn it over to the 24 hour newsroom. Don't break the fact to get into a house, back to the Accu Net Mortgage and Realty Show with Brian Wicker on W T M J. Welcome back to the October 8th edition. And hey, remember October used to be the eighth month of the, of the year. Now it's the 10th. All right . Anyway, so , uh, welcome back. And we were talking before the news that , um, uh, occasion to be looking at some Chicago metropolitan area statistics, where the average days on market, and I think now that I, I recall it was for the city of Chicago was 56 days. And so I just pulled up while , uh, we were on the news break , the , uh, days on market and , uh, for September, this is for condos and single family detached combined. And , uh, David, I'm gonna tell you the , uh, number one, and this is, I'm only looking at , uh, municipalities where there were at least 10 closed sales recorded in a multiple listing service. Mm-hmm . <affirmative> , uh, and I'm gonna tell you the , uh, top three and you're gonna put 'em in order. Okay. Are you ready? South Milwaukee, west Dallas , and a Whitefish Bay. Were the top three fastest selling municipalities in September. Put 'em in order.
Speaker 2:Uh, number one gold medal South Milwaukee. Am I right? Uh, number two, silver metal .
Speaker 1:Yes. Whitefish
Speaker 2:Bay. You
Speaker 1:Are correct.
Speaker 2:Okay.
Speaker 1:And it was a , and , and there's, this is a of only a frog here apart. Whitefish Bay was, do you wanna take a guess at the average number of days, continuous days on market for the 15 homes that sold in South Milwaukee?
Speaker 2:Mm . 13 days.
Speaker 1:Six. Who ?
Speaker 2:Okay, that
Speaker 1:Is lightning fast. Six days on market. Uh, uh, that was South Milwaukee. West Dallas was seven days, and Whitefish Bay was eight. Then at nine days you had , uh, Burlington, Grafton and West Bend. Uh , Cudahy at 11, Glendale at 12, Greenfield at 12 as was Wango , Waukesha , and wwa . That's fast. That's so much faster
Speaker 2:Compared to, is there any way to know? I I think I'd have to go ask some, some realtors is delayed status included in that days on market? I don't think it is. But anyway, you know, delay it status, really get 'em lathered up, you know, put out that teaser photo and , and then go live on Thursday, for example.
Speaker 1:You know what, we, we can, we can figure that out. But I have a feeling that the answer is no. I think that the delayed at that , the actual listing date is a date it goes live and not the sneak peak period. But we can confirm that. Okay . So, so you know that, that speaks to the demand side of the equation. Now remember that September sales went under contract when
Speaker 2:August or early September. Yeah.
Speaker 1:Yeah. Or , or maybe late July. Yep . And, and so, you know, now we just said earlier in the show that hey, we had almost 400 more listings than closed sales in September. So we have a little bump in inventory and you know, we saw a bump in loan applications during the month of September for transactions closing in October. So, you know, now we got rates up a little bit. You know, maybe that's also gonna temper demand slightly , uh, you know, that theoretically that would happen. Uh , but let's turn the page now before we get to some stories from the front lines , uh, of , uh, mortgage shopping or selling. And , uh, and I've got one by the way , uh, but here , here's what happened in the month of September. Uh , and to put this in context, if you look at the last several months, we're looking at , uh, five county me , metro Milwaukee area. Um, and this is , uh, condos and single family detached , uh, giving you the runup here in May, 64% of buyers paid over asking , which is exactly what happened in June and July, that cooled off slightly to 59% in August. And the trend line continued in September. 55% of home buyers paid over asking So little less competitive than it was, you know, at the, in the heat of the summer. And then same thing true of people paying $10,000 or more over asking it was as high as 48% in May, then 47% for a couple months dropped down to 40% in August, and now it's down to 36%. So it's, it's still definitely, I would say, would you call it a , uh, seller's market, David?
Speaker 2:Yes, absolutely.
Speaker 1:Still, but not maybe quite as , um, rabid.
Speaker 2:Never forget the list . The prices are made up number. That's just, just my little anecdote and I know, you know, we're using the made up number consistently over the months you just described to , you know, to create the trend line. That's , I just , yeah . I wonder,
Speaker 1:I wonder if sellers are getting any less aggressive right now with, you know, interest rates up and, and less action in measuring close sales .
Speaker 2:How would you, how would you quantify the pricing aggression of the listing number? And I don't know . I don't know if we could, we would have to, we would have to be able to categorize how many, how many people walk through and maybe how many offers you got to try to correlate like the, the out of the gate on the list price. But that's way, that's more wonky than we care to be.
Speaker 1:Alright, so we've got a couple of bits of news from Mortgage World , uh, and there's two, two little tidbits. It looks like Fannie Mae is gonna make it easier for people to buy duplexes. And also, is it three to four families? Yes.
Speaker 2:David or just
Speaker 4:Duplexes? Yes . And three and
Speaker 2:Four units.
Speaker 1:Yes. Okay . We're not quite a hundred percent sure. This is kinda like brand new information. And then the other thing is they're , um, going to make it more consistently less onerous for self-employed people, but there are is some misinformation out there. Uh, and this has to do with how long do you have to be self-employed before you can qualify for a mortgage. Let's give you those details. And , and David, you got a story to go along with this? Mm-hmm . <affirmative> , when we come back, you are listening to the Academic Mortgage and Realty Show on AM six 20 W T M J . Important home buying questions and answers you can count on. This is the ACU Net Mortgage and Realty Show with Brian Wicker on W T M J . Thanks for tuning in to today's Anette Mortgage and Realty show. You know, mortgage lending is all about rules and it's, it's , uh, kind of maddening sometimes and it doesn't make sense. But , uh, we wanna just talk about a fairly big chunk of the home buying and home owning population that has their own business. And , uh, the definition of being self-employed in Mortgage World is if you own 25% or more of the company at which you work and get your income from, and David, what are some of the rules once you fall into that category? You know, hey, you were , you were a 20% owner and the mortgage rule says fine, you're not self-employed, but then all of a sudden good things happen and one year you get to be the 26% owner of a company. What does that do to you as a home buyer?
Speaker 2:Uh , I'm gonna describe it as the clock starts over on the income that a mortgage lender can point to. And part of this is because you're running the show and mortgage lending wants to prove that now that you are in charge, that you can keep the golden goose healthy that pays your income as a self-employed person, which is kind of silly. We always like to point out like public, there are public companies that lose money quarter over quarter , but hey, you're a salaried person at that company, no problem. You know, we can help you. You
Speaker 1:Might lose your job tomorrow , future start
Speaker 2:Your job, right? Future income, but hey, you're, you , you're running the show. So that traditionally I'm gonna say requires a two year history of proof that hey, I am successfully earning a profit, paying myself and this is my income. 'cause also mortgage lending doesn't want to qualify you based on your best month or your best quarter or your best short time period. The two year is the, Hey, we think this is a reasonable average. And you know , dare I say track , I ki I kind of agree with mortgage underwriting on that part. Yep ,
Speaker 1:Yep .
Speaker 2:So there is a headline and I've seen a little bit of headline malpractice with this new Fannie Mae revision to their underwriting rule book that it now says, Hey, we can use, 'cause the key, the key in all this is do I have to use a two year average of your self-employed income or can I just use the latest year? The key ingredient in this, and in the headlines that I saw, was missing this key ingredient in the description. If you've been self-employed for five years or more, well or less in
Speaker 1:A row.
Speaker 2:In a row
Speaker 1:Continuously
Speaker 2:At the , in
Speaker 1:The same business,
Speaker 2:At the threshold of self-employed , um, you know,
Speaker 1:Ness .
Speaker 2:Ness , right? Yeah .
Speaker 1:N you're
Speaker 2:Right. You can't, three years ago you couldn't have gone from 15% to 30%. It needs to be five years of 25% ownership or more. Then we in mortgage land could use either one year or two years. And unfortunately the way Wait
Speaker 1:At our cha Oh wait, wait. We have a choice.
Speaker 2:Yes . Nu
Speaker 1:Rule . Or is it We
Speaker 2:Do have a choice if only because sometimes, you know, if the average of the two years maybe is stronger than just the recent year, we can choose to analyze the income to the benefit of the borrower.
Speaker 1:I'm gonna say it a different way. There are circumstances where we as mortgage practitioners and I can think of somebody who I helped, a business owner who I helped buy a second home in Florida where I really, really, really wanted to just use their most recent year. Yeah. Because there was funky stuff going on two days ago in the year before that. Yeah. And, and so we actually had to wait a half a beat, I think for their , uh, tax returns to get filed so that we could , uh, use the better, cleaner, more recent year. And , and it used to be that you would only get that , uh, answer out of the computer system when Freddie, when you ran your, your information through Freddie Mac. Well now you have a chance of getting it through uh, uh, Fannie Mae as well. Or is it a certainty, David, that if you meet the five year flesh
Speaker 2:Threshold nine , that it'll be more certainty now through Fannie Mae. Hey , I have been self-employed for greater than five years. I then now can use just my latest one year according to the mortgage underwriting software. But, but the way that I have seen it, but the way that I've seen the headline written is, oh , oh , Fannie Mae, you can only be self-employed for one year and we can use it. Nope. Sorry. There is not, you
Speaker 1:Still need a two year track record. Exactly.
Speaker 2:Can
Speaker 1:We ever get it done where they , can we ever get it done where they've been self-employed, you know, for 20 months, 18 months? Y
Speaker 2:Yes. My, the short answer is yes, but for sure we need one year of tax returns and a particularly strong year to date profit and loss statement. And, and also if you wanna sprinkle like, Hey, can I get this done? Maybe not quite at two years, hopefully you, before you became self-employed, you were working in the same industry this gets to Right,
Speaker 1:Right. Uh ,
Speaker 2:My two favorite words in mortgage lending, underwriter discretion .
Speaker 1:Right? We'll see.
Speaker 2:Right.
Speaker 1:We have one like that going on right now on a property that's on 10 acres. And it's , um, you know, normally we can only have two acres being farmed, but you know, in this particular case there are five out of the 10 acres that are being farmed. And so can we get an exception on that? Yeah. Uh , so there, there are some gray areas. There are Sure as heck is a lot of black and white. David, you got any , uh, good stories to take us through to the
Speaker 2:Show ? I do. I wanna talk about, 'cause I have an , I have a client on this self-employed journey that I, I think gets to the exact, you know, hey, let's pivot now to, now I want to go buy a house. I want to detail some of those bits when we come back from this break. You're listening to the Acuate Mortgage and Realty Show on AM six 20 W T M J . Find a place to call home without the headache.
Speaker 1:This is the Acuate Mortgage and Realty Show with Brian Wicker on W
Speaker 2:T M J . Welcome back to the Acuate Mortgage and Realty Show. I'm David Wicker. That's Brian Wicker over there, dad. Talking about some self-employed borrowers. And details matter as always in mortgage lending for these folks. They became self-employed fall of 2021. And so, hey, it's, you know , almost to the end here of 2023. I because they've only been self-employed less than that key five year threshold. I must use a two year average of their self-employed income. Well, 2021 kind of wasn't much of anything. So I so the , it was
Speaker 1:Their startup year . Exactly.
Speaker 2:And so I'm kind of stuck using this lower average 'cause I got this 2021 number that's kind of dragging me down. That for them equals a purchase price of around $250,000. And Okay . In , in terms of timing, they'd like to buy more than that two 50 purchase price. They'd like to buy maybe closer to 3 25 or three 50 . But given the rule book about self-employed, we must, they need to file their 2023 tax returns so that we can use 2022 was strong. 2023 is gonna be strong so that our average of those two years is higher come spring of 2024. That's a real life example of, you know, given that there's this lag and self-employed income and what we can point to come next spring, they can finally get to that higher number that they want for Yeah . Purchase price.
Speaker 1:So they, they just gotta hurry up and get their taxes filed. Exactly. So that we can use 'em . Yes . And then , um, the other thing I was gonna say, that kind of fits in the same category. Maybe you're not self-employed, but maybe you make bonus income Yes . Or commission income known as variable income. So that's another type of income that we need a two year track record in order to use. And, and then, you know , it's a matter of well, what makes sense are , you know , are we gonna average it? You know , is it trending up? It's a problem if it's trending down. So all these things matter and it just, it , uh, I'm sure it bothers you when you see people out there and every once in a while we get a call where, oh my God, yeah, I went out shopping with this flimsy, you know, pre-approval letter where they didn't do the homework, they didn't, you know, get what is needed documentation wise and you got a example or
Speaker 2:Something. I'm , I'm doing one of those right now on Tuesday. I am helping someone who started with a , a big bank that has a skyscraper downtown because they didn't do all the homework on their home purchase. Yeah . And the, and the real estate agent warned their buyer like, please don't do this. Please don't proceed with this big bank. Please just like talk , please talk to David, my local trusted, get on the phone. I'm not calling an 800 number in a skyscraper downtown wondering what's going on with your mortgage. They did proceed with Umma and then guess what? Ike swooped in and we're helping them close on Tuesday. 'cause I was able to problem solve what , what the big bank walked past.
Speaker 1:Mm-hmm. <affirmative> . Yeah. It's , uh, the , the level of homework that is not done in this thing called , uh, pre-approvals is shocking. And, and you know what? It works out too many times I'm afraid. <laugh> Right . That
Speaker 2:It's , uh,
Speaker 1:They're walking across the
Speaker 2:Our favorite
Speaker 1:Metaphor freeway and they don't get hit.
Speaker 2:Yeah, exactly. Walk , I'm gonna walk across the freeway and just 'cause I get to the other side doesn't mean that some cars didn't swerve out of my way.
Speaker 1:Yeah, yeah, yeah. <laugh> So, so it , it pays to do the homework. We love helping people plan ahead. It really reduces the stress, doesn't it, of the whole home buying process.
Speaker 2:I did, I said that , uh, I was talking to another agent this week who, you know, has , uh, she was calling some home buyers tire kickers. 'cause they're, they , oh , they wanna proceed, but they're nervous. And one of the ways I described that , I was like, dear buyers, like less stress, we call welcome to Accu Net Mortgage where we reduce the stress, the unknown , uh, of buying. And we can do that. There's no reason to be stressed about buying, at least on the mortgage side. You can be nervous and excited because it's this cool next thing, you don't have to be nervous about the mortgage.
Speaker 1:And we, we did this, by the way, one other public service announcement. If you're out there and you've got a pre-approval letter that says like 7% on it or seven and a quarter, you need to get that updated. We went through our whole, you know , uh, list of people that we're helping right now to make sure that we've caught up , uh, with this recent increase in interest rates. So while that's all the time we've got for today, folks, thanks for tuning in. We'll see you next time. You've been listening to the Accu Mortgage and Realty Show on AM six 20 W T M J. The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the host or guests of academic mortgage and academic Realty advisors and not W T M J Radio or Good Karma Brands. Milwaukee, l L C.