The academic mortgage and Realty show is sponsored by academic mortgage and equal housing lender and MLS 82 five five three six eight and accident Realty advisors, which is a separate company from, but still affiliated with accurate mortgage.
Speaker 2:Welcome to the[inaudible] mortgage and real to show getting you inside information on buying, selling, and financing your home with expert advice from accurate mortgage and Realty. And now here's Brian and David Wickers. Well, welcome to the affidavit, mortgage and Realty show. Memorial day weekend edition. I'm Brian Wicker, the
Speaker 1:Majority owner mortgage and the licensed broker owner of accurate Realty advisors. Along with David wicked, son of mine, only son only begotten son. He's the chief client experience officer of academic mortgage. If you've got a question or a comment you can call or text us on the Acushnet mortgage talk and text line, which is toll free(855) 616-1620 R. Right. Well, everybody's been talking about the crazy frothy market. There was an ad leading into our show, talking about that the mainstream media are all definitely picking up on it. David, what did you call the clickbait article?
Speaker 3:That's what I called it. It's clickbait. It's a, it's a headline writers giving people what they want to read. Uh, but you've got more data because it's beyond just the headline, both nationally and even here locally in the Milwaukee market.
Speaker 1:Well, yes. And we're going to get to that. Remember last week's$5 word was vertiginous meaning. So steepest cause vertigo or dizziness when describing the housing market. Uh, now I was a guest on WBBM news radio, Chicago this last week, talking about how listing prices are merely a suggestion these days. And David, you were almost a guest on January cure show. Yes,
Speaker 3:Close. I was ready to go on the air. Then the brewers went long. So it's all good for another day.
Speaker 1:Dire Jeff Wagner talking about an, a segment on, on a Friday. Well, the big national headline came, uh, from, uh, Robert Shiller, the father of the case, Schiller home price index. And he's a Nobel award winning economist by the way. Um, and this made the rounds and all the media that's because the headline number of the S and P CoreLogic Case-Shiller home price index posted a 13.2% annualized gain for March looking back nationwide a year, double digits. Now that's a national number and it is by the way, the fastest or largest most vertiginous jump in home prices going back to 2005, which proceeded the
Speaker 3:Housing and financial crisis. Yeah.
Speaker 1:S rate. Um, and now remember we liked these indexes better because they do take into account the square footage of the bedrooms, the bathrooms, all the other details of the homes were as the realtor number, which we mentioned last week, the median sales price in America was up 19%. While that doesn't take into account, what types of homes we're selling. So these indexes are more precise already, by the way of these 20 cities. Phoenix was the hottest of the hot at 20%. And now Milwaukee's not in that top 20 MSEs anymore. I don't know if we ever were, we're like number 38 or something like that. Um, but to put it in perspective, Chicago, our nearby neighbor, they were up 9% year over year. Okay. And Cleveland also on lake Michigan up 11%. Now, what is the difference in your opinion, David, between now, uh, with home prices at 13%, it may be 2005. What was true back then? That is not true now.
Speaker 3:Uh, easy financing, um, back in 2005, good old ninja loans, no income, no job, no assets, uh, versus today is literally just supply and demand. There's not enough supply houses and there's a huge amount of demand for people to want to buy and own homes.
Speaker 1:I agreed. This is all about supply and demand. And so when the financing pain took place back in, or the bubble burst back in 2008, through 2012, home prices plummeted like over 20%. But the reason was everybody's subprime mortgage. They'd gotten into the home buying game. And then all of a sudden, a couple of years later they realized, oh my God, my, my payment is doubling on this crummy loan. I didn't understand. Right. Even
Speaker 3:We're making the same money. The payment was shifting on people
Speaker 1:Right. Way up, way up. And, and, and then everybody realized they had to sell at once. So what did that do to supply it? Supply ballooned, right, right. Supply and demand supply. Yeah. All these distressed buyers needing to sell at one time, the prices came down and they came down precipitously and then it was just a bad downward spiral. I don't think we have at this time, we should not have a whole bunch of people who need to sell their home all at one time. In fact, we have just the opposite. You know, when you've got 10 offers, there's only one winner. The other nine people are still on the market. It also, it seems like the demand for homes is not going to let up. All right. I did a little research on the Milwaukee market. So are we anywhere close to 13%? I'm going to tell you that along with just how much people are overpaying in Southeastern Wisconsin, I've got to look at the may MLS data for actual closed sales. When we come back, plus some stories you're listening to the academic mortgage and Realty show on am six 20 WTMJ. I can hear it. All right. Hey, we're back. Uh, this is Brian Wickford, along with Wicker here on the academic mortgage and Realty show. And we were talking to the first segment about all the media articles, uh, worried, uh, hand wringing about how all this housing market sure. Feels like a bubble. So let's dive down into the local market. So I took a crack at all of the single family, detached homes, looking at those that sold in the month of may in the five county Metro area, there were 1,472 of those sales ranging from 2,500 David all the way up to 2.5 million. And what's interesting is first of all, the median sales price was$274,900. So let's call it two 75. That was half the sales occurred over that half or below. So I don't know if you peeked at my number or not, but, uh, did all of those sell above the asking price? David? I
Speaker 3:Did peek and then the answer was no. And amazingly, nearly one in five of those sales in may occurred below the listing price. Did that blew me away? Uh, cause it doesn't jive with the headline Kate. Yeah.
Speaker 1:Yeah. The story is every single home is selling for a gazillion dollars over asking. It's just merely a suggestion that asking price. Well, we don't know exactly the stories. Maybe there were some bad inspections, you know, maybe there were appraisals that came in low, but yeah, fully 17%, almost one out of five sold for below the price. And then the other thing that was surprising to me, the, uh, median, uh, number of dollars over asking price over all those 1,472 was only 10,350 bucks that I was ready for it to be like 20 grand. And on a percentage basis, that's 4% over asking that hardly seems frothy or frenzied to me. Now, if you do break it down by, um, asking price category, the two largest chunks are 100,000 to 200,000. That's where 27% of the sales occurred. And those folks on average did pay the real close to the average 10,300 over asking that's 6% on a percentage basis, not 50% right now, single digits, 6% over. And then the next category, which is the 200 to$300,000 price range where 28% of the transactions occurred on average, those folks paid$15,400 more than asking. And again, that's 6% over comments,
Speaker 3:Very regular. No, it just seems very normal. What you just said.
Speaker 1:Um, now, you know, when you kind of dig further into it, uh, there were within that group of 412 homes that sold between 200 and 300,000, there were 168, which is about 40%. So four out of 10 in that most popular price range did go for 20 grand or more okay. 20 grand or more so plenty of, you know, that that's enough to make for a lot of stories. You don't have to pay 20 grand more. And then one out of 12 in that 200 to$300,000 asking price range went for 40 grand or more than the asking price. So there are definitely anecdotes and cases where people are having to pay, you know, 14%, 23% more than asking price to get that beautiful home under contract, but it's not the entire market. Um,
Speaker 3:Those are just the interesting stories to tell. Those are the most interesting
Speaker 1:Stories and we love to tell them right, as do, as everybody else. The thing that we've got to remember though, is that asking prices are just that. And we have to wonder, and we get all anchored by them, right? If, if the seller is asking two 50, well, I got to go over that. How do you know whether or not that two 50 number is isn't already frothy? So this is where buyers really have to work with a knowledgeable buyers agent to help guide them to say, are we already starting out in the stratosphere here? And maybe we shouldn't get in a bidding war on that one because it's already frothy or, or is that maybe under priced and we're going to have to be more aggressive. All right, when we come back, I'm going to pick up on a story from last week about a semi retired couple. I'm going to say, looking to buy in the low two hundreds in Waukesha county and the conversation that we had this week with them that turned out really well. You're listening to the academic mortgage and Realty show on Wisconsin's radio station am six 20 w T M J
Speaker 2:Getting you into the home of your dreams. Here's more of the accurate ed mortgage and Realty show with Brian record on WGM, Jerry, our ride, a little Mr. Roboto. I have the opportunity to participate. I think in about three calls this week with
Speaker 1:Home shoppers and their academic loan consultants. And one of these couples is I'm going to call retired. The husband happens to be retired. The wife in this case is still working full time and they want to buy in the low two hundreds. They haven't owned a home now for five years. So they're officially first time home buyers again, which is kind of fun because remember after three years of not owning a home, you regain your first time home buyer status. And as a matter of fact, they are going to qualify for this special, uh, Fannie Mae 30 year fixed rate loan that offers lower rates and less expensive private mortgage insurance. Um, and the other new unique thing about this particular couple is they have enough retirement money plus regular savings to put 20% down, which is the most attractive way to write an offer in the eyes of the seller. Um, but we also don't want to dip into their, uh, retirement money. So like many stories we've told before we can give them a pre-approval letter that says we have verified, you have the assets to put down 20% and that's what we did. Uh, but that doesn't prevent them from putting down 10%, nothing wrong with that. Uh, and so we gave him actually two pre-approval letters, one to show to any potential seller that, Hey, we can put 20% down. Why? Because we actually verified it. And the other one for their peace of mind saying actually they could buy with as little as 3% down because they have excellent credit. And, um, and then, and then what happens when you have excellent credit combined with a special 30 year fixed rate loan program called home ready? The cost of PMI when you put less than 20% down is very, very modest. So all in all, we had great options for them, but their understandable concern, David, and in their particular situation, they think they may only want to own this home for four to five years, um, before they retire and move someplace warm, they don't want to get caught holding the bag. So there are questions for Emily and I were, Hey, so what do you think is this market really that frothy? And you know, cause we're talking, we mentioned last week, they really wanted to write an offer on a home listed for two 10, but they were afraid too many offers would be high. Yes. David
Speaker 3:Not froth. It's the actual beer, you know, when you pour beer, am I sipping on the, the head of the beer? No, no, no, no. It's actually it's the, to their question. It's like, no, no, no, no. It really is this strong, especially in the price range that they're looking at, right. There's always going to be an appetite in that range.
Speaker 1:Well, and what I pointed out to them is that in the Milwaukee metropolitan area, more homes in the 200 to$250,000 price range are not being built, especially in Waukesha county, we don't have any of these big tract builders, right? Some other areas of the country where you got a whole subdivision full of$250,000 homes coming on the market, not in Southeastern Wisconsin, all the new construction is three 50 and up. So it's not like there's going to be more supply and, and that's really working in their favor. Uh, then what I showed them using the FHF home price index in the last year, uh, home prices in Southeastern Wisconsin. So this is very specific. Now we're not talking nationwide. This is our backyard. We're up 13.3%. Over the last three years, home prices are up 26%. And so, you know, we were, we we're going down this road of, is it reasonably safe to pay two 35, 25 grand more for a homeless listed at two 10? And so I quickly illustrated that it would only take three years of home price appreciation at a rate of, are you ready? 4%, which sounds absolutely paltry. Right? Right. And your two 10 home that you bought this year in 2021, three years from now, it would be worth two 36. If the 4% continual annual growth rate continued in the fourth year, you'd be at two 45 and the fifth year you'd be at two 55. That bit of knowledge, that bit of information really set their mind at ease. If you could just go, oh wow, okay. It's not the boogeyman. It's not the horrible outcome that I was afraid of. And so that's what all of our loan consultants are good at is let's quantify, you know, the other myth that we keep fighting is if I pay, if I give the seller wiggle room on the appraisal, I will have to come with gobs more money to the closing table because that's the only way to cure that issue of the appraisal coming in low. Uh, that is not the case. And when we come back after the news, I've got a story of another first time, a home buying couple where we made that extraordinarily clear, uh, by showing them the difference between coming with the extra money and not coming with the extra money. All right. We'll cover that. When we come back right now, it's time for the news and we turn it over to the 24 hour newsroom.
Speaker 2:Don't break the bank to get into a house back to the accurate mortgage and real to show with Brian Wicker on WTMJ. Well, let's tell a story and we're always privileged to have the opportunity to help the children of our clients. And you know what, if you stay at long business, if you stay in business long enough, David,
Speaker 1:Then you get to do that. You know, the kids get to be grown up and they get jobs and then they need to buy homes. So, you know, 20 years
Speaker 3:From now comes true for me. I will buy us both a very expensive bottle of scotch, but that's not my problem. Okay. That's more you. Right. So anyway, all right,
Speaker 1:That's good. So, um, so this, uh, young couple, uh, both in the teaching trade, uh, hail, you know, help us get pre-approved and ready to go out there and buy a home. And so the first thing, uh, we have them fill out our cool online application, which gives us everything we need to start the diagnosis. And in this case, um, the, the wife's score is like seven 23. So that's second tier seven 40 and up is the best in seven 20 to seven 40, but the husband's credit score is seven oh four and they want to put 10% down. And so credit scores matter even more, um, because it affects not only the interest rate and or closing costs, but also the cost of the monthly PMI. And, uh, so I crack open the old, uh, what if credit expert tool? And I quickly see that if he pays down his$926 balance on his credit card with, let's say it was chase down to$250 or less, there's a 97% chance of his score popping a backup over seven 20. Why, what
Speaker 3:Was it about that balance that used zeroed in on
Speaker 1:It was, well, the computer told me, so I didn't have to do much thinking it's sad, but it was because$936 was more than 25% of his available credit. I think the balance or the available credit was 3000. And so the credit score is very sensitive to how much head room do you have on your credit cards? And he didn't have a lot of accounts. Okay. So it was a disproportionate weight, um, for this one little act. So guess what he did that right away now, we're just kind of cool on our jets and waiting for that. Uh paydown to get reflected in the databases before we reaccess his credit and enjoy his new w higher credit score. So that really helped with the cost of the PMI and like so many of our other clients though, um, I wanted to show them and we did how check this out. They had enough money, just like our previous story that they could put 20% down to Rick coaching them the same way. Hey, would you write this offer? You're going to want to write the offer with 20%, but they already wanted to only put 10% down. And then I showed them on a$300,000 home. If you put 10% down, you get this 2.9, nine 30 year fixed rate with an APR 3.15, their payment to buy a house like this would be$1,636, 1636, and they need 33 grand total money to buy down payment. Closing costs, soup to nuts. If they gave the seller$15,000 a wiggle room. In other words, I'll still pay you$300,000. As long as the house appraises for two 85, their payment goes up, are your ready?$17
Speaker 3:Bringing no bringing no extra money to closing
Speaker 1:Actually$600 less. Okay. Yeah.
Speaker 4:So all of the real estate agents,
Speaker 3:Seven 70 some what dollars 1701 seven one seven$17,
Speaker 1:$17. So to give$15,000 appraisal wiggle room, and your worst case comes true, you know, you offer 300 a house listed at two 85 and it comes in the appraisal comes right into two 85. That's your worst case? Did the buyers have to bring in the extra 15,000? That's what every home buyer and every real estate agent I've talked to assumes. And that is in car wreck, ladies and gentlemen, as just demonstrated through words. And we show people on screen exactly how this works. It's only$17 more per month, and it's only$600, more,$600 less at the closing table. That if that sounds borderline miraculous, it's just math, but we're really good with math and numbers. Now that can vary from situation to situation. So, you know, we cook up these custom illustrations and I find that people really pay attention when they're actually shopping. And when they were talking about a house that they have in mind or something that they saw, then this really gets through to them up until then. It's kind of abstract, but we know how to show people how not horrible it is to get that accepted offer. Even if you have to give more than what the people are asking. All right, when we come back, I got to refi story to tell David you're listening to the accurate mortgage and Realty show on Wisconsin's radio station am six 20, WTMJ important
Speaker 2:Home buying questions and answers you can count on. They say is the Acura net mortgage and wheel T show with Brian wicked on WTMJ. I went through the brewers game, this last Tuesday, Diego with my great nephews, Jack and Sam Posca 10, except that the Padres killed us that night. But anyway, be nice when it's back to full capacity, you're going
Speaker 1:To go to a game probably. Yeah. Coming up here. Okay. All right. Okay. So, um, got a, this has been kind of going on over a week or 10 days, a client whom we help last fall in November with a significant cash out refi, uh, because she wants to install an in-ground pool in her home and planning to do it here in the spring of 2021. Uh, so with the help of her financial advisor, she wisely chose the no closing cost option back in November, which had a rate of 3.375. And why do you think between Acushnet and her financial advisor, she chose the no closing cost option on her cash at Revit David?
Speaker 3:Well, it's in comparison to, if she had chosen a rate that may have been an eighth or a quarter lower, but then it's all about your break even, I guess when you, when you get it for no cost, it's free right away. You're not waiting, you know, for your lower payment to catch up. So you're already there. And in this case, how many months later she's circled back with us now to see if she can even improve her rate again? Cause she's not waiting to break even.
Speaker 1:Yeah, there you go. And the other true statement is that in the Pantheon of mortgage rates, the best rates are available for people who are buying homes. And this is because of the way Fannie Mae and Freddie Mac price, their 30 year fixed rate mortgages and 15 year. So you get the best rate of your buying. Second best rate is if you're just refinancing the mortgage you have, and the least attractive rate is when you're taking cash out. And so the other thing that was true, financial advisor and I were saying is, you don't know, maybe in six months after your cash out, refinance, Scarlet letter wears off. This is one of the stupidest things in mortgage lending that yet six months later. Now, if we do her loan again, it's not a cash out refi anymore. And she gets the better pricing. So we had sent out an email to all of our people, all of our past clients saying, Hey, 2.99 is back. That was what four or six weeks ago when we had been that's how long we've been enjoying this little dip in rates she responded and said, you know, that sounds good, but I really don't want to rebuy unless I can get two and a half with no points, Donna, I want to be on a 30 year fixed. Well, we didn't, weren't sure at first, so we responded with a 15 year fixed at two and a half, because that would have been with no points, very low closing costs, but she said, I had no way, well, I don't want that hugely higher payment. Yeah. You know, I met, I wanted two and a half on a 30 year fixed rate with no points. And I didn't say this to her, but it's like, I've always wanted to be six feet tall. And the chances of that happening are the same, roughly as two and a half with no points on a 30 year fixed. So it's just not available. And I get that you want a home run or, you know, and so finally we connected this week and I pointed out because of her loan size. And then we ran the all of information back through the Fannie Mae computer. And it turns out we don't need an appraisal this time around. So that saves her four 75. So I say to her, I wish I could get you two and a half with no points, but here's what I can get you for. Absolutely no loan costs. Okay. No appraisal, no title. We'll pick up the tab on all that stuff. Your payment's going to be$85 a month, lower forever. Yep. That's over a thousand dollars a year for as long as you have that house, uh, that maybe that's not a home run, but it sure is. At least the extra base hit
Speaker 3:Double, still score runs as they say in baseball. So
Speaker 1:Right. And since she, she, her, her financial advisor, I said, ask Tony, if he had an investment where you could invest nothing and it would give you$85 a month forever, would he think that was a pretty good investment? Yeah. And I guarantee you, he would say yes, absolutely. So the other thing that we've seen, uh, home prices, remember I just said in an earlier segment, according to the federal housing finance agency, home price index for Southeastern Wisconsin. So not a national number, you know, that's overly frothy home values in the five county Metro area are up 13.3% from a year ago. So if you bought your house with 5% down, you now have 15 or maybe close to 20% equity. So people even without significantly lowering their rate, if we can either eliminate or reduce the monthly cost of your PMI, private mortgage insurance that you're paying, that can be a huge win. In fact, one of our radio station colleagues, uh, I just remember recalled in and we're saving them like$200 a month, uh, and going from whatever he's got left on his mortgage, let's say 22 years down to a 15 year, and we're still saving them$200 a month cause he was paying what kind of insurance, F H a mortgage insurance, which never goes away. All right. So there's big opportunity when we come back, David, let's do a little bit of a rate Roundup and I got one of this story from the front lines of mortgage lending. You're listening to the academic mortgage and Realty show on the biggest stick in the state am six 20 WTMJ WTMJ
Speaker 2:W2, 77 CV and w KTI HD to Milwaukee from the annex wealth management studios is news radio. WTMJ getting you through the home buying process. Welcome back to the Acushnet mortgage and Realty show with Brian Wicker on WTMJ our right we're back, David, just how low our mortgage rates here as we stare down June 1st.
Speaker 5:Uh, so the most popular, uh, loan out
Speaker 3:There right now, I'm going to say refi what's, we're going to set aside purchase for a second. And don't forget folks that refi rates are now different than purchase rates on an apples to apples comparison, but still on a four to 9.9% on a 30 year fixed, uh, which is an APR of 3.04 for just$1,800 in costs. You can still snag a 30 year. That starts with it too, which is fantastic. That's a, it's a refinance or a regular refinance or a rate and term where you just leave your loan alone
Speaker 1:In order to get there. Well, you don't leave it all. They're going to pay it off. We're not going to lend you any fresh money exactly over and above. You're
Speaker 3:Not walking. Uh, so, uh, on a 15 year though, or as we might call it, the anti cash
Speaker 6:Offer or you're,
Speaker 3:There is free money out in the world, 2.5% for wait for it, zero loan costs. And so the APR is the same. That's my favorite right now, two and a half on a 15 points, no points.
Speaker 1:Almost nobody buys a home using a 15 year fixed just because, I mean, it's very, very rare. So this is almost always for refinances the 15 year, which is fine.
Speaker 3:Those are my two, you know, uh, trophy rates right now. Uh, and, uh, what I wanted to point out or segue back over to you was, uh, giving that wiggle room on purchases just to wrap up almost no matter what range you're in. You had noted the meat of the market is in that one 50 to three 50, but you had a conversation this week for someone who was even above that and wiggle room still applies, right?
Speaker 1:You only a little, um, older first time home buyer, a couple and again, uh, daughter of the valuable past client of ours. So we always appreciate that opportunity and, and treat them like they're our own. Um, so they're looking at putting 20% down, you know, in the mid five hundreds. And so I wanted to show them, you know, okay, here's what that would mean. And the price point that they were looking at LA, I was illustrating a$560,000 purchase price. So if they put 20% down, they're going to need to come up with about 120 grand. And then I was saying, all right, now, if you give 26 grand in wiggle room, oh, you know why I was coming up with this, David, they were going to go look at a house at five 34. So I said, all right. If, if you go to look at this house, that's listed at five 34 and you say, I will still pay five 60. I will give you$26,000 more than your asking price. As long as their praises out for the listing of five 34, these people did have the money. It's a bring the more money to closing. They wouldn't have to bring an extra$20,700 to closing in that scenario or wait for it. I can raise their payment by$48 and 54 cents per month. And then they just have to come up with 120 that math isn't even close as to which one would be the better option. It's ridiculous because that difference in the cost was simply the monthly PMI, which would automatically drop off in slightly less than four years. And so it's like, you should not throw down an extra almost$21,000 to save what amounted to less than I don't have the math here in far less than$2,000 a PMI costs. So again, we're the master illustrators of predicting the future. It's math, right? That's, that's all we're doing is putting on a computer screen right before people's eyes. And this is the best way to do it. We're on the phone. The home shoppers are looking at our loan consultant's computer screen, and we're doing these, what if scenarios so that it really sinks in what are the, of these various strategies? Well,
Speaker 3:And I was going to say, you know, in, as you note, you know, okay,$20,000 more is it's still 20,000 bucks. Whether you're trying to buy a$250,000 home or a, you know, five 50 home, it's, it's still real money. Um, it might not be a greater percentage of wiggle room, but to the ability to not be afraid of that wiggle room, I think still matters because I mean, it's Milwaukee$20,000 still goes a long way for a lot of things. Yeah,
Speaker 1:That's right. So I think, you know, realtors, we have a lot of realtors that listen to our show. If you want people who can help buyers understand the implications of overpaying or not overpaying, we're the people that can help them understand that. And, and we're really good at it. And we'd love to work with your home shoppers, especially you don't want to have an ad running right now. David says, Hey, if you've lost out on more than three offers, time to upgrade your pre-approval and get with the sharpest mortgage financers in Wisconsin, the folks at academic mortgage, because this is all about inspiring confidence in the mind of the seller. When you've got, you know, 15, 10, six offers on the table, the evaluation is who can make good on their offer. And as you like to point out, David, we're going to help you present the best version of yourself, given all your facts and circumstances, uh, to that seller. That's what we do every day at academic mortgage one, we're not helping people save big money on their refinancing. All right, well, um, everybody, I hope you enjoy the long holiday weekend. Thanks for tuning in to this week's edition of the accurate mortgage in Realty show on am six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the accurate mortgage and Realty show are solely that of the hosts or guests of academic mortgage and accurate Realty advisors and not WTMJ radio or good karma brands, Milwaukee LLC,