Welcome to the Acushnet mortgage and Realty show giving you inside information on buying, selling, and financing your home with expert advice from Acushnet, mortgage and Realty, and now here's client Weicker. And Tim Holdman welcome to the accurate
Speaker 2:Mortgage and Realty show on Brian Wicker, the majority owner of academic mortgage and deck unit Realty advisors, along with my son in law this week, licensed loan consultant, Tim Holdman Tim. Welcome back
Speaker 3:To the show. Thanks for having me, Ryan. Good to be here. You
Speaker 2:Can always grab a podcast, a recording of today's show, uh, or any past shows for that matter, wherever you get your podcasts while Tim is filling in this week for David because David and his wife, Kristy became parents. So we could go today with the arrival of a healthy baby boy. So David has taken some time off to acclimate to his new sleep deprive role as father. Uh, thank you for coming on the show again, Tim, and how you know, you've got a five-year-old and a two-year-old is a sleeping thing. Get a lot better, right?
Speaker 3:Oh, way better. Yeah, I can, uh, I can look at what David's going through with a little bit of, uh, you know, empathy and happiness that I'm coming out the other side shortly, so that's right. You can rub it in for him.
Speaker 2:We've been following on the show. Um, the story of an Intrepid first-time home buyers. We've been calling him Alex, not as real name and if you're just tuning in or hadn't heard the other segments, uh, Alex started his home search in late January and made six offers on successfully. Got his seventh offer accepted about two weeks ago, number seven. Yep. It was on a Sunday, two weeks ago today. And so, um, the, one of the reasons that he got his accepted offer was because he included at the advice of his excellent buyer's agent, a clause that said, Hey, I'll pay for the first$3,000 of any repairs. Oh, nice. Yep. That in combination with his rock solid guaranteed pre-approval, which was commented upon by the listing agent. Oh nice. Who wrote a nice email to the buyer's agent and said, Hey, thanks for the great offer. We took yours over another competing offer because of those two things. I just mentioned, the$3,000 I'll pay for the, any problems. And then also the, uh, strong pre-approval from a local reputable lender. That would be us. So that's how we helped Alex become, you know, a winner on his seventh try. Well wouldn't, you know, uh, the inspection happened the week after the offer and there were some major problems. I'm not going to say what the problems were, but they had to bring in some contractors to get bids. Gotcha. And, uh, the cost of doing the fixes is about$10,000.
Speaker 3:So over the$3,000 that they talk about in the office
Speaker 2:And then it came down to, okay. Um, well, you know, do you want to fix them before closing? Nope. And so then the alternative is the seller says, well, you know, we'll give you 7,000, so 10 grand of the fixes, minus three, you said you'd pay, right. We'd want to give$7,000. Well, this is a low down payment loan. It started out as 5% down. Okay. And so when, uh, when a seller wants to do things like, well, we'll just reduce the price by seven grand. Yeah. What's
Speaker 3:The, well, the problem is our buyers and not to just going to get seven grand in their pocket, just because the purchase price is reduced by seven grand because they're financing 95 purchase
Speaker 2:Price. That's right. So it would only cause them a$7,000 reduction in purchase prices like a$350 it's it seems. Yeah. Plus
Speaker 3:Their monthly payment will be like 20 bucks cheaper a month or something ridiculous like that. Not enough to make a dime. So,
Speaker 2:So the object of the game in this type of a situation is how do we take the$7,000 that the seller is willing to give and turn that into as much money, right. For the holes bang for the buck. Yeah, exactly. So that he has more money left over to make whatever those repairs are that we don't really want to know the details of, because if they were to tell us what those repairs were, we would probably make them do it before our closing profits. The other thing though, definitely. Yeah. That's the other thing we always remind, uh, practitioners or real estate agents is you never put in the amendment, Hey, a buyer is going to get a$7,000 credit from the seller because of
Speaker 3:Grand canyon in the basement. That's opening up the sinkhole or, you know, whatever.
Speaker 2:Yeah. You'd never say the why and this buyer's agents. Very good. So we just got the amendment on Friday. Perfect. And it's perfectly clean. Excellent. Um, but the question, the, the challenge here was our closing costs are so low. Right. In fact, we were paying for all the borrower's loan costs. So the only thing he was coming out of pocket for was the deposits into his tax escrow account going forward and the down payment, obviously. Yeah. I, yeah. And then also the, um, first year of homeowner's insurance. Sure. Yeah. So we didn't have$7,000 for a frost to eat up with a credit. This took me probably a 90 minutes to figure this out on Monday. Yeah. When I, when, when the facts came together, cause it's like, okay, I gotta get him some things, but you don't want to just invent closing costs because that doesn't put money in the home buyer's pocket. No. Right. Well, great. I got rid of the$7,000 credit. Right. But I put it all went into my pocket, you know, or actually let's say this, the only effect it would have would be lowering the home buyers, monthly payment.
Speaker 3:Exactly. Cause the way I can at normally in these cases can pay for the loan cost is to pick a slightly higher rate, not egregiously higher, but slightly higher so we can provide a lender credit. So what Brian is describing is if there's a seller credit, then we just give the borrower a lower rate. There are then loan costs, but the seller credit can pay for it. But that just translates to, again, a slightly lower monthly payment, which really isn't doing
Speaker 2:That much. It doesn't meet the criteria of, Hey, we got to leave this home buyer with more money when it's all said and done. All right. So don't say what your answer is, but do you have an idea for how we could solve this puzzle?
Speaker 3:You know, I would probably need close to the 90 minutes that you[inaudible],
Speaker 2:Uh, for this first break, we'll tell you how we succeeded in lowering the home buyers cash needed to close by about$5,500. We didn't get all the way there to 7,500. We'll tell you how we did it. When we come back, you're listening to the academic mortgage and Realty show on Wisconsin's radio station, a M six 20 WTMJ
Speaker 1:Home buying advice from the guys who know it best. This is the accurate Annette mortgage and Realty show with Brian Wichert on WTMJ. All right.
Speaker 2:We're back again. We're talking about the continuing story and saga of our first time home buyer, Alex, who got through his inspection and found out there was kind of a major thing that needed to be done or things costing about$10,000. But because he had agreed to pay for the first$3,000 of any repairs, the seller was now ready to give him$7,000 in the question is how can we put that to use in the smartest way? Uh, so that it results in the most cash leftover in Alex's pocket for him to do these home improvements. I'm calling them in air quotes after closing. And you remember we had this issue when we sold your home a couple of years ago. Yes. The problem for the seller is that once you know about the problem that comes up on the inspection, you have to reveal it to future buyers. Correct. Okay. And so it's like, as a seller, you're like, eh, I got to gotta, I got to deal
Speaker 3:With this. Yeah. If you're not going to deal with this buyer, you're going to deal with it with subsequent buyers and you
Speaker 2:Have an obligation to reveal that to future buyers. And if you don't as the buyer, your listing agent by state law, right. And the realtors code of ethics must, uh, make any future buyer aware of this negative thing having to do with the home. So that's why, you know, the seller is willing to play ball. All right. So the conundrum was because accidents, closing costs are so low. There's not$7,000 worth of dunks to pay for it. And so I was racking my brain on how to do this. And I finally had this aha moment because Alex is a first time home buyer. What is true
Speaker 3:For a first time home buyer? You only have to put down 3% of the agreed upon purchase price or appraised value. Whichever happens to be lower
Speaker 2:That's right. So, uh, 2% is like, Hm, four grand in this case, three$3,700. Sure. But then it did some other finagling and uh, found some other closing costs like, um, the home inspection, right. That the, um, uh, for which the seller could pay. And so I'm getting to the point where I'm thinking for a half a second, oh man, you know what I think you could get to$6,000, pretty close closing costs, but there's another rule in mortgage lending. Uh, the seller is only allowed to pay for 3% of the sales price. Right? And so what this ended up having to happen was it was a$5,500, um, credit towards closing costs. And the way I use those up by when we switched to a smaller down payment, I also went to using what's called a single premium mortgage insurance policy, where if you pay that in what I'm doing is I'm having to seller pay that right. Then there's no monthly PMI right. For the whole entire life of the loan. So there's a payment benefit too. Yeah.
Speaker 3:Cause normally for almost everybody, when they think of PMI, they think of it being part of their total monthly payment, this little chunk where you pay for a month at a time. What Brian is suggesting though, is that since we have the seller credit that we can use up, we can just pay for all the mortgage insurance premium, upfront as a one-time payment at closing, because then that seller credit can pay for that. And then the buyer doesn't pay for it on a monthly basis anymore.
Speaker 2:So there was kind of a sidecar benefit to that. And then, um, you know, the, the real magic though, was lowering the down payment, remembering that, oh, I can go with a 3% down payment in this deal. And so it all worked out the$5,500 is how much we're going to put in his pocket. And then they reduce the purchase price by 1500, 1500 just because we couldn't use up that money any other way. The takeaway from that story is that real estate can get complicated. Absolutely. And, and so it's having people on your team and, and that's what we have here at Econet mortgage is we have a team. In fact, I just got a call, uh, on Friday from one of our senior loan consultants with kind of a head-scratcher. Um, and this is about solving problems and coming up with a way to still get it done. So yeah,
Speaker 3:After the initial shopping of, you know, who can get you the best rate and lowest loan cost, because we're really good at that too. But what I think a lot of, uh, maybe potential home buyers out there where they miss the mark is it's really great to have someone on your team who is an expert at their craft and knows what they're doing. Cause this whole issue came up after they got an accepted offer, right. And after they were, you know, maybe halfway into the process of finding the home. So there's definitely significant value of having an expert on your team independent of obviously getting a good deal on the mortgage, which I think is what most people focus.
Speaker 2:Well, most people focus on the rate. What's your rate? What's your, what's your weight? Or don't forget about the closing costs. And then let's also remember you're in a contract, you have to hit deadlines that are before the closing. And then when stuff comes up, the cool thing about acting that we're not that big of a company, uh, the old guys like me are available to help problem solve, you know, all the time you're dealing with a loan, can somebody on our team, that's got two years of experience or 10, well,
Speaker 3:I'm old. The collective experience of acronym is shared across all loan consultants. So if we got a, a, maybe a younger loan consultant, they have access to you who has, I'm not going to say how many years of industry experience. Yeah. But yeah. So the collective experience of net is extremely valuable. Yep. All
Speaker 2:Right. So when we come back, let's pick a story out of Tim's last week of long consulting and, uh, share that experience with a lot of listeners. You're listening to the academic mortgage and Realty show on am six 20. WTMJ
Speaker 1:Getting you into the home of your dreams. Here's more of the accurate ed mortgage and Realty show with Brian records on WTMJ
Speaker 2:Welcome back. And joining me on today's show is my son in law, Tim Holden substituting for son David Wickford, who is acclimating to his new job of being a dad. And, uh, so we're talking, Hey, what happened this week in mortgage banking on the front lines of home buying and so on and on Tim, you're managing your group of loan consultants. You've got a story to share with us.
Speaker 3:Yeah. So one of my, uh, team of, of loan consultants, uh, brought an interesting case to me that I thought would be perfect to bring up on the radio show. So, uh, got a, uh, we'll call them a middle-aged couple who currently own a home and are looking to get pre-approved to maybe upgrade to a slightly bigger, slightly different home, you know, different location at different reasons for moving. So, uh, applied to get pre-approved, uh, with one of our loan consultants at Econet mortgage, they clicked on the blue button and they had an interesting case where, uh, we, we, I explained it, we talked about the three legs of the stool for getting pre-approved right. So I'm sure we've talked about this on the show before, but the three legs are first leg is credit score. Second leg is, uh, affordability. We'll call it the, you know, how much income you have compared to how much debts you carry. And then the third leg is money available for the down payment, right? So
Speaker 2:How are they looking on the three legs? Well, two
Speaker 3:Of them, we are looking good and it's interesting cause the, the one leg that isn't as strong was their credit score leg. Uh, their, their qualifying score was in the six forties, which is the second lowest possible range. You can have to qualify for a conventional mortgage. Uh, their other two legs were, uh, quite good. Their affordability, their, their income in relation to their debts was, was good. They had minimal debt on the shown on their credit report and they actually didn't even have a mortgage on their current home. They paid that off a couple of years ago. They've been in their current home quite a long time. Okay. Uh, and they had, uh, they said anyways, that they have money saved up in their savings account, uh, equivalent of 20% down in the price range that they're shopping.
Speaker 2:And why is that important that they're going to have at least 20%
Speaker 3:Down because of the six 40 qualifying credit score, if they were putting less than 20% down there, the cost of mortgage insurance would be extremely. Yeah.
Speaker 2:Especially if you're talking 5% or even 10% down that in combination with a lower credit score equals very high, uh, mortgage insurance. So I have another question. Do you know what was driving their score to be in the six 40? I do.
Speaker 3:I looked at the credit report and it was a couple, uh, very old collections that were actually paid off and closed. But with collections, they were still reporting every month on the credit report, even though they were paid off and closed at a zero balance. Wow.
Speaker 2:So that's, that's interesting that it's having such a long effect and I always tell people, and maybe it will tell this story later in the show, you know, even a$5 medical collection, right? Yeah. You missed it. They never sent you the bill or the dog ate it, or your kid threw it out. That$5 medical collection can take or like a hundred points. All right. So what approach should we take with these folks, given that they've got kind of an interesting mix of, of factors, right? We're going to be able to help them, but their credit score is this week.
Speaker 3:Absolutely. So the first thing I looked at with the loan consultant, that's gonna be helping them is we did a run, a simulation of what would happen if they got those collections deleted because they're in the situation where they don't absolutely have to go out and buy a house tomorrow. Okay. So they've got time. Yeah. So they've got time. So we are going to maybe make some suggestions. We're not licensed credit repair specialists or anything like that, but we do wear that hat from time to time. But if they do want to go out and buy a house with their current credit profile, the interesting thing that we have to offer is the rock solid preapproval. And this is key because in the terms of layering of risk, that low credit score really is a detractor. And, you know, can really sometimes even negate or cancel out those other positive attributes. They have like the down payment and the affordability. So the key detail that we're going to explain to them is we want to make sure their income and their money in their bank is exactly accurate to what they put on rock session, rocks out accurate, which we can only get with pay stubs of YouTube is a couple of things, you know,
Speaker 2:Uh, bank statements to say, because the thing I'm always afraid of is, oh, two months ago you deposited, you know, 20 grand and you forgot, or you forgot to tell us about it. Right. And then it turns out, well, yeah, that was my brother-in-law Louie. He's paying me back for a loan that I made him two years ago. Great
Speaker 3:Weekend at Pottawatomie at the blackjack table, you know, that
Speaker 2:You might be able to document it, but the payback of the loan from your brother, Louie from five years ago, did you have a written agreement? No. Did you keep a copy of, you know, when you gave him the money five years? No. It goes down a rabbit hole pretty quick. Correct? Yeah. And so when we're, so it turns out in this case, the rock solid preapproval is beneficial for not only the home buyer to know that they're solid. And of course we talked about how important it is to the home seller and the listing agent. It's also absolutely,
Speaker 3:In this case, I want us to get them rock solid because that's the only way I'm going to personally feel comfortable about putting an accurate pre-approval out into the world. Right?
Speaker 2:So these people could have gone online, gotten a pre-approval on their own, or if they went to a bank who only checks their credit, which is 90% of the banks out there, we call it the flimsy bank. Pre-approval all they're checking is the credit. They're not verifying the income in the down payment. They could be out there shopping for home, get an accepted offer. And then two weeks into the process, figure out it ain't really going to happen. Yeah. So, um, that's a great example of how, wow, it's rock solid for everybody. We don't want to be sticking our neck out there with a bank style pre-approval which we will issue. Yeah. Just basically credit and then have it blow up that's egg on everybody's face. Exactly. Right. Uh, when we come back, I've got another story, um, of somebody looking to buy a more expensive home, uh, near$700,000 and kind of did it, I'm going to call it prematurely. We'll tell you how we're thinking. We're going to pull that rabbit out of the hat right after the news. Now it's time to turn it over to the 24 hour newsroom.
Speaker 1:Don't break the bank to get into a house back to the accurate mortgage and Realty show with Brian Wickers on delegate TMJ. All right,
Speaker 2:Welcome back. And I want to share a story that came up on Friday and I'm going to blame the mortgage guys of the racket for, you know, making people think they can put the cart before the horse. And what I mean by that is one of the senior loan consultants. Uh, Michelle's working with a client who had contacted us to get rolling on a rock-solid pre-approval. And then before we had all of our ducks lined up, went out and got an accepted offer. Yeah. And so what they wanted to do is buy about a$700,000 home, uh, with 10% down, which we can do. Yeah. And so they get this accepted offer. Now we're starting to gather up the details and it turns out that, uh, one of our coal borrowers, uh, has assets in a foreign country. Oh. And when you, um, get a mortgage loan, that's above the Fannie Mae limit. So 545,004, I'm sorry, 548. How can I say that?$548,250. That's called a jumbled loan and then other rules apply. Right? So it's extremely common, uh, for banks or other investors who buy jumper loans to say, you know, in addition to the money that you need for down payment and your closing costs, we want to have, you also have some reserves. So that's, you're not like down to your last nickel,
Speaker 3:Which, I mean, it makes sense when you think about it would think we would
Speaker 2:Want that on every level, but we don't have to, if the loan, in most cases we don't have to, if the loan amount is under 540,000 to 50, unless it's a multiunit or something funky like that, or an investment property, sometimes a second home, you have to have reserves by and large we're in the realm with these folks, you know, 700,000 with 10% down, you know, they're looking at borrowing$630,000,$630,000. Yeah. So, um, they're short on the money they need for reserves. It's like, okay, it looks like we have enough us investments to handle the down payment or closing costs, but now we're short and now you're under contract. Yeah. So clock's ticking clock is ticking, so it will be, and this goes to what we were talking about before. It's not just one person's bringing to that can have mortgages all of our parents. And so Michelle calls me up on Friday and says, help me think this through. And so, you know, I said, I think we just got a email from such such jumble investor that they are now doing 5% down. Yeah. So I looked that up, David
Speaker 3:And I talked about this on the radio show, maybe three, four weeks ago, that 5% down jumbo option. We got it now to a loan amount of six 50. Correct.
Speaker 2:And so in T in that deal up, uh, we could offer three and a quarter on, on that, uh, product. Um, they only need$45,000 total money needed to buy. Right. Plus the reserve months of reserves, which is about 11 grand. So we have to verify 56,000 and we can do that with U S U S money only the other alternative, uh, if we wanted to do, um, two loans and we used to do a ton of these back in the day, it's called a piggyback loan, right. And this was designed now. So, Hey, we want to get away from needing to verify the reserves, right. Uh, we said, well, we could make you one loan for$548,250, sell that loan to Fannie Mae who says we don't need to verify reserves. And then we get a, either a home equity line of credit or a fixed rate, second mortgage to fill in the rest. So that would be about$73,000, right. It's called a piggyback cause we're giving two loans instead of one. And, uh, the drawback of that is that they need a little over 75 grand because they're putting 10% down instead of five. Right. But because we got rid of the reserve requirement, that would have been another way to skin this cat. So we have solutions.
Speaker 3:And another thing that I'm thinking of as I'm looking at the numbers here, another nice benefit of doing the, uh, max conforming first with the piggyback. Second is the LTV is loan to value. Ratio will avoid using that jargon, uh, is under a little bit under 80%, which means that there's going to be no mortgage insurance. Correct. So they save a little bit of money in PMI payments every month. Yeah. So,
Speaker 2:So the interesting thing is the combination of that first mortgage at the maximum Fannie Mae that, uh, payment along with, and that's at a rate of 2.99, by the way, which everybody loves that come on. And then we can give them a fixed rate 20 years, second mortgage. Now that rate is a little less attractive because it's in second lien position. That's going to be at 4.59. Sure. Bottom line is that payment is about 200 bucks, less per month than going with the jumble 5% down 3.25. So we'll find out maybe next week, which one they pick. Sure. But as we're looking at this on the screen right now, why wouldn't you want to accept, you know, what the drawback is? They got to come up with 30 grand more cash. So there's always trade offs in life. Hey, 30 grand, less cash at, you know, closing. Um, and your payment difference is 200. I'm going to do the math here right. Quick divided by 200. Oh wow. 150 a month. You could just put that money aside in your sock drawer and take out$200 a month. And you could that for 150 months. So it's a toss up. It's going to be what flavor
Speaker 3:Of right bottom line. It's great to have choices though, and options on how to get something done while we're, while they're under the gun to get something done quickly because they're under contract.
Speaker 2:You know what? I just came up with an analogy for this. This is like, when you're played your original play, doesn't go well, and now the quarterback has to scramble. There you
Speaker 3:Go. Okay. And we're the Aaron Rogers of mortgages,
Speaker 2:Right? Yeah. We're scrambling. We're gonna throw a touchdown, you know, nine times out of 10. All right. When we come back to him, let's do a quick little rate Roundup. Sure. And then I've got another story about a customer we're going to help, um, do two loans. Uh, both of them refinances. We'll tell you about that. When we come back, you're listening to the academic mortgage and Realty show on am six 20, WTMJ
Speaker 1:Important home buying questions and answers you can count on. They say is the accurate mortgage and Realty show with Brian wicked on WTMJ
Speaker 2:Welcome back. Uh, I'm Brian Wicker. That's Tim Holdman over there. Um, or by chief son-in-law for right now, again, just talking about, you got to give you a chief of something. I'll take chiefs on it. Okay. Chief son-in-law of, uh, Brian wicked. And, uh, anyway, let's do a little quick rate Roundup here. We had a little bit of a rate improvement on Friday after Reese. We're kind of going away from us at the beginning of part of the week. Where did we end the week on the favorite 30 or fixed him?
Speaker 3:Yes. So ending the week on Friday, the 13th of August on the third year fixed, we were at a 2.99% rate with an APR of 3.015 that's on a$250,000 loan amount, a 25% equity, all of the other rights stuff as Brian likes to call it on the commercials. Uh, and our total loan costs were only$934. So that's not an accurate origination fee or a processing fee. That's the all-in cost, including if we need to praises title insurance, closing agent, all that stuff, all only 934. What do you mean if we need an appraisal? Well, it was very, I shouldn't say very common, but there's a good chance that when we take an application, we run, uh, all the details through what's called an automated underwriting system, which is a program that Fannie Mae uses. And a lot of times they give us what's called a property inspection waiver or known as a PIW. And that allows us to do the whole loan without needing an appraisal. And if we get that, that eliminates that$475 appraisal cost, which we, we don't put that extra revenue in our back pocket. We pass that along, which means that our loan costs at the end of this week would have gone down to$459. I'll get
Speaker 2:That appraisal waiver. And that's all based on big data because Fannie Mae has probably seen your property before and the appraisal on your property. Plus it has all the property, all the public records data, correct from the assessor's offer office and everything else. So if the computer believes the number we feed it, did it goes sounds good to not know Pascoe or yeah. Go right to the pass. Go collect 200. Yeah. All right. What about the 20th it's one
Speaker 3:Year we would be at a two seven, 5% APR is 2.78 for a total loan costs of$1,209. And again, that's, if we need that appraisal a 15 year, uh, really fantastic. Great. With at 2.25, so two and a quarter APR is 2.288. And again, a standard loan costs of about 1200 bucks all in, uh, so overall not a bad week in terms of rates, you know, for a lot of people, if you haven't refinanced, I'd say in the last year or so probably good opportunity to do that. What I've been talking with a lot of customers with in addition to rates is home values are way up. So if you're paying any type of mortgage insurance premium on your current loan, chances are chances are, you can probably get rid of that or reduce it, which that's real money in your pocket, real savings, regardless of rate, even if your rate is awesome, even if you're maintaining that same rate, if you're paying 90 bucks a month in PMI and get rid of that 90 bucks a month, that's real money that adds up over time. For sure. What
Speaker 2:Are you seeing people select?
Speaker 3:Uh, yeah, I mean, it runs the gamut. I would say the 20 year recently has been a really strong candidate for people that are like, some people don't even know the 20 year exists. It's like 30 or 15 years. That's just what everyone talks about. And if you're five, six years into a third year, some people don't like the idea of going quote unquote backwards into a 30 year. Yeah. But maybe that 15 years is just a little bit too much of a stretch in terms of the increase, the monthly payment, 20 years, a great candidate for those, for those people. Um, I talked to a lot of people who are nearing retirement age that are picking a 30 year, even though they could pay it off in 15 years or less. Cause they want that built in flexibility if they ever need it.
Speaker 2:Yeah. When they get to retirement, maybe you don't want to have that big payment if you did not successfully pay it off.
Speaker 3:Well, I've had a handful of customers just in this past week that are two, three years away from retirement. We're refinancing them into a 30 year fixed, but they're going to pay that like a 15 year for the next couple of years. But once they retire, they're going to probably pivot back to that minimum 30 year payment at that phenomenal rate that has a two in front of it.
Speaker 2:Uh, other observations here, just in case you're ever wondering, this is at the$250,000 loan amount, correct. Payment difference, even though the rate is lower at the 20 year, because you're paying off the principal much more aggressively, the payment's about$300 higher per month. Correct. Okay. So you gotta be willing to strap that on. Yep. But what you're seeing is, Hey, I I'm five years into my third year, so I'm really got 25 years left. Maybe the combination of lowering the rate and shortening that term for 20 years gets you to about the same payment. Yeah. You know, and then one other thing to say, oh, just by the way, going to a 15 year from a 30 to a 15 year, that's a 585 or our payment increased because you're paying it off twice as fast. Yes. Two-thirds. By the way of your payment of your very first payment on a 15 year fixed two thirds of it is principal principal. Right. And then also how many people are you finding are customizing their mortgage term because Hey, I got 27 years left. I don't want to go back to 30. I'll take the 27 year. You know, I offered,
Speaker 3:But to be honest, not that many simply because I explained to them that whether you pick a 30 year or a 21 year or anything in between any a year increment between that's all priced the same as a 30 year mortgage. And I do the math with people, I'm happily, I can happily tell them what they want to make their payment. If they want to stay on a 23 year payment track. But I tell them the third year it gives them that added flexibility. If, if they have a lean month or some other financial expense comes up, then they can dial back to that 30 year payment if they ever need to. That's a
Speaker 2:Perfect segment into the next story. I'll want to take about a talk about it, which is a long-term customer. We're going to refile both the primary residence and a rental home. We'll tell you about that. When we come back, you're listening to the acronym, mortgage and Realty show on am six 20. WTMJ
Speaker 1:Find a place to call home without the headache. This is the accurate mortgage and Realty show with Brian Wichert on WTMJ.
Speaker 2:And we're back with a final segment at the beach. So thanks again to you for filling in for your brother-in-law David myself. Yep, absolutely. And so we're going to talk about, we're fortunate being in business 22 years, we have, uh, many, many loyal repeat clients and one of them called up on Monday and said, Hey, it is time to refinance my, uh, primary residence here in Wisconsin. And what about that rental property in Florida that you keep telling me is impossible to refinance. So, uh, I looked into it and what we're going to be able to do is we're going to be able to refinance, uh, um, their primary residence in Menominee falls at no cost at a rate of 2.99. Awesome. And that's going to drop their payment about 90 bucks a month. Okay. So that's kind of, I'll call it a layup. Yeah. Right. You know, it's, it's a leap. It's like, well, why wouldn't you do that? That's a thousand dollars every year for as long as you have that house and you paid how much to get that. No, nothing. That's a thousand dollar post tax rate exactly. Post tax. Right. You don't have to pay income tax on that. So they jumped on that. And at first I didn't think that I was going to be able to do the, uh, rental property. It's single-family rental property in Florida. And that's because Fannie Mae and Freddie Mac rather suddenly and swiftly and largely turned up their nose, uh, back in about April. Yeah. On second homes and investment properties were to the point where they were like impossible to price you, like, you just
Speaker 3:Forget about it. They didn't say we're not doing them. They just said, we're going to price them so poorly that it's just not going to make sense to
Speaker 2:Them. And so luckily when I looked at it again for this many time repeat client, things had gotten a lot better and we just don't do that many non-owner occupied or investment properties. Right. Um, and so now, uh, as we were on break there, you and I just checked, we've got one investor who's pricing, second homes, like primary risk houses again. And I mean, that's awesome. That's awesome. And while the investment properties are priced, not as favorably as primary residences or second
Speaker 3:Homes and combat properties always have been priced more poorly than primary residency,
Speaker 2:Fannie Mae and Freddie Mac have decided long ago that, Hey, if it's not your shelter, you're more likely to cash in your chips and say, you can have the property back if it's a rental property and, you know, you lose your logical. Right. So in this case, um, uh, ed was at a four and a quarter on the Florida property. And we gave him that loan when he bought it in 2015. And so we were talking about, oh, do you go back to a 30 year? Do you go back to it? You know, or do you go with the custom term of 25
Speaker 4:Years or 24 to 20? Yeah. And
Speaker 2:In this particular case, I think ed wisely decided he's going to go back to a new 30 year fixed rate. Sure. We were able to get him three and a half percent on that deal. And just like that, uh, you mentioned somebody earlier in this show where they're going to keep making a higher payment voluntarily. Right. But here's the story on that particular situation with the Florida rental property, his mandatory payment is going to go down$343 a month. Awesome. That's big. It's about a$355,000 loan amount. Um, and if he keeps, however, I showed him, we have the calculator to do this. If he keeps making his existing payment to match the payment he's making now at four and a quarter, he will save$53,000 in interest over the remaining term of the loan compared to his current deal. That's real money. That's real money. But frankly, I would take the cashflow on a rental property, but whatever he wants to build up the equity, that's fine too. But then let's see, he loses his renter. Right? Well now he can fall back to that lower year, minimum payment. Sure. That's right. So he liked that idea a lot and we're doing a 30 year on his, on his house here in Wisconsin as well, which he may choose to pre-pay. Sure. So that's always the thing. And you had a customer this week. I know who is trying to decide between a 15 and a 30 year. And in that case, we're refinancing their primary residence to get cash, to buy a second home. Right. What did they decide to do?
Speaker 3:So on their primary, they chose the 15 year, just because of the, the rate was just too low to pass up. It was too juicy. I think we got them two and a quarter percent for literally no loss because that was illegal and about 548,000. And they had all the right stuff. Excellent credit, high equity, big loan amount, all that. Uh, but for the, the second home they're going to go with a third year. I think just for the, uh, like you said, that flexibility, the increased cashflow, they, they could have qualified on a 15 year, easily
Speaker 2:Jumbo loan, over a million dollars. We were able to snag them 2.8, seven, five. Well that's. If they get the property under contract, they don't have
Speaker 3:That one. Yeah. Not under contract. And for a second home jumbo, they have to put 35% down. Okay.
Speaker 2:Lots of details. That's the whole point folks is mortgage lending is fun. We get to help people save money or upside their dream homes or their vacation homes or whatever. But you really got to deal with folks who know what the heck they're doing. It's what we love to do. And we do it every day. So we'd love to help you, whether they're looking to refi or get that rock solid, guaranteed pre-approval to buy it. That's all the time we have for today's show. Thanks for tuning in. You've been listening to the academic mortgage and Realty show on am six 20 WTMJ.