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#53 Mid-Year 2025 Mortgage Market Update | Multifamily Loan Opportunities & Buyer Tips · Own More Doors

0:00
SPEAKER_01: What's up, everyone?
0:01
SPEAKER_01: It's Juizar with another Own More Doors podcast.
0:04
SPEAKER_01: Excited to be back in the studio.
0:06
SPEAKER_01: Thank you guys for being patient.
0:08
SPEAKER_01: I'm here with uh my business partner, um, Phoebe Tutorof.
0:13
SPEAKER_01: Uh, she's with Sage Trust Mortgage.
0:15
SPEAKER_01: And today we're going to be doing a kind of a mid-year review in 2025 on what is going on in the mortgage industry, about specifically relating to multifamily properties.
0:24
SPEAKER_01: What are we seeing?
0:25
SPEAKER_01: Are loans up?
0:27
SPEAKER_01: Are they down?
0:27
SPEAKER_01: We know interest rates are up, so I could only imagine what that's doing to the market.
0:32
SPEAKER_01: So, Phoebe, thanks for joining me today.
0:34
SPEAKER_00: Thank you.
0:34
SPEAKER_00: Glad to be here.
0:35
SPEAKER_01: Phoebe, um, I heard you speak on Friday.
0:38
SPEAKER_01: And why don't you summarize um what you're seeing, specifically with Sage Trust mortgage right now, different from the years past?
0:49
SPEAKER_00: Um, definitely a pickup in interest of purchasing replacement properties, multifamily properties, um, not too much refi business, unless you're taking out a second mortgage.
1:05
SPEAKER_00: Um, but definitely a pickup in the amount of interest, the amount of applications, um, pre-approvals, everything has increased, including closings as well.
1:16
SPEAKER_01: Yeah.
1:16
SPEAKER_01: So you were saying that we've done more loans this year than we've had done the last three years.
1:21
SPEAKER_01: Correct.
1:22
SPEAKER_01: And so, you know, I I'm friends with a lot of mortgage uh folks who are in the industry.
1:27
SPEAKER_01: You know, I'm in the industry, and so most of them, their numbers are down, it's tough, and they're out there doing anything to try to do loans.
1:34
SPEAKER_01: And and what you're saying is our our business is up.
1:38
SPEAKER_00: Correct.
1:38
SPEAKER_00: It is.
1:39
SPEAKER_01: And which we appreciate.
1:41
SPEAKER_01: And so thank you guys all out there who who have been reaching out and and can please continue to reach out and you know, uh, feel free to refer us.
1:48
SPEAKER_01: We we love that.
1:50
SPEAKER_01: So, Phoebe, how do you explain that our business is up when interest rates are still high?
1:57
SPEAKER_00: I think a lot of people that were interested in purchasing their next property were waiting and waiting and waiting for rates to come down.
2:06
SPEAKER_00: Um, and that just has not happened.
2:10
SPEAKER_00: Um, you know, there was forecast that they were supposed to come down by the end of the year.
2:15
SPEAKER_00: They were supposed to come down in the first quarter of this year, and um it just didn't happen.
2:20
SPEAKER_00: They did come down slightly compared to where they were 12 months ago, but they're not pandemic interest rates, they're not pre-pandemic interest rates.
2:29
SPEAKER_00: Um, and I think a lot of people are just at the point now where they keep seeing property values increase, purchase prices increase, and the interest rates are remaining pretty consistent.
2:40
SPEAKER_00: So um, you know, always telling everybody now if the property works for you, you can afford the loan, date the interest rate, marry the property, right?
2:50
SPEAKER_00: So when rates do come down, at least you're getting into the property at a price that you're comfortable with, an interest rate maybe not so much, but just know that that's not forever.
3:02
SPEAKER_00: So the property is gonna be forever, but the interest rate won't be.
3:04
SPEAKER_00: So I think more people are just realizing that if they keep waiting, that property is just gonna get more and more expensive or the properties clearly.
3:14
SPEAKER_01: And and for anyone listening, we're we're in Southern California.
3:17
SPEAKER_01: And when Phoebe's saying that the prices keep going up, she's referring, she's gonna be referring to single-family homes, duplex, triplex, fourplex.
3:25
SPEAKER_01: Uh, this is not the case in the five plus uh five plus market.
3:29
SPEAKER_01: Uh, we'll do another podcast for that, and I'll let you guys know the opportunities that are there.
3:32
SPEAKER_01: But um, so that's what she's referring to.
3:35
SPEAKER_01: And and yes, the prices continue to go up, and a lot of it could continue to be supply and demand.
3:41
SPEAKER_01: You know, Phoebe, we keep hearing that everyone's leaving California, but that's not exactly.
3:45
SPEAKER_01: I mean, we have friends that have left, and we've also had friends that have left and come back.
3:50
SPEAKER_01: And then we look around and then we are, you know, there's still tons of traffic, no one's really going anywhere.
3:55
SPEAKER_01: I I don't, you know, I joke around.
3:57
SPEAKER_01: We're not fighting each other to get out of California, although people like to make it seem like that's the case.
4:03
SPEAKER_00: I agree.
4:03
SPEAKER_00: I agree that I mean the builders are still building, there's new construction everywhere.
4:07
SPEAKER_00: I mean, yes, people are leaving, but I think people are coming into California just as much as they're leaving.
4:14
SPEAKER_00: So I I yeah I don't see a decline in people staying in California.
4:24
SPEAKER_01: Yeah.
4:25
SPEAKER_01: Um, Phoebe, talk about, you know, we've had clients that are that are doing um cash out for different things.
4:32
SPEAKER_01: Like what what kind of projects are people looking to doing right now by by pulling money out of their current house, rental house, you know, any of that kind of stuff.
4:44
SPEAKER_01: Like what are you seeing people do?
4:45
SPEAKER_00: Um, first and foremost, most of them are pulling equity out to purchase another property, um, leveraging their existing assets to purchase more assets, right?
4:57
SPEAKER_00: So um that's typically what I'm seeing.
5:00
SPEAKER_00: And then secondary, I'm seeing people take out money for major renovations, you know, new roofs, remodels, um paint, you know, in the multifamily world, they're, you know, updating uh units as tenants move out.
5:14
SPEAKER_00: If they move out, they're updating the interior of their units um so that they can collect higher rents for the next tenant.
5:21
SPEAKER_01: Yeah.
5:21
SPEAKER_01: I'm also seeing people um pull out money so that they can build an ADU.
5:26
SPEAKER_01: Yes.
5:27
SPEAKER_01: So whether it's for a duplex or it's for a house behind your house or a house behind your rental house.
5:33
SPEAKER_01: I mean, if you already have rental property and you're gonna add, it makes sense to add more rental property to your parcel that you have tenant in already.
5:43
SPEAKER_00: I agree.
5:44
SPEAKER_01: And so I know a lot of people are doing that as well.
5:46
SPEAKER_01: Um, and I'm recommending um that if someone's pulling money out, you know, that they'll ask me, hey, is that is that a wise decision?
5:55
SPEAKER_01: And I tell them, well, if you're gonna invest that money wisely, then then it makes sense.
6:03
SPEAKER_01: And so one of the things that I'll just briefly talk about, and and it's that in the five plus market, so we're talking at five units and above, the financing changes in that situation, right?
6:14
SPEAKER_01: And so in that type of situation, you typically need uh a much larger down payment.
6:20
SPEAKER_01: You have to meet certain debt coverage ratios that you would not have to meet with the fourplex, triplex, or duplex.
6:27
SPEAKER_01: And those loans are typically five to seven years, maybe 10 years.
6:31
SPEAKER_01: Okay, so those come due.
6:32
SPEAKER_01: So what's been happening in that market, Phoebe, is um we're seeing like major price reductions.
6:39
SPEAKER_01: In fact, the most interesting thing is about 17% of all five plus units in Long Beach are currently selling for less than they did five years ago.
6:49
SPEAKER_01: So it's amazing.
6:50
SPEAKER_01: So the way that I look at that is the way that I see this is okay, so five years ago, someone could have overpaid, so that's one part.
6:58
SPEAKER_01: Uh, but most likely they probably improved the property.
7:01
SPEAKER_01: So, you know, you're you're talking possibly windows, roof, paint, uh, upgrades, you know, maybe even interior upgrades.
7:09
SPEAKER_01: They definitely increased the rents, did cash for keys, um, substantial renovation.
7:15
SPEAKER_01: So what they the way I see it is this they took an asset, they made it better, improved with improvements, and they made it better with income.
7:23
SPEAKER_01: Now you know that when prices, when the income goes up, the value of the asset goes up.
7:28
SPEAKER_01: And so all I'm saying is they made this asset better.
7:31
SPEAKER_01: And now, because of the the way that the financing works in the five plus market, what they call the commercial market, how it works is putting a pinch in those people.
7:41
SPEAKER_01: It's putting a pinch on anyone who got a loan five years ago.
7:45
SPEAKER_01: And so now that loan that they got is coming due.
7:47
SPEAKER_01: There's more inventory on the market, it's harder to move at that level.
7:51
SPEAKER_01: It's uh cap rates are a huge driver.
7:55
SPEAKER_01: And so what's what's happening is there's tremendous opportunity in the five plus market.
8:00
SPEAKER_01: And the only reason I mentioned this, and I know today's show is going to be, you know, we're gonna focus heavily on mortgages and multifamily.
8:07
SPEAKER_01: It's it's I want people to know when when you're listening to this and you have another house or a condo and you're thinking, you know, I have this money there, it's it's a half a million dollars or or a million.
8:18
SPEAKER_01: What can I do with it?
8:19
SPEAKER_01: Well, you could utilize some of it as a down payment for a five plus market.
8:23
SPEAKER_01: Now, now why would you want to be in the five plus?
8:26
SPEAKER_01: Because that's where the greatest opportunity is right now.
8:29
SPEAKER_00: For a buyer.
8:30
SPEAKER_01: Yeah.
8:31
SPEAKER_01: And so um, one thing that I'm currently doing, you know, one thing that's important for me, Phoebe, is that I want people to know that I'm not just talking about investments.
8:42
SPEAKER_01: So I currently sold a triplex that I have because I was able to sell that at the top of the market.
8:49
SPEAKER_01: And very rarely, Phoebe, do you get to sell at the top of the market and buy at the bottom of the market?
8:54
SPEAKER_01: And that's kind of what I'm seeing.
8:56
SPEAKER_01: So the fourplex, triplex, duplex, you could still get a strong value.
9:01
SPEAKER_01: Like you said earlier.
9:02
SPEAKER_01: It's still in that situation, it's still a seller's market for the most part.
9:08
SPEAKER_01: But in the five plus market, it's a buyer's market.
9:11
SPEAKER_01: So I was able to do sell uh a triplex in Long Beach that I've owned for a very long time, um, and and do a 1031 exchange on an eight-unit building in a better location, uh, new much newer construction, better income, better, better tenancy base, and I'm happy with it.
9:29
SPEAKER_01: Now, I'm I'm only telling you this because if I'm doing it, and granted, I I should know what I'm doing, right?
9:35
SPEAKER_01: I'm the broker owner of Sage Real Estate that you specialize in multifamily.
9:39
SPEAKER_01: I should know what I'm doing, and I'm currently doing that.
9:42
SPEAKER_01: And so I'm currently investing into more units.
9:45
SPEAKER_01: And so sometimes people will ask me, uh, is this a good time to buy?
9:49
SPEAKER_01: Well, I'm buying, and I better know what I'm doing.
9:52
SPEAKER_01: This is my profession.
9:53
SPEAKER_01: So I I only put that out there.
9:55
SPEAKER_01: So if anyone has an asset and and they want to get into more units, I would say this is the time.
10:03
SPEAKER_01: And, you know, reach out to Phoebe if you if you have a house or some units that you have a significant amount of equity and tap into that equity, not to throw it away, not to buy a boat and a car.
10:16
SPEAKER_01: I'm not saying that.
10:16
SPEAKER_01: This is this is own more doors.
10:18
SPEAKER_01: This is not own more boats.
10:20
SPEAKER_01: So it's important to me that that we're you utilizing the equity that we have and trying to make it work hard or work harder.
10:30
SPEAKER_01: Um, Phoebe, so I'm gonna get into um, we're gonna go through a couple questions.
10:35
SPEAKER_01: And so this is this is for our our listeners, our viewers on YouTube, and and for some of you who are listening to the podcast, um, we're definitely also on YouTube.
10:44
SPEAKER_01: And so you if you if you're more of a visual person, you could see us there.
10:48
SPEAKER_01: If you like the audio, then definitely keep on listening.
10:50
SPEAKER_01: We appreciate the support.
10:52
SPEAKER_01: Um, we decided to do this podcast with uh questions you must ask a mortgage broker or lender when you're buying a multifamily property.
11:00
SPEAKER_01: All right.
11:01
SPEAKER_01: So this is not every lender knows how to work with multifamily.
11:05
SPEAKER_01: They're gonna say they can, but that's fine.
11:08
SPEAKER_01: They could say yes, and maybe it's not real, or maybe they've done a little bit, but we want you guys, if you're not working with us, we want you to work with someone who's good.
11:17
SPEAKER_01: So here's some questions we want you to ask.
11:18
SPEAKER_01: And so the first question is how many multifamily property deals have you done within the last year?
11:25
SPEAKER_01: Or you could say within this year, because it's 2025.
11:28
SPEAKER_01: Why why is that question important?
11:30
SPEAKER_00: Well, that question's important because it shows that the mortgage broker that you're working with understands multifamily lending, right?
11:40
SPEAKER_00: If they've closed multiple multifamily loans, then that mortgage broker obviously, or you would think, pretty much knows what they're doing and how to structure multifamily loans to make them work for that buyer.
11:56
SPEAKER_00: Um we have closed 13 multifamily loans this year.
12:06
SPEAKER_01: Okay.
12:07
SPEAKER_01: And and percentage-wise, out of the majority of our loans, how much is that?
12:12
SPEAKER_00: 80%.
12:13
SPEAKER_01: 80%.
12:14
SPEAKER_01: All right.
12:14
SPEAKER_01: So for anyone listening, so a little bit of a tangent.
12:17
SPEAKER_01: Everything's 80-20 in life, right?
12:19
SPEAKER_01: So um, so what we're saying is is Sage Trust Mortgage as a as a mortgage company, 80% of the loans that we're doing is multifamily, which adds up because we are a multifamily brokerage company.
12:33
SPEAKER_01: That's what we're you know, that's what that's what we're preaching, and that's what we're investing in ourselves and all of our agents.
12:38
SPEAKER_01: And so uh 80% of the loans that we're doing.
12:41
SPEAKER_01: And so if you talk to someone and say, percentage-wise, how many loans, and if it's if it's like what would be too little?
12:50
SPEAKER_00: It it's like for multi-family loans, what would be too little?
12:54
SPEAKER_00: Like if you're closing 20 loans and only one of them is multifamily, that's too little.
12:59
SPEAKER_01: Got it.
12:59
SPEAKER_01: Okay.
13:00
SPEAKER_01: All right.
13:00
SPEAKER_00: I mean you have to know the product.
13:02
SPEAKER_00: You have to know the product, you have to understand how it works.
13:04
SPEAKER_00: You have to know how to utilize rents to make the qualifying easier and better.
13:09
SPEAKER_00: And um, yeah, it's it's a different appraisal, it's it's a different approach.
13:15
SPEAKER_00: Um and you just yeah, you need to know how to structure it.
13:22
SPEAKER_01: Perfect.
13:22
SPEAKER_01: Okay, so the next question to ask a lender, what type of multifamily mortgage loan is best for me?
13:33
SPEAKER_01: Um you know, sometimes sometimes, Phoebe, the the borrower doesn't even know that.
13:41
SPEAKER_01: But but but but the lender should know that.
13:44
SPEAKER_00: Well, the lender should give the borrower options.
13:46
SPEAKER_00: Okay, right.
13:47
SPEAKER_00: So um the most popular and best priced type of mortgage right now, whether it's a single family, a condo or multifamily, is going to be a 30-year fixed mortgage.
14:00
SPEAKER_00: Those are the types of loans that are closing the most, and those are the types of loans that um have the best terms.
14:08
SPEAKER_00: So I'm always going to offer that initially.
14:11
SPEAKER_00: Um, and if the interest rate is better on a 30-year fixed, I don't know why you would choose any other type of loan other than that, unless you choose to do an interest-only type of loan, but that's still going to be fixed.
14:24
SPEAKER_00: Um, the adjustable rate mortgages that are available on the conforming product, you know, which is what most borrowers are utilizing for multifamily two to four units, um, the best loans are 30-year fixed loans, uh, term and price-wise.
14:42
SPEAKER_00: Um, even going to a 15-year, which, yes, you're going to pay off the property faster, you're going to pay less interest, those interest rates are not that much lower than the 30-year fixed, where you're going to see a huge benefit in paying a much higher mortgage payment.
14:56
SPEAKER_01: If you're looking to get a specific loan type, VA, home loan, FHA, how many of these loans have you done for multifamily properties?
15:04
SPEAKER_01: Because these are questions that we want a consumer to be asking.
15:08
SPEAKER_00: So each type of loan that you just mentioned, whether FHA, VA, or conventional, has different guidelines.
15:15
SPEAKER_00: So it's going the best type of loan for an individual borrower is going to be based on um the property type and what that borrower qualifies for, because each has a different set of rules and guidelines.
15:28
SPEAKER_01: I I think one important part when someone says, you know, yeah, I want to get multifamily, I what kind of loan can I get?
15:34
SPEAKER_01: You know, one of the first things that I think of, I'm like, well, are you intending and living in it or are you not?
15:39
SPEAKER_01: Because that that really changes how a lender is going to look at it.
15:44
SPEAKER_01: So part of it, yeah, the questions to ask the lender are important, but part of it too is that the individual, the the buyer, the consumer, the the investor needs to know some of this stuff heading into it.
15:56
SPEAKER_00: Right.
15:56
SPEAKER_00: Correct.
15:57
SPEAKER_01: Um, next question Do I qualify for any down payment assistant programs?
16:02
SPEAKER_00: Um many people do.
16:04
SPEAKER_00: Um, down payment assistance programs are geared towards single-family homes and condos.
16:09
SPEAKER_00: Um, I don't see those available for multifamily.
16:14
SPEAKER_00: Um, they do have income limits.
16:16
SPEAKER_00: They're for first-time homebuyers only.
16:18
SPEAKER_00: Um, and they're a great product for the certain individual that is going to own or occupy the property and is buying a house or a condo and doesn't currently own any other property.
16:28
SPEAKER_01: Got it.
16:29
SPEAKER_00: And has not owned a property in the last three years.
16:31
SPEAKER_01: So if someone's asking because they intend to buy multifamily, the chances of them qualifying for uh one of these programs is non-existent.
16:41
SPEAKER_01: Correct.
16:41
SPEAKER_01: Got it.
16:42
SPEAKER_01: Okay.
16:42
SPEAKER_00: Not that I have knowledge of.
16:43
SPEAKER_01: Okay.
16:44
SPEAKER_01: Um, so this is a question for them to ask.
16:46
SPEAKER_01: What is my interest rate gonna be?
16:48
SPEAKER_00: Well, the interest rate is going to be dependent on the loan program, whether you're going to occupy or not occupy the property, your credit score, and your down payment.
17:00
SPEAKER_01: Phoebe, let me ask you something.
17:02
SPEAKER_01: Uh, a lot of times um I've noticed that with some of the buyers that I'm working with, I tell them, hey, we we have an in-house company that does loans, say trust mortgage.
17:16
SPEAKER_01: And and I'm like, but feel free to speak with your bank, uh, your credit union, whomever you you know like and trust, and then compare that to our rate.
17:26
SPEAKER_01: Why is it that our rate, like literally nine times out of 10, is better than anyone else's rate?
17:32
SPEAKER_01: Like, why is there a difference if if if that individual has given you the same information, gave them the same information?
17:39
SPEAKER_01: Why is it that our rates are better?
17:41
SPEAKER_01: You know, I'm not promising that they're gonna be.
17:43
SPEAKER_01: I'm not quoting anything.
17:44
SPEAKER_01: I'm just saying most times they decide to go with us.
17:47
SPEAKER_00: So mortgage brokers work on the wholesale side of lending.
17:51
SPEAKER_00: Um, they take out, what, for lack of a better word, the middleman, right?
17:56
SPEAKER_00: So you're not supporting a salary for a loan officer and the loan processor and all of the bank employees or the direct lender employees, right?
18:04
SPEAKER_00: You're working with a wholesale lender who works with a multitude of lenders, and they're able to shop your loan per se, um, to get you the best terms for your type of property and your situation.
18:20
SPEAKER_00: Um mortgage brokers have lots of options.
18:23
SPEAKER_00: They're not just one set of lending guidelines because that's the bank or you know, the credit union that you work with.
18:32
SPEAKER_00: They only have one set of programs, right?
18:34
SPEAKER_00: And one set of guidelines.
18:35
SPEAKER_00: So a mortgage broker is going to have the opportunity to shop it around with different types of loan programs and different interest rates based on um the scenario that your transaction is is currently working with.
18:51
SPEAKER_01: Got it.
18:52
SPEAKER_01: So that could be one of the big differences is that you're a mortgage broker.
18:54
SPEAKER_00: Correct.
18:55
SPEAKER_01: And you're able to shop around and kind of get the best rate so that when when you do speak with that, the buyer, the investor, you're like, this is the best rate.
19:03
SPEAKER_01: And sometimes it's more you know what what I what I don't like is when someone you give someone the better rate, and then that individual goes back to the lending company or the lending arm that gave them the higher rate and they show them your better rate, and then they say, I'll match that.
19:19
SPEAKER_00: Right.
19:20
SPEAKER_00: It happens all the time.
19:21
SPEAKER_01: Yeah.
19:21
SPEAKER_01: And the reason I don't like it is that if that initial lending company that you spoke with, if they weren't willing to give you the best price from the beginning, what does that tell you about them?
19:32
SPEAKER_00: Right.
19:32
SPEAKER_00: That's they're not looking out for your best interest and they're not giving you the best deal available.
19:36
SPEAKER_01: And and the only reason they lowered it down is because they were about to lose you as a customer.
19:40
SPEAKER_01: Correct.
19:41
SPEAKER_01: That's pretty, that's pretty sad.
19:45
SPEAKER_01: And yeah, so be careful.
19:47
SPEAKER_01: You know, I I only put that out there because we see it happen a lot.
19:51
SPEAKER_01: And we don't mind voting alone, but uh, you know, we would hope that that, hey, we're gonna give you the best thing from the beginning.
19:57
SPEAKER_01: We're not gonna play these games or try to see, well, maybe they won't know any better.
20:01
SPEAKER_01: And that's really what's happening is is is the mindset of maybe they won't know any better.
20:06
SPEAKER_01: And by giving them a higher interest rate, some sometimes they they probably get paid more, right?
20:10
SPEAKER_01: Correct.
20:10
SPEAKER_00: That's what happens.
20:11
SPEAKER_01: Okay.
20:12
SPEAKER_01: So, folks, uh, you know, I'm gonna pull back the curtains in case you didn't know this was happening.
20:17
SPEAKER_01: This is the way the way it works.
20:19
SPEAKER_01: So, um, anyhow, so that's something to definitely pay attention to.
20:24
SPEAKER_01: Um, let's go to the next question that that they should be asking.
20:28
SPEAKER_01: Are you doing a hard credit check on me today?
20:31
SPEAKER_01: Explain what that means.
20:32
SPEAKER_00: A hard credit check is when all three credit, well, it's not necessarily all three credit bureaus because you can do them individually, but it's when an inquiry is placed on your credit report when the credit is run.
20:44
SPEAKER_00: There's different types of credit reports that are available.
20:48
SPEAKER_00: There's a hard credit check, which is the type of credit check that's typically required when you're looking for a full pre-approval to write offers on.
20:58
SPEAKER_00: Um, there's a different type of credit check that's called a soft inquiry, where we're just looking at the credit score and the credit report, but there's no inquiry being placed on your credit report.
21:12
SPEAKER_00: And in most instances, the soft credit check is just a cursory glance, kind of a pre-qualification tool to see where your credit score and your credit is at.
21:21
SPEAKER_00: Um, however, most of the time the hard credit check is required, but you do have the option in the beginning when you're looking into becoming pre-qualified or pre-approved to do a soft credit check.
21:34
SPEAKER_00: Um, but just note that when you want the final pre-approval to be able to get um a pre approval letter and start writing offers on properties that you're interested in, more than likely that hard credit check is going to be required.
21:48
SPEAKER_01: Got it.
21:48
SPEAKER_01: I I know that a lot of people give you pushback.
21:51
SPEAKER_01: You're gonna run my credit, but what you're saying is at some point, we're gonna have to run your credit.
21:56
SPEAKER_01: Correct.
21:56
SPEAKER_01: And and I would just say this if you're if you're Sometimes we get folks that reach out to us and they you know they might be a year out, six months out, maybe even two years out or more, and it's okay.
22:07
SPEAKER_01: I mean, it's I you know, I'm I'm happy when I'm like, man, I've known this person for five years, and we now, now we got to to to help them achieve their dream and and this investment journey.
22:18
SPEAKER_01: Um what type like if someone says, hey, I'm ready to like what type of timing should give them a signal that it's okay that that Phoebe or or someone like you, someone that trusts, it's okay that they run my credit.
22:33
SPEAKER_01: Like what type of timeline are we looking at?
22:36
SPEAKER_00: For hard credit checks?
22:37
SPEAKER_01: Yes.
22:38
SPEAKER_00: That needs to be done when you are ready to start viewing properties and writing offers.
22:44
SPEAKER_01: Well, I mean, a lot of buyers want to view properties today without even being qualifying.
22:49
SPEAKER_00: And that to be honest, that may be a waste of everybody's time because until you find out what your credit score is and where your credit is at, you looking at properties that you may or may not qualify for is a waste of your time specifically.
23:07
SPEAKER_01: Got it.
23:07
SPEAKER_01: Okay, guys.
23:08
SPEAKER_01: So I mean, be a little lenient to the agents out there.
23:11
SPEAKER_01: I mean, if you're not, if you're not ready and if you don't know what you're gonna qualify for, probably don't be.
23:16
SPEAKER_01: Some agents out there are are eager, they're new to the business, and they'll be showing you stuff, but it's it's it's premature, is what we're saying.
23:23
SPEAKER_01: Cool.
23:24
SPEAKER_01: Um, another question that they should be asking is will I have to pay mortgage insurance?
23:29
SPEAKER_01: So explain to us what mortgage insurance is and and kind of how that factors in when getting a loan.
23:34
SPEAKER_00: Uh mortgage insurance is an insurance policy that protects the lender against foreclosure.
23:40
SPEAKER_00: Um and anytime you put down less than 20% in most instances, the type of mortgage that you're going to obtain, other than a, well, a VA loan has a funding fee, but other um, most mortgages with less than 20% down are going to require mortgage insurance.
24:01
SPEAKER_00: Um, FHA has an upfront mortgage insurance premium and a monthly insurance premium.
24:07
SPEAKER_00: VA loans have an upfront funding fee, right?
24:11
SPEAKER_00: And those loans are for veterans, eligible veterans.
24:14
SPEAKER_00: And then conventional loans, um, anytime you put less than 20% down and you have one mortgage that exceeds 80% loan to value, you're going to have mortgage insurance.
24:25
SPEAKER_00: And the mortgage insurance premium is dictated by property type, credit score, and down payment.
24:31
SPEAKER_00: So those are the three factors that are going to determine how much your mortgage insurance is monthly on a conventional loan.
24:38
SPEAKER_00: Um, FHA is a little bit different structure, and then VA loans just has an upfront funding fee, and that's based on a veteran's eligibility.
24:47
SPEAKER_01: Got it.
24:48
SPEAKER_01: So typically, just kind of uh to summarize that, if you have the 20%, put it because otherwise there is this additional fee, and the additional fee is a lot.
24:57
SPEAKER_01: I mean, it it adds it's hundreds of dollars.
24:59
SPEAKER_00: Correct, it can be.
25:00
SPEAKER_01: Yeah.
25:01
SPEAKER_01: So so if you could do the 20%, do it.
25:03
SPEAKER_01: Uh if not, then um just account account for hey, you're you're gonna have a bigger payment.
25:11
SPEAKER_01: Okay.
25:13
SPEAKER_01: Um the next question is and this is probably the most important.
25:19
SPEAKER_01: I I it's not the most important, but I I think it's important is what will my monthly mortgage payment be?
25:25
SPEAKER_00: So that's going to be determined by the amount of money that you borrow, your interest rate, and whether you have mortgage insurance, so how much your down payment is, right?
25:35
SPEAKER_00: Um again, interest rates are you know based on property type, down payment, and credit score, um, and obviously loan type as well.
25:46
SPEAKER_00: Um but it really depends on on the factors of your specific transaction and what you're buying and how much your loan amount is.
25:55
SPEAKER_00: It's I mean, it could be I mean, I couldn't even tell you a number of what my mortgage payment would be, but those are the factors that are going to, you know, dictate what your mortgage payment is.
26:08
SPEAKER_01: Sure.
26:09
SPEAKER_01: Um, let's go on to the next question.
26:11
SPEAKER_01: So this is a question that we want you to ask.
26:14
SPEAKER_01: A mortgage broker or a lender that you're interviewing, do you have an origination fee?
26:19
SPEAKER_01: So what does that mean?
26:22
SPEAKER_00: So an origination fee typically is going to be a fee that the lender you're working with charges you for that loan.
26:30
SPEAKER_00: Um there there's an origination fee, they also call it a discount fee, they call it points.
26:38
SPEAKER_01: Um so all those are the same.
26:40
SPEAKER_00: Pretty much, pretty much.
26:41
SPEAKER_00: Those are all going to be lending fees.
26:43
SPEAKER_00: Um, even, you know, when you if you say you're paying points and you're buying your rate down, that's still part of an origination paid to the lender, right?
26:51
SPEAKER_00: So they just call it different things.
26:53
SPEAKER_00: Some loans have an origination fee.
26:55
SPEAKER_00: There's usually going to be options to have an origination fee or not have an origination fee.
27:00
SPEAKER_00: And those are usually going to affect the interest rate.
27:03
SPEAKER_01: Got it.
27:04
SPEAKER_01: Um, what on average, what's what's like a a typical origination fee?
27:10
SPEAKER_00: I mean, you know, just I mean, throwing it out there, I mean 1%.
27:16
SPEAKER_00: And that would be 1% of your loan amount, but it could be less, it could be more.
27:20
SPEAKER_00: Um, it's it would be something that you if i i if you wanted to borrow money and you wanted to buy your rate down and you told the lender you were comfortable paying 1% origination or discount, where would my interest rate be versus no origination?
27:34
SPEAKER_00: Like you always want to compare the two options.
27:37
SPEAKER_01: I mean, if someone, if I call someone and I'm like, hey, what's your origination fee?
27:40
SPEAKER_01: And they say 3%, should I head for the Hills, Phoebe?
27:43
SPEAKER_01: Or is there a catch like, oh, it's 3%, but look at the interest rate I'm gonna get you?
27:46
SPEAKER_00: Correct.
27:47
SPEAKER_00: I mean, the interest rate better be commensurate based on the origination they're charging.
27:52
SPEAKER_00: If you're if you, you know, shopping around and someone gives you an interest rate and charges three percent, and another lender gives you the same interest rate with no origination, well, it's all about the money that the lender's making.
28:05
SPEAKER_00: So you, you know, you need to do your due diligence and and and check around and see where the best interest rates are at and what's best for you.
28:12
SPEAKER_01: Okay.
28:13
SPEAKER_01: Um, if someone is in the process right now, Phoebe, and and I'll just say California in general, because I know that's for the most part where we could do loans.
28:20
SPEAKER_01: Yes, we could do loans out of state, but it's more uh what they call non-qualified mortgages.
28:25
SPEAKER_01: But if someone right now is has started the process, they got a quote or a pre-approval or something in their hands.
28:33
SPEAKER_01: Um are you available to to review that with people?
28:38
SPEAKER_01: Is that something you want to do or um and kind of give give your two cents on on what you could do with the interest rate?
28:43
SPEAKER_01: Would that be um something you could do?
28:45
SPEAKER_00: Absolutely.
28:46
SPEAKER_00: So I am always willing to review the loan estimate that you receive with the current lender you're working with, which is a required document um that they're required to give to you.
28:56
SPEAKER_00: I'm always willing to look it over, give you my opinion, and let you know what I can do for your specific scenario and see if it's better for sure.
29:05
SPEAKER_00: And that only takes 10 minutes.
29:08
SPEAKER_00: It's a really quick process.
29:10
SPEAKER_01: Because that's one thing where, you know, some people who know are gonna be, you know, they're gonna put a little more effort to make sure that they that they're getting the best deal they can, right?
29:20
SPEAKER_01: It's my job as a real estate broker to be able to negotiate the best terms on your behalf, right?
29:25
SPEAKER_01: So that's that's my job.
29:26
SPEAKER_01: That's my duty.
29:27
SPEAKER_01: Now, maybe not every broker thinks like that, but but I do.
29:32
SPEAKER_01: And so um I've noticed, I've noticed that when I'm selling a property and we receive an offer, and then you and I go through the offer together, and then we look at the who's doing the mortgage, you kind of like jump off your seat because you're like that is not a good loan.
29:50
SPEAKER_01: That's not a good loan.
29:51
SPEAKER_01: But again, folks, this isn't this is a buyer that we're not representing.
29:55
SPEAKER_01: We're representing the seller, but we get to see that's data that we get to see.
29:59
SPEAKER_01: And and Phoebe's like, why are they going with them?
30:02
SPEAKER_01: You know, and and so it's and part of our show too is to just educate and let people know, but people are closing transactions not knowing that they got a higher interest rate than they should have, and they probably paid more origination fees than they should have.
30:14
SPEAKER_00: Correct.
30:14
SPEAKER_01: And there's no reason for that, especially when we're saying, hey, reach out to us and we can help.
30:19
SPEAKER_00: Yeah, at least have another set of eyes, review your initial disclosures.
30:23
SPEAKER_00: And you got to do it in the very beginning, though, because remember you're you're you're on timelines once you get into escrow, but always look around and search around.
30:31
SPEAKER_00: You don't have to have your credit run for someone to do a review of your existing loan estimate to see if there's a better deal out there for you or you know, a better interest rate, better terms, less fees.
30:43
SPEAKER_00: Um I I would love the opportunity to review any loan estimates that people have to see if I can do better.
30:51
SPEAKER_01: Okay.
30:52
SPEAKER_01: Uh, folks, I suggest you take her up on that offer.
30:55
SPEAKER_01: Um next question that the consumer should be asking is how and and when will I be updated on the loan's progress?
31:07
SPEAKER_01: Why is that important?
31:08
SPEAKER_01: And and why does it vary between lenders?
31:11
SPEAKER_00: Um, it so there's certain steps that a loan takes.
31:15
SPEAKER_00: Once you get into escrow, um there's there's steps that the loan goes through outside of the purchasing side of it.
31:23
SPEAKER_00: So your realtor is going to work with you on the real estate side of it, the mortgage broker or lender is gonna work with you on the loan side of it.
31:30
SPEAKER_00: Um, and you should be updated every few days with an updated status of where your loan is at and what's happening and what the next steps are.
31:40
SPEAKER_00: Um I do send out emails, you know, with the next steps.
31:44
SPEAKER_00: And, you know, in the mortgage world, there's, you know, three kind of large ones.
31:50
SPEAKER_00: And that's going to be number one, getting your offer accepted and getting to escrow is kind of the most important one.
31:55
SPEAKER_00: The second one is getting disclosures and getting your appraisal ordered.
31:59
SPEAKER_00: The third one is getting loan approval and finally getting it clear to close and going to, you know, signing your final loan documents and getting to closing.
32:09
SPEAKER_00: So those are the kind of the major steps that you're gonna walk through.
32:12
SPEAKER_00: And if there's any hiccups during those steps, you're gonna be informed instantly when they do occur.
32:18
SPEAKER_00: So, um, and we always have workarounds and solutions and and options if there is any hiccups during those steps.
32:26
SPEAKER_01: Okay.
32:26
SPEAKER_01: Um, the last question that I'm gonna ask is um, well, not gonna ask you, but this is the question we're asking.
32:33
SPEAKER_01: Do you offer a pre-approval or pre-qualification?
32:36
SPEAKER_00: So I offer both.
32:38
SPEAKER_00: So that will kind of go back to um the credit check question, right?
32:44
SPEAKER_00: So if you're just looking to see what you possibly may be approved for based on your income, you tell me what your credit score is from whatever service you subscribe to.
32:56
SPEAKER_00: We talk about your debts a little bit or your liabilities that you currently have, such as car payments, credit cards.
33:02
SPEAKER_00: Um, I can give you kind of a pre-qualification idea and a pre-qualification letter, but remember, it's gonna be subject to a credit report, right?
33:11
SPEAKER_00: And a final approval.
33:13
SPEAKER_00: Um, a pre-approval is full blown.
33:16
SPEAKER_00: All of your income is verified, all of your assets are verified, your credit report is pulled, all of your debt and liabilities are verified, as well as your credit score is verified.
33:25
SPEAKER_00: So though those are kind of the two differences.
33:27
SPEAKER_00: A pre-approval letter is going to mean that you're going to be approved to buy a property at that specific purchase price and loan amount based on the information you have provided in the credit report that was run.
33:40
SPEAKER_01: Okay.
33:41
SPEAKER_01: Um, I have another question.
33:43
SPEAKER_01: Yes.
33:44
SPEAKER_01: Um, one of the hot topic loans right now is uh what they call it a DSCR loan.
33:53
SPEAKER_01: When when does a consumer know, hey, am I a better fit for a DSCR loan versus a conventional loan?
34:01
SPEAKER_01: Like how does that get how do you bring that up?
34:04
SPEAKER_01: And obviously, does every lender know about DSCR loans?
34:07
SPEAKER_01: Do they not?
34:08
SPEAKER_00: Not every lender knows about them.
34:10
SPEAKER_00: I mean, it it's it's a very available type of loan.
34:15
SPEAKER_00: And I would say most lenders know about them.
34:17
SPEAKER_00: Do all lenders do them?
34:19
SPEAKER_00: No.
34:19
SPEAKER_00: Um, a DSCR loan is for well, a DSCR loan is is is for the investor purchasing a property that they do not intend to occupy, right?
34:32
SPEAKER_00: Um, and those type of loans are for um the specific buyer that typically has good to excellent credit, um, can be a seasoned investor, doesn't necessarily need to be a seasoned investor, has a decent down payment.
34:47
SPEAKER_00: I'm talking 20% or more, right?
34:50
SPEAKER_00: And they may or may not be able to verify their income.
34:54
SPEAKER_00: And income meaning paycheck stubs, W-2s, tax returns.
34:58
SPEAKER_00: Maybe you're a self-employed person who writes off all of their income and has very little, you know, income to show on their tax returns to qualify.
35:07
SPEAKER_00: So the DSCR loan may be an excellent option for that type of person.
35:12
SPEAKER_00: But again, just remember the DSCR loans are for the investor, for the person not intending to occupy the property.
35:17
SPEAKER_00: Um and the rents on that property are really going to qualify that person to purchase the property.
35:25
SPEAKER_01: So it's very property dependent.
35:27
SPEAKER_00: Correct.
35:27
SPEAKER_00: All right.
35:28
SPEAKER_01: All right.
35:28
SPEAKER_01: And then for that reason, then you got to be working with the right real estate brokerage team to be able to identify those properties because not every property is going to work.
35:36
SPEAKER_01: Just because someone says, Oh, yeah, you qualify, it's not a blanket, you qualify for all of them.
35:40
SPEAKER_01: It's well, you qualify for this one because the the numbers work on this one, but they may not work on the next three.
35:45
SPEAKER_00: Correct.
35:45
SPEAKER_00: Correct.
35:46
SPEAKER_01: So, Phoebe, thank you so much for today uh for joining us.
35:49
SPEAKER_01: We're gonna keep keep having you back.
35:51
SPEAKER_01: Um, for those tuning in, uh, check out sage regroup.com forward slash mortgage.
35:59
SPEAKER_01: You will get Phoebe's phone number, her email address, and everything's there.
36:02
SPEAKER_01: Well, of course, we'll have it down on the show notes, but again, that's sage regroup.com forward slash mortgage, and you'll go onto our landing page and you could get started right away.
36:12
SPEAKER_01: Uh, thank you for tuning in, and until next time.