Getting you inside information on buying, selling, and financing your home with expert advice from accurate mortgage and Realty. And now here's Brian Wexford and Jerry[inaudible]. Well, welcome to the academic Oregon gen Realty
Speaker 2:Show BV edition. I'm Brian Wicker, the majority owner of accurate mortgage Anakin and Realty advisors. Along with Jerry circuit. Ditcher long, my long time co-owner of academe mortgage. How many years now? 20, at least 21 of them.
Speaker 3:21. Yeah, 21 plus. So yeah, a long, long time. And it's great to great to be back.
Speaker 2:You know why we know that because your son, uh, Connor was born 21 years ago. He just turned 21,
Speaker 3:Just turned 21. He was still in the womb, uh, when, when we, uh, joined together. And, and so yeah, every year, uh, he turns a birthday. I know it's another year that we'd been together. It's been a great long ride and great to be back with you on the radio.
Speaker 2:So, uh, maybe David old, the reason we call it baby edition, David is at the hospital right now. Uh, birth is imminent for, uh, Becky and my third grandchild coming along here. Maybe we can get them to call them to the shell. You know, that'd be something after only if the birth happens in the 10 o'clock hour. Okay. Moving right along. We ended last week, shill, uh, with a story about a first time home buyer, we're calling them Alex, not his real name. Alex got his first rock, solid guaranteed. Pre-approval in late January. And he's looking in the 1 75 to$200,000 price range in Milwaukee. He had written six unsuccessful offers since January. And we had to update his rock-solid preapproval twice because the credit report freshness expired. And, uh, and he was doing all the right stuff, you know, cause he's a good student and was following that advice. He was typically asking over the ask or writing over the asking price, you know, Hey, I will, I will pay you one 90 for your home. That's listed at 180 and I'll even still buy it at one 90. Even if it appraises out at 180, given that appraisal wiggle room, um, we helped him or suggested, and he was able to get, uh, two,$5,000 gifts for a total of 10 grand that allowed us to bulk up the down payment to make his offer look as good as it could. We were able to write that preapproval letter with 10% down, even though he really qualified at 5% down. So we're doing all the right stuff, but apparently on the first six offers his good offers. Weren't good enough. Somebody else either offered more or maybe didn't have any appraisal contingency who knows. So last Saturday wrote the, uh, number seven offer. And, uh, we found out shortly after the show ended last week, Jerry, that his offer was in fact accepted.
Speaker 3:If at first you don't succeed. Try, try again. It's all too familiar, right?
Speaker 2:Yeah. Patience is a virtue and sticktuitiveness um, and then, uh, we got, uh, the buyer's agent forwarded me this email from the listing agent saying, thank you for the great offer. We did receive another offer last night, but because you had a great preapproval lender, a letter from a respected lender in town, and the fact that your buyer had a$3,500 inspection addition, we'll explain that in a minute, the seller chose your offer over the other one. So you know, all the details matter and, and having that rock solid preapproval from Acushnet that says, Hey, we've not just verified your credit. We've also verified your down payment and your income and you are all good to go. The only mystery that remains is the appraisal and folks. What does a typical bank? A pre-approval verify Jerry
Speaker 3:Credit. That's about it. Yeah. Credit credit report. They will access and ask a potential home buyer about where they work and how much they might earn you. Hopefully they'll ask how they're compensated. Right. Because we all know how important that is in this industry.
Speaker 2:Absolutely. Yeah. Yeah. If you're on commission, that's a different look back or feel a lot of your income. Well, right, right. So, so if you read the bank preapproval folks, it'll say we verified Alex's credit. And based on the information Alex gave us about his income and down payment, he's good to go for a blah, blah, blah. That is why we call that a flimsy bank. Pre-approval now the other interesting thing that happens. So we sent out the information, uh, to Alex with his different choices and, and he had managed by the way to save an extra four grand, uh, from January up until August. So he had now enough money on his own to comfortably make the 5% down payment and also all the closing costs. So my recommendation we're now talking about the gifts from his parents. My recommendation was don't use the gift money, you know, put that aside. Why? Because he wants to make some improvements to the house after closing. So I emailed him and give him that advice and he accepts us. And then we get an email from back saying, Hey, my dad really thinks I should put down the extra 10 grand so that I have a lower payment. He thinks that that's going to be a better, uh, situation for me. And, uh, you know what, I'm going to tell you that after the first break, Howard replied to that and where we went with that excellent question, Hey, you've got this extra 10 grand, should you put it down? Or should you keep it in the bank? You're listening to the academic mortgage and Realty show on Wisconsin's radio station am six 20 WTMJ
Speaker 1:Home buying advice from the guys who know it best. This is the accurate mortgage and Realty show with Brian Wichert on WTMJ all sure we're talking about our first time home buyer who did on the seventh
Speaker 2:Try because he did not quit. Uh, it has an accepted offer on a home in the 1 75 to$200,000 price range, a really nice part of the city of Milwaukee. And, and so two things that helped them get the offer accepted were, uh, in this particular case. And we're going to talk about this a little later, Jerry, he just wrote at the asking price, he did not have to go over asking for this particular house. Interesting. And he still won over a competing offer.
Speaker 3:Any escalator clause?
Speaker 2:Not that I'm aware of. Nope. But what he did did, in addition to having the rock solid preapproval letter that made a positive impression and helped him win that offer. The other thing that, uh, you brought up during the break that we haven't talked about yet is he wrote in a special language, his buyer's agent did that said Alex will pay for the first$3,500 of any repairs, uh, should the home inspection, you know, reveal things that need to be fixed. They're called in, uh, the contract language defects, something that will shorten the life or threatened the health or safety of the occupants. That's the general definition. Well, by the way, they did get the inspection done already this last week midweek. And remember, you only got the offer accepted Sunday. So here's a lesson and a takeaway, get the inspection done quickly. Like they did like Alex did because guess what? They found stuff. And so now they have to have contractors come in and say, well, how much is it going to be to fix the blah-blah-blah? What is it going to cost to do the XYZ work? And you don't get any extra time,
Speaker 3:Right? No. And, and they need time then to chase down contractors and schedule that work to be done prior to closing.
Speaker 2:Well, that's true too. Yeah. So not only, so the first pressure crucible is that, Hey, I have to get those, um, bids in and I have to know what I'm talking about, because let's say it's$5,000 worth of work. Then there's going to be an amendment proposed that says, Hey, I'll pay for these things that add up to$3,500. And now I'm asking you Mr. Seller to pay for this 1500 bucks, or I'm just making that up. I don't know what the circumstances are going to be. So they have until, uh, this coming Friday is the 12th day. So the typical inspection contingency is 15 days. They wrote this a little quicker at 12 days that that puts the onus on the buyer's agent and the buyer to do this homework. Now that made me think of this. And I'm sure you've thought of this as well over the years, why wouldn't a seller get a, an inspection before they list their home so that they know what the buyer's going to find, you know? Right.
Speaker 3:It makes perfect sense. We, we do know some that have taken that step and it, it, the transaction goes so much smoother when you can, you know, provide the, the prospective buyer of full home inspection at the point they're writing the offer or the, you accept their offer. Yeah.
Speaker 2:Well, and then you fix the stuff ahead of time. I have Becky and I have done this on both of their most recent home transactions, home sale transactions. And I found stuff, you know, it's like, oh my God, you know what? There is a little mold in the attic. I need to take care of that.
Speaker 3:Well, that's right. Not only are you able to present them with the inspection report, but also the, the, um, the paid receipts to evidence, the fact that you've remedied.
Speaker 2:Yeah. Yeah. Like not to worry, I've taken care of this stuff, but I think in this particularly a habanero hot market, um, I think that some offer, or I know some offers are being written without home inspections. So I would get that maybe in this market, you'd say, yeah, don't ask, don't tell, I don't want to know because there's a good chance my buyer's going to buy without an inspection, you know, in these[inaudible] situations
Speaker 3:Yeah. Where they're removing most all contingencies. And I just was going to add about Alex here, that to right in the$3,500 language saying that I'll cover the first$3,500 for, especially for a buyer like him, uh, is, is way better than waving the home inspection. Okay.
Speaker 2:And especially, you're talking about housing stack in this part of Milwaukee, or, you know, a lot of Wallatosa is example or the houses are 75 to a hundred years old now. Okay. Yeah. Maybe they've changed hands in the last, you know, 20 years or 10 even. And you'd hope that maybe during the course of that transaction transaction, they found stuff and fix it. But these are not spring chickens, you know, homes. These are in a lot of cases, beautifully maintain homes.
Speaker 3:Go ahead. And while sellers are reluctant to accept offers with that home inspection contingency, because they know they can, you know, we hear the term nickel and dime, no they're going to want me to fix everything, but you take away some of that reluctance by saying, you know what, Hey, I'll cover the first two or three or$4,000 of repairs.
Speaker 2:Right. Appropriately. So, all right. So here we got, so we had a good instructive conversation on that, right? Make sure you get your inspection done right away. So you have time to follow up. And, uh, we may be seeing a little tilting in the world in terms of, um, our, our people as crazy with waiving home inspections. Now let's get to that topic and we'll put on ice. The topic of should Alex put his extra 10 grand a gift towards the down payment or a monthly payment. We'll cover both that and take a quick look at how hot was the market in July. When we come back, you're listening to the acronym, mortgage and Realty show on Wisconsin's radio station am six 20. WTMJ
Speaker 1:Getting you into the home of your dreams. Here's more of the accurate mortgage and real to show with Brian record on WTMJ.
Speaker 2:And let's not forget Jerry circumstance, sheriff senior vice president, one of the managing owners of academic mortgage. All right. So in the month of July, I got up early today, Jerry and I was cranking the numbers. These, you just don't pluck these numbers out of the air
Speaker 4:And got to grind these beans normally up early, preparing
Speaker 3:It. Wasn't just because you knew David and, uh, and Christie were yeah,
Speaker 2:Yeah, yeah. It wasn't because of the sleepless night waiting for a baby Wicker to arrive. But anyway, uh, there were 1,790 single family, detached homes, meaning not condos that changed hands in the four county Metro area in July. I did four counties cause I can only export 2000 records from the MLS at a time. So I excluded Racine in this analysis. Um, and think about this, Jerry, if you closed in July, when did you go on the market and get your contract accepted?
Speaker 3:Well, probably a June no earlier than June and likely may.
Speaker 2:Yeah. So these, so the, the numbers that we're going to talk about here are on July sales, which means they reflect the conditions between buyers and sellers back in June, let's say June, maybe may. All right. So overall, and maybe you peaked what percentage of the closings in July closed at greater than the original asking price? The multiple choices are 48%, 58% or 68%. What's your answer jury, were you right in the middle 58, 58? The answer is 68% of single family. So two out of three went for over asking in the Metro area, 9% sold, right at the asking price. And believe it or not folks, don't forget this 23% did sell for less than the original asking price. Now sometimes that's only by$500 or a thousand, but you know, based on some inspection item, uh, that the evidence that we may still be closer to the habanero market. Okay. By then. And now wait, I dug in a little deeper, if you go to the, the hottest of the hot markets. So remember it's two thirds sold over asking, but if you drill down easy, what about the 300 to$400,000 price range? 74% went over asking so three out of four and that's at an average 4% above the asking price. So that would be 12,000 to 16,000 over asking 200 to$300,000 price range, 73% sold for more than asking Eddie even bigger premium 9%. So 9% of 200 is 18009% of 300 is 27 grand. So I'm going to, I'm going to pronounce the 200 to 300 price range, the hottest of the hot, uh, because of that big size of the average premium, even in the four to 500,000 price range, seven out of 10 sold for than asking at a 7% average premium. And even at 500 to 670% went for more than asking at an average premium of eight, 18% over asking. So that is Hoben Euro. Can you eat a habanero? Uh, can you, you got the hot palette. You can do that. Well,
Speaker 3:I do like hot and spicy food, but boy eat, even that is the eyes start watering. The nose starts running.
Speaker 2:Okay. So I, I, one of the solicited comments from two tap agents this week, uh, one of them did use the hot pepper analogy. That's where I got that from. And she said that the market had been hopping Euro hot, but now seems to be moving towards more towards jalapeno. Um, the other agent said he feels it's less heated, kind of sending some mixed signals. The really nice houses are still getting multiple offers a way over asking, but he said it's no longer any house in any condition at any price that it's not that way right now in August, because remember, we're talking about July sales figures, reflecting June, uh, balance of power between buyers and sellers. Now, here we are in August. So it's cooling off a little bit. It seems. And both of them noted that there have been some price reductions. So I think what happened there, sellers got a little over optimistic, like, well, I can get a bazillion dollars, you know, and they're actually having to make some price reductions because they're not getting the offers. And we haven't seen that for all of 2021. Um, all right. So that's the state of affairs. All I did also check, there are some, a good amount of listings coming on. So I think the, the news and I just re um, recorded a new 62nd radio commercial. I think the tide is starting to turn, oh, another thing that they said is some buyers have left the market. They've they've kind of had, what do you call that fatigue, right? Yeah. They they've they've, they've just quit. And so I think that's opening the door for buyers to get back in the game and we'd sure love to help them with a rock solid pre-approval all right. Uh, when we come back, we'll give you a little update on where mortgage straits are right now. It's time to turn it back over to Tony bannock in the 24 hour newsroom,
Speaker 1:Important home buying questions and answers you can count on this is the accurate mortgage and Realty show with Brian wicked on WTMJ.
Speaker 2:All right. So at the, on Friday, uh, we got the monthly jobs report, which showed that the economy created like 935,000. Is that the number
Speaker 3:9 43, 940 3000
Speaker 2:New jobs? That's the best since the pandemic, right?
Speaker 3:It is. And the, the, the forecast, which is always important, what the consensus estimate is that was calling for 850,000, which even still is a big number,
Speaker 2:The big number. Yeah. Right. Okay. And so, so the reason why the mortgage industry cares about this is as follows. Uh, first we have to remember, uh, why are mortgage rates so low? And the answer to that is the federal reserve, uh, Jerome Powell and, and the open market committee. They are buying, uh,$40 billion of mortgages every month. And they're saying we have got an appetite for really low rate mortgages, give me a heap and helping of that two and a half or 2.7, five or 3% 30 year fixed. And you know what, and for dessert, I'd like some 15 year fixed that, or, you know, like two and a quarter, I got an unlimited appetite. I appetite are virtually unlimited. And so they have now announced that their latest meeting that as the economy gets better, maybe a jobs report with 930 943,000 new jobs is a bit of evidence in favor of that argument. Gee, the economy is getting better. Unemployment also went down, they're going to taper. They're going to reduce the billions of mortgages that are buying. And then the question is, well, who's going to sit down at the table in back of them and might they not want such low rates to go into their portfolio? And that's why there's general upward pressure. That positive economic news probably means the fed is going to start to taper their mortgage buying sooner probably yet this year. So if you've been well. Yeah. Cause it is not,
Speaker 3:It's not a matter of if it's when it's just, how soon is that going to happen because it will happen. That's right.
Speaker 2:All right. So Jerry, where did we end ended the week at low overhead academic mortgage.
Speaker 3:Well, as you were saying, this, uh, this appetite is strong. And so we have fixed rates ranging from 30 to 15, that still all start with a two. So no points were all, you know, all the right stuff. This is for a$200,000 loan amount, uh, with all the right stuff, owner occupied, no second mortgage or home equity line. Okay. Good credit. And
Speaker 2:So forth percent equity, 25% equity. Yeah.
Speaker 3:Correct. 25% equity, a single family home. And so the 30 year fixed was still all the way down at 2.8750 points. Again, that comes with a total total loan costs, a little over$1,200. Uh, that includes it's all inclusive appraisal title, closing fee, um, that, that, uh, APR 2.8, nine, six,
Speaker 2:The closing costs are so low. Yeah,
Speaker 3:Indeed. Yeah. The gap, just as a quick reminder, the gap between the note rate, which in this 30 year fixed is 2.875. And that APR the smaller that gap, the less costs that are, are being factored into to this loan. Uh, so that's a good, good lesson for those that follow the APR. If you want to see that right on top of the note rate, uh, the two points a 20 year fixed 2.75 again, zero points that APR 2.779. And then finally, the 15 year, you just mentioned 2.25 indeed. That's where we ended the week, uh, at ACC unit 2.2, 5%, zero points with an APR 2.284. So incredible,
Speaker 2:Mighty fine. But if you've been sitting there scratching your head thing and T you know, our rates low enough for goodness sakes, just click on the blue button. We can give you a customized rate quote. You can get your own rate quote, uh, pretty darn fine, accurate rate, quote yourself, uh, just go under the check rates tab on our website, and you can do that. Um, you know what? I had two, uh, clients interested, one just email came in over the weekend that I saw where they want to possibly switch from a 20 year to a 15 year. And I can give you an example of that, but I also wanted to double back and say, so back to Alex, our first-time home buyer whose dad said, you know, why don't you put that 10 grand down? Uh, and I wrote an email to both of them and said, well, if you put the extra$10,000 down, in addition to the minimum 5% down, that's going to change Alex's payment$44 a month. And I said, he could put the$10,000 in his sock drawer, not on any interest on it. And he could take out$44 for 225 months, which is just shy of 19 years know, plus if he needs money to do remodeling, why not use that super cheap money? It's literally$4 and 43 cents per thousand. And so they wrote back and went, oh, thank you. That is an excellent idea steady as she goes. So that's, you know, that's what we are. We, you know, it's math, right. But we have the tools to say, yeah, you can put that 10 grand down if you want to, but it's not that big a deal. So
Speaker 3:The numbers, the numbers tell the story, as you said, you know, we, we lay out the options and we're careful to make sure that we are providing all of that information so that a buyer like Alex in this case comes to a decision that he's going to be comfortable with and confident with, you know, both him and his dad,
Speaker 2:Plus it's less hassle. Now we don't have to document the gifts. So what, when we come back, you know, we're talking about, you know, how hot the real estate market is. Um, there was a, a change in how the federal government and the, and the national association of realtors are looking at real estate commissions. And I thought, well, we were just talking during the break. Let's just review for people how the real estate commissions do get paid now. And what the potential issue is that the department of justice, uh, has on their mind, you're listening to the acronym, mortgage and Realty show on am six, 20 WTMJ
Speaker 1:Expert advice on buying a home. Here's more of the accurate mortgage. And we'll do show with Brian Wicker on WTMJ.
Speaker 2:All right. Let's just remind people about how real estate commissions work, uh, currently. And, uh, in the current setup, let's say you've got a median priced home, which I just pulled it up for. July was actually$250,000 in the five county Milwaukee Metro area. So if you've got a$250,000 home, the seller is going to sign a contract with the listing broker, and there is a lot more variety in, um, real estate commissions. Now, I think, than there ever has been in the past, you know, uh, for a long time, it seemed like most brokers, a little, there can be no collusion on this. There's supposed to be a free market. Um, it seemed like 6% was a very common, uh, admonition, but now they've hear advertisements on this radio station for, uh, realtors that are full service and offering three and a half to 3.99. There have been flat fee brokers out there for a long time, but let's just use the number 5%. So 5% of 250 grand is$12,500. And so if you, as a buyer or do business and use, just go to the open house and you work with the listing agent, that brokerage is going to make the full 12 five. Um, and then in the Milwaukee Metro area. And this is kind of always interesting to me as well. This is a little bit more of a tradition. Um, if, if you work with a buyer's agent, somebody who's going to have your best interest in mind and get you the best terms, because remember one of the duties of the listing agent, Jerry being a former broker yourself,
Speaker 3:What to well for the, the listing agent has to work to get the highest and best price for the seller. They have to be fair to all parties, but make no mistake. The seller, the owner of the property is their client that's
Speaker 2:Right. And so in the Southeastern Wisconsin, the listing agent, if there are more than one agent involved, they share their commission and they keep 60%, which in my example would be$7,500 on a two 50 home. And then the, uh, buyer's agent would get$5,000 for bringing the buyer. And that goes to the brokerage that doesn't all go to the individual agent, but it goes to the brokerage company. And then they have an agreement as to how much the individual agent receives of their total commission. So, um, in this respect, you're not saving any money as a buyer by working with the listing agent. And I think a lot of first-time buyers don't understand that, that, Hey, that that commission rate is going to be paid by the seller, regardless of how many agents are involved. So our analogy has always been, Hey, do you think Aaron Rogers was using, uh, the Packer's agent when he just renegotiated his deal with no, he had his own age, not like right. Not likely. Um, so, so that's thing, number one, just to remember that that's how the economics work and now most, if you asked a hundred people who pays the real estate commission, everybody would say the seller, right? Cause that's how it looks on the closing statement. It gets subtracted from their gross purchase price and the sellers comp, but it's baked into the purchase price, right? Every seller always says, well, okay, Hey, I'm going to sell for two 50, but now, you know, I'm going to pay this$12,500 commission. I'm going to get to 37 5 after the commission. Everybody's doing that math,
Speaker 3:Right? When, when they're calculating what their proceeds are going to be, that is, that is a, an important number as they're working with a real estate agent, trying to come up with a list price, because that's going to be a deduction right off the top.
Speaker 2:So the department of justice hasn't liked that arrangement, where the commissions get split by real estate agents. And so they worked out a deal with the national association of realtors last fall to try to make that more transparent or obvious to the, I think the buyers, because I don't think the buyers have any idea, uh, you know, who's making what, until they, I asked,
Speaker 3:We get asked a lot, Brian, you know, from buyers specifically first time home buyers, you know, w w who think that if they work with a real estate agent or a buyer's agent, that they're going to have to pay that commission out of their pocket. And that's a misconception, because as you just mentioned, the seller's paying that listing or that commission to list their home, which is then going to be split between the listing agent listing agent and the buyer's agent. And, and so we get that a lot. So there is misconception that I think is what, what the lawsuit, if it was, I think you said it was
Speaker 2:A lawsuit, what they're trying to get at more transparency and well, so my, our hunch, Jerry and I were talking about this during one of the breaks is maybe it's going to evolve to where the buyer's agent is going to have to disclose upfront to the buyer, what their commission is going to be. And then maybe the buyers are going to have to write into their offers because nobody's going to want to just stroke a check, especially a first time home buyer, uh, you know, for, in my example, the$5,000, it's like, yeah, I don't want to pay that. I don't have the money. And so, yeah, yeah, right. Yeah. He doesn't have an extra five grand or four grand to throw around. So, so I think maybe what it's going to evolve to is, Hey, the buyer writes the offer and he says, oh, by the way, Mr. Seller, I, I need you to pay my buyer's agent commission. So it's probably just going to put more into the open exactly what that buyer's agent commission is, uh, more upfront in the transaction, just like we have to disclose any and all fees that we're making, uh, as lenders. All right. So, uh, why don't we come back? You and I both have you were talking at the last break examples. I have somebody who emailed in, Hey, I got a 20 year now at 2.6, two five, I think about switching to a 15 year. And you said you had somebody who's in a 20 year and is looking at switching to a 30. Let's talk about that. When we come back listening to the academic mortgage and Realty show on am six 20 WT, M J
Speaker 1:W WTMJ W2, 77, CV and WK T I HD to Milwaukee from the annex wealth management studio. This is Newsradio. WTMJ helping you find a place to call home. This is the accurate mortgage and Realty show with Brian Wickers on WTMJ. All right. So we got it email in
Speaker 2:Over the weekend here from a potential client who just got a 20 year fixed rate last November at a rate of 2.6, two, 5%. I shared, Hey, I got through$355,000 long amount of my, uh, houses worth at least 700,000. You know, what do you got for a 15 year? So the answer is, Hey, 2.1, two five on that bigger loan amount, you had mentioned two and a quarter for a$200,000 loan amount. And so what we do at Acushnet mortgage is if, if that a larger loan amount, we can often give a better deal because they're just more dollars at work there. And, uh, so his payment, if he switched, if he dropped his rate a half a percent, it would go up$365 a month. So that's his commitment. And so when I'm running, I'm looking at these numbers right now. I think the way I always look at this, Jerry, and tell me if you agree, we have to compare what if he made that same higher payment on his exist on his existing mortgage, right? Cause if you're willing to step up and do it right. And so then let's look at the interest savings. And the calculation for this person is that he would save a little over$16,000 of interest net of the upfront costs, which you mentioned cost of 1000,$234. We're getting a lot of appraisal waivers, a lot of appraisals. Well, that's
Speaker 3:True that, that is worst case 1000 to 300.
Speaker 2:So if we don't need an appraisal that knocks the cost of a refi down to 7 59,
Speaker 3:Yeah. 7 59. And we know that number, uh, very well because it happens lot.
Speaker 2:It happens a lot. And you know, and that's just another reason why people have that refi phobia, right? Or they're afraid all the closing costs. And if you do go to certain lenders folks, you will pay thousands of dollars in closing costs, but we keep those to an absolute minimum. The other option, if you wanted to pay three quarters of a point upfront, he could get the trophy rate of 1.99, and then he would save$17,600 net of all the upfront costs, including those three quarters of a point. So we'll see if he likes that or not. Um, the other thing would be a no-cost option where he, uh, go a two and a quarter and then he'd save 13,800. So, and what's the story on your person who wanted to go from 20 to 30?
Speaker 3:Well, this is an active application to refinance and originally applied for a 20 year fixed, locked in net rate. Although when we help somebody lock in loan terms, we are locking in a snapshot in time of all of that day's options. So we can still make available the 15 or the 30 based on and, or a customized loan term. Uh, Brian, we should say that again, we can customize for those that have 24 years remaining, we can help you with a 24 year loan term as well. Um, but, but ultimately this, this, uh, gentlemen started on a 20 thought that that's really what he wanted. Uh, he has now, uh, contacted me and said, you know what, I'm really considering the 30 year term, we talked about that originally, we usually talk about 15, 20, 30, try to help people understand their options. And he is coming around to the 30 year because of the fact that as we were just talking, he likes the flexibility of the lower required payment that comes with the 30 year term. And looking at just using the$200,000 example, the difference in payment between a 30 and a 20 year term is$254,$254.
Speaker 2:So a 200,000. Yeah.
Speaker 3:Yeah, that's right. And so, and, and here's the other thing. The interest rate differential is only 0.1, two, five, an eighth of a point. So if looking at this parallel, these parallel paths, it's a 30 year at 2.875 versus a 20 year at 2.75. The difference in, if, if let's just say he wanted that flexibility to more, his required payments to 2 54, but he thought, you know what, I'm going to still make that. I just want to know that I have the opportunity to draw back. Yeah, exactly. So to give himself the flexibility of the, uh, lower, the lower required payment of$254 over the term of that loan, if he made the 20 year payment on the 30 year, even that, that eighth of a point difference in rate, you know what that would, yeah. You know what, that would cost him over the loan term,$3,632. So he would, he would, it would take him an extra. Exactly. It'd be about an extra three payments he'd have to make beyond the 20 years before he'd pay the loan off. But for the flexibility of being able to drop that payment. Yeah.
Speaker 2:That's an option. All right. Well, we are here, uh, to help you decide what to do while the getting is still good because rates are low right now, but the pressures are mounting, uh, for that low rate party to go away. Also encouraging people to get back into the housing market. If you've taken a break out of frustration, listings are up and the, the fevered pitch seems to be coming down a little bit. That's all we have time for on this week's show. We'll see you back here at the same time. Next week, you've been listening to the acronym, mortgage and 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.