The Accunet Mortgage and Realty Show
The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 8-11-24
The following program. The ENT , mortgage and Realty Show is paid for in full by ENT mortgage, LLC and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, LLC, and not WTMJ or Good Karma Brands.
Speaker 2:Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Net Mortgage and Realty. And now, here's David Wicker and Tim Holdman.
Speaker 3:Good morning and welcome to the Accu Mortgage and Realty Show. I'm David Wicker, managing owner at ACU Net Mortgage, as well as Senior Loan Consultant, chief Client Experience Officer.
Speaker 4:So many titles,
Speaker 3:I don't know if I'm probably gonna have another title before the end of today's show. <laugh> , my individual N ml s ID number is 3 2 8 8 4 7. Joining me this Sunday Yes . Is one Tim Holdman , also senior loan consultant, Tim's individual,
Speaker 4:That is my only job title. <laugh> Tim's
Speaker 3:Individual NMLS ID is one five nine three one four six. You can call or text the WTMJ talk and text line, which is 8 5 5 6 1 6 1 6 20. And as always, you can grab a podcast of today's show wherever you might get your podcasts. Um, Tim lot happening in the mortgage and real estate world's.
Speaker 4:We're talking rates. That's right.
Speaker 3:It's , uh, busy season or , and ultimately, you know, our world is somewhat seasonal.
Speaker 4:Oh, very much so. Yeah . If
Speaker 3:Only because winter's a little more quiet, kids are in school. Mm-Hmm . <affirmative> . Nobody wants to move when the snow flies.
Speaker 4:Not nobody, but not as, not as many, unless
Speaker 3:You're someone in our family, <laugh> , in which case we all buy houses during wintertime. Yep . Um, but as has begun since spring and extended now into summertime, people are still buying houses. Mm-Hmm. <affirmative> . Hey, when you want to go buy a house, one of the things that you're interested in is, Hey, David, hey Tim. What are rates?
Speaker 4:What are rates? It's not the deciding factor, as we've said many times, never for
Speaker 3:People. I , I am willing to stand on my chair and say it is never the factor. But that's hyperbolic some .
Speaker 4:Yeah. But it does matter. It does matter for sure. And it's a conversation worth having. And it's been an eventful a couple weeks now. Let's called 10 days. Yeah. Yeah. An eventful week and a half in the , uh, rate world. So we wanna catch you up on it. So,
Speaker 3:Because if only for this past week, our , um, friends in journalism have been writing breathless headlines. Oh ,
Speaker 4:Well , and have
Speaker 3:You about
Speaker 4:Rates . Have you noticed that the , the news cycle is always a good two business days behind reality. Okay .
Speaker 3:I agree . Two business days. Yeah. And so, kind of here's the lay of the land last, last Friday. I should look at my calendar. It wasn't August 2nd. Oh , it was August 2nd. Yes.
Speaker 4:It was Friday,
Speaker 3:August 2nd. The monthly jobs report comes out. And just for summary, it was, you know,
Speaker 4:Lackluster Well , and really the Wednesday, the 31st of July was the first domino to fall. 'cause that was the Fed meeting where they announced the, you know, anticipated they opened that
Speaker 3:They were like, yeah, you know, rates, maybe we will cut 'em in September,
Speaker 4:The anticipated rate cut of September, which it was almost guaranteed. So mortgage rates reacted immediately to the anticipated rate cut in September. So I , I know Brian and I said this last week, but it bears repeating the mortgage rates , uh, of today that are available today. Sort of have that anticipated fed rate code of September baked into current pricing. Yes. So , uh, minus all other economic factors, when the Fed does drop rates as expected in September, nothing's gonna actually change with mortgage rates.
Speaker 3:And what has been interesting, so Chair Powell has his con , uh, conference with journalists Wednesday the
Speaker 4:31st <laugh> . Yes. He does.
Speaker 3:Kind of just like, eh , you know, maybe we will, maybe
Speaker 4:We won't. I listen to it and Jockey is so funny. Yeah . And
Speaker 3:Then , and then on Friday, jobs report comes out. The reason why the market cares about the jobs report is because when people have jobs, they spend money. 70% of the American economy is you, me and everybody spending money just
Speaker 4:Going out and buying stuff. And they're
Speaker 3:Gonna do that. They kind of have to have jobs. When you spend money that can drive inflation, inflation is the enemy of interest rates. So when less people have jobs, less spending cools off inflation. There
Speaker 4:You go. That was a whole semester's worth of , uh, boom . Right here . Knowledge Sunday morning, 30 seconds. If you need to rewind that and play it back, feel free.
Speaker 3:So that Friday news on August 2nd, bond markets, mortgage markets, were like, oh my
Speaker 4:Gosh, let's go. It's ,
Speaker 3:I think it's here.
Speaker 4:It's happening.
Speaker 3:And markets got real excited and led to this drop ish in rates.
Speaker 4:It was pretty good to , to a point. The , the news , uh, outlets did say they did report accurately that at one point, probably on Friday or maybe Monday of , of this past week. So what would that been Monday? The , uh, fifth. Yeah. Rates were at the lowest point of 2024. And that was the news catching headline I saw from a bunch of different sources. Rates are at the lowest point of all year. Yeah. <laugh> all 2024. And so
Speaker 3:What happened was we had this nice dip on Friday, then everybody woke up on Monday and Tuesday and had a cup of coffee Yeah. In the bond trading world, <laugh> . And was like, you know, well may maybe this isn't exactly the best news. And the reason why everybody spent this last week sobering up about what rate and so rates kind of gave it back was because this coming Wednesday is the consumer price index report. Mm-Hmm. <affirmative> 7:30 AM tune into , I mean, I'm always on CNBC, but as I told a client on Friday, if that inflation report comes in as expected, as
Speaker 4:Expected
Speaker 3:Rates aren't gonna get any better because it's baked that things are going well. Right. If that inflation report comes in hot and high, we might look out , we might keep giving it back. Yeah . Which is why everybody we got excited on that Friday the second. Yeah . And then we we're gonna be sp we did spend all last week and we're gonna spend the next couple days almost like bracing Mm-Hmm . <affirmative> for Wednesday. So all that to say, let's put that in context, because rates equal payments. Mm-Hmm. <affirmative> . And when you and I are talking to customers, there's a certain, it's , uh, got a sizzle to it when you say, oh , rates are this, but ultimately it's a payment. Let's just define that when we come back. You're listening to the ENT , mortgage and Realty Show on the biggest stick in the state AM six 20 WTMJ
Speaker 2:Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 4:Welcome back to the Anette Mortgage and Realty Show. I am Tim Holdman, senior loan consultant, joined by my colleague in arms , David Wicker. Uh, Brian is , uh, down blessing the reigns in Africa this week and , uh, next week. So we're, we're gonna be not
Speaker 3:Figuratively,
Speaker 4:Literally, literally blessing them. Uh, so we are gonna be doing the radio show <laugh> for you guys for the next couple weeks here . Total
Speaker 3:References here on that . I , I hope
Speaker 4:Someone picked that up. Yeah . Yeah. So in the first segment, we were talking about the movement in rates and in , in summary, David, everyone got really excited , uh, you know, August 2nd into Monday, August 5th. And then since then we've been given away or given back , uh, some of that hot pricing and the rates have been creeping back up. They're not back up to all the way where they were prior to the 31st of July. Yeah . Before we all got excited. Yeah. So they're , they're still overall improved a little bit, but not quite as hot as we were at that, at that nice low point. So where are rates today just generally for , uh, our kind of our, our general scenario that we show on our website? Yeah.
Speaker 3:So , uh, well , uh, you can always get, as I like to tell my clients, you can get any rate you want. It's just a matter of how much do you wanna pay Tim to get that
Speaker 4:Rate.
Speaker 3:Indeed , indeed. So at the close of business on Friday, I like to quote , uh, something close to what dad talks about, which is the median sales price , uh, in southeastern Wisconsin, kind of around that 3 45 Yeah . Range and all the other Right. Stuff is now seven 80 credit 25% down. You could get down to 6.625 on a 30 year fixed. The A PR is 6.7 and the, your total loan cost in order to get there are right around $2,400.
Speaker 4:Yeah. That's not bad. And you know, if you check on our website, our , our , oh ,
Speaker 3:You want 5 9, 9? Yeah, we can
Speaker 4:You get it? Yeah. Right. So the , the trophy rate is still in the high fives or low sixes, but that's generally paying , uh, two points, which , uh, a point by the way is 1% of the loan size. Yes . So paying two points or 2% of a , you know, $300,000 mortgage, that's six grand. That's gonna be a hefty, you know, amount of extra money. Well,
Speaker 3:Which I, I have clients, I say whether or not you realize it when you pick a rate Mm-Hmm . <affirmative> and closing costs . You are expressing an opinion Yeah. And on Friday
Speaker 4:About where rates are gonna go in the future.
Speaker 3:Exactly . Because if you're gonna spend the money to get a low rate to kind of justify yourself, you're kind of hoping rates stay the same or go up. Sure. And the opposite of that is if you're not spending much and taking a higher rate, you're expressing an opinion, like, I think I'm gonna trade this rate in relatively
Speaker 4:Soon . Sooner rather than later. Yeah . Right ? Yeah. And that we have this conversation ad nauseum day in and day out. And unfortunately no one actually knows <laugh> the , the correct answer on day one. 'cause we can't predict the future. So it's really more about what makes you ,
Speaker 3:If I did, I'd be an owner of the Bucks Yeah . If I knew the answer to that question Exactly . Which way rates were going.
Speaker 4:Right. So it's like, just choose the answer that makes you feel the most comfortable today. And we're, you know, once you're part of the aced family, we're gonna be checking on rates for you . Obviously.
Speaker 3:You know , and Tim, the , the other thing, so let's use median sales price 3 45, 20 5% down. Oh my gosh. David , I heard that rates plummeted. Yep . They maybe they went down a quarter.
Speaker 4:You talking a southern borrower, a quar .
Speaker 3:Rural Rural, yep . They went down a quarter,
Speaker 4:Quarter percent. They wouldn't save, wait for it.
Speaker 3:$43 a Oh.
Speaker 4:Which I mean, come on. I wouldn't turn down $43 extra a month for free . But at the same time, like that's probably not gonna be the thing that, imagine
Speaker 3:It's not like you hang up the monthly budget . It's not like you hang up the phone, honey. Yeah . I just talked to Tim over at Accu at Mortgage and he confirmed rates are down a quarter, we're gonna save $43 a month. You know what, we should go see that house now that we've been eyeing up since Wednesday night when it went live . That's , if ,
Speaker 4:If $43 a month in savings all of a sudden makes you wanna buy the house, you probably didn't really like that house that much to begin with anyways.
Speaker 3:Well, and as has been true, we're all about, let's take the headline or let's take your concern and let's at least quantify what
Speaker 4:It is in real
Speaker 3:Life . We talk about that with Oh , overpaying. Well what does that really mean? Mm-Hmm . <affirmative> or Mm . Rates went down. Mm . Okay. Well what does that mean? Rates went up. Well, okay, you're telling me you don't wanna buy that house because it's 43 more dollars Yeah . A month. 'cause it went the other way. It's like, I I think you still want the house. Yeah , for sure. And quantifying what it is that is of concern. Mm-Hmm. <affirmative> , um, to ,
Speaker 4:And ultimately we can't, you know, force you or make you be less or more concerned about something. Our job is to educate. Right. So we're gonna shine a spotlight on the numbers for you. And then if the answer is you're not happy with that monthly payment didn't , then the answer is Yeah, you probably shouldn't be looking right now. And that's okay. Yes . Right. But I think a lot of times people get suckered into just rate watching. And a rate really just influences what your monthly payment's gonna be. That's the thing that actually matters. I always make the bad joke with my customers. I say, if I call you on your one year anniversary of buying this home and I ask you what your interest rate is without you looking it up, you're probably not gonna be able to tell me. Most people don't. I probably couldn't tell you off the top of my head what my rate is. <laugh> , you're gonna , I know the joke you're gonna make. Yours is nice and low, so you're gonna , it's
Speaker 3:Fine . Well , no , no , no . It's, but you're right. It's, well, not everyone's a mortgage banker, so why would that be?
Speaker 4:Right? You're gonna know generally what your monthly payment is. 'cause that leaves your bank account every month. And that , you know that Right. But what your rate is, people are not gonna generally care after a while . Right . Right. Exactly.
Speaker 3:Alright , so let's, I wanna segue into, I've got a story about dad calling in for his son, thinking about buying a house. Uh, and then you've got a story on, and actually I have a second story about parent as co-signer for, I
Speaker 4:Got for their, I got one of those too.
Speaker 3:Their child as well. It just is a , a good conversation around, think about home ownership as chapters in a book, right ? Mm-Hmm. <affirmative> , there's chapter one and then there's gonna be chapter 2, 3, 4, and five deep. We need to at least write chapter one so that there can be subsequent chapters. Let's get into that after this break. You're listening to the NT Mortgage and Realty Show on AM six 20 WTMJ getting you
Speaker 2:Into the home of your dreams. Here's more of the Accu Net Mortgage and Realty Show with Brian Weer on WTMJ.
Speaker 3:Welcome back to the Accu Net Mortgage and Realty Show. Uh, Tim, I have got at least two clients right now where the path of analysis has led us to, Hey, you know what? The best way to get this mortgage plan put together is for a son to be on the mortgage and for a parent to be a co-applicant. And PSA announcement for anyone who might be propositioned to be a co-signer, co-applicant. It's not a light touch. You are a borrower on the loan as a co-signer, co-applicant. The same as if you're moving in.
Speaker 4:Yeah. You are equally obligated on that financial responsibility and all of your financial criteria are given equal weight Yes . To the , the primary borrower who will be living in the property. So it's not like you're just kinda like given the little , little extra nudge. No . Yeah. It's like your credit is accessed, your income is utilized, your debts are considered. And a lot of times, not all the time , but a lot of times your assets are also part of the equation. It's, it , it's a case by case basis, but like Yeah, I like the way you said that. 'cause I've had that question before and it's like, oh, is it
Speaker 3:Okay if I Yeah , you like sneeze on this and it'll be okay. Is
Speaker 4:It okay if I take out this car loan, I'm just the, the co-signer. I'm like, no, no, you that matters. Yeah . Don't, don't do that. So
Speaker 3:I gotta call from a long time listener whose son lives out of state . The, his son wants to buy a home with his girlfriend, mark that down.
Speaker 4:His son in , in , in , in state , they wanna move back to this area or no, this
Speaker 3:Is still out of state . Got
Speaker 4:It. Okay . Dad , dad
Speaker 3:Lives here in the Milwaukee area, son lives out of state . Okay . And the question, and I always appreciate this because we always answer the question, if , if we had a family member pose this to us, what is the reply that we would give to them? Yeah. Uh, and for his son doesn't really have income that any mortgage company and we wouldn't be able to do the loan. Any mortgage company wouldn't be able to document his son's income.
Speaker 4:Sure. So he has real life money, but not usable money in the sense of , uh, for a mortgage. Exactly.
Speaker 3:And then, you know, briefly, it was this tangent of like, do you dad really want to co-sign on a loan with your son's girlfriend? Mm-Hmm . Because the way that I asked the question, I was like, is this the girlfriend right now or is this the girlfriend for forever? Mm . And the answer was like, I don't
Speaker 4:Know. Interesting. Well,
Speaker 3:But that bears keeping in mind, right? Yeah. You know, if you,
Speaker 4:That's a whole other , uh, tangent we could go off of .
Speaker 3:Yeah. The unromantic answer.
Speaker 4:It's like buying a home with someone that you're not married to, but Yeah. Which
Speaker 3:If you do that, it's fine. Your best path if you do that is probably just to sell the house if you end up not proceeding with the relationship. Right. But as I told the client, I was like, maybe the best way to do this is son is on the note, he's on the borrowed money. Because then you can classify the mortgage as a primary home.
Speaker 4:Oh yeah,
Speaker 3:Absolutely. Your son's income can be listed as zero. Yeah . But his contribution needs to be breathing. Mm-Hmm . <affirmative> and living in the home and then you get the best rates. Well , lowest closing cost ,
Speaker 4:Assuming his credit score is decent. Right. Because
Speaker 3:I think it
Speaker 4:Is. Okay. Yeah.
Speaker 3:Even if it's not, even if even if son has mediocre credit, it's better to try to get that primary Oh yeah . Occupancy rather than if dad just bought the home living outta state. It's an investment property, bigger down payment, worse rates at
Speaker 4:The end of the world . Reserve , reserve requirements. Exactly. All different kinds of , uh, extra details that need to go in there .
Speaker 3:So that was one where it's like, you know, why would you think if you're a listener Mm-Hmm . <affirmative> and you know you're a plumber for a living, why would you think to yourself, oh, you know what? My son can still be on the mortgage, but I'm gonna kind of carry the day on income for qualifying. Yeah. Because then in real life, you know, who's gonna make the monthly payment? The son , son and girlfriend if she also lives in the home. Right. So that was one client. Um, you had one and I have , I i I want to talk about yours because they, they're in the middle of trying to get to the closing table. Yeah. And the first cut at a different mortgage company
Speaker 4:Didn't go well . Didn't work. Yeah. So I , we'll we'll carry this over into the next segment. 'cause this is kind of an interesting but but complicated story. So , um, puzzle
Speaker 3:Solvers, Tim, that's all we are. Puzzle
Speaker 4:Solvers. Oh man . Yeah. And I think this one's gonna have a happy ending, but , uh, husband and wife looking to buy a new construction home. Right. So buying from the builder and they were proceeding with a different mortgage company because their realtor was cousins with the mortgage lender , uh, that they ended up connecting with. So that , that was kind of the, you know, connection there. Yeah . Which is fine. It happens all the time.
Speaker 3:We have cousins,
Speaker 4:We have cousins, we have family, we have friends. And uh, they , uh, were communicating with me 'cause I had done previous mortgages for them on, on other purchases and things like that. And the conversation actually started around, I was able to save them a lot on rate and closing costs . Mm-Hmm. <affirmative> . Uh, so we , uh, got the application process going and I realized that due to some financial history stuff with the husband, he couldn't qualify for a mortgage right now. So we pivoted
Speaker 3:On payment history.
Speaker 4:On payment history from previous debts. Exactly.
Speaker 3:Because payment history matters when you, when you raise your hand and you say, hi, I'd like to borrow new money on a new mortgage. Yeah . They look at the mortgage world says, well, tell me about how you've paid your monthly payments before. Yeah. It's new money. Can't wait for the rest of the story. After this break, let's hand it over to the six 20 WTMJ Breaking News Center.
Speaker 2:Don't break the fact to get into a house. Back to the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 4:Alright . Welcome back to the Nette Mortgage and Realty Show. Uh, David and I are having a good time. Uh, we're in the story swapping portion of our , uh, of our weekly segment. Yes . And , um, you know, mortgage approvals are not always as cut and dry as we would all like them to be, but the good news is, we've been doing this for so long, we've got so many at bats that if there's a way to figure something out, we're gonna figure it out.
Speaker 3:Not the first time we've seen a knuckle ball .
Speaker 4:Yeah, exactly. So , uh, before the break I was sharing a story with a customer where we had to pivot the game plan, husband and wife buying a new construction home. We had to remove him from the equation. But he had income he had, and really his big thing was his income was, was helping contribute . Yeah. Not fully the , the wife works too, but his income was substantial. So what we did is , uh, his dad also passed customer mine is still working. And he said, you know what, Tim, I'm, I want them to get this house. I want them to get the best deal on a rate, you know, and closing cost . I'm willing to co-sign. I said, fantastic. Who's
Speaker 3:My daughter-in-Law?
Speaker 4:Yes. Right. So it is the wife, AKA, the dad's daughter-in-Law. And, and the dad, those two are gonna be on the loan. We're leaving the husband out of it for now. There may be a time in the future where , uh, as part of a refinance, maybe we add him back on and, and remove the dad. But this is all about that chapter one from the , from your book analogy, right? Yeah. So it's like we're trying to get you into the house as fast as possible, as painless as possible, and ideally with the best rate and closing costs as possible. Right. 'cause that certainly matters in , in real life. Yes . And um, their previous lender really came to the same conclusion where they realized they couldn't do the loan with the husband on either, and they proposed a portfolio loan. 'cause that's something they have in their arsenal where it was very much a staff gap mortgage. They were saying, we will give this to you interest only , uh, for six months and after six months you have to refinance to, to get into a regular conventional a balloon mortgage. Yeah. And the rate was a mafia loan BA basically, because , I mean, it is a portfolio loan is literally in an individual's money. So they understand there's elevated risk with that. Mm-Hmm. <affirmative> . So it as an extremely high rate , uh, the interest only payment at that rate was higher than my third year amateurism payment due to the rate discrepancy. Right. So it it was substantial for sure. And , um, you know, they wanna close as fast as possible and , uh, legally the soonest a mortgage lender can close on a loan is eight calendar days from the application date. Uh, so that's not an acuate rule. That is a all mortgage company rule. And it looks like we're gonna be able to do an eight day close. We put a rush on the appraisal. We got the appraisal back a day after we ordered it. Um, got everything signed and uploaded from the customers in terms of documentation and disclosures. 'cause again, an eight day close, the customers have to be just as motivated as the lender to get that. Yes . That is a full team effort. All hands on deck and , uh, you know, good job by you to , well, thank you. I'm gonna save that for maybe next Friday. I'll update it. We're , uh, set to close the 14th on , um, Wednesday the 14th. So by next week, you know, Sunday I'll have that , uh, that , that official update. But things are definitely trending in the right direction for sure. So again, this was an example of
Speaker 3:Let's get you in there . It's
Speaker 4:Not , yeah , it's not a one size fits all , but if you've got a , a relative, most likely a parent who's financially strong, good credit, good income, good assets, and are willing to do this for you, it , it can be the difference between a really high interest only balloon mortgage that you don't really wanna take, but kind of have to, if it's your only option and a nice conventional 30 year fixed lower rate loan. And again, you know , we all know going in, we wanna refinance the dad off as soon as it makes sense. Yeah.
Speaker 3:But you've taken the pressure off
Speaker 4:Exactly.
Speaker 3:Like, yeah , maybe it's seven months, maybe it's 13 months. Right.
Speaker 4:'cause the dad's not gonna be making this mortgage payment. The kids are, they're , they can handle the mortgage payment in real life. Yeah . Right. So yeah. It's, it's literally the definition of a win-win.
Speaker 3:I can't wait till chapter two and chapter three come walking down the hallway.
Speaker 4:Exactly. Uh ,
Speaker 3:I want to , I want to tee up a version again, another , uh, a co-signer story. I have a client referred to me by their real estate agent who similar to the chapter in the book version, my clients, because they're coming from out of state one starting a new job. One is in healthcare . Okay . At a new hospital part-time. Ah, and
Speaker 4:I see where this is going.
Speaker 3:Well, the element in all of this, they're looking at a house. 'cause guess what? They have a young baby. Mm
Speaker 4:Oh, so they're not buying 'cause rates just dropped a quarter percent. No , not at
Speaker 3:All. <laugh> . And , and they are mindful of, Hey, we just moved to town. Sure. Husband's starting a new job, wife and healthcare part-time. But like, where are we gonna be two years from now? Mm-Hmm . <affirmative> . Because the husband is going to continue to grow in his income Yeah . Over the next 6, 12, 18, 24 months. But like right now, you know, what can they, what can the mortgage world get for them? Exactly. And you know, your story and my story about having co-signers can be that gap between Mortgage World and the real world. Collect that again , as you noted. Like, you know, who's gonna make the monthly payment on your client's , you know, loan. Yeah.
Speaker 4:The people living in the house,
Speaker 3:The people living in the house. But it's, and so it's nice to have the parents step up as co-applicant. I want to just detail a little bit more about my client after this last break. You're listening to the Accu Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Important home buying questions and answers you can count on. This is the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ. Thanks
Speaker 3:For hanging with us. I'm David, that's Tim. Hello there. Talking about, well basically like family stepping up to help family with getting into a new home. As we have begun to describe in chapter one of the book. And for my client, the, there's a couple paths to walk down as we began to analyze husband and wife's income, he has a small base salary now that he's in Wisconsin. Okay. Yeah . And she's part-time at the new hospital. Got it. They can qualify for a lower than hoped for purchase price. Yeah. But the reason why they're here in the Milwaukee area is because they have small children. They wanna be close to family. They're thinking like, what's the house that we wanna be in three years from now? Not just what house can we swing right now? Yeah . Or what house can we be qualified
Speaker 4:For? And this , this goes back to a core concept that Brian has talked about many times. He said it to Grace and I when we were looking for our first house, I'm sure he said the same thing to you as well. It's like, don't, and maybe any everyone's situation is different. I'm not telling people to go out and stretch themselves financially, but
Speaker 3:We're kind of telling people that
Speaker 4:Don't, don't buy the house that you're comfortable in right now if you think you're gonna outgrow it in two or three years. Yes . Buy the house that you think you will be comfortable in for five years or more. Because guess what, two or three years from now, homes are probably gonna be more expensive. Right. So you're gonna
Speaker 3:Will, I'm willing to say , will Okay . Be more expensive.
Speaker 4:So, you know, yes, you're gonna sell your home for more, but you're also gonna spend more on the next house. So why not spend 20, $24 Yeah . On a house that you can then stay in until 2031 and , and actually you're gonna save money in the long run. Uh ,
Speaker 3:Also for, for my clients, they have one young child. I'm thinking, you know what? Yeah . Maybe in two or three years you might have two or three definitely young children and you will need the space Oh yeah . To , uh, welcome them home. And so thankfully one of their parents has an amazing job and relatively clean financial life such that I can put husband and wife and dad on a loan and they can go buy , I mean, kind of basically at this point
Speaker 4:Within reason. Yeah .
Speaker 3:As much house as they dare.
Speaker 4:So, so then it's more a conversation of, hey, in real life, what monthly payment do you want to choose to have? Yes. And whatever that is, we'll tell you what price range gets you into that monthly payment and then go forth. 'cause qualifying is not gonna be an issue. This is a key, maybe not disconnect, but it's a key different differentiation between, hey, in real life, where do you want your monthly payment to be? Yes. And what do you want to choose to tolerate? And then over on the mortgage side of things, we gotta make sure we can qualify you for that.
Speaker 3:Well, and my clients, they're kind of , they are trying to skate to where the puck is going to be. Mm-Hmm . <affirmative> in two ways. Right. One, they're going to con , their income is going to continue to grow as they advance rapidly
Speaker 4:Professionally. Yeah.
Speaker 3:Yeah. In their professional, the , their path for income growth is very clear. Are they there right now? No. Will they be there in two years? Yes. Almost
Speaker 4:Assuredly.
Speaker 3:Yeah. And then if parallel to that, you're like, well our one year old's gonna be a 2-year-old and then we're gonna have a new baby. Mm-Hmm . <affirmative> at the same time they're going to advance. I can only, it's, it's like a melancamp song <laugh> , like where they're gonna be two years from now. Because if they re if they reach now, and I don't, you know what, it never feels all that comfortable to reach right now. But if you can look across the table at your spouse and be like, here's how we're doing this. Here's why we're doing this. Mm-Hmm. <affirmative> . And by the way, if it ever becomes uncomfortable, you can just sell the home. Sure. It is not an unalterable decision if you decide to stretch.
Speaker 4:Sure.
Speaker 3:I like it . It's, you're buying a house not just for who you are today, but for who you will become. And you and I both can, you know, speak personally. Yeah. When I bought my house, there were no babies in the house. And now there are babies in the house. Now there
Speaker 4:Are multiple Yeah .
Speaker 3:And they are filling the house Yeah . With themselves and all of their things. <laugh>, it's always nice when you don't think to yourself, boy, I wish we had more space, but rather look at this house that now absorbs Yes. Our new occupants. Yeah. And my clients are trying to do the same thing. Well,
Speaker 4:And you mentioned, so the wife is part-time in healthcare . Was she, how long has she been part-time for?
Speaker 3:She in their previous out-of-State Home. Yeah. She was part-time. Oh, got it. And is now accepted a new part-time position at a hospital. So , and I , I got the question right, because in real life it's like, well, this
Speaker 4:Isn't, you got money coming in. No . Yeah .
Speaker 3:The , the check is real. My work hours are real. Mm-Hmm. <affirmative> . Why is it that I Yeah . That the mortgage world won't look at?
Speaker 4:Well , and that's why I wanna , this new income, I want to talk about that in the last segment because lately Fannie Mae has really seemed to , uh, clamp down on something they call variable income, which Jason Hansen probably immediately his ears just perked up even from where he is right now. As I said those words,
Speaker 3:Managing owner, director of operations at academic mortgage.
Speaker 4:Yes. Because that is really the
Speaker 3:Oracle as we
Speaker 4:Call him, has been a sticking point. And it's worth talking about because this is one of those disconnects between real life and mortgage world. Yes . Life variable on how they, on how they view income and that dirty word called variable income. So we'll talk about that. Uh , after the break.
Speaker 3:You are listening to the ACU Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Welcome back to the Accu Mortgage and Realty Show. Tim, this has been a good segue talking about our co-sign clients. Yes. Because part of the reason why some of our clients have to do co-sign is because they've got variable income, which is a catchall phrase.
Speaker 4:Totally. So by definition, and this isn't right out of the Fannie Mae seller guide, so forgive me if someone actually has that up and is , don't quote me word for word . This is the Tim version of it. <laugh> basically anything that is not salaried. Yeah . Or full-time. 40 hours a week is hourly. Hourly if you're paid hourly is considered variable income. Sometimes if we can get it in writing from the employer saying that full-time by their definition is 36, 38 hours a week. Yeah. Sometimes we can get that to go through. But that only works if we get multiple pay stubs showing that every single week they hit that benchmark. Yes. I've had <laugh> situations where, and this is, this is not fair to borrowers, by the way. I'll be the first to say that. This is where common sense lending falls short. I've had,
Speaker 3:I'll take the other side just
Speaker 4:A little bit. Well sure. This is more my talk track for customers <laugh> . But you know, I've had people get, show me pay stubs where they're paid hourly, but one week they have 37 hours and the other week they have 35, and then one week they have 39. But it's by literally by definition it is varying. It is variable. Right.
Speaker 3:Well , let's, and let's come up with , uh, the quick list right here. People with exotic income who might not think that they have exotic income. Nurses, police. Mm-Hmm. <affirmative> firefighter. Uh, an hourly posi manufacturing. Yeah.
Speaker 4:I just , the trade the trades. The trades.
Speaker 3:All the trades. Yeah . If you're a plumber, carpenter, something like
Speaker 4:Electrician Yeah. You,
Speaker 3:You are getting paid. But what we would want to examine before you go and walk through a house and fall in love with it ideally, is how is the mortgage world
Speaker 4:Gonna view your income?
Speaker 3:Right. Because if one month is this, the next month is that we're trying to smooth out to some kind of average.
Speaker 4:Well , yeah. And that's exactly what the underwriting world will make us do is that if they say your income is variable and they label it as such. Yeah. Generally they make us do a two year average of your historical earnings to calculate what is the income number we get to use on your application for qualifying for the mortgage. And that isn't necessarily always a bad thing, but if you haven't been at your employer very long or maybe, or
Speaker 3:If you were at one last year and you're at a new one. Yeah . And we're trying , oh, I was a mortgage person at, you know, a, B, C mortgage and now I'm at x, y , Z mortgage. Yeah. To try to string those two together. Well , you can do
Speaker 4:It. And what about raises, right? Yeah . If two years f ago you were at a certain hourly wage and then logically by staying there and getting better at your job and working your way up the ladder, you got a raise. Well you can't just use your current hourly wage as your income. You still have to use the average, which is bringing down your average, if your hourly wage used to be lower a year or two ago Yes . Than it's now. So all those things can
Speaker 3:Wait , wait , Tim , you're saying details matter?
Speaker 4:Details matter. And you know, I can't say that it's always going to be an issue, but if we're helping someone stretch, like we were just talking about with your customers previously. Yeah . Yeah . If they're stretching to buy a house that they want to be in long term , that probably means that what's called the debt to income ratio all their monthly, you know, liability payments compared to their monthly income probably means that's pretty tight already. Yes. Right. So all of a sudden, if underwriting makes us give the variable income person a quote unquote haircut and maybe their usable income, again, not their real life income, but usable income Yes . Went from 4,000 a month to 3,600 a month, that haircut might be enough where all of a sudden we have problems approving the mortgage if
Speaker 3:They want to reach in your, in our example. Yes.
Speaker 4:So this is tough because we fully appreciate
Speaker 3:That , Elle , why would you think, Hey, I gotta a raise six months ago. I've been paying bills with that first half a
Speaker 4:Year. Now let me use it. But to play , to play devil's advocate. 'cause I think you were gonna about to maybe opine on the other side of this from the underwriter's perspective, which they always think in worst case scenarios, right? So maybe why don't you play that side of the coin
Speaker 3:For a statement ? Well , it's life can easily go back to what it was seven months ago before you got that raise. It's as simple as
Speaker 4:That. Well , and it's, you know, if you're not guaranteed to work X number of hours per week, who's to say that maybe your employer says, ah , you know what , we don't need you as much, maybe we're gonna cut your hours or something like that. Right? 'cause again, if it's variable, if it's not set at a guaranteed number of hours per week, 'cause that , that's the key is like whether it's 40 or 32 or 36, right. If your employer confirms in writing that you're guaranteed to work this number of hours per week and it's, and you're a full-time employee, generally underwriting will accept that as gospel. Right. But if they're not gonna give us that in writing and many employers will not for whatever reason. Mm-Hmm . <affirmative> , we have to consider it variable income for qualifying for the mortgage.
Speaker 3:If you're thinking of venturing out into the mortgage and real estate space and would like a guide who's gonna make sure you not only get that accepted offer, but get to the closing table, mindful of the details, you know what to do, click on that blue button@acuacuate.com. Tim, thanks for hanging out with me. My
Speaker 4:Pleasure. We'll do it all again next week.
Speaker 3:You bet. You've been listening to the Acuate Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 1:The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the host or guests of Acuate Mortgage and Acuate Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.