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.

Speaker 1: 0:34

Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real Estate broker with ANet Realty Advisors, and also the majority owner of ANet Mortgage, where my individual NMLS ID number is 2 5 9 6 1 0. Here today, again with my son David, the president of ANet Mortgage, and his individual N ML S ID number is 3 2 8 8 4 7. If you have a question or a comment, you can call or text us on the Siding Unlimited talk and text line , which is 8 5 5 6 1 6 1 6 20. You can also get a podcast of today's show wherever you normally get your podcasts. So , uh, David , um, kind of generally good news , uh, mortgage rates are, are back down a little bit. Uh , we can talk about that. Um, but the , the headline that I wanted to grab , uh, that was came out I think last Thursday, was the National Association of Realtors , uh, announced their March existing home sales report. Um, and , and kind of the headline that got repeated was that home sales slipped 6% in March, and what they were focusing on is the difference between February and March. And that is a bit unusual. And then , um, the seasonally adjusted, what, what the National Association of Realtors do is they take the monthly number of sales and they turn it to turn it into an annualized number of home sales. Then they also seasonally adjusted. And so that came out to 4.02 million homes on a seasonally adjusted annual basis. And one enterprising news outlet did their research and said, you know, that's the worst that it was since 2009, the worst March since 2009. Uh, by the way, compared to March of the year before Nationwide, again , um, home sales were off just 2.4%. So if it's the worst since 2009, it's not worse by much. How do you think that compares David to our local market in southeastern Wisconsin? Uh ,

Speaker 3: 2:26

It doesn't , uh, it doesn't compare at all. It's like describing the weather in Naples compared to the weather in Wisconsin. One does not influence the other. Maybe only if you wanna live in one place compared to the other. But it's, as soon as you said nation or home sales were down, I I was immediately like where <laugh>

Speaker 1: 2:46

Right. Nationwide down 6% from February to March. Okay. The number for the five county Milwaukee metro area, March home sales compared to February, we're up ready 20% <laugh> not down. Six, we're up 20. Yeah . That's quite a difference. However, in all fairness, if you look at this March versus a year ago March, we're down 7% compared to the national, which is only down 2.4. So, you know, and by the way, that amounts to I think 89 fewer home sales Wait Milwaukee

Speaker 3: 3:17

Metro area . But this is where I stand on my chair and I'm like, well down , but I'm not looking in me one at 800,000 and , uh, you know, west Dallas at two 50. Correct.

Speaker 1: 3:29

It's all about the micro market . Yeah. In which you're shopping also from the national headlines. You know, if you're, if you're reading that and thinking, oh, this must apply to where I'm shopping. Inventory of properties for sale nationwide now stands at a four months. That's where you take the 1.3 million homes that are listed for sale by realtors and divide it by the number of sales in March. You come up with a four month supply, which is balanced in the rule of thumb book. Uh, by the way, that inventory is up 20% from a year ago when it stood at 3.2 months in southeastern Wisconsin. In the five county metro area, there are 3070 single family detached and condos on the market listed by realtors. And if you divide that by March home sales, we have a 2.7 month supply, which is still a seller's market.

Speaker 3: 4:19

Yep .

Speaker 1: 4:20

Okay . Still a seller's market. One last nugget from that , um, median sales price was 403,700 nationwide. That's up 2.7% in southeastern Wisconsin March. Home sales , our prices median price was up 7% from a year ago and comes in at $338,000. So there you have it. We are not like the, like the national average. Whoa . All real estate is local

Speaker 3: 4:45

And , and, and specific, not just local. But even I have, and I'll share perhaps some stories later in the show, dad, I would almost tell you that every house is a market unto itself for supply and demand. Of course the supply is one, but the demand, well, does this house, is it nicely redone? Yeah. Does it need a lot of work and buyers are presenting or, or bringing the economics of a particular home to bear based upon how much foot traffic is coming through that house and how many offers a seller is or is not entertaining. If I, maybe if I ever wrote a book, I could title it every house is its own market or something like that mm-hmm <affirmative> . That micro markets are even too big sometimes.

Speaker 1: 5:32

Sure, sure. And that's influenced by like what you just said, the , uh, condition of the house, the location, and where they choose to price it coming out of the gate. Right. I think there's , uh, a lot of agents, listing agents out there that kind of list a little bit on the low side in order to , um, gain a lot of interest in a lot of offers and then it gets kind of up makes for

Speaker 3: 5:51

A good story.

Speaker 1: 5:52

Exactly. And, you know, I think it's a , a successful , uh, technique. Alright. Do you want to come back and tell us about a specific story that has that uh,

Speaker 3: 6:00

I do. So I, I, it's kind of two stories talking about each other. One, I had a client interested in a home in a Milwaukee County suburb , uh, that they didn't even get the chance to walk through 'cause it was so busy. But the , and the other story is, well, dad, I got a message that two of my clients were both interested in the same house. Ooh , nice . And that interesting element as well. And it speaks to supply and demand. We'll get into all that after this first break. You are listening to the Acuate Mortgage and Realty Show on a six 20 WTMJ

Speaker 2: 6:37

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 3: 6:45

Welcome back to the Acuate Mortgage and Realty Show. I am David the younger, taller, more handsome of the wicked men, at least for now. Uh , and over there is Brian the wiser of all wicked men. Uh, dad, my clients getting out there and doing the thing just like a lot of a connect clients. Good. And as , um, April has been , um, a lot of whiplash , uh, for the bond market and rates.

Speaker 1: 7:16

And how much do your buyers are pay attention to that? Well,

Speaker 3: 7:20

C come are you just , are you Ed McMahon? Come on. Yeah . I'm Ed McMahon . The answer is not at all that we , um, have been on the tariff rollercoaster and I have received no calls or texts saying I'm out, I'm in, I'm out again, I'm back in. Right . Right . Clients, they have the real life reasons of why they wanna get out there and do the thing called buy the house and , but we'll

Speaker 1: 7:45

Take the win , right. That things have calmed down . Well, of course. And come back , uh, you know, in , in, in, in our direction. And , and just to say it out loud, on a $250,000 30 year fixed rate with a 25% down payment and all the other right stuff , uh, we're able to offer here a 6.875 interest rate and we can even pay or closing costs, which in Wisconsin would make your closing costs only a thousand bucks, including an appraisal if we need one. Boom. And so then the , um, a PR is 6.899. We could also offer 6.375, which has a 6.55 a PR. And that's because that comes with $5,700 of loan cost . You're paying points to get that lower rate or 6 9 9 , uh, with an a PR of 6 9 9. And that has guess how much in the loan cost ? Zero. Zero. So there are your options , uh, as of the end of , uh, the week. Alright , back to your story.

Speaker 3: 8:38

Well, so this, some folks might think that real estate happens on the weekends. It also happens during the week of , I got a text from an agent who I really enjoy working with on Monday at five o'clock. Okay. Hey, my clients are considering this home. Could you check to see if we get an appraisal waiver after this price? Or going above? Do

Speaker 1: 9:01

You have that person? Well , uh, well educated,

Speaker 3: 9:03

Well I think, I think Tim and I talked about this last week, dad, but

Speaker 1: 9:06

Yes, you did. If,

Speaker 3: 9:08

If you are , if you're a buyer out there looking, stare into the depths of the eyes of your real estate agent and ask, are you, or will you call or text my lender to see if we get an appraisal waiver on this home that I'm considering? Well just,

Speaker 1: 9:24

Just switch to ACU net and we

Speaker 3: 9:26

Take care of just Well , but is <laugh> , but that's the whole point. I, it , I work and AED loan consultants work as a team with your real estate agent that when you are considering a home, you're like, wow, we are gonna draft an offer and here , here are prices we're considering down payments we're considering. Wouldn't you want to also sprinkle in waving , not needing an appraisal? Literally nobody walks through the house if the, if the underwriting software gives you the thumbs up on value. Boy, if I was a seller, I would want that. And if I was a buyer, I would want to give that to a seller in order to do that. Your agent or you needs to be texting David, Tim, anyone here at the ACU net team? Can you check in on this for me?

Speaker 1: 10:14

Yeah . What's the minimum down payment nowadays , uh, to possibly obtain an appraisal waiver ? That

Speaker 3: 10:18

The, the technical answer to that is it can be as low as 3%. What the , the published appraisal waiver can be as low as 3% that you can go on Fannie Mae's website. That is what it is. In reality, out in the wild, we have seen it usually takes about a 10% down payment or more. Okay . Okay . To get that appraisal. Well, I'm just telling you what the public know , all it's public info, it can be that low, but in reality we have really only seen it with as low as 10%. As your down payment increases, that appraisal waiver likelihood also increases. I have seen for the same price, for example, $500,000 house. Oh, I get the appraisal waiver at a 30% down payment, but not at 20.

Speaker 1: 11:05

Oh, okay. Interesting. We've seen , alright , so there's

Speaker 3: 11:06

Variation as well.

Speaker 1: 11:07

Mm-hmm <affirmative> . Okay. Now do you have some buyers, David, though, who like, no .

Speaker 3: 11:12

I , I ,

Speaker 1: 11:13

I wanna know what an appraiser thinks the value is. I need that psychological comfort that somebody else believes the same thing I do. I

Speaker 3: 11:21

I have not had clients ask me for that. I think I can think of one in many, many years of you and I talking about this. I think you had one client decline to use the appraisal waiver. Yeah. But my talk track is why do you care what a stranger thinks this house is worth? Correct. Yeah . If it's worth it to you and the seller says, yes, let's get to the altar and get this thing hitched. Right.

Speaker 1: 11:48

Although actually I had one buyer's agent last year say , oh no, I don't believe in that. I think we need to to get an appraisal. I'm like , okay, well we didn't get the appraisal waiver anyway , so it was a moot point. But I was a little bit surprised at that. No , I think my clients deserve a independent, don't forget folks, the appraiser gets a copy of the contract so they know exactly what you paid, which <laugh> what you agreed to pay. So , uh,

Speaker 3: 12:09

I had a , to that exact point, dad, I had a client, they're buying a house for six 15. The appraisal report came in this week at six 17. What do you know? I walked over to Cora's desk here on our team. I was like, amazing Cora. How they came up with that number six 17. It's almost as if they had the contract when they were putting together their report. So, so I wanna just describe a little bit of the competitiveness for this client , uh, as well as other stories from the latest and greatest of the front lines of mortgage lending and real estate here on the ACU Net Mortgage and Realty Show. This is six 20 WTMJ getting

Speaker 2: 12:47

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

Speaker 3: 12:56

This is the ACU Net Mortgage and Realty Show. I'm David Wicker. That's Brian Wicker over there. Dad , I am describing to you the art of the sequence for helping our buyer get ready to getting ready, be the most competitive that they can be when a in a particular home pops up. And what's uh , uh, kind of a sidebar. You know, we help lots of clients get ready to, I I've almost described myself. I'm like a , um, engagement ring jeweler, right? Oh yeah. Okay. You , um, I think I , I think I wanna get out there and , and meet some houses and Great, well, your preapproval letter is like an engagement ring and , uh, I , I'd like to get you that engagement ring so that you can go on some dates with some houses. Hmm . Okay . And then a client says, oh my gosh, David, I just met this house. I think it might be the one, you know, can you help me dry, clean my shirt so that it looks nice? Sure . So that when I propose they're really ready to say yes. I you want to present yourself the best that you can as a buyer Of course. So that the seller feels safe. That you are safe and strong just like a fiance who doesn't want someone to love Right . As both safe and strong. Nobody wanted weak and wild.

Speaker 1: 14:16

So , well maybe somebody, but go on . Somebody does. Yeah.

Speaker 3: 14:18

With leather. But my client had their , with their agent who had referred them to me. It is our natural for, for the agents that I really like working with, it is common. If not , uh, the protocol for them to message me, Hey, we are going to go see this home. Can you run , you know, even before you walk through the house, can you check to see if we got an appraisal waiver

Speaker 1: 14:46

And at what value

Speaker 3: 14:47

And at what value? I usually always start at the list price. 'cause you know, I , the seller probably wants that number , uh, to begin with. Well, yeah. Talking more than that. Yeah. Well, and if I get that appre , if I get that waiver at that number, we just keep pinging the system. It's like, well what about $10,000 more? What about 10,000 more than that? What about more than that? So the property that my client , uh, was interested in, I, I had to remind myself, dad, I had to poke myself about the psychology of the list price. Right. Because it is listed for $500,000.

Speaker 1: 15:25

Okay.

Speaker 3: 15:25

I kept, and my clients are strong. They're , they're , they could put as much as a $200,000 down payment. Oh , nice. So super strong running through the software. Right. List price is 500. Do you wanna guess, how high did the underwriting software say, I believe you on value?

Speaker 1: 15:45

I'll go with five 50, 10% higher.

Speaker 3: 15:48

600,000. Whoa . I ran the house listed at 500 for a purchase price as much as 600,000 with a great down payment. Okay . And the underwriting software said, sounds good.

Speaker 1: 16:02

Sounds good. Nice .

Speaker 3: 16:03

I I, I had like a, like any buyer out there on the house hunt, I had to step back and be like, well no David, it's not that this house is listed at 500. That was only the starting point. Right. It could be as much as 600. Well, or the software says it is that high.

Speaker 1: 16:25

Software says. And so what did they decide to write their offer

Speaker 3: 16:27

At? I am waiting to hear back. I don't know. Isn't that the , the psychology of all of this though? Like it would even take me David, a lot to untether from that list price Sure . And be like , well, the computer says 600. I'd be like, ah ,

Speaker 1: 16:45

Ah , I can't believe that. Right. Really? Yeah. Uh , what if it, you know, maybe go up in , in , in between, you know?

Speaker 3: 16:51

Right. Exactly.

Speaker 1: 16:53

Practically or something and say, oh , okay, but I don't need an appraisal. So that's, that is comfort as you said. That is certainty, which is what it's all about.

Speaker 3: 17:00

So I'm, I'll wait to hear back , uh, to see what price my clients decided to write at and if they were winners. But having that element of, it's more the knowledge dad. It's as a buyer, if you can know that this is the price , uh, it allows you to then understand, well, if the seller says yes to this price, and I know that the appraisal will come in at this price, then I can have confidence now that this is what my monthly payment will be. Sure. This is how much money will leave my checking account in order to get to the closing table. I oftentimes though need to share with clients that this appraisal waiver cements how much down payment you'll need to make. Oftentimes when an appraisal gets done, we tell clients, I understand your financing contingency says you are capable of making a 20% down payment. You could put as little, you could put far less than that if you qualify. And if you would like to find some balance between down payment and mortgage amount.

Speaker 1: 18:08

Lemme say it back to you . Go ahead . If we , if we get the appraisal waiver with a 25% down payment, you can't then come back and say, oh , I'd really like to put 10% down.

Speaker 3: 18:16

Well, because what that means is if you, let's make it even smaller than that. If it , if the appraisal waiver only sticks at 25% and you wanna change the down payment to 24.7% mm-hmm .

Speaker 1: 18:30

And it doesn't

Speaker 3: 18:30

Go with that , and the software says, oh , get an appraisal. You are, you need to stick to, to continue to utilize and leverage that waiver. You gotta be ready to commit to that down payment. Alright .

Speaker 1: 18:42

Worth

Speaker 3: 18:43

Talking about.

Speaker 1: 18:44

Okay. Yeah, absolutely. Um, I, I've got a , a story about some , uh, follow up story on some Illinois , uh, customers , uh, looking to buy a home. I'm sure you've got a couple more stories too. Yes . I also got some interesting , uh, demographic information on what the makeup of buyers and sellers was in 2024. We'll get to all that, but right now it's time to turn it over to the WTMJ Breaking News Center.

Speaker 2: 19:08

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

Speaker 1: 19:15

Thanks for hanging out with us today. I'm Brian Wicker , uh, licensed real estate broker and majority owner vacuum mortgage. That's David Wicker over there, the president of mortgage. And so , uh, David, a couple weeks ago I mentioned this , uh, couple looking to buy a home in the suburban Chicago area. And at the time , uh, they were, this was a word of mouth for sale by owner that was not on the market yet. They were preparing to put it out there on Zillow as a for sale by owner. And so they got their buyer's agent involved and , uh, had 'em approach the seller. And so there were these verbal negotiations. Um, and at first it was like, yeah , we think we're gonna go out there on the market in the low seven hundreds. And, and um , and , and , and then also , uh, what we want to do is, you know, give you, give us your offer. So they made them, they made our buyers say the number first. And so they came 50 grand over. And at first the talk track was great, we're gonna accept your offer, but until you give us the actual loan commitment, you know, which means the appraisal's gotta be done and the inspection, you know, for their own sake , uh, we wanna keep marketing the property and if we get a better offer, we can bump you until such time as you give us the actual loan commitment.

Speaker 3: 20:31

Hey, if , if you've got the leverage, then why wouldn't you ask for that as the seller? Right.

Speaker 1: 20:37

But so somehow then they negotiated that out of the deal in exchange for saying, we'll pay you 50 grand over what you thought you were gonna ask and we'll take the lumps for wherever the appraisal comes in. Fine. Okay , fine. And , and so the, the antidote to that was going to be , uh, if it came in low, we were just gonna give them some , a little sprinkling of private mortgage insurance for not having a 20% down. That would've changed their payment by 50 bucks. So we had a , to

Speaker 3: 21:05

Bring no additional money to

Speaker 1: 21:06

Closing . No additional money to closing. Yeah . And that worked , you know, pretty much as low as the , uh, you know, original asking price. And they were quite confident it would come in above that. Yeah . So, great. Uh , but the step number one, before we go and get the appraisal, so we did not get an appraisal waiver on this house. Okay . And , uh, so step one was for them to do the inspection. Now keep in mind they had already had one failed transaction , uh, in January due to inspection. So, great. The inspection's going well, I'm told. Well then all of a sudden they find something that I had never heard of before. And this house is , I guess is about 60 years old. It had a partial slab basement , uh, underneath the powder room. And so the heating and duct work was encased in concrete. And it turns out that it was, the duct work was made out of a material called trans , which I'd never heard of before. Okay . Uh , but they, they informed me that I Googled it , uh, that it's a concrete mixture that's made up of like between 10 to 15% asbestos Hmm . Commonly used in that era. Yeah . Remember I said this house is about 60 years old. And so they did their research and they found out that, oh, you know what, transient has an expected life expectancy of about 30 to 50 years before it starts to break

Speaker 3: 22:18

Down. We past that. Yeah.

Speaker 1: 22:19

Past that. And then , um, also if it gets wet, then that can cause it to break down faster. And they're going like , oh , this is beneath the powder room.

Speaker 3: 22:29

Go ahead. Wait. But is it, did it is, I mean, is there a picture of it now? Is it in okay shape or it's untouched and fine. I , i , I

Speaker 1: 22:37

Didn't get that deep into the conversation because by the time I, you know, got in the loop, I'll jump to the end of the story. They decided to cancel the transaction. Okay. And , and , and say, yeah, you know what? Because it's the powder room and it's encased and there's this water issue, and we're beyond the life expectancy. What, what I don't know is, is there some kind of a remedy? Like could you, is there somebody that could come in and seal

Speaker 3: 23:06

Jackhammer it out with a guy with a hazmat suit on?

Speaker 1: 23:09

Well , that, that would be really expensive, I would imagine. But my thought was, you know, could you do some sort of a ceiling , uh, a seal, seal this stuff, you know, with some plastic coating or who knows what Oh, to make sure that it never, you know, the as pestos never makes it out , but, you know, for their personal reasons, they decided it's a risk we don't wanna take. Now keep in mind, in Illinois it's the exact opposite of Wisconsin. In the real estate contract in Wisconsin, you have to give the inspection to the seller, and then the seller has a obligation. And if they don't choose to do this, the real estate agent, if they're aware, has to do this to disclose any material adverse facts that you know about the property

Speaker 3: 23:49

To the next buyer.

Speaker 1: 23:51

Yeah. To all buyers. All future buyers. Well, in Illinois, it's the exact opposite. It says, do not give the seller the inspection report . I ,

Speaker 3: 23:59

I wanna be blind and unaware. I

Speaker 1: 24:02

Don't tell me . So, you know, now the sellers do know what the problem was 'cause they backed out. But it'll be, and I have no idea if the sellers are gonna disclose, you know, this potential issue. And I'll bet that there's some buyer out there that will say, well , you know, okay, you know, it's not loose now, you know, the , the I'll take the chance or I'll I'll deal with it later. Hmm . But , um, unfortunately, you know, they're going back out, you know, on the market and gonna

Speaker 3: 24:28

Find , well I guess that's my, you know, my question is, is it a more direct path to try to scope out how much would it cost to remedy this versus get back out there And you , you know, when, when you decide to scuttle the current deal implicitly you are hoping I can find the same or better home for the same or better price and not have to deal with this. And it's like, well, does that exist? Like if you're, if you're looking in Wauwatosa and you're still looking at Wauwatosa , it's like most of the homes are just about the same age. So I don't know if you're going to skip necessarily the same issues if the housing stock is all nearly the same age. You're you're hoping that's not a strategy though.

Speaker 1: 25:11

Yeah. Yep . Alright . You got a story first to come back to? I

Speaker 3: 25:14

Do. I have two. Uh , we'll do flip a coin , uh, after we come back. Uh , more stories on helping home buyers do the thing, move in, not just write offers. You are listening to the ACU Net Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 25:30

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

Speaker 3: 25:39

Welcome back to the ACU Net Mortgage and Realty Show. Okay, dad , uh, flip a coin, proverbial coin , uh, I have one client who is, who is asking me , uh, how much more would I need to put down to avoid PMI? Okay . And the conversation that ensued there. My other client, yeah. Maybe I will ask my dad for a $250,000 gift so that I can make the down payment and not have a home sale contingency.

Speaker 1: 26:09

Whoa . Uh , I'll go with the second one. Okay . Asking the parent for a $250,000 gift, that's a big gift.

Speaker 3: 26:14

It is a big gift. So my client currently owns a home and they're thinking like, like a lot of people, we want more space. Boy, these young children turn into teenagers and they want more room, I need more room away from them, or they need more space. So let's try to get a bigger house. Of course, in consultation with their real estate agent, it's like I can write you two pre-approval letters. One that is contingent upon the sale of your home, which upon that sale extinguishes the monthly payment of the mortgage, and of course the property taxes and the homeowner's insurance on that old home. And then I can write you a second pre-approval letter that is not contingent on the sale of your old home.

Speaker 1: 27:02

I can tell you the one I'd wanna see if I was a seller. <laugh> . Wow . I'll take door number two. Yes . I wanna , I don't wanna be beholden to you being able to sell your house. That is pretty much a deal killer in today's market.

Speaker 3: 27:14

Well, and especially for any competitive , um, reasonably nice home that a seller might be considering more than one offer. This is just us reporting from the front lines of real estate. Generally those offers go right to the bottom.

Speaker 1: 27:29

Yeah . Okay. So you go down the second of, I wanna make it not contingent, but let me guess. They're short on down payment or is there they can't really afford both payments or what's

Speaker 3: 27:39

The deal ? It's the both payments thing. Right? It's, it's not that either payment by itself is unreasonable on the old house or the new house. It's just that mortgage underwriters are like, I wanna make sure that you can afford both, at least on paper, even if you can't unload your old house. Right. And so my client, I I think sometimes in mortgage lending we benefit from, let me say the preposterous, let me just describe to you Right. Because my client doesn't really wanna make this would end up being like half down on the new house.

Speaker 1: 28:16

Okay. And is that necessary to get the payment on the new house to a level? Correct. Where they can afford both properties at the same time. Okay .

Speaker 3: 28:24

'cause the payment on the old house is what it is. If we're gonna fit in the box to qualify you, we need to keep pushing down the payment on the new house in order to get that payment low enough. I was like, you're not just putting 20% down or 25% down, we gotta help you put half down.

Speaker 1: 28:43

And do they have a lot of equity in their old house that uh , they

Speaker 3: 28:47

Do, but that's stealing from Peter to pay Paul well ,

Speaker 1: 28:50

Right. Right, right, right . I I understand if we put more debt on that house, that doesn't really solve the problem. So that money's gotta come from an outside source.

Speaker 3: 28:58

And, and in my conversation with my client, it's like, here is, and I didn't know this when I proposed Right. I kind of felt like I was delivering like a, I'm pretty sure crazy . There's either no way you either can or want to. He's like, I can help you write an offer on this new house, not contingent on the sale of your old home that would require to , for you to make a 50% down payment. And my client went, Hmm . Okay. Lemme see if I'll call my dad.

Speaker 1: 29:28

Well, David, what about the gift tax limit, which I forget what it is or the gift, the , the gift limit this year. Was it 19,500 or something? Won't, won't dad or the son have to pay some ginormous gift tax?

Speaker 3: 29:40

Uh , I sometimes, when I'm trying to be a little half facetious with clients, I was like, are your parents worth more than $28 million? Yeah.

Speaker 1: 29:49

No.

Speaker 3: 29:49

101 out of 100 clients say no. And then I say, okay, I'm not a tax professional, but there will be no tax consequence to them. If your dad gives you $250,000 as a gift check with your tax advisor for the down payment on this new home, please call Paul s Wicker cousin, cousin Paul, or any tax advisor to confirm. But we have both read the irs.gov website and we know smart tax people who validate ain't no gift tax. You know what, if you've got more than $28 million, what are you calling me for? But that's just , yeah , there you go.

Speaker 1: 30:26

No, but yeah , so , so the idea is that you can give more than the annual gift limit according to the irs.gov or your tax professional because there's this lifetime exemption. And so if you do give more than the , uh, annual limit, you just gotta fill out a form and tell the government, Hey, I I I went over the limit, put this towards my lifetime gift exemption limit. All right .

Speaker 3: 30:45

So go on. And then well, what my client may do, okay, dad is on board to give the giant gift to help get them into the new home. When my client sells their old house. Yeah. They are free to do whatever they want with that money. They

Speaker 1: 31:02

Can re-gift it back to the dad, some of it, all of it,

Speaker 3: 31:05

Whatever . Well , they could take 'em on a really nice cruise if they wanted to. Yeah. But that it's about putting the game plan together for the new one. All right . I wanna talk about this PMI one 'cause I'm just gonna , I'm gonna get you going on this Alright . With my other client. You are listening to the Acuate Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 31:24

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

Speaker 3: 31:32

This is the last segment of today's Acuate Mortgage and Realty show. And Dad, this is , this is the mortgage bankers segment is what? It's all right . I had a client, they are currently making a 13% down payment is what they Okay.

Speaker 1: 31:48

13%.

Speaker 3: 31:49

They have awesome credit. And their monthly private mortgage insurance PMI is gonna cost them $58 per month.

Speaker 1: 32:00

Okay.

Speaker 3: 32:01

For that 13% down payment and the loan amount that they're borrowing, they pose the question to me, Hey, how much more money would need , would we need to bring to the closing table in order to get to 20%? And having reached that 20% threshold, you are no longer required on a conventional loan to have private mortgage insurance. Right.

Speaker 1: 32:22

So 7% of the sales price is how many dollars?

Speaker 3: 32:25

The answer to that is 23,000 more dollars for them that would lower their monthly payment principal and interest by $147 a month and remove the monthly PMI, which is 58 bucks a month.

Speaker 1: 32:39

So the total payment reduction is how much?

Speaker 3: 32:41

$205.

Speaker 1: 32:43

Okay. So should you fork over 23 grand to lighten your monthly payment by $205? Okay.

Speaker 3: 32:51

The mortgage bankers here on the Academic Mortgage and Realty Show would say no, please don't. But in real life, if that's what makes my client more comfortable, of course I'm gonna say Sounds good. Sure.

Speaker 1: 33:05

Yeah. Here's the fact and then I'm sure you did the break even on that.

Speaker 3: 33:09

Yes. Which, which is

Speaker 1: 33:11

Nine was about 109.3 years. Yeah. Takes you 9.3 years of saving $205 to replace that 23 grand that you were gonna I part

Speaker 3: 33:22

With. But, and see having owned a home and improved a home moving in is only the beginning. It's not just the $23,000 you're, you know, fiddling with should we put it toward the down payment or not? It is also, well, what else could those funds be used for? Are , are there any home projects? Is there a really ugly carpeting that you need to swap out ?

Speaker 1: 33:48

Is there's something you , you need to improve? Spend money . Right ? Yeah .

Speaker 3: 33:50

Is , yeah. Is there siding on the house that you think are , how's about this? Do you think you might need to replace the windows at any time in the near future

Speaker 1: 33:57

Depending on how old the house is or , or the roof or what have you? Hey , did you think about having them just put 2% more down so they get to the magic 15%? Which yes . Makes the PMI even a little less expensive. It kind

Speaker 3: 34:08

Of though was an old school . PMI is evil even though I don't understand what it is or how much it costs.

Speaker 1: 34:18

Yeah. Okay.

Speaker 3: 34:19

And let me to defend my friends and private mortgage insurance. PMI is the greatest invention in the history of home ownership and is a tool that can be used if you wish to both u understand it and wield it. My clients wanted to go down the path of what made them feel most comfortable. Here's the other kicker though, too, dad. This was gonna be gift money. So it's not their 23,000 bucks. Oh , it's grandma's

Speaker 1: 34:48

Somebody else's. Okay. Hey .

Speaker 3: 34:49

Which makes it even easier, I think, to be like, sure, we'll yeah, we'll use grandma's money

Speaker 1: 34:55

To , we're take this money and yeah, we're gonna save $200 . So , so it's really a gift from grandma, which she would not, would she give them the gift even if they didn't use it towards the down payment?

Speaker 3: 35:04

Ah , that would be, that's a separate conversation.

Speaker 1: 35:06

Yeah. Yeah. Who knows?

Speaker 3: 35:08

But as is always the case, our job is to, let's quantify what this is, share with you a break even as you noted and then client, you tell me 'cause you're the one who has to sleep in the house and feel comfortable with life month. Have

Speaker 1: 35:23

They decided?

Speaker 3: 35:24

They have Not yet. They're still thinking about it ,

Speaker 1: 35:27

So . Okay. But they've , they are armed with the facts. Yes . And do they have a house under contract or not? They

Speaker 3: 35:31

Are, they are closing at the end like Memorial Day. So

Speaker 1: 35:34

We're okay . So yeah ,

Speaker 3: 35:35

We're clear to close, man. We're gonna

Speaker 1: 35:36

Be sitting around for most of May, just counting down the days. Fantastic. Alright , well thanks for those great stories, David. Of course. Hey , that's all the time we have for today's show. We would love to help you, your loved one, your friend, your coworker , uh, get in position to , uh, buy a home and make you the most competitive buyer you can possibly be. All you've gotta do , uh, to get started with that is click on the blue button@accunett.com. You've been listening to the Anette Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 4: 36:04

The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the host or guests of Acuate Mortgage and Acuate Realty Advisors, and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.