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KOSTER REALTY TEAM · One on One With a Professional

• 0:01
  Speaker 1: Good morning, good morning, good morning, and welcome, welcome, welcome.
• 0:04
  Speaker 1: It's time for One-on-One with the Pro, and we've got
• 0:06
  Speaker 1: the Cost of Your Team radio show rolling here today.
• 0:09
  Speaker 1: Going to be talking about interest rates, creative financing, and
• 0:12
  Speaker 1: making today's market work for you. And we've got a
• 0:16
  Speaker 1: special guest here with Shelly. We have Jennifer Lillard with
• 0:20
  Speaker 1: the Bank of Oklahoma Mortgage. And my goodness sakes, ladies,
• 0:24
  Speaker 1: it's great to have you back in studio. How you been?
• 0:27
  Speaker 2: Amazing. It's always great to be here, Tom.
• 0:30
  Speaker 1: And welcome. You had a little bit of a drive,
• 0:32
  Speaker 1: but it's great that you got here.
• 0:34
  Speaker 3: Thank you. I appreciate it.
• 0:35
  Speaker 2: Even before me.
• 0:36
  Speaker 3: I was early today.
• 0:39
  Speaker 1: Well, this is great. Now, I have a little bit
• 0:43
  Speaker 1: of questions here to ask you. First of all, where
• 0:47
  Speaker 1: the mortgage interest rates are today and what factors are
• 0:50
  Speaker 1: influencing them?
• 0:53
  Speaker 3: So that's that's that. That's an open question, isn't it?
• 0:56
  Speaker 1: It's a big one.
• 0:57
  Speaker 3: It's a hot topic when it comes to interest rates today. And,
• 1:01
  Speaker 3: you know, just to kind of start off, just kind
• 1:03
  Speaker 3: of what the national average is, is we're running anywhere
• 1:05
  Speaker 3: between 7% and 7.5%.
• 1:06
  Speaker 1: Okay.
• 1:07
  Speaker 3: A lot of those factors will include the product that
• 1:11
  Speaker 3: we're placing with the borrower. Also, credit score, you know,
• 1:15
  Speaker 3: just all the criteria that will allow us to place
• 1:19
  Speaker 3: their product in the right environment.
• 1:22
  Speaker 1: Sure.
• 1:23
  Speaker 3: So, you know, seven and a half isn't where we
• 1:25
  Speaker 3: want to be, but it's not the worst we've seen.
• 1:28
  Speaker 1: By far. I paid double for my first home back
• 1:32
  Speaker 1: in the late 70s, early 80s. Yeah.
• 1:34
  Speaker 3: Yeah. I hear it all the time. Oh, I remember
• 1:36
  Speaker 3: when interest rates were 15%. Yeah.
• 1:39
  Speaker 1: You know.
• 1:40
  Speaker 3: So, you know, when we're looking at interest rates, you know,
• 1:43
  Speaker 3: what all does that come up? What's driving the rates?
• 1:46
  Speaker 1: Sure.
• 1:47
  Speaker 3: Right. So we're going to talk about inflation.
• 1:48
  Speaker 1: Right.
• 1:49
  Speaker 3: We're going to talk about the economy, and we're also
• 1:51
  Speaker 3: going to talk about the bond market.
• 1:54
  Speaker 1: And buyers, should they realistically expect the rates to return
• 1:58
  Speaker 1: to 3% or 4% or 5% or 6%? Are we
• 1:59
  Speaker 1: going to see 3%? Maybe not.
• 1:59
  Speaker 3: When we saw 3% and lower than 3%, that was
• 2:01
  Speaker 3: because of the pandemic, right? That was COVID. That was
• 2:04
  Speaker 3: a worldwide shutdown that we just couldn't predict. You know,
• 2:17
  Speaker 3: will we see four and five percent? I think we
• 2:20
  Speaker 3: could see it. We saw it in 2018 and 2019.
• 2:23
  Speaker 3: We'll see fives. And I do see fives. And, you know,
• 2:28
  Speaker 3: in prior to the war in Iran, we were in
• 2:31
  Speaker 3: the low sixes, high fives. So we weren't far off.
• 2:35
  Speaker 1: Now, Shelly, you're dealing with buyers all the time and sellers, too,
• 2:39
  Speaker 1: of course. But how are these interest rates affecting buyers
• 2:42
  Speaker 1: and our sellers in our local market?
• 2:44
  Speaker 2: Well, the great thing about what I do is everybody,
• 2:48
  Speaker 2: I don't know one single person that doesn't need somewhere
• 2:51
  Speaker 2: to live, right? So that's a great thing. And what
• 2:55
  Speaker 2: we're seeing is, like you said, Tom, I remember when
• 2:57
  Speaker 2: interest rates were way up in that double digits. And
• 3:00
  Speaker 2: even when I moved back and bought in 2002, interest
• 3:02
  Speaker 2: rate was eight. Here's the thing. is that what we're
• 3:06
  Speaker 2: seeing at effect a lot is the sellers that have
• 3:09
  Speaker 2: locked in, those two and three, right? That makes it
• 3:11
  Speaker 2: a little bit iffy. So we really want to look
• 3:13
  Speaker 2: on the big picture and where that's taking them. However,
• 3:17
  Speaker 2: if you're a buyer, you have to look at it
• 3:19
  Speaker 2: this way.
• 3:19
  Speaker 1: 7%, 8%.
• 3:19
  Speaker 2: I mean, I'm seeing people buy cars that aren't cheap anymore, right?
• 3:24
  Speaker 2: And they're using that 7%, 8% on short term, right?
• 3:28
  Speaker 2: We look at what you can really afford. Homes are
• 3:30
  Speaker 2: still going up. So if you wait, and you're waiting
• 3:34
  Speaker 2: on the interest rates to drop, but your home prices
• 3:37
  Speaker 2: are increasing, you really aren't saving anything.
• 3:39
  Speaker 1: No.
• 3:39
  Speaker 2: And that's where we partner with great lenders to look.
• 3:42
  Speaker 2: Even if you're at that 7, 8, because you're not
• 3:44
  Speaker 2: married to that rate. You can always refinance when that
• 3:47
  Speaker 2: goes down. And you have to look at it this way.
• 3:50
  Speaker 2: If you're renting, you're paying 100%. Oh, gosh, yeah. And
• 3:54
  Speaker 2: gaining no equity. So you're better to pay that 7
• 3:58
  Speaker 2: and 6s and in there 7 and a half you're
• 4:02
  Speaker 2: still going to build equity than to not buy real
• 4:05
  Speaker 2: estate at all. There's never a bad time to buy
• 4:07
  Speaker 2: real estate.
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  Speaker 1: And if you're selling, don't worry about that. Yes. Because
• 4:10
  Speaker 1: the same applies.
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  Speaker 2: Yes. We're seeing more creativity. We're seeing a lot more
• 4:16
  Speaker 2: creativity when it comes to buying. We're seeing sellers. when
• 4:20
  Speaker 2: they're selling, you know, being asked to pay for closing costs.
• 4:24
  Speaker 2: And I know we're going to talk a little bit
• 4:25
  Speaker 2: about rate buy-down. So it's really challenging us to step
• 4:29
  Speaker 2: up and be consultants to them and do our job
• 4:32
  Speaker 2: and help them get into it, where it's a win-win
• 4:34
  Speaker 2: for both.
• 4:35
  Speaker 1: In a world where every little thing seems to count. Yes.
• 4:37
  Speaker 1: I got a question for you. How much difference does
• 4:41
  Speaker 1: a 1% change in interest rates make to your monthly
• 4:44
  Speaker 1: mortgage payments?
• 4:45
  Speaker 3: So a lot of that, there's going to be some factors, right?
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  Speaker 3: Our loan amount, our term. But if we were just
• 4:50
  Speaker 3: to look at, let's just say my interest rate at 7%,
• 4:54
  Speaker 3: if we're taking a purchase price of $ 250, 000 and the
• 4:56
  Speaker 3: borrower is putting 20% down, we're financing $ 200, 000. So at 7%,
• 5:02
  Speaker 3: principal and interest only. Now that's just the cost of
• 5:05
  Speaker 3: the loan. That does not include your taxes, your insurance,
• 5:08
  Speaker 3: possibly mortgage insurance. You're looking at $ 1, 331. Now if we
• 5:11
  Speaker 3: take that down to 5%, you're looking at about a
• 5:15
  Speaker 3: $ 250 difference in payment. So it is.
• 5:19
  Speaker 1: Something to be cognizant of.
• 5:21
  Speaker 3: Right.
• 5:23
  Speaker 1: Don't let it spoil your plans to buy a home.
• 5:24
  Speaker 3: Don't let it spoil you.
• 5:25
  Speaker 2: Right.
• 5:26
  Speaker 3: I'm sure Starbucks on a monthly basis to some people
• 5:28
  Speaker 3: equal that much.
• 5:29
  Speaker 1: Yes. For sure. That's really good, too. Now, Shelly, are
• 5:35
  Speaker 1: buyers a little bit more focused on purchase price or
• 5:37
  Speaker 1: monthly payment? I hear both. Yes, we do.
• 5:40
  Speaker 2: We really try to educate them, too. We want them
• 5:43
  Speaker 2: to be pre-approved and talk to a lender. And here's why.
• 5:46
  Speaker 2: We want them to be in a monthly amount because
• 5:48
  Speaker 2: we don't want them, again, to be married to that
• 5:51
  Speaker 2: home in the fact that that's all they are working
• 5:54
  Speaker 2: for is to make their house payment. We want them
• 5:56
  Speaker 2: to have a house payment where they're comfortable with it
• 5:58
  Speaker 2: and can still afford to do the things that they
• 6:02
  Speaker 2: want to do. So we send them to lenders first
• 6:04
  Speaker 2: to get them qualified and authorized. I tend to educate them,
• 6:08
  Speaker 2: look at the mortgage payment versus the amount. And also
• 6:11
  Speaker 2: when we're buying, sometimes the lowest cost home isn't the best.
• 6:17
  Speaker 2: Is it going to require more maintenance? Things like that
• 6:20
  Speaker 2: that are going to be out of pocket. That's where
• 6:22
  Speaker 2: you really want to lean on your professionals to guide
• 6:25
  Speaker 2: you through that.
• 6:25
  Speaker 1: And you need them. Trust me, you do. This is
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  Speaker 1: the Koster Team radio show, and we are talking with
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  Speaker 1: Shelly Koster and also Ms. Jennifer here. Jennifer Lillard is
• 6:35
  Speaker 1: with Bank of Oklahoma Mortgage. And a question to you, Jennifer.
• 6:40
  Speaker 1: What is a two-to-one temporary rate buy-down, and how does
• 6:45
  Speaker 1: that work?
• 6:46
  Speaker 3: So that's a great question. 2-1 buy-downs is something that
• 6:49
  Speaker 3: always comes up. It seems like it becomes a popular
• 6:51
  Speaker 3: product when our interest rates are rising, right? So basically
• 6:55
  Speaker 3: what it does is it temporarily reduces the buyer's effective rate.
• 6:58
  Speaker 3: So an example would be, or let's back up. I apologize.
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  Speaker 3: So 2-1, 2 being the year that we're going to
• 7:06
  Speaker 3: reduce the mortgage, and 1 would happen every year, okay?
• 7:09
  Speaker 3: So in the example of a 2-1 buy-down, let's just
• 7:12
  Speaker 3: say we're locking the interest rate in at 7%, okay?
• 7:14
  Speaker 1: Okay.
• 7:16
  Speaker 3: The first year, that borrower is going to go down 2%.
• 7:18
  Speaker 3: So that first year, they will have a 5% interest rate.
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  Speaker 3: The second year, because it'll go every year, will be
• 7:27
  Speaker 3: at 6%. And then 3 through 30 will be at 7%.
• 7:31
  Speaker 3: So it temporarily reduces that monthly mortgage payment for the
• 7:36
  Speaker 3: borrower before we get to the fully extended rate that
• 7:42
  Speaker 3: we are at.
• 7:43
  Speaker 1: Well, this sounds pretty good. It sounds like, you know,
• 7:45
  Speaker 1: the person who's moving into their new home, they got
• 7:48
  Speaker 1: a little extra money to kind of fix things up.
• 7:51
  Speaker 3: Right. It gives them more cash. It gets them, you know,
• 7:55
  Speaker 3: used to maybe not so much of a payment shock,
• 7:57
  Speaker 3: you know, kind of eases them into another payment, you know,
• 8:00
  Speaker 3: because every year you kind of. okay, I can handle
• 8:03
  Speaker 3: that extra $ 100. So we're really starting to see this
• 8:06
  Speaker 3: become a popular product.
• 8:08
  Speaker 1: I can see why. I can see why. Now, Shelly,
• 8:10
  Speaker 1: how could a seller use the 2-1 buy-down to attract buyers?
• 8:14
  Speaker 2: Look, it potentially could be a benefit because instead of
• 8:19
  Speaker 2: reducing the price, And then paying that higher, it could
• 8:22
  Speaker 2: be an incentive for them because they're going to have
• 8:24
  Speaker 2: a lower payment the first two years, right? So that
• 8:27
  Speaker 2: might be more beneficial than automatically just saying we're going
• 8:31
  Speaker 2: to reduce the price of the home. It's a great
• 8:34
  Speaker 2: marketing tool. It's a great way to get your buyers to,
• 8:39
  Speaker 2: it's a benefit, right? Buyers are also now asking, it's
• 8:42
  Speaker 2: not uncommon, which, you know, go back, it was a
• 8:46
  Speaker 2: common thing, is they're asking for sellers to pay for
• 8:49
  Speaker 2: closing costs. So there's lots of creative ways that we
• 8:52
  Speaker 2: can get buyers into homes and help them save money
• 8:55
  Speaker 2: without a lot of money out of pocket as well.
• 8:57
  Speaker 1: That's great. Creativity is a wonderful thing.
• 8:59
  Speaker 3: Yes, we are creative.
• 9:01
  Speaker 1: Now, Jennifer, what other financing strategies can help buyers manage
• 9:07
  Speaker 1: the higher interest rates?
• 9:09
  Speaker 3: So, of course, number one, what we just talked about
• 9:11
  Speaker 3: was the 2-1 buy-down. So, you know, there is a
• 9:14
  Speaker 3: fee that is associated with that along with everything else.
• 9:18
  Speaker 3: So we could look at the 2-1 buy-down. Maybe we
• 9:20
  Speaker 3: could take those funds and maybe not do the 2-1 buy-down,
• 9:24
  Speaker 3: but maybe just buy the rate down permanently where it's,
• 9:28
  Speaker 3: you know, a lower interest rate. So take a fee,
• 9:31
  Speaker 3: buy that rate down, and then you're locked in for
• 9:33
  Speaker 3: the 30 years at the lower rate.
• 9:35
  Speaker 1: Okay.
• 9:36
  Speaker 3: We are looking at seller-paid closing costs. So in a
• 9:40
  Speaker 3: situation where the borrower may have only $ 10, 000, let's say,
• 9:44
  Speaker 3: to work with, you know, the seller helping pay pay
• 9:47
  Speaker 3: the closing costs maybe would allow them to pay off
• 9:50
  Speaker 3: debt with that money, you know, to increase their spending power,
• 9:56
  Speaker 3: you know, because we've eliminated some credit card debt, we've
• 9:58
  Speaker 3: eliminated a car loan. you know, and just kind of
• 10:00
  Speaker 3: reallocate the funds to make it more affordable by having
• 10:04
  Speaker 3: the seller pay closing costs. Gosh, there's all kinds of things.
• 10:08
  Speaker 3: We could look at some down payment assistance programs. So
• 10:12
  Speaker 3: we can help buyers with assistance that are offered through
• 10:15
  Speaker 3: the state to help purchase homes. Those are sometimes at
• 10:19
  Speaker 3: a lower interest rate as well. And then also, you know,
• 10:23
  Speaker 3: we forget about assumable loans. You know, back in the day,
• 10:25
  Speaker 3: assumable loans were really popular. You know, our government loans,
• 10:29
  Speaker 3: so FHA, VA, those are, let's just say a buyer
• 10:33
  Speaker 3: or a seller has a 3% interest rate. and a
• 10:35
  Speaker 3: buyer wants to come in and assume that product. So
• 10:38
  Speaker 3: they can take that loan from the seller at that
• 10:41
  Speaker 3: interest rate, and that really helps out as well.
• 10:44
  Speaker 1: Very good. When we talk about creativity, we don't miss anything.
• 10:48
  Speaker 2: That's right.
• 10:49
  Speaker 3: We got it.
• 10:50
  Speaker 1: Now, Shelly, what creative incentives are you seeing for recommending
• 10:54
  Speaker 1: at these summits?
• 10:55
  Speaker 2: Well, I think pretty much Jennifer covered a lot of that.
• 10:58
  Speaker 2: And for us, it's knowing what programs are out there.
• 11:02
  Speaker 2: That's why it's important to sit down. It's important for me.
• 11:05
  Speaker 2: when I'm working with a client, either buyer or seller,
• 11:08
  Speaker 2: but to really do that needs analysis, really find out,
• 11:11
  Speaker 2: do what is important to them to keep the cash
• 11:13
  Speaker 2: in the pocket? Do they have cash to put down?
• 11:16
  Speaker 2: And what are they buying? Do they need that cash
• 11:19
  Speaker 2: to go in and do any repairs, remodels, things like that?
• 11:23
  Speaker 2: So it really is understanding what your client's needs are
• 11:27
  Speaker 2: so you can match them up with the best incentives.
• 11:30
  Speaker 2: And The sellers, too. So it's really doing those needs
• 11:33
  Speaker 2: analysis and understanding what their needs are. And we can't
• 11:37
  Speaker 2: assume that buyers or sellers know that because it's common.
• 11:41
  Speaker 2: We can sit here and talk about it. It's our
• 11:42
  Speaker 2: common language. It is not theirs. It's not the consumers.
• 11:46
  Speaker 2: So it's our job to educate them and help them
• 11:48
  Speaker 2: determine that.
• 11:49
  Speaker 1: Very good. Getting back to Jennifer here, what advice would
• 11:54
  Speaker 1: you give buyers who are waiting for the interest rates
• 11:58
  Speaker 1: to drop?
• 11:59
  Speaker 3: Don't.
• 12:00
  Speaker 1: No, stop it.
• 12:01
  Speaker 2: Stop.
• 12:02
  Speaker 1: Stop it right now.
• 12:02
  Speaker 3: Stop it right now. You know, and I mean, I understand.
• 12:06
  Speaker 3: You know, social media is such a powerful thing now,
• 12:09
  Speaker 3: and that seems to be the hot topic, right, is
• 12:12
  Speaker 3: I'm going to wait for the interest rates to go down. Well,
• 12:14
  Speaker 3: what happens? They may not go down.
• 12:17
  Speaker 1: They may not.
• 12:17
  Speaker 3: We haven't seen them.
• 12:18
  Speaker 2: They may go up.
• 12:19
  Speaker 3: They may go up, right. You know, the Mortgage Banker
• 12:23
  Speaker 3: Association came out and said that these rates are going
• 12:25
  Speaker 3: to be here for probably 12 to 18 months.
• 12:27
  Speaker 1: Mm-hmm.
• 12:28
  Speaker 3: Things don't change. So my advice is if you're thinking
• 12:32
  Speaker 3: about buying a house, definitely let's get set up. Let's
• 12:36
  Speaker 3: have a one-on-one. Let's see where that budget puts you.
• 12:39
  Speaker 3: Quit shopping interest rates and let's start shopping budget because
• 12:44
  Speaker 3: you'd be surprised. You know, maybe it's not the $ 250, 000 house,
• 12:49
  Speaker 3: but maybe we can figure out how to get you
• 12:51
  Speaker 3: in for.
• 12:53
  Speaker 1: $ 200, 000.
• 12:53
  Speaker 3: Or we're paying off something in lieu of a house payment.
• 12:57
  Speaker 1: Mm-hmm.
• 12:59
  Speaker 3: So definitely get in and let's just do this.
• 13:00
  Speaker 2: And don't wait. Don't wait and don't guess. Get with
• 13:03
  Speaker 2: your lender. Get with Jennifer today and let her help
• 13:07
  Speaker 2: you discover when that right time is. Don't assume. Don't
• 13:11
  Speaker 2: ever assume that you know if you can afford or
• 13:15
  Speaker 2: what you can't afford.
• 13:16
  Speaker 1: Great. Great advice. What would you say to homeowners who
• 13:19
  Speaker 1: want to sell but don't want to give up that
• 13:21
  Speaker 1: low mortgage rate?
• 13:22
  Speaker 2: Well, that's, again, where we go in and do that
• 13:24
  Speaker 2: needs analysis and figure out what do they really want, right?
• 13:28
  Speaker 2: What do they really want? Because we want to look
• 13:30
  Speaker 2: at what equity do you have in the home. So
• 13:32
  Speaker 2: if you have enough equity in the home, what's your
• 13:34
  Speaker 2: down payment? And then would it benefit you to do
• 13:36
  Speaker 2: a buy down on the home that you want? Don't
• 13:38
  Speaker 2: let the current market or the current interest rates affect
• 13:42
  Speaker 2: what your long-term goals are, right? Because we don't know
• 13:45
  Speaker 2: what tomorrow is going to bring. We don't know what
• 13:47
  Speaker 2: the interest rates are going to do. But we always
• 13:50
  Speaker 2: know that the Real estate is always a great investment.
• 13:54
  Speaker 1: Oh, yeah. It never hurts to buy dirt. No.
• 13:57
  Speaker 2: Exactly.
• 13:58
  Speaker 3: Real estate is going to be probably one of your
• 14:00
  Speaker 3: biggest assets that anybody's ever going to have.
• 14:02
  Speaker 2: Oh, yeah.
• 14:02
  Speaker 3: You know, and the equity building is purchasing power for
• 14:07
  Speaker 3: the future. You know, you can't walk into a bank
• 14:11
  Speaker 3: and just say, I want a $ 25, 000 personal line of
• 14:12
  Speaker 3: credit at 7%, 8%. You know, but if you have equity,
• 14:18
  Speaker 3: that's an option for you. So build your wealth that
• 14:21
  Speaker 3: gives you purchasing power in the future.
• 14:23
  Speaker 1: Very good. Jennifer, what is one thing you wish more
• 14:26
  Speaker 1: buyers would understand about mortgage financing?
• 14:31
  Speaker 3: Oh, gosh, that's a big question. Where do you start? So,
• 14:35
  Speaker 3: you know, as far as financing is concerned, again, there's
• 14:39
  Speaker 3: so many different buckets, so many products that the borrowers
• 14:42
  Speaker 3: can choose from. That's where getting with an experienced lender works.
• 14:45
  Speaker 3: that understands everything is going to put them. So, you know,
• 14:49
  Speaker 3: don't assume like Shelly said. Never assume. Let's talk. Let's
• 14:54
  Speaker 3: figure out what your goals are and let's get you going.
• 14:56
  Speaker 1: Very good. And Shelly, what's your biggest piece of advice
• 15:00
  Speaker 1: for someone considering buying or selling in today's market?
• 15:05
  Speaker 2: Don't let the interest rates affect your future plans. Don't
• 15:09
  Speaker 2: focus on that. seek advice, sit down. It costs nothing
• 15:13
  Speaker 2: to have that conversation with us or with Jennifer or
• 15:16
  Speaker 2: your lender and determine what is your future and what
• 15:19
  Speaker 2: really matters the most.
• 15:21
  Speaker 1: Very good. I want to thank you both.
• 15:22
  Speaker 2: Don't listen to National.
• 15:24
  Speaker 3: Don't listen to National.
• 15:25
  Speaker 1: Don't listen to National. It doesn't apply here. We're all
• 15:28
  Speaker 1: in the same area.
• 15:29
  Speaker 2: This state's local.
• 15:30
  Speaker 1: Very, very local. That's why you say location, which is right.
• 15:34
  Speaker 3: Where we are. We're in a great area that's still thriving.
• 15:37
  Speaker 3: So I'm super excited.
• 15:38
  Speaker 1: It is. I want to thank you both for coming
• 15:40
  Speaker 1: in today. It's been wonderful. One of our best shows ever.
• 15:43
  Speaker 1: The Costa Team Radio Show right here on K1, The
• 15:47
  Speaker 1: One You Trust.