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: 0:21

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: 0:35

To the Accu Mortgage and Realty Show, pre-Christmas edition. I'm Brian Wicker, licensed real estate broker with Kinnan Realty Advisors and the majority owner of Kint Mortgage, where my individual NMLS ID number is 2 5 9 6 1 0. Here again today with my son David, who's president of Academic Mortgage and his individual NMLS ID number is 3 2 8 8 4 7. So , uh, David, lots of news , uh, this last week, and let's start out with the Federal Reserve. Yep . Who announced that they're cutting their rate singular mm-hmm <affirmative> . By a quarter percent on Wednesday. And I think the average person, you know, walking down the street with their for think wall , then mortgage rates must have gone down. Yes . But may in for soThe

Speaker 3: 1:20

Rates got worse. Mortgage rates.

Speaker 1: 1:23

Mortgage rates got worse. Yeah. So the exact opposite. You know, what's up and down , what's up is down, you know,

Speaker 3: 1:29

What's left is right. Yeah.

Speaker 1: 1:30

Not , not what you expect, expect what's hot is cold . But , uh, remember, what you gotta remember, first of all folks , is the Fed only controls one interest rate, which is the very short term overnight rate that banks cha charge each other Yes . To borrow money. That's called the Fed funds rate. And they did lower that a quarter. The only consumer facing interest rate that that impacts directly is the prime rate, which is used to set rates on credit cards and home equity lines of credit. So, good news there is, that primary rate is now down to 7.5% <laugh> . And that's a full percentage lower Yes. Than what it was , um, last, last summer. Yep . Unless we forget. It was kind of a three point, was it a three and a quarter or 3.75 for it seemed like forever

Speaker 3: 2:09

3 7 5 for forever during ,

Speaker 1: 2:11

During the covid crisis. Well, anyway , um, why did mortgage rates and other long term and short term rates go up after the Fed said they're cutting rates statement ? What's the story? Uh ,

Speaker 3: 2:24

My, my quick summary would be it's not about what happened on Wednesday, it's how they talked about the future. Aha . And that's what markets care about. By the time Wednesday arrived, everybody knew the cake was baked. Uh , by the time one o'clock showed up on Wednesday afternoon, it was all about what's next.

Speaker 1: 2:43

Although in , uh, in , uh, chairman Jerome Powell's press conference following the announcement, he said it was a closed call in the quarter point cut. Like there was some debate whether they should do it at all. But you're right, it was Which,

Speaker 3: 2:55

Which might be jockeying Yeah . More than truth.

Speaker 1: 2:59

Okay. Well, they certainly changed the expectation. And in fact, at, at , uh, four of the Fed meetings, and this was one of 'em , uh, the 19 participants in that meeting come out with their predictions. They say, here's where we think we're gonna be going with that overnight fed funds rate in the next year or two. Back in September, they had penciled in not only two more cuts for this year, which came true, but they had also penciled in four rate cuts for 2025,

Speaker 3: 3:28

Which if I could translate rate cuts, which was the prediction when they were all sitting around the table in September. Yeah . By saying four rate cuts in 2025. That is the Federal Reserve's way of saying, Hey, we want to make things a little easier for the economy to go along. We need to alleviate the cost of, you know , borrowing borrowing. Yeah . We need to help.

Speaker 1: 3:56

Right. We need to Yeah. Make it less restrictive. Right . Yes . And so what happened is when it came out with the DOT plot on Wednesday, they had cut the number of forecasted interest rate cuts down to two. And apparently that was a lot fewer than what the market was . 50%. Yeah. Well, but I don't know what the market was really expecting. Nonetheless, the stocks had a hissy fit. Yeah . And in a rare double whammy, not only did we get stocks get hammered, I think they were down like more than 3% that day. Mm-hmm <affirmative> . Uh , but also longer term interest rates went up. Yes. Um, the , the other interesting thing I thought was that , uh, Powell , uh, during his news conference, while he didn't come right out and say that the incoming administration's tariffs were an possible issue relative to inflation, 'cause if you put a tariff on lots of imported goods, that's gonna make the prices of those goods higher. Yeah. Which is the definition of inflation. He did say that some of the participants in their forecast took into account policy potential policy changes. Yeah. I'm pretty sure that's what he meant. Alright . So, so the bottom line, remember , uh, is that the Fed wants inflation to go down to 2%

Speaker 3: 5:09

Currently at three ish.

Speaker 1: 5:11

Oh yeah. We're gonna get to that in a second, but , um, it's proving stickier, you know, it's kinda like two and a half to 3%. So we mentioned that in the news conference. Like, boy , inflation is appearing to be stickier than we thought it was gonna be. Yeah. Uh , and then there other mandate is full infl , uh, full employment. And he did say, you know what? We think the job market is going just fine. Right. Based on the latest jobs report, those come out every first Friday of the month. So we don't have a , a labor problem. Mm-hmm <affirmative> . We don't have like, lots of people getting laid off, which would, you know, cause the fed to cut rates. So the only two things that are gonna help mortgage rates come back down are worst job reports. Right. If we see the unemployment rate going up Yeah . Or friendlier inflation reports when we come back. If, if the, if the Fed , um, uh, dot plot and the comments were the lump of coal in the proverbial mortgage and home buying, stocking. Stocking , yes. We got a inflation report on Friday that was like the shiny Christmas present. We'll talk about that. And where we ended the week and mortgage rates when we come back. You're listening to the Acade Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2: 6:24

Home buying advice from the guys who know it best. This is the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 6:33

Welcome back and thanks again for tuning into today's show or downloading the podcast. The podcast. 'cause remember, you can get a copy of today's show wherever you normally get your podcast. Yep . Um, so Dave , we were talking about , uh, the Federal Reserves revised , uh, rate cut predictions

Speaker 3: 6:48

Not coming to the rescue perhaps in the ways that markets had hoped Right . They would do in 2025.

Speaker 1: 6:55

Yep . Because basically they're saying the job market's just fine. And, you know, inflation's kind of stubborn. So the thing that we need for mortgage rates to come down is , uh, better inflation reports and what did we get on Friday? Indeed , much to our eyes, the consumer , uh, personal consumptions, oh , did I say that wrong? CPE

Speaker 3: 7:13

Consumption expenditures reports . Yeah .

Speaker 1: 7:16

That's it.

Speaker 3: 7:17

All good.

Speaker 1: 7:18

Alright. And , uh, that happens to be the , um, the Fed's favorite measure of inflation Yep . As opposed to the consumer price index. And so we got that report for the month of November. The market had been expecting a 0.2% month to month increase, and it came in at 0.1

Speaker 3: 7:38

Woo woo . Merry Christmas

Speaker 1: 7:40

A year over a year. The market was expecting inflation to log in at 2.5 and it came in at 2.4. And then lastly , uh, the , like the , what the Fed really likes to look at is the core CPE index, which excludes food and energy. They were thinking, Hey, that should be at about 2.9. It came in at 2.8. So this little sliver of being, it's

Speaker 3: 8:03

Like winning a basketball game by one point is like, yes, it's a win, but it always feels nice when you win on Tuesday by 15 points.

Speaker 1: 8:11

But all that matters to us folks in the mortgage industry or home buyers out there. Yeah. Is that the interest rate markets went, oh God. Finally some good news, some relief. Okay. And so , uh, that allowed us to end the week with the following lineup of rates , uh, which is mysteriously similar to where it was a week ago. Uh, we've got , uh, this is on a $335,000 home purchase. That's the median sales price in southeastern Wisconsin. So let's use a $250,000 30 year fixed rate loan with 25% down excellent credit and all the other Right. Stuff. And so we could offer a 6.5 rate David at the end of

Speaker 3: 8:50

The week. Come on. 6.49.

Speaker 1: 8:52

Well, that's right . What am I thinking? I don't do that. Yeah , I know you some everybody else does. Yeah. But , uh, you would've to pay $4,750 of interest upfront called points mm-hmm <affirmative> . In order to fetch that rate. And that makes the annual percentage rate 6.6899999999999995%. That's because what happens in the A PR calculation,

Speaker 3: 9:11

You spread the cost of points over your , over the entire 30 years. That's

Speaker 1: 9:17

Right. Which nobody really keeps their mortgages for 30 years. I think the most popular option would be the 6 9 9. Yeah . Rate. Uh, and that would only have $250 of points. And remember though, folks, oh by the way, the A PR 7.01 , uh, most every other lender on the planet charges lots of fees. Underwriting, you know, processing, tax

Speaker 3: 9:40

Service administration fee

Speaker 1: 9:41

Administrative. Typically we see our 900 to $1,500. We don't do that. We just say, Hey, we'll take care of all that stuff. Yeah . That's , that's our expense, not yours. And, and then if , but if we need a little bit more money to make our ends meet, then we just charge points. So pretty good deal. And then at 7.125% sounds terrible.

Speaker 3: 10:00

Oh , hideous,

Speaker 1: 10:01

Hideous accu that would not charge any points. And in fact, we could chip in $600 toward your loan cost , bringing those loan cost down to a total of just $865 to get the job done. And that's if you need to have an appraisal, which sometimes we don't need to have an appraisal, by the way , um, a year ago, the 30 year fixed rate was about three eighths of a percent lower. That's 0.375 . So $61 payment difference between this week and a year ago.

Speaker 3: 10:31

Um , in looking at your numbers, one of the ways ultimately any loan consultant at Acue wants to deliver the, what's gonna help you sleep at night. Yeah . Sleep best at night. Sure. But one of the ways that we talk about this is, so the difference, dad and the numbers you shared between paying the points to get the low rate and maybe in comparison to 6 9 9, that payment difference is $61 a month. One of the ways that we bring this up for clients is how much are you willing to spend to save $61 a month? Yeah. And then clients , right? 'cause if you say, well , I'm not really willing to spend anything to lower my payment $61 a month. Okay,

Speaker 1: 11:15

Well then you know what to

Speaker 3: 11:16

Do. Alright ? Oh, I'm willing to pay , uh, you know , $5,000 to lower my payments. Like , okay, well is that a savvy use of $5,000? And it's all about what do you get for your money? That's

Speaker 1: 11:30

Right. And yeah , what else do you, what else would you do that money if you weren't spending it to get a lower repayment ? So we're really good at quantifying people's choices and well,

Speaker 3: 11:38

It's because as I learned long ago, it ain't just about the rate. It's what did you have to spend to get it or not.

Speaker 1: 11:46

And part of that is what do you think is gonna happen in the future with interest rates later on in the show? I do have the latest , uh, forecast from both Fannie Mae and the National Association of Realtors as to home sales and also interest rates. But what are we gonna talk about when we come back

Speaker 3: 12:03

To , I wanna talk about some grandparents that I talked to this week and the real life reason why they're getting ready to move. Alright , we'll cover that after this break. You are listening to the Anette Mortgage and Realty Show on AM six 20 WTMJ, getting

Speaker 2: 12:19

You into the home of your dreams. Here's more of the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 12:26

Thanks again for joining us. Uh , today. I'm Brian Wicker , the elder. That's David Wicker, the younger. And , uh, David, you said you have a story, a grandparent related story of which I'm a cart carrying member. Um , and thanks for, for helping me be in that club, David, come on. So , uh, what's the story?

Speaker 3: 12:43

So this is a referral. We are actually helping the son Oh . Close on his new home next week.

Speaker 1: 12:53

Okay .

Speaker 3: 12:54

And I was introduced to him by his real estate agent , uh, silky smooth , uh, and then was connected with grandma and grandpa. Not yet Grandma and grandpa. Future potential pending grandma and grandpa by both the son and the real estate agent. Nice. Because these grandparents currently live in Illinois. Sun is about to close on a new house in Wisconsin. Okay. And these folks are willing to trade in. Ah , they're not just paying a low interest rate Dad, what they're , they're they're paying a 0% interest

Speaker 1: 13:34

Rate. Oh . Oh . They got the free and clear

Speaker 3: 13:35

House . They have the free and clear house because they're willing to move for a real life reason, which is going to be not yet grandkids. Sure. A tale as old as time. Of course. As I like to say, no grandparent has ever said, you know, I could have watched you grow up. I just wasn't willing to give up my 3% interest rate to do so. Right, right. No grandma has ever said that. So,

Speaker 1: 13:59

So why do they , uh, do they want to have a mortgage on their Wisconsin property or is this some sort of a temporary financing situation?

Speaker 3: 14:06

This , uh, is somewhere in between. Okay. 'cause this is both about where do they want to arrive, you know, when all the dust settles Yeah. Financially, but then also, well, what steps and in what sequence can they get there? So as always, I start the conversation with like, well, you know, so their Illinois house is worth maybe $500,000. Okay. I said, how much house do you want in and around Milwaukee? Right? Like if you , if you wanna be able to host these future grandkids, maybe overnight, how many bedrooms do you really need in order to do that? The answer's probably, you know, maybe as low as 500, maybe as high as 700. Oh , okay . Depending, which might mean for a time they will need to carry a mortgage , uh, when all the dust settles on the sale of their Illinois home. The sequence then of course it's great that you want to buy a $500,000 house in Waukesha County. Okay . Well, do you want to close on that Wisconsin home before you've sold your Illinois house or after?

Speaker 1: 15:20

I'm gonna guess the answer is before,

Speaker 3: 15:23

Well, the answer is dunno for the right house. Right. Uh , as they shared with me, I think they've been trying, they've been trying to sell their Illinois house or maybe get it ready to sell for what's felt like years. Okay. You know, maybe the conversation has been going on for four some years, but now they're more serious I think. 'cause their son is actually in a relationship, you know, is on that path to being a dad and them grandparents. So maybe it makes selling Illinois a little more real. More real. Yeah . And as this is true for a lot of clients, right. It's the what you're willing to , uh, endure, what you're willing to , uh, consider changes. When there's a specific house that you're looking at for the wrong house. You're like, ah , I don't really want to , you know, so have the turmoil of uh , I have

Speaker 1: 16:19

A very mortgagey question. So Yeah . What are they gonna do for down payment on the new house?

Speaker 3: 16:22

Okay. So if they decide that a house is worth it before having sold Illinois, we will need to set up a bridge loan Uhhuh on the Illinois home to extract some of that equity to be used for the down payment on the Wisconsin house. Okay.

Speaker 1: 16:41

So they don't have other liquid assets that they're willing to use.

Speaker 3: 16:44

Uh, or the bridge loan is a little easier Okay . As well. Alright . Just for them in terms of quarterbacking money. And so we've got the asset part figured out if, well, if they sell the Illinois house, it's really easy. Yeah . They might not need a mortgage. Right . They might just need a small mortgage. Right. So that's kinda like the easy path as you've discussed in telling stories like, well, can you really go write an offer on a competitive home in and around Waukesha County? Hey, contingent on my Illinois home being sold. No, that's

Speaker 1: 17:17

Not likely.

Speaker 3: 17:18

Probably not. Uh , so as we, you know, map out what's possible, okay. If you find a house in Wisconsin that you want to buy before you've sold Illinois, we'll need to do a bridge loan on your Illinois house, then the conversation turns to, well, any good mortgage lender needs to point at income Yeah . For your new house. And that is important to nail down, particularly when you're moving geographically from

Speaker 1: 17:54

Yeah . Are these , are these people

Speaker 3: 17:54

Working in Illinois to Wisconsin? Yeah. Let me get into that piece of the puzzle. After this break. You are listening to the Acuate Mortgage and Realty Show. Now it's time to turn it over to the Breaking News center. Don't break

Speaker 2: 18:09

The bank to get into a house. Back to the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 3: 18:17

Welcome back to the Acuate Mortgage and Realty Show , uh, dad sharing the story of grandparents or, you know, in anticipation of becoming grandparents. Sure . Making the move from Illinois to Wisconsin. So as we began and summarized, if they want the Wisconsin house before the Illinois home is sold, yes. They'll need a bridge loan to extract the equity in the old house to be used as the down payment on the new house. Alright . That loan, then when the Illinois house is sold, that bridge loan is retired having with the buyer of the Illinois becoming the new owner of the Illinois house. So naturally then it's like, well you're moving from Illinois to Wisconsin. What job or income are we gonna point at? Because this isn't just moving from like, you know, Whitefish Bay to Waukesha. Correct. Within the same Yeah . Commuting, whatever

Speaker 1: 19:11

Employment area. So are both of these , uh, future grandparents working?

Speaker 3: 19:16

Uh, one is, so the first , uh, part of the income , uh, plan is easy pension. Oh . You can live anywhere, anywhere you want. 'cause he's getting a pension from a job he retired from a number of years ago. Okay . Uh , the , the other borrower works for a national financial services company and she can work wherever she wants. Okay. Uh, because they've lived in this Illinois house for a quarter century. Okay. And her employment situation, she could work from Timbuktu. And so moving up to Wisconsin is no deal at all. Nice. Which was a relief. Yeah. Right. You know , uh, in terms of game planning for 'cause do we , if it was geographically, you know, important, well then it's like naturally they are , uh, the tool that I would've reached for might have been creating IRA retirement.

Speaker 1: 20:14

That's why I thought you were going for , for this didn't

Speaker 3: 20:16

Need it . Didn't need to reach for that tool . It was on my mind. Right. Because otherwise, if you know you're working at a specific location

Speaker 1: 20:27

Yeah. You're a machinist and you have to go to, you know, work at the machine shop.

Speaker 3: 20:31

Right. You could, if you got a new job, we could likely point to that new income. But that adds a whole other layer of

Speaker 1: 20:42

Yeah. You gotta be shopping for a job while you're

Speaker 3: 20:44

Also shopping job and a house for a house .

Speaker 1: 20:47

So , so the husband in this case, we don't need his income or, or he doesn't have a job

Speaker 3: 20:51

We do need . So this is the last element of my story. They have a paid for house in Illinois. Right. But mortgage underwriting, if they now own the Wisconsin home while still having not yet sold and still own the Illinois house, we have to include the monthly carry cost of that Illinois house.

Speaker 1: 21:16

Not just the bridge loan , uh, interest expense, but also the property taxes and insurance. Which,

Speaker 3: 21:21

You know, you have a paid for house in your mind. You're not thinking that that's part of the formula of like qualifying for the next house.

Speaker 1: 21:30

And in Illinois, the Chicago area property taxes are not low.

Speaker 3: 21:33

It's these folks, the uh, property tax and homeowners insurance would be a thousand dollars a month.

Speaker 1: 21:42

I was expecting it to be more. Well,

Speaker 3: 21:44

But it in their minds Right. Walking down the street. Yeah . Why would you think? Right . What do you care about my old house? It's about to be sold and Yeah . Well I don't have a mortgage.

Speaker 1: 21:54

We have to assume that you're gonna have that forever.

Speaker 3: 21:56

Well, exactly. And so that was , uh, not eye-opening, but it's just a good mortgage practitioner knows, you know , like, congratulations, you don't have a mortgage on your old house. Right. But I still have to , I can't ignore the other expenses. Property taxes and insurance. And if we use a bridge loan, the bridge loan that cost as well. So they're set, they have a game plan now where if they want to, they can buy the Wisconsin house before having sold the Illinois house. Now they just have to find a house that's worth it. Worth it.

Speaker 1: 22:34

Right. Alright . So yeah. Real life reasons to,

Speaker 3: 22:38

And and guess what? If they have to carry a small mortgage, they are willing to take on the six point whatever percent that you shared earlier in the show, because that's worth it. Yeah . Right . To be closer to their grand future grandkids.

Speaker 1: 22:54

Yeah. People , thankfully people , uh, have real life reasons to make moves. Yeah. Uh, whether it's , uh, I was reading some study, I don't have it up in front of me, but, you know, the motivations for people selling and, and life events is number one of course. Like , Hey, I need a bigger house because I have more children now. Yes . Or I need a smaller house 'cause I don't have any children and I want a ranch. Not a two story . You know. So thank goodness that there are not portable mortgages. <laugh>. That's true enough. Somebody asked me about that the other day. I'm like, no , thank that .

Speaker 3: 23:27

Is that a European thing?

Speaker 1: 23:28

Portable mortgage? I don't think so. Okay. I don't think so. Um, alright. What ?

Speaker 3: 23:33

So I can't wait to, they're coming up to visit. Oh , uh, around the holiday season. I would, it'll be a coin flip. I bet that they'll find a house that's worth it all of a sudden , uh, on their visit.

Speaker 1: 23:47

I stopped by in a closing , uh, on Friday. Let me just tell you that story when we come back. Okay . First time home buyers. You're listening to the ACU Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ.

Speaker 2: 24:01

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

Speaker 1: 24:11

Welcome back and thanks again for joining us today. So David, I stopped in on Friday to a closing , uh, that was happening at our world headquarters in Waukesha. First time home buyers in their mid twenties, so significantly younger.

Speaker 3: 24:25

I remember that time. Yeah.

Speaker 1: 24:26

Then the 38-year-old median , uh, age for first time home buyers that we reported on a couple weeks ago. Very happy with their ACU net home financing experience. And they definitely benefited from getting their offer accepted in November. Remember we always say, Hey, there's less competition in November, December, January.

Speaker 3: 24:48

We say it because it's true.

Speaker 1: 24:49

Yeah, because it's true. Uh ,

Speaker 3: 24:51

We pre please tell me, did they like go shopping or house hunt like the day before Thanksgiving On Thanksgiving? Like really no competition?

Speaker 1: 24:58

No, I think it was the week before Thanksgiving. We pre-approved 'em on November 15th. They got their accepted offer on the 20th

Speaker 3: 25:05

Giddy

Speaker 1: 25:05

Up. They only looked at four houses and they wrote one offer. They had to do a , um, the , the , the seller did a multiple counter offer . There was only one other competing offer. And , uh, they did offer 5,000 over asking , uh, this house was priced in the upper 200. So about a little less than 2% over the asking price is what the 5% amounted to. But all the seller wanted them to do was , um, move up the closing date to December 20th instead of early January. And , uh, voila, you know, they got an accepted offer.

Speaker 3: 25:38

This , this is an example, like when you're ready to win as a buyer, you can, you just have to be okay with what does it take. Yeah.

Speaker 1: 25:47

Now talking to the real estate agent that was there , their buyer's agent , he said, yeah, this is much more swift. So the point of this is it is possible, you know, I'd say that this is more the exception than the rule. We only look at four ounces and get your first offer accepted. But it does happen. I'm gonna say it's the minority.

Speaker 3: 26:04

If, if , if getting the accepted offer is like trying to lose 10 pounds, as soon as you stop fighting against, you know, the thermodynamics of weight loss, you'll get there. It was like, if you as a buyer are ready to do what it takes and listen to your agent on what will it take to win on a house, you will do so.

Speaker 1: 26:24

And , and so they succeeded. They're happy as a claim . And by the way, they took a slightly higher interest rate , uh, that allowed ENT to pay for all of their loan costs. Um, you know, 'cause they're first time buyers, they don't think they had a lot of extra money. So that made sense to them and they could afford the payment.

Speaker 3: 26:39

Well , 'cause as we also like to say, sometimes there's two, two down payments, dad, 'cause it was snowing on, you know, Thursday and Friday. Yeah . So not only did they get a new house, they probably had to go to Menards and get a shovel or a snowblower Sure. To add to their , uh, things in their garage

Speaker 1: 26:55

And Yeah . Be ready. Um, you know, speaking of being ready and doing your homework though, that's always a good idea. Um, and things are constantly evolving in the mortgage lending world. Yeah . And , um, in terms of variable income, that's a hot topic. Uh, I

Speaker 3: 27:16

Would just call it scrutiny of income. Okay . That to you living your life, doing your job, it feels like ba base pay a salary. But the scrutiny of like, well, you know, this week you only work these many hours and the week after that this many hours, that's getting a level of attention from underwriting that you just can't, as, as a buyer, you think in your mind, I make this. Well, an underwriter might take a more conservative approach. They don't based upon the ebb and flow of your work week through the year. That's

Speaker 1: 27:52

Not, that's not a might. They will. Correct. That's 'cause that's their job. Yeah . Is to correctly adjudicate the income. In fact, you know, I had, I had somebody who, you know, told me they made this many dollars per hour. And I said, do you work 40 hours a week? And they said yes. And then it turned out they didn't,

Speaker 3: 28:10

You know , it feels like 40 <laugh> .

Speaker 1: 28:11

Right? Yeah . And so variable income is a , um, hot topic, which can mean, you know, bonus income overtime . Uh, you know, we're, we're looking at getting those details, which is why folks, you or your loved one who's going out there and shopping for a home, you want the rock solid , fully verified , uh, preapproval. Yeah. Where we actually look at your pay stubs and w twos so that we can do that calculation ahead of time. Uh, brother-in-law, Tim, you know, had a, a situation where the folks were pre-approved with another lender. They had not verified the income. You know, we talked about this last week. Yeah . And then , and then that whole deal went sideways. Well,

Speaker 3: 28:55

Let , let , let's, the real life example could be a lender who doesn't investigate says, you can buy this. You go out and get the accepted offer. And then when the documentation actually happens, it's like, oh, you know that house you fell in love with ? Yeah. And you're already moved in and you're already putting the Christmas tree in this corner. Cancel. Yeah. Because you, your income isn't what you were told it would be upon analysis.

Speaker 1: 29:19

Yeah. We didn't do enough , uh, homework. Yeah. So, so you know, then that we , we can come up with some other examples of that. Um, the other topic that I want to get to after this next , uh, short break though, is something that's , um, new-ish and that's where you can , um, make payments, make , can make installment payments. What's, what's the,

Speaker 3: 29:40

The buy now pay later, buy now

Speaker 1: 29:42

Pay later phenomenon. Let us get you up to speed on how that is coming into the mortgage situation and what we can do about it when we come back. You're listening to the Acura Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 29:55

Find a place to call home without the headache. This is

Speaker 3: 29:58

The Acura

Speaker 2: 29:59

Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 30:03

Thanks again for joining us today. I'm Brian Wicker, the , uh, elder. And that's David Wicker, the younger over there. Uh, David , uh, I want to still get to those updated forecast from Fannie Mae and the National Association of Realtors here in our last segment. But , uh, what's the story on these , uh, buy now pay later situations?

Speaker 3: 30:21

Well, I think home buyers are humored sometimes at , well, what counts into my me qualifying and what doesn't count the, what doesn't count. Cell phone bill don't count that. And you're thinking , you know, Hulu. Exactly. Netflix , um, c car insurance not included cable utilities. Utilities, but like, you really have to pay for that stuff. But Fannie Mae and Freddie Mac are like, we don't look at that . We aren't gonna ignore that. But the newest development of what they are looking at and caring about is buy now. Pay later , uh, installment loans like through Klarna or Affirm , you know, Hey, buy that Christmas presents and pay for it with just four small payments of why wouldn't you wanna do that X, Y , Z . Right? Right. Right. But that level of scrutiny, right. If we supply a checking account statement that has your down payment money to an underwriter, congratulations. The money's in there. You've got your down payment. But can you please tell me, 'cause this isn't on your credit report, can you tell me, I see an outgoing cost to affirm for $12 a month. Please tell us what that is, which will then get added to your debt to income ratio for qualifying.

Speaker 1: 31:42

And there's a little bit of a hassle factor in there because they're not being reported on their credit report . So then we also have to have you go onto the website and , uh, print out some truth and lending information that spells out what the monthly payments are and how long they're gonna last. So

Speaker 3: 32:00

Yeah , so the, the , uh, as is always our north star, what is the smoothest way to get through underwriting is let's point at a boring account. Yeah . If we can find one. Right. Don't send in a checking account statement if there's enough money in the savings account. There's no approval at underwriting is like a basketball game. You only gotta win by one at everything above that is just ego. There

Speaker 1: 32:29

You go. Well, and the other thing we could say is maybe we should start advising clients don't buy stuff on the firm or Yeah . Other pay buy now. Pay later. Smart.

Speaker 3: 32:39

Just

Speaker 1: 32:40

Overall in the , in the pre-approval , uh, process. Alright, so , uh, the Fannie Mae last week came out with their latest forecast , uh, and this was based on where interest rates were on December 11th, just by the way. Mm . And so did the National Association of Realtors. Uh , so keeping in mind that the last two years have been like the worst for existing home sales in 30 years, just over 4 million. Uh, the National Association of Realtors has says the worst is over. And so they are predicting a robust seven to 12% increase in existing home sales in 2025. Hmm . Fannie Mae came out, they're still at a , uh, 4.8% increase in overall home sales , uh, nationwide. And then they are , uh, saying that interest rates are going to , um, be slightly higher than their most recent prediction. They're thinking 6.6 , uh, for the first quarter of 2025, which I don't know , they , they might revise that based on these last,

Speaker 3: 33:38

You know , they might look outside.

Speaker 1: 33:40

Yeah, yeah. They might look outside and say, you know what, it is snowing out. Yeah. Uh , you know, with, with rates more like 6 9 9 right now, I , I have a feeling they may come out with a revision, which then in turn may dampen their , uh, prediction for existing home sales maybe . But sticking with that for just a second. Um, the , uh, number, if you , if you boil that down to Southeastern Wisconsin, and if you took the , um, Fannie Mae's number, that would mean that we would say 800 more closed home sales for the whole year of 2025. If we have 4.8% more, which would be nice, we'll take it.

Speaker 3: 34:20

Yeah.

Speaker 1: 34:21

Uh ,

Speaker 3: 34:22

Buyer buyers will take it. Right. To add more inventory, more sellers interested in transacting and moving on with their lives.

Speaker 1: 34:31

Correct. Uh, one other nugget. The , uh, national Association of Realtors came out with their November , uh, report on existing home sales, which were also up, happens to be coincidentally, 4.8% from a year ago. And, but inventory was a little less. Now remember, and we talked about this I think last week compared to a Redfin number , uh, the realtors are saying that there's a 3.8 month supply nationwide of homes when you , you take inventory divided by number of home sales. Yeah. We're seeing it more like 2.2 to 2.4 in our local area . So a little tighter inventory here than elsewhere. Year to date . Uh , in southeastern Wisconsin, you'll recall that , uh, our listings are up 3.9% on a year to date basis, and home sales are up , uh, on a year to date basis. Mm . 0.8% <laugh> . So remember, all real estate is local. Yes. We know it's Christmas. We hope you all have a Merry Christmas, but we'll be back here next week for the in between the Pre New Year show. And in the meantime though, if while you're sitting around the Christmas , uh, dinner table, you're thinking about , uh, becoming a homeowner, we'd love to be part of your team. We think we're really good at it. Mm . And we would love to make sure that we take out all the mystery and eliminate any unhappy surprises by giving you one of them their rock solid , fully verified, guaranteed pre-approvals that we'd like to issue at Accu . We'll see you here again next week. You've been listening to the Accu Mortgage and Realty Show on AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Accu Mortgage and Realty Show are solely that of the host or guests of academic mortgage and Accu Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.