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 Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Mortgage and Realty. And now here's Brian and David Wickers.

Speaker 1: 0:34

Welcome to the Accu Mortgage and Realty Show on the last show of the year, the New Year's Week edition, I guess we'll call it. I'm Brian Wicker, licensed real Estate broker with Aedt Realty Advisors, and also the majority owner of Aedt Mortgage, where my individual NMLS ID number is 2 5 9 6 1 0. And I'm here today along with my son David, who's the president of AED Mortgage. His NMLS ID number is 3 2 8 8 4 7. And so , uh, David, here we are staring the new year in the face . So I did a little , uh, you know, Googling Yeah, about 20, 25 , uh, uh, market predictions for real estate and mortgages and the like. Okay. And , um, by the way, January is typically the month in southeastern Wisconsin where both buyers and sellers get moving. And uh, typically there are only about eight to 900 new listings that come on the market , uh, in the five county Milwaukee area in December and in January, that typically jumps up to 1200. So hoping for a nice bump.

Speaker 3: 1:36

Yeah. The psychology in that is, is in , in , I I'm , I'm conflicted. It makes sense. And yet it also seems , um, um, odd. Like if you're a seller, do you want to list, you know, before Christmas, you know, get somebody who's in the spirit to imagine themselves in their new home, or you don't want to potentially linger 'cause buyers aren't as hungry. And so you don't want to give the appearance of weakness even though you went on the market. So you wait to your point until traditionally until January 2nd,

Speaker 1: 2:09

Flip that calendar over and now let's get that house on the market. Yeah. And , uh, so, so that's good news for , um, buyers. Yeah . There should be an uptick in inventory here coming up in the new year. There are, by the way, David, currently about 2,650 single family detached homes and condos listed as active in the five Milwaukee metro area. That's a little bit more than a two month supply. If we were to use, you know, like 1200 close sales for December. Of course we don't know what the total close sales for December is , uh, yet, but that's kind of typical. So that is still a seller's market. Yeah . In the definition where one, two or three month supply means , uh, conditions are tilted in favor of the seller. Uh , by the way, they're just under 900 of the current listings have accepted offers already. So there are currently 1,750 homes listed for sale as condos and single family detached and the entire five county metropolitan statistical area. Yeah. So that's one component is the supply component. When you start looking and thinking about 2025 , um, you know, nationwide, I've seen , uh, you know, articles talking about, Hey, home inventory is up 17%, 20%. Eh , it's all, you know, that's a big ball of string. What really matters is what is the inventory and the price range and the geo geography where you wanna buy your house. Exactly. Uh , mortgage rates are currently stuck around 7% with mortgage news daily reporting, a best case 30 year fixed rate scenario at 7.12%. You'll recall that , uh, we got that unwelcome increase in rates after the federal reserve cut rates. Ah , but they announced that they were gonna do fewer rate cuts in 2025, just two instead of the four that they had previously predicted. So that's why mortgage rates are up a little bit here at Acuate, we could still deliver a 6.99% 30 year fixed rate that's on a 250,000 loan amount to buy an owner occupied home with at least 25% down in all the other Right stuff. The annual percentage rate would be 7.04. The rate on our special first time home buyer program, though is only 6% Woo-hoo. On a third of your fixed rate. Wow . And that a PR though is going to vary depending on the cost of your mortgage insurance. Oh, yeah. Which adds directly. So it could be anywhere between, I guess, 6.02 if you were putting 20% down as a first time buyer. And, you know, maybe anywhere up to 7% depending on your credit score and the percentage of down payment on the a PR . So that's kind of where we sit condition wise . Now, Newsweek had an article last Thursday that had this headline, will house prices fall in 2025? Experts give their predictions. And David, do you wanna be an expert? Do you think home prices are gonna fall in 2025?

Speaker 3: 5:01

Uh , where

Speaker 1: 5:03

That's a savvy answer?

Speaker 3: 5:04

Yeah. And, and my, my more broad answer is no. Uh, I , I always pick a fight with, you know, a dis any report that is a discount to the list price. 'cause the list price isn't the sales price, it's just the list price. Right. Uh , but I mean, maybe in markets where the inventory is adding up, I'm looking at Southwest Florida, for example. But like home, home values in WWA or Greendale? No.

Speaker 1: 5:37

Well, on an aggregate nationwide basis, Moody's Analytics says that they expect home values to go up one to 1.5% in 2025. Redfin, the big publicly traded real estate brokerage firm sees , uh, home prices rising 4%. Again, in aggregate, Zillow is predicting a 2.25% home value increase year over year. So the answer to the headline is no <laugh> , because those are the facts that they described in the article. It's

Speaker 3: 6:04

A good headline writing.

Speaker 1: 6:04

Um , but here, here was a , an interesting , uh, uh, quote from Matthew Walsh, the Moody's Analytics , uh, economist, and he said that in order to get back to 20 nineteens , uh, affordability levels, we would have to see one of the following happen. Either mortgage rates would've to drop to 4.6%, wages would've to increase by 70%, or home prices would have to fall by 40%. None of that's gonna happen. So I only want

Speaker 3: 6:31

The first one to happen.

Speaker 1: 6:32

Okay. I I like that. Alright , when we come back, David, you said you've got a story about somebody looking to buy a $1.1 million home, or at least that's what they're prepared to offer. Let's cover that when we come back. You are listening to the Accident Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2: 6:51

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: 7:00

Welcome back and thanks again for joining us on this , uh, last show of the year. And David , uh, before we move on to your story, I did find another comment relative to the home affordability. You know, while the comparison to 2019 is not good, it's downright poor relative to home affordability, which is really a combination of wages , uh, home prices and interest rates. If you kind of think about it, I did find a comment in a separate report by Freddie Mac that pointed out that we're really just at the upper end of a normal range in terms of home affordability and that we're kind of similar to where affordability was in the early two thousands. So, once again, it's all depends on what you're comparing to. Can I ,

Speaker 3: 7:41

I , I don't wanna nerd out too bad on this, but let's just, I in perspective affordability, there are what, 55 million mortgages out in America right now, give or take. I'll go with that . We're only, we're only making 4 million new mortgages per year. So you're describing affordability, you're referencing the price of the home, not just necessarily the amount of money borrowed. 'cause I've got a lot of clients who are rolling over equity that is built up, thus reducing the cost . Sure. The,

Speaker 1: 8:15

The mortgage balance,

Speaker 3: 8:16

The acquisition price might be higher as values climb, but the lift of new mortgage, as I like to say, you're paying 0% on, you know, that equity that you might be using for the new home. Is that the middle ground perhaps where affordability is a challenge? And yet let's not walk past the amount of appreciation that a lot of clients have.

Speaker 1: 8:42

Hey, let's say this, if you're , if you're downsizing, things are great, right? 'cause you take all that equity, that's what end , end up with either no mortgage or a smaller mortgage. You know, if you're going up, I mean, you know , and

Speaker 3: 8:54

Youre borrowing the same , same like you're going up , it's gonna cost more. I, I had a client, this is not the story that we teased, but they are currently in a , um, $600,000 house with a low mortgage. They were looking for life reasons. Their neighbor across the street, they, you know, just in conversation, Hey, you know what, maybe we can buy their house 'cause they're moving someplace else for $1.2 million. It's like it , yeah , it's gonna be more expensive, but you aren't borrowing for them. They're not borrowing every dollar for the new hire bigger house. They are gonna get some relief. Uh, you're , the answer lies somewhere in the middle. I, I think I'll , I'll , oh , thank goodness . Go ahead.

Speaker 1: 9:41

Thanks . Goodness that it's not all about the math, right? Is this is , uh, you know, home buying . It's

Speaker 3: 9:45

About real

Speaker 1: 9:46

Life. Yeah. Yeah. I wanna live in that house. Alright , so what's your story about this , uh, nice client who contacted us? Uh , yeah , thinking about, Hey, you know what? I wanna put an offer at 1.1 million. That's , that's a nice house.

Speaker 3: 9:57

That is a nice house. Uh, and I , in this is a conversation with at least two topics and I'm sure another will unfold. One was the, what does it take to win an accepted offer when you get above a million dollars? When would a , when is a seller ready to say yes? When is a buyer ready to say, here's what I'm willing to pay you? The other one , uh, after that would be to just talk about homeowner's insurance. Yeah. If you own a million dollar house, it's gonna , the insurance company's gonna say pay us more because it costs more to build you a new million dollar house compared to a half million dollar house. Yeah. So the, the conversation began with, these clients currently own a primary home , uh, perfectly modest probably in the 400,000. When I asked them, you know, what are you, what do you think when the time comes, what do you think you're gonna sell your soon to be old house? Uh , maybe 400,000. Great. Okay . They literally told me they have 11 payments left on the old mortgage. Oh , nice . So close to being paid off and, but they might be ready to saddle up for even more house and more mortgage , uh, having gotten so close to paying off the old house. So they're taking quite a step up in size and price. Yeah . For the new house. Part of what is helping to make that palatable, right? Because they're , they want to pay 1.1. They don't have the appetite to borrow, you know, 900, they just sold a secondary residence lake house and have a boatload of proceeds , uh, somewhere north of $800,000. So my first question to you, Mr. Chief Honesty Officer is, Hey, I just sold my secondary home and I cleared $800,000. What do I need to be mindful of for with all that money staring me in the face? Uh,

Speaker 1: 11:56

Thing number one is capital gains tax. Because generally you do not get any slack. Uh, and I'm assuming they owned it more than a year. So yeah , you're gonna own long-term capital gains tax on the increase in value , uh, from when you bought to when you sold, minus any documented improvements or costs to selling like real estate commission, title insurance, things like that. So yeah, you're gonna end up paying, you know, a , a fair amount, you know, not, not hundreds of thousands of dollars, but a chunk of change . Tens of thousands of dollars,

Speaker 3: 12:28

Which is a reminder, like especially when, you know, selling a secondary home like crack open that shoebox of receipts, right? Like find every bill that you had in making that home appreciate and value. 'cause you get the savings , uh, when the time comes to pay Uncle Sam his cut. Let me give you the rest of the story of these , uh, million dollar plus clients after this next break. You are listening to the ACU Net Mortgage and Realty Show on AM six 20 WTMJ, getting you

Speaker 2: 12:58

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

Speaker 3: 13:05

Welcome back to the Accu Mortgage and Realty Show. I'm David, that's Brian over there. Dad, beginning to tell the , uh, story of a client looking to buy a house for north of a million dollars. And you know what? It there , whatever the , uh, you know , um, expectation is of when you pay a million dollars. It just sounds like a lot. It sounds like a big house. It's, and you know what it is. Yes .

Speaker 1: 13:29

Maybe unless it's on a lake . Go on

Speaker 3: 13:32

<laugh>, then you're paying to , to hopefully look at the water and not have to walk that far to be inner onset water. Yeah. So for these folks, the conversation started, Hey, we are considering offering paying $1.1 million for this house that has been on the market for some time. And it appears that the seller hasn't found the buyer that they're looking for. Which then led me to ask, well what is it? What's the address? And what has it been listed for? What is the history of this home's , you know, list price. Currently the home or the seller would like someone to pay them $1.3 million for their house. Okay . And my buyers, at least their first draft of what they're willing to pay for it is 1.1. That's a big gap.

Speaker 1: 14:20

What are the Yeah, it is it , right? And it kind of depends on how each party is coming up with their price and how motivated, you know, the seller is to sell. Uh , by the way, there are 318 , uh, sales in the last year in the Million Dollar and up club . And that's in Waukesha and , uh, Milwaukee County. And surprisingly David, about two thirds of those sold or got an accepted offer in less than three weeks. I was shocked. I would've thought that those houses took longer to market, but not so well . But anyway, back to this particular story. So they're gonna come in with a substantially lower offer. What are, are they gonna write with a financing contingency? Did they share?

Speaker 3: 14:58

Are they they are not. They are writing. They have presented to the seller from the phone conversation. Uh, sounds like they've presented to the seller a copy of their retirement account or some proof already. Like, we have the funds, we could just show up with our own suitcase of money. They would like our clients, they would like to finance some of the purchase price, but they wanted to show that level of strength to the seller .

Speaker 1: 15:28

Compelling to the seller. Yeah. I'm a cash offer. That's the best. Yeah, that's the best. Financing contingency is no contingency. And just let the record show, you had mentioned earlier that they've got over $800,000 proceeds from the sale of a vacation home. Well , yep . They gotta put some money aside for capital gain , gain tax. But then the other thing that they might want to keep money aside for is remodeling on this new house. 'cause maybe it's not just the way they'd like to have it. Well , and I go, go ahead. Uh , is this gonna be a primary residence? It is the new house. Okay.

Speaker 3: 15:56

This is gonna be a new primary. And I think it just, some of this, your , your data surprises me about homes above a million in 2024. That two thirds went so quickly to me, as I look at listings , uh, it would seem to me that it is a barbell experience for properties above a million. You have homes that go quickly because they are beautiful. And when a client who wants to own a home above a million dollars fi sees a beautiful home, they are ready. They wanna make it happen. Yeah . But the other end of that barbell is if you're not pretty, you might sit for, or you're overed might feel well and or overpriced , uh, you might sit for a lot longer than what other we otherwise feel comfortable. Because when you're above a million dollars, you know, the number of people who can actually afford and want to afford that price range is a lot smaller than the more meat of the market. You know, between 1 75 and 4 75

Speaker 1: 17:03

Agreed. Uh , by the way, only about 30 of the 318 listings that sold in the last year over a million dollars in Milwaukee and Waukesha County, were on the market for 90 days or more. So not that many sick . Okay . For a long period of time. Maybe

Speaker 3: 17:17

It's just because when you go look online, they're still there. And so they just occupy a larger, you know , uh, space in your head for any , if , if you're looking , uh, at homes for sale, that those houses, you recognize the pictures of those houses 'cause they've been staring at you week by week by week by week. Oh,

Speaker 1: 17:33

Alright . So you're looking at those. Okay. Good

Speaker 3: 17:35

Enough . No , well, it is late , late at night just to see Yeah . What's out there in the world. It's, this is what we do. Some people watch Netflix shows in the Wicked Family, we look at, oh , what's inventory like in real estate? There you go . That's what we do. So I'll be curious. They've only begun their negotiations. I , I don't know. If you're a seller and you have this price up here and a buyer walks in and says, I would like what would feel like a pretty steep discount. You might be stubborn enough or patient enough to be like, I'll wait to

Speaker 1: 18:11

Sell. Well , maybe they're gonna make a counter offer . Right? That's the other thing that they

Speaker 3: 18:14

Can do. As I always like to remark, until you have an accepted offer, until someone has actually paid you for the home, the home is really worth zero. Uh , that's very and a philosophical, this is like Schrodinger's, you know, cat's house. It's both dead and alive. It is both worth something and nothing at the same time. Wow.

Speaker 1: 18:33

That is deeply philosophical.

Speaker 3: 18:35

Philosophical. Yeah. Uh, so I , after this break, I just wanna talk one , uh, other line of conversation we had was regarding homeowners insurance, which is not just for this client, but is meeting , uh, or clients are discovering the 2025 version of homeowner's insurance more and more. Let's get into that a little bit after this break. But right now it's time to turn it over to the WTMJ Breaking News Center.

Speaker 2: 19:06

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

Speaker 3: 19:13

Welcome back to the Accu Mortgage and Realty Show. Dad wanted to , uh, wrap up this story client looking at a home above a million dollars. It , which is its own stratosphere. And one element that came up in this conversation that seems to permeate more and more of my conversations with clients is regarding homeowners insurance. And people only know what they know, I think, as my grandmother used to say. So this , uh, couple has been paying a modest, you know, $1,200 homeowner's insurance premium on their home for 10 years, right? Yeah. You'd think, yeah, what could it possibly cost to insure my new north of a million dollar home? And I think as they had begun to investigate with their current insurance carrier, you know, hey, quote me out a little bit on this house. That number was quite possibly , uh, north of $3,000 per year in annual insurance premium for this bigger house, to which I diplomatically was like, yes,

Speaker 1: 20:20

<laugh>. Yeah, it's of course it's gonna cost more to rebuild that house if it burns down. Uh, yeah. The premium is gonna be higher.

Speaker 3: 20:26

Well, and because the insurance company needs to build the house needs to rebuild the same house. They can't build you a derivative house if your house is made a brick. They're ensuring a new brick house, not a vinyl alternative. Uh, even if that was cheaper, because that's not the collateral that is being insured. Well , and so the cost of the cost of materials has gone up. It's like, it is like, yeah, imagine if your house was made outta diamonds and I gotta build you a new house built outta diamonds. It only matters what the current cost of diamonds are. Not what you paid or what diamonds were 10 years ago back

Speaker 1: 21:03

Then. Wow. That that would be a nice house. Uh , so, so David, there was an article this last week in the Wall Street Journal by Nicole Friedman that had this headline quote , insurance and taxes now cost more than mortgages for many homeowners. And it was an article that delved into some data provided by the big mortgage loan servicing software company, ICE Technologies. Sure. And they kind of aggregate all this data from different mortgage lenders who use their software. And so they looked at , uh, mortgage loans where people were escrowing for taxes and insurance. And on average, here's one nugget. Um , the percentage of the total payment , uh, principal interest, taxes, and insurance. So David, of that whole total, what would you guess is the taxes and insurance component average nationwide?

Speaker 3: 21:51

Well, wait, you just said what percentage ? Shouldn't it be 51% based upon the headline? Or they're saying

Speaker 1: 21:56

More ? Well , it said many. It said many. Yeah . Oh , many. Okay . But ,

Speaker 3: 21:59

Uh , 12% of all those people have more than half of their taxes and insurance are going

Speaker 1: 22:06

Part of their payment. Okay . That's a , that's a good guess. Okay . The answer is 9%. So on the one hand,

Speaker 3: 22:10

Well , that's more than eight. It's going up.

Speaker 1: 22:12

That's right. And , and I , and I wanna object to the headline because that doesn't constitute as many 9% doesn't constitute many. And that's a few <laugh> , you know, more . But the national average, by the way, is that , uh, people pay of their mortgage payment. 32% of it. About a third is going towards taxes and insurance. And that is up from 10 years ago when it was 29%. So we're kind of busting the headline here. It's like, eh , it's up, but it's not that bad. And certain anecdotally, in certain parts of the country, like they of course had somebody from New Orleans who's like, they're paying $3,000 a month, you know, for their homeowner's insurance and including flood. And I mean, they must, well , it's probably low

Speaker 3: 22:54

Lying areas . It's actually in

Speaker 1: 22:55

Water hurricane, it's

Speaker 3: 22:56

In a ,

Speaker 1: 22:57

Who knows. Uh , but on a , on a reality basis, I looked at a couple of our homeowners here. I got another quiz question for you . So, Naples, Florida, Southwest Florida, but I'm gonna tell you, this property is 10 miles inland from the Gulf. Uh, $1.6 million purchase price this last , uh, fall. What do you think they have to pay to insure that home?

Speaker 3: 23:18

Well, you say 10 miles inland. It , it , it could very well just be in Wisconsin at that point when you're 10 miles in from the coast , uh, one point through

Speaker 1: 23:27

Third five and $925,925,000 replacement cost , to be fair, 'cause a lot of the value

Speaker 3: 23:32

In 3000 bucks a year for homeowners

Speaker 1: 23:34

Insurance , uh, 4,200. So not that bad. Okay . As a percentage of the purchase price. It's only like less than a quarter of 1%. Uh , Wauwatosa , uh, or I'm sorry, Waukesha, I just looked up somebody who closed , uh, on a $420,000 house, they're only paying $855 for , um, homeowners insurance. I thought that was a bargain. But you know what, on a percentage basis it's the same as the person in Florida. It's a little less than a quarter of 1%. And so I think the takeaway is that depending on where you are, 'cause like as an example , um, the Chicago suburbs more expensive , uh, for homeowners insurance and property taxes. Yeah . Property taxes are quite high. Yeah . In the Chicago area, you do need to pay attention when you're shopping for a home as to especially what the property tax component's gonna be. Oh yeah. And you know, depending on the area and the price range, you might need to pay attention to the homeowner's insurance component too. In general, in southeastern Wisconsin, municipalities that are in Milwaukee County are gonna have a higher , uh, mill rate or, you know, tax rate per thousand of fair market value then , then the municipalities in the surrounding , uh, counties . So you gotta be aware of that. It , you know, the difference between paying 1.5% of the value of your home annually in taxes and, and , uh, 2%, you know, that can add up to a hundred, $150 a month. Yeah . You know, for the same priced house. Yep . So, gotta keep that in mind. Hey, when we come back , uh, what do you wanna talk about Dave ?

Speaker 3: 25:07

You want I , I had a client close on Friday, but you were telling me about a divorce client referral. You wanna flip a coin

Speaker 1: 25:13

When we come back? Okay . We'll flip the client and let you know what we're gonna talk about right when we come back. You were listening to the Academic Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ.

Speaker 2: 25:23

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

Speaker 3: 25:32

Welcome back to the Academic Mortgage and Realty Show. I won the coin flip, so I'm gonna tell my story. Uh , dad, we had a client close on the purchase of their new first home on Friday afternoon. Woo-hoo. Yeah. Uh , and

Speaker 1: 25:47

In December.

Speaker 3: 25:49

Oh yeah. Yeah . Um, and so I , a couple of smart things like there, there's always that time when you look at a , a purchase transaction and you're like, yeah, that's like the way that I would do it if it were mine. If, and you know, what to each their own. But sometimes you just look at the way a , a loan is put together and it just resonates with me personally as a mortgage banker. So for these folks, they must be , uh, future mortgage bankers 'cause they did a 3% down payment, the minimum down payment for a conventional loan for a first time home buyer. 3%

Speaker 1: 26:25

You can buy. David, are there any income restrictions in that were involved in only being put

Speaker 3: 26:31

Three . So long as one of the persons on the , uh, loan has not owned a property in the last three years, you can receive the no income limits blessing of Fannie Mae, Freddie Mac and put as little as 3% down to buy a house. Amazing. Which , why would you ,

Speaker 1: 26:52

Why would you wanna put so little down, David? Why didn't they have more money to put down? Couldn't they made a 10% down payment or 20,

Speaker 3: 26:59

They had $40,000 in their checking account, but they only have to show up with $16,000 at the closing table. What are they

Speaker 1: 27:08

Gonna do with all that leftover

Speaker 3: 27:09

Money? Well, you could just look at it. You can just have it once you make that down payment. My favorite metaphor, it's like putting Benjamin's on your roof, but you don't have a ladder. Okay . The money is up there, you just can't get at it. Versus if it's in your checking account or your savings account, hopefully you don't have to use it, but at least you have the option , uh, for home improvements. Things you need to snowblowers for example. Yeah . Yeah. A a quality snow shovel. Things that you're gonna wanna buy after you move in after you close at ACU net World headquarters on a Friday afternoon. So they're , I I didn't really have to lead them to water all that much. They got their all on their own

Speaker 1: 27:57

Probably. Because you probably laid out options. You probably said here , of course, here's what it is. If you put 10% down, here's what it is. If you put 5% down, but even here's what it is with 3% down and clearly my guess, they have to be comfortable with the payment that goes , that goes along with a 3% down payment. It's gonna be a higher payment than if you put 5% down.

Speaker 3: 28:13

What, what melted their mind was for every thousand dollars in down payment beyond the minimum, it was going to lower their monthly payment by $7 a month. Whoa. So it was like, honey, what matters more to us in our new home, we could put 5,000 more dollars down for down payment and that'll save us a whopping $35 a month. Or we could just keep the $5,000 in our checking account. And you know what, we'll find a way to swing that extra 35 bucks a month. There you go. That was their math. The other, so , so two other things. The seller on the final closing disclosure is paying for some repairs to the home, which you

Speaker 1: 29:03

Can do . We've done before closing,

Speaker 3: 29:04

These repairs were completed before closing. They are , there is no escrow hold back for things weather related , you know, on the outside of the home. These things have been done. But for a seller who doesn't necessarily want, want or have the cash to make those repairs or pay for those repairs out of pocket, you so long as we can get the paid receipt and lien waiver upon liquidation basically of the house of the asset , the of

Speaker 1: 29:33

Sale , sale of the house, yeah .

Speaker 3: 29:35

That is a smart way for any seller to get those fixes done without necessarily having to stroke the check.

Speaker 1: 29:43

Ultimately Yeah . Ahead

Speaker 3: 29:44

Of time . They are . Yeah. Ahead of time they are paying for it. But for any seller kind of doesn't feel like they're paying for it. It's getting paid for out of the proceeds. That's right.

Speaker 1: 29:55

Outta my winnings. Yeah. It's outta

Speaker 3: 29:56

My winnings. Exactly. And then the last, we talk with clients a lot about buying the home, closing on the purchase of the home is only chapter one of the book. There's going to be, as I said dad , I don't think there's a single client from 1999 who's got that same mortgage and they're just five years away from paying it off here in before 2029 there . This is only chapter one of the book. There's gonna be chapter 2, 3, 4, 5, on and on we're set up beautifully for these clients for a refinance when it makes sense. First reason they didn't pay any points to acquire a lower rate. So they don't , they don't really have any sunk cost . Okay . Yeah . Yeah . To acquire the rate. The other thing, the at that 3% down the appraisal came in $11,000 over the contract price.

Speaker 1: 30:50

Oh. So they have a little instant warm feeling of , uh, equity.

Speaker 3: 30:53

Exactly. I can't use that nice equity to, on this current purchase mortgage because your friendly lender has to use the lesser of the purchase or the appraised value. But on the refinance, let's say eight months from now, I could call them up and say, Hey, I can drop your rate half and we can use that higher value from the appraisal. Now that's a win-win when we can lower someone's rate and lower, if not eliminate the monthly PMI That gets us to a benefit a lot faster using a value that we already know we have. For sure.

Speaker 1: 31:33

Let me clarify that. You're gonna be able to lower the cost of their monthly private mortgage insurance Yes . By getting 'em into a different equity category. Exactly. Alright , so that's that's a great story. Can't wait for rates to come down. Hurry up. Yeah. Yeah. Alright . When we come back, I've got the , uh, story , uh, uh, a divorce related refi. We'll cover that in our last segment. You're listening to the Acade Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 31:55

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

Speaker 1: 32:03

Thanks again for tuning into today's show. David. Let's wrap up , uh, with a short segment here on , uh, divorce related refinances. I think

Speaker 3: 32:11

Actually always a possibility after the holiday season, some people go , uh, and wanna buy houses together. Some people want to go have 20, 25 by themselves.

Speaker 1: 32:20

Yeah, there you go. I think January is the biggest month for divorce filings, by the way. So , um, you know, thing number one in general, you need to have , uh, a marital settlement agreement approved by the court Yep . Before you are eligible to refinance , uh, following a divorce or in the midst of a divorce. So technically the divorce doesn't have to be final, but you have to have that financial component worked out and approved by the court. Uh, because once you file, no mortgage lender in America wants to lend you money until you've got your, you know, financial box all nailed down. Right? Yes . Because we don't know are you gonna end up receiving alimony and child support, paying alimony and child support, you know, what's the story gonna be? And , uh, so that's thing number one. In this case, the, the parties are in the midst of , um, negotiating their settlement agreement and the, the initial communication from the divorce attorney was, Hey, I got a slam dunk deal for you person makes a lot of income and it's gonna be all great, you know. Okay. Well let's, let's dig into that Great <laugh> . Okay . It turns out that in this particular case , um, our potential client is gonna , wants to retain the former marital home. And so the typical thing folks is, is you have to refinance to remove the future ex-spouse from the debt obligation Yeah . The mortgage. Okay. And then you become the sole owner of the property. Uh, and then in a lot of cases you gotta also do take a little cash out to kind of settle up and say, Hey, here's your portion of the equity , uh, in this house relative to all the other assets and liabilities that we have. Very typical. And in this particular case, our potential client had just gone back to work , um, uh, like earlier in 2024. Mm-hmm <affirmative> . Okay . Not necessarily a problem, but she didn't go back to work full time and she also has a second job. So what's the problem, David, for a Fannie Mae, Freddie Mac lender , uh, who, who is looking at a borrower that started a second job nine months ago?

Speaker 3: 34:28

Oh, well a second job would require a two year history for sure that you can basically prove I can swing both doing both jobs in real life and the stability of income from that second job. But on your, they , they went back to work on their primary. Is that a full-time job on the primary job I guess we call

Speaker 1: 34:48

It ? No, it's not. So that, that has a little hair on it as well. Okay . But , uh, but then, but you know, if, if we can document that it's a for sure, you know, x number of hours every week, you know that, that , that typically can be used. It's not always easy to get. But then the other thing that's true is that , um, there is a very large student loan and , uh, the folks assume she , the person doesn't have to make , uh, any payments on this based on their income prior to going back to work. And , uh, so that is gonna , uh, that's lurking be an issue because mortgage lenders can't just assume that there's gonna be zero payment on that. I think we're gonna have to put a pin in this 'cause we're running out of time. So maybe we'll start the new year talking about that happy topic of divorce. 'cause there's more

Speaker 3: 35:32

For everyone else getting divorced in 2025.

Speaker 1: 35:34

Here's more, there's more, there's more to cover on that , uh, rich topic. In the meantime, as you turn over the calendar to the new year folks, if you or anyone you know is looking to buy a home or refi, we'd love to be on your team. We're really good at what we do and we like it as well. All you gotta do to get started with the rock solid guaranteed preapproval is to click on the blue button@ecut.com. That's all we have for today's show. We'll see you back here next week. You are listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ. 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 Accu Mortgage and ANet Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.