The Accunet Mortgage and Realty Show 7-25-2021

This Week’s Highlights:

• Credit Scores: The Third Part to Mortgage Lending
• The Ingredients of Your Credit Score
• It’s Never Too Early to Start Preparing

Transcript

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Speaker 1 0:00

The accurate mortgage and Realty show is sponsored by academic mortgage and equal housing lender and MLS ID 2 5 5 3 6, 8, and Akon Realty advisors, which is a separate company from, but still affiliated with Acushnet mortgage.

Speaker 2 0:14

Welcome to the [inaudible] mortgage and real to show getting you inside information on buying, selling, and financing your home with expert advice from Acushnet , mortgage and Realty. And now here's Brian and David Wickers . All right, for morning and night , welcome to the

Speaker 1 0:32

Academic mortgage and Realty show. I'm Brian Wicker, the majority owner vac unit and accurate Realty advisors as well, along with my one and only eldest son, David Wicker, who is our chief client experience officer at academic mortgage. If you've got a question or comment you can call or Texas on the accident , mortgage talk and text line, which is 8 5 5 6 1 6 1 6 20. Well, thank you David, for doing the show last week , uh , with Libby and the week before that with , uh , your brother-in-law, my son-in-law , uh , Tim Holden, appreciate that having a couple of Sundays off that was , uh , uh, good times. All right. So , um , first of all, and you mentioned this on last week's show, we just want to confirm everybody listening out there. Uh, interest rates on refinances got one eighth of a percent better , uh, this last week because of a change in the structure of how Fannie Mae and Freddie Mac looks at risks. Uh, and so they've decided now that , uh, an irregular refinance for you're not pulling cash out , um, or combining a first and second mortgage, if it's just a regular refinance. Now, the pricing is once again the same as if you're buying a home. And so all of us in the mortgage industry are relieved at that. Uh, but I wanted to kick off the show here talking about something we haven't talked about in a while , which is credit scores. And I think everybody knows that their credit score is important. Go ahead. I was going to say,

Speaker 3 1:56

I was going to say, because so much of our conversations, every Sunday, we talk about the three legs of the stool in mortgage lending. You've got income. Talk about that. Maybe you're self-employed or played by a family member down payment . That's the other leg of the stool, but we don't talk a lot about that third leg credit score. Hey, how are you measured at paying back other bills? We'd like to know

Speaker 1 2:20

That's right in the wall street journal that prompted us to talk about this as a front page wall street journal article with the headline FICO scores, hold on. The credit market is slipping. And I thought I got to read that. And the issue that they were talking about in this particular article is there are 53 million us adults, which is a lot, right? Cause isn't the, like the us adult population, like 250 million , maybe. So , uh , so a big chunk of us adults don't have enough information in their credit reports to generate an accurate credit score. And so after reading the article, what it was really about is how banks are trying to come up with their own additional scoring models, like going beyond what's in your credit report, maybe looking at things like, well, what is in your bank account? How much money do you have in your bank account? Uh, how many times have you been overdrawn in the last 12 months? Because they're trying to, why deepen the pool of applicants to whom they can lend money? Not for mortgages folks. It turns out that was the punchline, but rather for car loans and credit cards,

Speaker 3 3:26

There was a line, there was a line in the article they're trying to get so nuanced that there's one a retailer, Hey, if you're buying a treadmill, we're going to have that be more valuable than if you're just taking out a personal loan and kind of just rearranging the deck chairs on your ship of debt that says that they want to like, you know, oh, you're buying a treadmill. You're trying to change your life and do better. And that's a better predictor of success in borrowing money. I just thought I was like, I didn't disagree. And just the applicability seemed like a scratch tenuous. Yes,

Speaker 1 4:03

That's really, that's really just a closet extender . Cause you will end up hanging your clothes on the treadmill. That's really, what's true. I know that's what I do with my bowl flex back in the day. All right . Well anyway , so just a quick review here on , on FICO scores. First of all, not all facial tissues are Kleenex one , not all credit scores are FICO scores. FICO stands for fair Isaac corporation. And it turns out that you David are just one year older than the FICO credit score. I didn't realize that came on in 1989. So it's 32 years ago is when FICO first said, you know, we're going to produce this three digit number that is going to predict your likelihood, Mr. Borrower of paying back that next debt . A couple of other fun things I learned while doing the research for this topic. David, do you think that , uh , FICO sells more credit scores per day than Starbucks sells cups of coffee?

Speaker 3 4:58

I cheated. I think it was, if I go has more scores than Starbucks sells coffee, right?

Speaker 1 5:03

That's right. FICO sells get this 27.4 million FICO scores a day. Wow . That's twice as many cups of coffee at Starbucks. All right. What about FICO scores versus McDonald hamburgers? Over the course of a year, I read

Speaker 3 5:19

It was a multiple. It wasn't just that they beat them by a little bit that they, by a number of , by a factor.

Speaker 1 5:24

Okay . Four times, four times as many FICO sells 10 billion FICO scores each year McDonald's only sells 2.4 billion hamburgers worldwide. All right . So, so again, what the FICO score, which is the brand at that , uh , uh , model. And that's what we use a very particular FICO score in mortgage lending. And I think that's something that a lot of people get confused about, you know, and you know, I think it's time for a break. I don't go one more minute to a break. I'm getting rusty. All right. So the, the, a lot of people get their credit score at credit karma. Is that a FICO scored in ?

Speaker 3 5:59

No, it's not.

Speaker 1 6:01

It's, it's a vantage score 3.0, which is a competitor to the FICO score model. And it's something that TransUnion and Equifax came up with. So that's what you're getting when , when you get your credit karma score. And we always know when somebody says my credit score is 900, like , okay, you're out, you're talking credit karma scores because the top FICO score you can have is eight 50. Um, and the credit score does impact the interest rate and the closing costs you get on your mortgage. Uh, and then also you should know, like I just looked at my own credit score on bank of America on my credit card. Well, that's a FICO score model eight and the mortgage industry uses FICO score model for all right , after this first break, we're just going to quickly review what exactly is the impact on your mortgage pricing based on your credit score. And let's remind everybody what goes into your credit score. And the one thing you can do to manipulate it in your favor before you apply, you're listening to the acronym , mortgage and Realty show on am six 20 WTMJ

Speaker 2 7:08

Home buying advice from the guys who know it best. This is the accurate ed mortgage and Realty show with Brian Wichert on WTMJ

Speaker 1 7:18

And also David Wicker chair, chief client experience officer. And so we're talking credit scores and we're talking particularly about phyco credit scores . So that's a branded credit score. And , uh , we're talking about right now, what goes into your credit score? So just as a reminder, there are five components to your FICO score. The most important one is a recipe. This was what goes into the recipe, 35%. So a little more than one 30 or FICO score is dependent on your payment history. Well, you know, if you're trying to predict whether or not you're going to pay back the next loan, because that's what a credit score is, of course your history of paying back other loans is going to be front and center. Um, and then the other thing that is true about that, the little nuances, if you have a very recently payment that hurts you a lot more than if you have a late payment , uh, two years ago. Okay. So payment history is a third. Uh, let's uh, we're going to leave. The one that I think is most in people's control until the last , um, the credit mix that you have is worth 10% is 10% weighted. And that means what the FICO score model likes the most is if you have a mortgage, if you have a car loan or a lease, and if you have a credit card that are all active, because those are the three different types of credit mortgage installment is what that's called. And student loans are in that installment category as well. And then revolving debt or credit cards when you have all three types of credit. And you're doing a good job on that. The FICO score was, I liked that. Okay. Another 10% component. So not, not very heavily weighted is new credit. Hey, if you're going out there and you're applying for lots of credit, you're going to get dinged on your credit score. However, if you're shopping for a car and within a two week period, you have your credit check, 90 times it only counts as one inquiry. Same thing. If you're shopping for a mortgage, if the credit scoring system is smart enough to know, oh , uh, David and Christy are shopping or, you know, they must be refinancing because , well , you'd only have one credit inquiry active , but maybe somebody else would have would have more. Um, so that's something that you can control, right? Like don't go out and, you know, if you buy a car and then a month later, you go shopping for a home, you might impact your score , uh , 15% of the length of your credit history. So that's something you're able to get started on earlier. You know, you can't really change that, but the older you are the longer, your positive track record is , uh, the higher your credit score is going to be. And the thing that I believe most people are least aware of, and that is credit utilization or amounts owed. And so this is where if you've got a $5,000 credit card limit and your balance is at 4,900, you are not going to have as good a score as if you're at 50% utilization. In my example, $2,500 or less, or if you're even under, what is it, 30%, then you get another little bump on your under 30%. So that's something that people could take care of , uh , and kind of manipulate in their favor. And, and we do that frequently because we have, what's called a, what if tool , uh , where we can crack open the hood on your existing credit report. And then we can say, well, what if, you know , we can do it two ways, Hey, we need another 20 points of higher FICO scores to get a better deal for Fred. Uh, we can ask the computer, what do we need to do to do that? Or we can just take guesses because we're smart and say, well, what if you paid down this credit card , um, and that can have a material impact, David, your , your best example is when I'll never forget from probably two years ago now , uh, Stephanie, the school teacher . Yeah,

Speaker 3 11:13

Well, just had a small credit card limit of $500, but there was $300 on this credit card. And so on a nominal basis, Hey, it's only 300 bucks. You can pay that off. It's the percentage that really mattered. And so by simply advising her to pay the $300 down to zero. Now you've gone from 60% utilization to 0% utilization. I think our score popped north of 50 points instantaneously because of that one brain

Speaker 1 11:42

From in the, in the high six hundreds to the low seven hundreds. And that made a material difference on the cost of her private mortgage insurance, as I recall, and also the cost, the rate. All right . Let's, let's talk little bit about that. And then let's also get into our first story of preparedness , uh, of somebody that I talked to on Friday, you're listening to the acronym , mortgage and Realty show on Wisconsin's radio station am six 20. WTMJ

Speaker 2 12:07

Getting you into the home of your dreams. Here's more of the accurate ed mortgage and Realty show with Brian record on WTMJ,

Speaker 1 12:17

Along with David Wicker as well, the younger, more handsome, taller , uh , Wicker to this family. So , um, this, before we move on to our first preparedness for a David, the difference , uh , on w on a scenario where you're putting a 5% down on a $250,000 home, if you've got top-notch credit, which is seven 40 or higher, and things change every 20 FICO points. So if you're seven 40 and higher, though, it doesn't get any better on a regular Fannie Mae Freddie Mac loan. Um, your payment would be $1,600 a month at our current rate of 2.8, seven five with no points. Okay. And I I've got some taxes built in their homeowners insurance, the cost of private mortgage insurance and the rate. And that's with no points, 2.875. If you drop down to the fourth best phyco range of six, 80 to 6 99, and now your rate would go up a smidgen to 2.99, but you'd have to pay an extra $1,200 in points compared to the no point deal. And then the kicker that people don't realize is the private mortgage insurance gets more expensive. So it's not just the adjustment to the rate, but the PMI companies who are covering the risk of foreclosure are going down lower credit score. There's a higher chance we've got to charge more. So the total difference in payment is 110 bucks a month. And you had a great observation while we were on break about why people need to pay attention to their credit score in particular, this market,

Speaker 3 13:45

It eat . If you have to pay a little bit more, whether it's, as you said, a little bit more in rate or in the monthly PMI that could eat into how much house you could swing. The national association of realtors came out this week and said, Hey, for the month of June median home price for the whole country was just over $363,000. It would kind of, it would be really disappointing if you're middle of the road credit score, you know, kinda tripped you up on being able to afford the amount of house that you wanted to because, oh , shoot, honey , uh , we have $140 that could have been going toward this house in this mortgage has to go to covering the risk. I'm going to say of the middle of the road credit score. So it , it, I mean, not to mention the a hundred, some bucks bucks a month can be real money, but the affordability piece, you know , uh, how to say another way, why limit yourself to being able to afford a $320,000 house when you could have afforded a $350,000 house with the sharpest credit score you can manage

Speaker 1 14:52

That's right. And then the other thing that sometimes happens, I'm just, as you were explaining that, and it was recalling a situation from earlier this year , uh , where, you know, it's taking people longer to get to find their homes, right, because there's more competition out there. And so , uh , credit reports are good for 120 days. And so what happened to this particular couple that I have in mind, it wasn't my client, but I got involved because of this problem is their credit report became too old. Uh, like either right before they wrote their offer or right after. And when we updated their credit report, their score plummeted like 50 points. And it was because of a rinky dink, a $9 balance that they didn't realize they had on some, you know, like credit card. They opened to buy something online to get a better deal. And it had reported not just once, but two times late in a row . And so this made their pricing will not materially different. In fact, I think we had a , it boosts their down payment in order to just get the loan approved. So this goes to the fallibility, I guess, of credit scores, right? Because is the fact that this person accidentally made two late payments on a $9 or didn't make any payments at all on a $9 . Is that really mean they're a bad credit risk? No, no, but, but the, the scoring model penalize them heavily just like a medical collection. If you have a $10 medical collection that you didn't know about, and this happens the most frequently, I'd say this is the most frequent credit trip up that we see is, you know, the person, the last three times he did their loan had 800 credit. Now we'd go to, you know , refinance them or help them buy a house. It's like, oh, your credit, six 80, what happened? Oh, you got a $10 medical collections . So it's not the, a dollar amount of the late, that matters. That is something that is blind to the credit scoring model. It's just the fact that it happened and when it happened , uh , the other thing that surprises people , uh, that's not in the credit score. It doesn't know your income, the credit score does not know how much you make the credit score does not know how much money you have in the bank. Uh, so it's just limited to what is your track record that your creditors have been reporting ? All right. So take care of your credit score. I would, I , I monitor mine through my credit card. I think a lot of people do that now and monitoring for free through credit karma is better than not monitoring at all, but it's not the same. All right. Well, we managed to talk again about credit scores for the whole first half of the show, but it's really important. All right, after we come back, I promise we're going to talk about how to not do what these people did necessarily, but how important it is to be prepared right now. It's time to turn it over to Tony Barrack and the 24 hour newsroom.

Speaker 2 17:50

Don't break the bank to get into a house back to the and mortgage and Realty show with Brian Wichert on WTMJ .

Speaker 1 18:01

All right . Rosanna, love that song. All right. So that's total, I think isn't it. Anyway , um , music from your life here at WTMJ. Thank you, Isaac. So , uh , all right . So about a month ago, a repeat client of my end called up, and she's the sister of a long time client and friend of accurate and to say, okay, I'm ready to sell my family home. And she's single now and her daughter's going off to college and I'm going to downsize and buy a condo. Okay, great. Cool . So we have this discussion, first of all, her , her initial take on life was, and I don't want to have a mortgage on my condo. I just want to, you know, give me a bridge loan on my, why she's calling you . Okay. Well , um , right. Cause, cause she, she wanted to extract the equity out of her existing home and then use it to pay cash for the next home. And so we had a discussion very politely and I'm like, you knew I can lend you money in the twos on a 15 year fixed. And you know , can't your financial advisor make you more money than that. And I did the math and we could replicate the math, but it's like, if you take the money that you were going to use to not have a mortgage and you just put it in your sock drawer, you know, you can make the payments and you , even if you are no interest on it for I'll do the math on the next break, I should have done it before. It was 12 years is what is what my recollection is. You could have 12 of the 15 years, you could just sit there and take the money out of your shoe box and make your mortgage payment. Maybe it is 10 years, but it's a long time. And that's again, assuming you made no rate of return on it. And so she did get comfortable with that. All right. But still, she didn't want to use her liquid savings. So the, the , um, action step a month ago was all right. I can help you set up a home equity line of credit or you can go set it up yourself. Um, now, you know, cause she didn't have a house under contract. She didn't have her home listed for sale. So she could go somewhere and get a home equity line of credit and not tell him what she was going to use it for and get a good deal. Okay. So it's a month later now in our computer system tickles one of my team members to call and see what's happened. And, and it tickled me too . And, and so I said, well, I'll call her. And so I always answer the phone when I call. And she said , oh my God, this is so crazy that you're calling me right now. Cause I'm just driving away from this condo that I think I'm going to write an offer on like, okay, well please, God tell me that you went and got the home equity line that we talked about. Ah , no, I've had this and that and the other thing. And so she doesn't have it. Uh , so then , then , you know , that's where you got to say, all right, well I'm , we're not gonna be able to put one in place right now. Let's talk about how much money you have in savings, where , and it just so happened that we could come up with a 20% down , uh, for the particular kind of she was looking at. And then, you know, the discussion was, Hey, you know, this seems really perfect. It's about a 15, 20 year old side-by-side the property itself. Right. Because , uh, you know , she's

Speaker 3 21:23

For what she thinks her life is going to be.

Speaker 1 21:25

Exactly. And it's got vaulted ceilings and yeah , it needs , uh , you know, the kitchen cupboards need to be painted, you know, so it's not perfect. Right. But it's got a really nice mature wooded backyard, you know, that she doesn't have to take care of cause it's a condo, but she can sit in her cool deck and look at it. So I'm like, yeah. And you know, her, her issue and it's hard sometimes to do things alone, right. It's always nice to have that life partner who then, you know, either tells you you're crazy or says, it's awesome. Um, but I looked at it and I said, I know it's all of a sudden, but do you really want to let this one go? You know, I think you got to write on this. And then we talked about making that no regrets offer, but the point of this story is it would have been better for her. Had she been able to put that line of credit , uh , in place, like we had planned a month ago and I get that life happens. Right. Um, but what you can't control is when is that perfect property going to pop up here? All right. And so that's going to lead us to my next story

Speaker 3 22:31

About the young people. Oh , sorry. I was just going to say, cause what you're going to end up doing possibly, you know, she had, she put that game plan in place. She could have used the pile of money. She preferred, which was her home equity. If instead she's going to simply reimburse herself on the back end when it all shakes out, it all shakes out and her world will look basically the same just in a different sequence. But the end result will be the same.

Speaker 1 22:58

And she's going to end up paying more on that , um , home equity line of credit on her old house, because once she has the new house and there's all those facts come to light, it's going to be a bridge loan, which means higher closing costs or a higher rate it's going to, in her case, it's going to be a higher. So it's not the end of the world. It's just suboptimal . Right. Because had, she'd been able to get it done ahead of time. She would've got a better deal on that bridge loan air quotes. All right. But that leads me to the other story about the young couple expecting their third child about, you know, being prepared and maybe I don't think they, they are as prepared as I'd like to see a B . We'll tell you more about that. When we come back, you're listening to the accurate mortgage and Realty show on am six 20, WTMJ

Speaker 2 23:49

Important home buying questions and answers you can count on this is the Acura net mortgage and wheel T show with Brian Wicker on WTMJ.

Speaker 1 24:01

So I was at a party , uh , which is a good thing to go to party, be a beautiful night last night. And I am just Catholic, came with a younger couple , um, and they have two small children and one on the way. And they've mentioned, yeah, we're going to be looking, you know, we're actively looking for a house. Oh really? And , uh , and is when the first time I met him, but th and they volunteered. Yeah. I said, well, remind me, do you own a home now? Yep. And we own it free and clear. We're just really enjoying, not having a mortgage. Well, Hey, congratulations on that. Even though that wouldn't have been my, you know, you know , me, I like our product. I think everybody should have a nice big mortgage. Um, and, but , and then they're looking in three specific , uh, high school areas, like, okay, they've realized that, you know, the area where they live in Waukesha county and the high school that their kids will go to. And, you know, another eight or 10 years , um, that high school isn't rated as high as the other high school in that community, or these two others that they have in mind. And so I just casually, I didn't want to turn it into a full-scale consultation on, you know, mortgage lending, but I said, well, you know what you probably want to do, and we can help you do it. If you, if you want help, you need to set up a loan on your existing house, even though you own it free and clear, we need to help you set up a line of credit on that existing home. So that when you find when all of a sudden we were just talking about you can't predict when that perfect home comes on the market. Yeah. That's out of your control. But what you can do, just like a previous story is you can put the , um, tokens, the , uh , the chess pieces in place and make sure that you have a ability to make a nice down payment, because remember, Hey, you own your house free and clear. You probably want to roll at least some of that equity over into your new home, and you want to be ready so that you can write the offer with a nice big down payment, like 20 or 25% down and not be all of a sudden scrambling when the, oh yeah. Like, where are we going to get the down payment? Or maybe they were thinking, well, we'll just put 5% down. We didn't get into that conversation. It's a conversation that needs to happen of all right. When you find this house, you know, what are you going to do? I , I kind of have to think that they were thinking, well, we'll just sell our house right away. Well, it's like that. Isn't gonna, you can't write your offer that way. So didn't have the full conversation with them. But you know, here, you imagine people that are in a good position. Go ahead.

Speaker 3 26:40

I was just going to say it's because you, okay. Mortgage is just a thing that helps you achieve the real goal, which is why they said to you, oh yeah, we're looking for a house, which is only one step. And so what we're trying to say, you know, if they found the house of their dreams, then they were going to maybe think about step two and three. And we're saying like, can we make that instead, like step zero. Can we, can we think about how you're gonna , you know, like you said, be ready to propose to that seller.

Speaker 1 27:14

Yeah. Right. So that you can successfully so that they will say, yes, you don't want to all of a sudden go, oh yeah, we don't have all of our ducks in a row. And now I have to make a suboptimal offer, you know, to these folks. But maybe the bank of dad, mom and dad will help out. Uh, we don't know, but there are lots of ways to execute a successful plan in their particular situation. And by the way, to your point, it doesn't matter what inventory is. It doesn't matter what interest rates are to these people. They've got a third baby on the way and their house ,

Speaker 3 27:45

Isn't it . They want to go to this high school. Like that is what people care about.

Speaker 1 27:49

That's right. And so we also then talk briefly about how, cause they mentioned the areas in which they're looking. I said, you know, you're going to have to overpay. And we happened to help this young , uh , woman's sister buy a home in Illinois earlier this year. And she was at the party too. And I said, did you, did you have to overpay? No, we didn't have to overpay. Okay. Well, that's awesome for you. But in these particular areas where your sister's going to be looking, she is definitely going to end up paying more than asking. And so it's just kind of going through those mental gymnastics , um, because of how tight , uh , inventory is. All right. So to turn the corner now for our, maybe our final story of the show, which we'll get to right after our next break, this is the opposite. We're now we're planning a way in advance. So this story is about a client and friend of Aconex who is buying a new construction condominium in Ozaki county. That's not going to be done until maybe February or March of next year. And so I want to talk about the discussion I had with Jim, his real name. Uh, when we come back, you're listening to the acronym , mortgage and Realty show on am six 20, WTMJ

Speaker 2 29:05

Your TMJ W2, 77 CV and w K T I HD to Milwaukee from the annex wealth management studio. This is Newsradio . WTMJ getting you through the home buying process. Welcome back to the Acushnet mortgage and Realty show with Brian Wichert on WTMJ.

Speaker 1 29:24

So , um, got a call or actually an email from a longtime friend and client saying, Hey , um, sold my house , uh, and got a lot of money for it. And now I've got an accepted offer on a new construction condo development. It's one of, it's like three stories tall and really lovely in Ozaki county. Um, and these places are selling for around $700,000. And so the Genesis of the conversation was, well, the bank that's financing, the developer, you know, they're offering a, are you ready? Four and a quarter five-year balloon. That's a horrible product. Okay. Now, now the , the reason why it might end up being the product well for two reasons, first of all, when you have a new construction condo project, it is not eligible for the most popular financing in America, the 30 year fixed rate, that's going to get sold to Fannie and Freddie. And that's because Fannie and Freddie don't know whether it's going to be a successful project or not. And if you look back over history, what happens with condo projects is if you're in the middle of, you know, selling off your units as the developer and the world goes to heck in a hand basket, I dunno , COVID no housing crisis, whatever. You may not be able to sell the rest of those units. Um, and then you start to cut the price to start to try to sell them. And then somebody who already bought it, you know, in the first wave needs to sell because they lost their job. And now they can't because the prices are down because the developer was chopping the prices in order to sell the rest of the next thing, you know, is down the toilet. So that's my Fanny and Freddy won't get involved, but luckily we have portfolio lenders, banks who are looking at these and they go, okay, the guy's putting 20% down or 25% down. And you know, it's in our backyard, we think it's going to be successful and we can do it. So the thing though that the, the , um , buyer though, was like looking for an arm with a rate that starts with a two, well, those aren't available amazingly in this interest rate cycle. We're not seeing very many lenders with super aggressive adjustable rate mortgages, but I can get them like 3.1 to five on a seven year arm where the rates fixed for the first three years. So he likes that. But then I said to him, Jim, I , um , I'm just going to guess that the comparable sales, like all the other , uh, you know, condos in Ozaukee county, they're selling for seven. I think that's going to be a very slim pool. And then this morning, right, when we were getting ready for the show, I did a search in the MLS and the number of condos in Ozaukee county that has sold for $700,000 or more is exactly in the last year. Are you ready? One, one. And it's a side-by-side condo to boot. So that's an apple and this new project is a zucchini, right? Cause it's , uh , you know, it looks more like a regular condo project where it's, you know, three stories hall. And I think it's got about 30 units or something like that. So luckily though, the other , um , thing that came up in our conversation is several of the buyers who are already under contract are cash buyers. So what do you think my thought was David, on how we might first to the party,

Speaker 3 32:56

Let, let other people buy and set the market

Speaker 1 33:00

That's right. So we're hoping that as things unfold and, you know, we get around to be December or so, you know, we're going to have another conversation and say, okay, can, did you happen to talk to the developer? Maybe I should call it a developer. Maybe, hopefully they're already onto this as is the bank that's doing the developing work. It's like, have those cash buyers sell because then we could get two comps from the same project. And then our only problem is coming up with that third comp that's similar. And the other thing I explained to him , which is lost on people, you can't take three, $600,000 condos and adjust them all up to 700, that's called a crummy appraisal. You're supposed to find a comparable that sold higher than the subject property. And one that sold lower, at least one of each and kind of pinch that value or bracket it. So , um ,

Speaker 3 33:53

I was going to say on the, on the ugly offer from the bank, that's, you know, helping the builder developer construct these condos. It's like, it might be the ugly option now, but it's not, it doesn't have to be the permanent option. Maybe it's right . If it's like, okay, you know, eat this frog now because it gets you into the house you're in the house. And then coming, even in a worst case scenario, you've got five years to figure out some alternative game plan. Maybe after the development is totally complete. Like it , at least it doesn't have to be a one-step and that's the only step it could be a two-step tango. Yeah.

Speaker 1 34:36

And that is, I also mentioned that to him. I said, yeah , you might have to close on the developers four and a quarter in a balloon just to see what that is. That means at the end of five years, it's up to the bank. Whether you get a new loan or not, that's what scares the heck out of me is you don't know whether the bank is going to be in the mood to lend you money again, you know, what if your financial situation has changed, our rates remain extraordinarily low , um, 2.875 on a $250,000 , 30 year fixed rate with an APR of 2.9 that's with no points. If you have 25% equity and all the other rights stuff , uh , quoted somebody a 15 year fixed at two and a quarter all day , um, similar , similar loan amount APR, I think that was a no loan cost. So 2.25 would be the APR as well. So money is extraordinary cheap. If you've got an interest rate that starts with the number three, you probably want to be clicking on the blue button this week to see if we can improve that game plan. All right , you've been listening to the academic mortgage and Realty show on Wisconsin's radio station 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 host or guests of academic mortgage and accurate Realty advisors and not WTMJ radio or good karma brands, Milwaukee LLC.