Speaker 1: 0:00

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: 0:20

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 Brian and David Wickers. Welcome

Speaker 1: 0:34

To the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with Aced Realty Advisors, and also the majority owner of Accu Mortgage, where my individual N ML s ID number is 2 5 9 6 1 0. And I'm here today along with my son, David, whose individual NMLS ID number is 3 2 8 8 4 7. And who I am proud to announce to our listening audiences as of today, the President of Accu Mortgage. Congratulations, David.

Speaker 3: 0:57

Thank you, dad. Uh, what's exciting is what was true yesterday is gonna be true going forward. We show up every day and work to help our clients do a cool thing, which is buy a house or make the money cheaper if we can.

Speaker 1: 1:11

There you go. Well, you've done a great job for the company and our clients in your first nine years with ANet , and I'm excited to have you lead the next chapter of our history. Well , uh, if you have a, and by the way, I'm, I'm , I'm here every day , so don't worry, you or the listening audience. Yeah. Still, still , uh, active every day . Uh , but glad you're leading the charge. If you've got a question or a comment, you can call or text us on the WTMJ talk and text line , which is 8 5 5 6 1 6 1 6 20, and you can get a podcast of today's show wherever you normally get your podcast. Well, one of the things we can be thankful for, in addition to a green and gold victory , uh, yeah . This last week was a little easing in mortgage rates during the Thanksgiving week. And instead of being a touch higher than 7% according to mortgage news dailies , uh, tracking of the 30 year fixed rate , uh, Fannie Mae, Freddie Mac, great . We're now a touch below , uh, 7%. Uh , according to their tracking of the market, we're at about 6.92% for the best case scenario, which should actually be 40% down. Uh , we always do our kind of advertising and show quotes with 25% down, you get a little better deal if you put 40% down. Yep . And by the way, their tracking rate comes with some unspecified upfront lender fees. Well, the reason cited for the easing in long-term rates like mortgages and the 10 year treasury yield was that President-elect Trump's nomination of billionaire hedge fund manager, Scott Besant , as Treasury Secretary, made the market players feel comfortable that he's, air quotes a safe pair of hands. And Oh , and what they mean by that, according to what I read, and I'm sure you read the same thing, maybe he's gonna get , uh, president Trump to take a little softer approach on those tariffs, which would generally be bad for interest rates. Right. Because the tariffs are , uh, would increase the costs of goods, right . That are coming , you know, that the consumer pays. Yes . And that would ignite inflation, which is the enemy of interest rates. And , um, and also that he's just gonna do a good job of implementing everything else , uh, and boost economic growth and target the reduction in deficit spending. So anyway, the market loved it, and long-term interest rates came down. We also got the Fed's preferred measure of inflation. Uh, last week, Wednesday, when the Bureau of Economic Analysis , uh, reported that personal Consumption expenditures index , uh, was running at an annual rate of 2.3% overall, and the core rate when you strip out food and energy , uh, 2.8%, which was exactly in line with expectations. Remember, the Federal Reserve wants that core rate to come down some more from 2.8 down to 2%. Um, and so the market just said, oh, that's good. And actually drifted down a little bit. Um, let's say, David, that you, you know, had a billion dollars to invest in, in something, and you said, I need some fixed fixed rate , you know, action in my investment portfolio, if you bought a pool of 30 year fixed rate mortgages where the borrowers were paying, let's say 7% on the nose , do you get the full

Speaker 3: 4:00

7%? No. Uh , the , there , the , the full plumbing of the mortgage ecosystem, it's your whomever you make your monthly payment to, they take a sch nibble for the pleasure of taking your , taking in your monthly payment .

Speaker 1: 4:14

A quarter of 1%. Yeah.

Speaker 3: 4:15

And then Fannie Mae and Freddie Mac for guaranteeing to the end investor that the end investor will get their money back. They take a sch nibble of , of that as

Speaker 1: 4:24

Well. Point six of 1%.

Speaker 3: 4:26

And then, and then yes, if you're the teacher's pension fund of Oslo, Norway, you get the rest, which is, you know, still pretty nice, but you don't get the full boat.

Speaker 1: 4:35

Well , 6.15 in my little example here , um, on a pool of mortgages where the borrowers are paying seven. Yeah . And then if you subtract out the inflation rate of 2.3, your , your real rate of return is 3.85. Yeah . Your other alternative is, Hey, maybe I wanna buy some 10 year treasuries. Those were floating around four and a quarter this last week. Uh, and so if you take out the inflation of 2.3, you're down to 1.95 on an inflation adjusted return. Still quite a thick spread there between the treasury and mortgage back . So though we'd like to see that come down in the real world, meanwhile at , uh, low overhead acuate on a $300,000 30 year fixed rate with 25% down to buy a single family owner occupied home with all the other positive attributes, we ended the week at , uh, your choice of 6.5. If you were willing to pay , uh, 1.9% in points to get that rate down, that would make the a PR 6.69. Or you could have 6.75 on the 30 year fix with one and a quarter points, bringing the a PR to 6.89 or 6.99 with an a PR of 7.04. Uh, by the way, the next big economic , uh, report coming up is

Speaker 3: 5:42

Jobs Report Friday.

Speaker 1: 5:43

Jobs report on Friday. Yes . December 6th. And remember, a stronger than expected jobs report is bad for mortgage rates , uh, weaker than expected. And I don't even know what the expectations are yet. I haven't read any articles saying what they are. Uh , but , uh, remember that's what caused , uh, mortgage rates to dip down towards 6% in late August, was some weak jobs reports. Yeah . And then they got a lot stronger and so on and so forth.

Speaker 3: 6:07

Alright . Expectation is one eighty three, a hundred and eighty 3000 jobs. Previous report, again, for everybody was 12,000 jobs, which was why everyone went. What?

Speaker 1: 6:17

Okay. Alright . When we come back , um, let's do, let's do, should we do a story or, I've got some, I've got some , um, uh, home price appreciation numbers, both historical and forward looking . Well, Dave , it'll surprise you with his pick. That's fine . What we're gonna talk about next, you are listening to the Academic Mortgage in Realty Show on AM six 20 WTMJ

Speaker 2: 6:39

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 1: 6:48

Welcome back and thanks again for joining us on this , uh, December one edition of the Academic Mortgage and Realty Show. Uh, David , uh, even though we're , we've got both , uh, backward looking home price appreciation figures , uh, from Fannie Mae, Freddie Max regulator , uh, we also have forward looking mm-Hmm. <affirmative> , uh, home price appreciation numbers for all the Wisconsin markets. We'll get to that a little later in the show. But , uh, we've got a radio ad running right now talking about Patrick and Monica who are first time home buyers . And I think their story is interesting , uh, in that a lot of lessons to be learned here. They , they came to us after mentioning to a friend who is a multi-time academic client, that they were getting concerned , uh, because the bank that they had chosen for their pre-approval and where they actually started the financing process for the purchase of their , uh, new construction spec home. Yeah. So this home was already completed. It was a model home, I believe , uh, had not yet offered to lock in their interest rate. This is back in like the second week, first , something like that, a second week of October. And interest rates were starting to itch up at that time, and they also had not ordered the appraisal. So they were just getting a bad feeling. They're like, you know, we're having a call and say, well , can't we lock in our rate now? And being first time home buyers , they're like , yeah , don't know what's expected.

Speaker 3: 8:00

Which is fine. Like, you can float your interest rate. It's , to your point though, it is odd, like, why can't we talk about this? Can't we talk about locking floating? Should we, shouldn't we? But they just, there was no conversation being had apparently.

Speaker 1: 8:12

Right. They'd gotten their initial disclosures with the rate floating, but then no follow up conversation. And , um, so we connected right away by, by phone. As soon as I got the battle alert, you know, from my friend and client saying, these people need help, can you help 'em ? So he jumped on the phone right away, gathered their application information , uh, put together some specific rate and closing cost numbers, which made them feel really a lot better. Oh yeah . And they wisely decided to lock in , uh, one of those options. And remember this was in mid October when rates were lower. And so we were able to lock in a 6.625 rate with loan costs that were, are you ready? 3,600 bucks less than what the bank was quoting for their normal losing closing costs . Yeah . Um, of course we got the appraisal order right away, and by the way, then we were still ready to close in three weeks. Oh yeah . But wait, there's more. Oh , there's more. They were buying , uh, new construction, as I mentioned, spec home, and they wanted to preserve some of their savings. Uh, and this was a , you know, more than typically , uh, high priced, higher priced home. Right. Not your typical first time buyers. Um , and , and so they wanted to put less than 20% down, which means what,

Speaker 3: 9:24

Can I just quantify though what you're talking about? I think we've previously said the meat of the market is anywhere from 200 to 500,000. Is that Sure . Yeah. And so you're saying, Hey, this is above that meat of the market price wise .

Speaker 1: 9:38

That's right. These folks are a little, well, maybe they're not older. 'cause I think, what did we say the median first time home buyer age was like

Speaker 3: 9:45

3 37 38 ,

Speaker 1: 9:46

Something like that. Yeah. Okay. So anyway, but they're well established in their careers. Yeah . And so are able to afford a nicer first home. Yeah. Um, well anyway, they need to pay PMI because they're gonna put less than 20% down, and that was gonna be about 40 bucks a month. And it is gonna save them. That allowed them to keep like 12 grand in their pocket. Wow. You know? 'cause we kind of engineered this. This is what we do. Right. This is the standard practice for all academic loan consultants. How much do you want to invest in down payment at all closing costs? Let's start with that number. Yes . And , uh, and

Speaker 3: 10:21

Then what does that get you?

Speaker 1: 10:22

Right ? Yeah , exactly. Where does that put you? But that bank that they had started working with was telling them that their PMI would automatically drop off really fast when , when their loan got down to 80% of the original purchase price. What is wrong with that , uh, statement, David ? Um ,

Speaker 3: 10:39

Uh , it doesn't have enough detail. It's wrong, but it's wrong for lack of specifics. Yes. At any time you can petition to have PMI removed. If you feel like you have achieved 20% equity through a combination of either paying down the loan balance and or home appreciation, the, the inaccuracy of that statement that you said automatically at 20% the true trajectory, and it it's listed in the amortization schedule that they would probably get at closing. That probably exists in the software. It falls off automatically at 22% equity. Right . To allow for, you know, gyrations in home value.

Speaker 1: 11:24

Who knows? That was just a negotiation whenever that law went into . Is that right? 25 years ago? Yeah. So , uh, so that in real terms, the loan would reach 80% of original value in the summer of 26, but it would take until the summer of 28 for it to automatically fall. So just a little, you know , misinformation there. And then the bank was also telling them they did not have to escrow for property taxes and insurance, which would be super rare with less than 20% down. All the Fannie Mae servicers we work with , uh, require escrowing for taxes when you have less than 20% down. And they were fine with doing that. Um, and that led us to another topic , uh, which was the property tax proration for this new construction hall . Oh. And right, because did I mention it's new construction new , yeah. So let's put a pin in that. We gotta take another quick break. Yeah . And when we come back, we're gonna tell you how we really helped them on that little topic. You are listening to the Academic Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ, getting

Speaker 2: 12:27

You into the home of your dreams. Here's more of the ACU Net Mortgage and Realty Show with Brian Weer on wtmj.

Speaker 1: 12:35

Welcome back and thanks again for tuning in. Uh, we're talking about , uh, Patrick and Monica, first time home buyers who we helped , uh, purchase their first home , uh, in November. And how we , um, improved their situation quite a bit. Not only in terms of the rate and closing costs just given, you know, their , the bank that they had originally chose was not giving 'em a feeling that , uh, they were on top of things. And so we quickly took over and, and got this loan closed in just three weeks, by the way, including the appraisal and some other things. But the topic that we were just about to talk on , um, it has to do with their property taxes. And I mentioned this was new construction. Yes. And so in the Wisconsin offered a purchase , um, there are three boxes you can tick as to property tax probation. And this agent who actually is their main practices in Illinois , uh, had written the offer using the most common box, which is, Hey, we're gonna prorate taxes based on the prior year's tax bill. Which is very common. Yes. What's the problem with that, David? On a new construction,

Speaker 3: 13:39

The prior year's tax bill w was for a house that wasn't a house, it was just some dirt. And so Correct . If last year's tax bill was a hundred bucks, then you're getting a proration on a small amount. You're not getting a proration based on what the future next bill will be. Correct .

Speaker 1: 13:57

And so that was actually $161. And so I'm noticed that, and I gently pointed out to the agent that maybe they wanted to check the second box, which was to use the current assessed value , uh, which was the property's value as of January 20, 24 times the most recent known mill rate or, you know , tax rate per thousand for that municipality. And much to my surprise, she proposed that to the builder , and the builder agreed, which means that they received a, about a $3,100 property tax probation <laugh> . Okay . At the closing instead of just , uh, 140 bucks. And so apparently the builder just thought, oh yeah, that's the right thing to do. Was I lead us to say they're pretty happy about that.

Speaker 3: 14:43

You Yeah. Simply from them walking in to Brian's operating room, you saved them 6,000 plus dollars both to manufacture the mortgage and be smart about the property taxes.

Speaker 1: 14:56

Well, and as you say on the ad, that's why there are latest raving fans. But again,

Speaker 3: 15:00

The , I would be too, I would talk about if you save me 3000 bucks, I would talk about you too.

Speaker 1: 15:04

Or in this case, six grand. Yeah. Now, the , the, the other interesting , uh, tidbit is that when you close on a home in November, your first payment's not gonna be until January. Yeah . So when you're escrowing for taxes, you actually walk out of you . There's not time for you to make that first payment and then get a check back from the loan servicer. Right. 'cause that's gonna happen in January. Right. And so what happens for a November or December closing is as a buyer who is escrowing, you walk out of the closing with a check. Now you brought the money in and then you got the credit for that tax preparation. But they , they walked out with a check for like, I'm gonna say 3,600 bucks. Go

Speaker 3: 15:43

Ahead. I like, I like to tell clients, you're this money is getting routed many places. Yeah . And when we hand them a check to go pay the property taxes, they are assisting in routing some of their own money where it needs to go.

Speaker 1: 15:57

That's a good, that's a good way to describe it. And so they get a check payable to them jointly, they, the borrowers, the buyers, and the municipality. And then when the tax bill comes out in December, which is still not out yet, that's gonna get mailed to the new house. Right . And then they're gonna take that check into the treasurer's office and endorse it over just to the treasurer. Mm-Hmm . <affirmative> . And then if it's too high, they'll get a refund check back. And if it's too low, they gotta add some of their own personal funds. Yeah. David , you got a comment?

Speaker 3: 16:25

I had a client close before , uh, Thanksgiving and this is the real life stuff. I was sitting there at the closing with them and they've got a lot on their minds. They're buying a house, they're moving. And I said, okay, here is this, here's this check when you get, you know, get the property tax bill, if you need a reminder of, wait, how did all of this money come together? Why am I showing up with all of this money for the property taxes? Call me. 'cause we talked about it there sitting at the closing table. But three weeks from now, four weeks from now, are they gonna remember necessarily how , how in all the ways, you know, how did the seller contribute to the property taxes this year? They're not Right . Gonna necessarily remember. And I think our job, not only to help clients get to the closing table, but everything that can come after, let's just talk like normal people. You know, you're about to show up and pay the property taxes. If you need a refresher on how that came together. Yeah . Just call or text. Well ,

Speaker 1: 17:24

I'm talking about it . Right ? 'cause you got a pro , you know, nine times outta 10. Although we do have a loan closing this week where buying from family members and they decided because of the sweetheart deal they're getting, there was gonna be no property tax preparation. Sure. Right. So they have to foot the whole bill and they're not getting a credit at the closing for the number of days in 2024 that the seller owned the house. But, you know, 98 times out of a hundred mm-Hmm. <affirmative> . Mm-Hmm. <affirmative> , uh, you're , you're getting a proration from the seller for the time that they owned the house. So, as we said, these folks are mighty happy and they're moved into their house now and, you know , cool. Had Thanksgiving in their house. And, and , uh, happy customers, we'd love to make you our next happy customer. Alright . Uh, when we come back, we are going to talk about , um, the FHFA, the Federal Housing Finance agency's latest numbers on home price appreciation around the country, and also right here in our own backyard. But , uh, right now it's time to turn it over to the WTMJ Breaking News Center.

Speaker 2: 18:22

Don't break the fact to get into a house. Back to the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 18:29

Welcome back and thanks again for joining us on this edition to the Accu Mortgage and Realty Show. Well , David , uh, probably 25, no , maybe 30 years ago , uh, case Schiller chip case and I , I think it was Bob Schiller came up with the very first paired sales analysis home price index. And that's where, instead of looking at just the raw prices of what homes are selling for, like we do when we quote the median sales price from the realtor data. Yeah . Uh , that doesn't account for the size of the home, the number of bathrooms or bedrooms. 'cause she might have a different mix of housing stock from one period to the other. So the K Schiller index was the first one to come up and say, you know what, we're gonna look at the same home actually selling twice over a period of time. And somehow through statistical analysis come up with the rate of appreciation, you know, on a quarterly or a month to month or an annual basis. Well now, Fannie Mae and Freddie Maxx regulator, the Federal Housing Finance Agency has for probably a similar amount of time, maybe 20 years now, had their own home price index, which again, is believed to be more accurate than, let's say, the blunt instrument of the , uh, of the realtor's media .

Speaker 3: 19:35

Just to say it , just to say it , it's your house. When it , the last time it was sold, and then this new time it was sold, the interim measuring stick is valuing my house based upon what my neighbor sold, which is Yeah . Proxy. It's, it's , it's useful. But this analysis is the same 1, 2, 3 main street. Yeah.

Speaker 1: 19:57

And , and they throw out outliers by the way. You know, like if your house doubled in value, they're like, that ain't right. And so they kicked that one out. And then I honestly do not know how they, you know, if your house sold 2.5 years from one period to the next, how do they translate that into an annual rate of appreciation for the whole bunch? I have no idea. Okay . But let's just say that it's pretty good. Yeah. And so they came out with their home price index for the third quarter. That's the most recent. So comparing home values for the quarter, ending September 30th, 2024 to a year earlier, which one of these states we're gonna take it at the state level first, David, which one of these states saw home values actually decline over the most recent year? Was it Florida, Louisiana, or Washington? DC Florida. That's a good guess. But to my surprise, as a state, Florida was actually still plus 1% Louisiana. For reasons I don't know

Speaker 3: 20:51

You , but let's just also say it's hard to declare uniformity over an entire state of Florida.

Speaker 1: 20:59

Absolutely. We're gonna get to that in a , in a , in a in a minute. Yes. Uh , Louisiana was down minus 0.4% and Washington DC was down 3.1%. Okay . So that's at that level. Uh, by the way, states with the highest appreciation , uh, the list of top five. I'm gonna give you the list. You , you just pick which one you think was the highest. You think it was New Jersey, Connecticut, Rhode Island, Delaware, or Hawaii was the hottest

Speaker 3: 21:24

Year ever year . Rhode Island.

Speaker 1: 21:26

Good. Good Guess they were at 8.4 Hawaii. Top the list at 10.4%. The other three were also in the , uh, 8% range. Huh ? Here in the upper Midwest. I'm just looking at states that touch Wisconsin , uh, Illinois was at 7.2%. Home price appreciation over the last year. Michigan 6.9, Iowa, 4.7 Minnesota at 3.7. Hey, you know what, we could also call that? That's the , uh, NFL uh , central division. Where do you think Wisconsin fell in all of that?

Speaker 3: 21:56

Uh , I'm gonna say leading the pack . Are you gonna tell me we all top of the pack ? I like

Speaker 1: 22:00

It. Okay . Ah , 6.70, okay . 6.7. Now though, if we drill down to the metropolitan area

Speaker 3: 22:07

And is this Wait , wait. Is this where I can make my comment like, Brian , I'm gonna wait for home prices to moderate before I get into that ? Yeah, go ahead. How's hunt ?

Speaker 1: 22:16

How's that working out for you ?

Speaker 3: 22:17

Good luck. Yeah. Was that something I heard in 20, 21, 22, 23 or 24. Oh, wait . All of those years, right?

Speaker 1: 22:24

Right. Yeah. Home prices keep going up and will come to the reason for that. And by the way , uh, maybe in the next segment I've got the forward looking . So this is , remember what happened in the last year and now Yes , we also have in our hip pocket. What do some smart people think it's gonna be going forward? If we drill down here on the Wisconsin metropolitan areas , uh, which metro area do you think was the hottest? I'm gonna give you a choice of three. Do you think

Speaker 3: 22:49

It was ? I think I , I think I know the answer. 'cause I , you , uh, you were looking at some of this data. Is it Manitowoc?

Speaker 1: 22:56

No. What not for the rear view mirror. Uh, this was the osh . So here are the choices. Your choice. Oshkosh, Nina, was it , or was it Green Bay or Kenosha, which also pairs up with Lake County, Illinois as a metropolitan area.

Speaker 3: 23:09

Um , Kenosha,

Speaker 1: 23:10

Good guess. Uh, and it was close , uh, Oshkosh, Nina topped the list at an 8.5% appreciation rate. Wow . Kenosha was right in their hip pocket. 8.2%, which by the may way that MSA is in the top 100 MSAs in the country. And so they ranked number 12 in the entire country, huh ? For metropolitan statistical areas . Green Bay up 7.2. Milwaukee Waukesha, MSA was 6.7. Exactly the same as the state. Madison 6.6, Appleton 6.5. And , uh, the weakest metropolitan statistical area. Your mother's alma mater. Uh, and where your mother and I were married , uh, Eau Claire Wisconsin was only up one Blue goals five. Yeah. Go Blue Goals , uh, year over year nationwide, by the way, in terms of , uh, weakness, there were three Florida MSAs as you kind of suspected, and two Texas MSAs that were the, had the biggest decline. Austin was down 1.5% year over year . Cape Coral Fort Myers down 2.9 Jacksonville, down 3.1 San Antonio down 3.2%. And Sarasota Bradenton minus 6.4% year over year . Alright , so there you have the rear view mirror. As long as we're talking about the stuff when we come back, let's talk about the future. Uh, home price appreciation predictions. You're listening to the Acade Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ.

Speaker 2: 24:32

Important home buying questions and answers you can count on. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ. Welcome

Speaker 1: 24:42

Back and thanks again for joining. I'm Brian the Elder. That's David the younger, taller , more handsome of the wicker men. And , uh, so David , we're just talking about past home price appreciation , uh, according to the Federal Housing Finance Agency's home price index. And , uh, the only entity that I, I've been able to find that has the , um, courage to come out and say, here's where we think home prices are gonna be in the future. Are the economists at Zillow? You got coming .

Speaker 3: 25:10

We're an entity. Come on. We've been saying for, we , we've been , um, we bold about home values for years here on the Anette Mortgage and Realty Show.

Speaker 1: 25:19

Well, it's kind of just basic economics, right. Supply and demand. Uh, by the way, last week Freddie Mac came out with some , uh, observations about the housing and mortgage market. Mm-Hmm . <affirmative> , they don't do the specific , uh, forecasts like Fannie Mae does , uh, anymore. They stopped doing that a couple years ago. Oh, okay. But one of the interesting nuggets that they had is their estimate that throughout the country , uh, looking at the population and lots of other things, very sophisticated analysis, they estimate that the United States housing market is short about 3.7 million housing units. Yeah . And just to put that in context, you know, the annual , uh, rate of sales for existing homes, but most recently is hovering just under 4 million. So we're like short an entire year of existing home sales. So that's the supply side of the equation. Yeah . Household formation continues to occur, and so the demand side isn't waning. Wow . And uh, you know, that puts up upward , you know, you got steady demand and not enough supply. That's the recipe for prices going up. Yeah . So, so this next bit of information is from , um, Zillows economists . And this is their forward looking . They're saying, Hey , uh, where do we think home prices will be in these various metropolitan statistical areas a year from now? And I'll give you a choice again here, we'll play the multiple choice game. Uh , which of these three do you think and is gonna be the hottest according to Zillow? Is it gonna be Green Bay, Wisconsin, Sheboygan , or Manitowoc?

Speaker 3: 26:52

Okay, this is the data Manitowoc.

Speaker 1: 26:54

Yeah. They're predicting that home prices in Manitowoc on average will be 5.5% higher , uh, year , uh, in October 25 compared to October of 24. They got Sheboygan at 4.2 and uh , green Bay at 4.1. mm-Hmm. <affirmative> , uh, they've got the Milwaukee Metropolitan area at 2.2 Madison at 2.4. And then, you know, everybody else is positive. Uh , let's see, the lowest one in the bunch is , uh, Stevens point of 2.1 and everybody else is in the twos and threes. So that's not, you know, everybody would like their home to go up in value. Right,

Speaker 3: 27:29

Right. After they move in. Yes. They would like, yeah . Right , right . They would like a deal and then the next day they would like home appreciation. Please. Isn't

Speaker 1: 27:36

That funny how that works? Yeah. Um, yeah . One other bit . Speaking of the FHFA, which is the Home Price Index people , uh, they also came out this , uh, last week and made it official the new , uh, magic loan amount , uh, maximum loan amount that Fannie Mae and Freddie Mac , uh, can buy. Uh, is now, are you ready? $806,500 <laugh> ? Uh , wow . Do any guess , do you wanna know? That was what that number was when we started acting

Speaker 3: 28:05

At , I I was gonna ask you , um, 1 25.

Speaker 1: 28:09

No, come on. We're not that old. Two 40. Okay. It was $240,000 in 1999. And then , so this, this number goes up every year based on a formula on what home prices cost . I don't know how, I mean, I think the median existing home price is like four 30 or something in America. So I don't know how they get to 8 0 6. Frankly, I tried to look that up and I couldn't find it. Uh, but , uh, it, it has gone up. And then guess what? During the great , uh, financial crisis Yeah . When home values actually did come down, they held it steady. They , they , so they never let it go down. They, they kind of always keep it at what, last

Speaker 3: 28:45

Year ? Four at four 17 ? Yeah , that's the number that's tattooed in my memory. Yeah .

Speaker 1: 28:49

It was $417,000 for a long time and then started going up. So here we are at 8 0 6 500, which means if you wanna borrow 8 0 7, you're a jumbo loan. Yep . And so what are some of the differences, David, between having a Fannie Mae, Freddie Mac loan available to you and a jumbo loan?

Speaker 3: 29:05

I would just go jump . Yeah, I would just detail that a jumbo loan , uh, brings a level of scrutiny and depth of underwriting that doesn't, that is not required for a Fannie Mae or a Freddie Mac loan. Probably not always, but just probably for a jumbo loan we might need two years of tax returns as a , as compared to perhaps just a regular Fannie Mae Freddie Mac loan. If we don't, if we don't need your tax returns, I'm not gonna ask you for them.

Speaker 1: 29:33

Yeah. We'll just get the W2 pay stub .

Speaker 3: 29:35

And the other uh , element is reserves can come into play on a jumble loan as well. Like, oh my goodness, we're lending you north of $807,000. I'd like to make sure you have some money left over to pay bills if you are , uh, you know, tight month to month , that , uh, reserve analysis usually is not part of Fannie Mae and Freddie Max underwrite. Correct.

Speaker 1: 30:00

It , it would be, it would be rare. Other things that I could think of. The rate on a jumbo loan is about 0.4% higher. Sure. Generally point 0.375 ish higher than on a conforming loan. Uh, you , you, I agree. Uh , reserves. The other thing though is that when you go Fannie Freddie , you put it through their automated underwriting systems, which will typically allow borrowers with good credit to devote up to 49.9% of their gross monthly income towards their housing payment and all other monthly debts. And jumbo investors are typically , uh, not that aggressive. That's called the debt to income ratio. Yeah . Alright. So you're up to date on all that stuff. David, when we come back, what are we gonna talk about?

Speaker 3: 30:36

I have a first time home buyer that I've , uh, connected with this past week via Teams call. And I just want to highlight some of the w it was interesting the dynamic between this couple on how they're approaching the home shop. So I'll get into that after this break. You are listening to the Accident Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 30:56

Find a place to call home without the headache. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 3: 31:04

Welcome back to the Accu Mortgage and Realty Show. I'm David, that's Brian over there. Dad , I , uh, had a video call with a new client this week referred to us by their real estate agent, and we welcome all the ways in which people want to analyze how they go about buying a house. What , what was , uh, encapsulated in this couple was the two very divergent ways in which they were approaching their house hunt. Oh,

Speaker 1: 31:35

Okay. Tell me more .

Speaker 3: 31:37

He , well, he and his questions were focusing on , um, down payment thresholds. He was asking me the difference between a conventional loan and an FHA loan. Okay. He wanted to know what were interest rates doing, what was my expectation of what interest rates might do going forward as they begin their house hunt in analytical data gathering approach.

Speaker 1: 32:02

I was gonna say, is this person perhaps an engineer or an accountant?

Speaker 3: 32:05

Uh, if he's not, he is one late at night. Okay. Alright . Got it. But, and then she was focusing on the amount of house that they could be approved for, what the monthly payment might be and the budget and basically neighborhood that that might allow them to get into. Okay,

Speaker 1: 32:25

Gotcha . Right.

Speaker 3: 32:27

For them. The , one of the things that I highlight too, so they're looking in, let's say the mid two hundreds is their preference. Okay. I, when I run my analysis on their pre-approval, I can approve them for up to a $300,000 house. Okay. Do they want to afford a $300,000 house? No , no,

Speaker 1: 32:49

They don't. Not from what you're telling me.

Speaker 3: 32:50

Probably not. But this , uh, a theme that I have brought forth with a lot of first time home buyers is for the right house reaching for a little bit more budget Sure. Allows you to not have to come out of pocket and pay cash for improvements. Right. And, and because I was on this video call the aha that I saw in their eyes for viewing, not just acquiring the home, but then the cost of actually making it nice or making it what they want it to be.

Speaker 1: 33:27

Yeah.

Speaker 3: 33:28

Was sure, we were talking about mortgage, but really we were talking about, we were talking about how to get into a home and use the cash while keeping what they want in reserve as well. Sure.

Speaker 1: 33:41

Yeah. You buy that nice house that doesn't need anything done to it and you know , that's, that's one way to go about it. Right, exactly. 'cause it's all done and right . So maybe you're gonna have to, you're obviously you should have to pay more for that house than the one that's not as nice and is gonna need you to pour in 10 grand or 15 grand to get it where you wanna go.

Speaker 3: 34:00

Well, and uh , this , so this is , uh, me stealing from Brother-in-Law. Tim Holdman , but quantifying for them. Okay. I maybe you only would prefer to pay two 50 for a house. Yeah . Okay. But two 60 a $10,000 , uh, yeah . Increase is $10,000 to the seller. For you it's a $70 monthly payment decision. Alright.

Speaker 1: 34:29

What , what is their percentage down or amount down that they're thinking about just by the way,

Speaker 3: 34:33

They would prefer probably anywhere from just 3% to maybe 5% down, depending,

Speaker 1: 34:37

Can we document any additional money that they're not gonna use? Perhaps just the old window dressing like, Hey, let's look at your return

Speaker 3: 34:45

Per , perhaps. But, but ultimately for them they're mindful of, you know, how much money they're actually bringing at the closing table. But my, my emphasis for them was you can write a strong offer on price, but it's not like you're showing up with that increase for cash. Correct. And , and I think that allowed them some breathing room to Sure . Be to , to look at houses that maybe don't need the amount of love and improvement that they were afraid of before our conversation.

Speaker 1: 35:15

Sure. And that's gonna be a popular price point too. Yeah . Anywhere between the two 50 and 300, they're gonna have a lot of competition. Yeah . All right . Well good, good counseling on your part, David. Yeah . Alright , so , uh, so we've got , uh, big news coming up this Friday. The jobs report could make interest rates go one way or the other. We never know how that's gonna turn out. Yeah . But , uh, things are a little bit better than they were to start the week anyway , uh, than they were let's say two weeks ago in terms of , uh, mortgage rates and hey, if you can find a house that you love, now's a great time to buy it. Right? Yes . You're have less competition. Yes. Alright , well thanks for joining us , uh, for part of your Sunday or whatever day you're listening to this on your podcast. We appreciate you tuning in and we'd love to help you or a loved one, or friend or neighbor become a home buyer. All you gotta do is click on that blue button to get started@anet.com. You've been listening to the ANet Mortgage and Realty Show on AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Acuate Mortgage and Realty Show are solely that of the host or guests of Acuate Mortgage and ANet Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.