Latest / WCHS Network Podcasts / Retire Right Radio – Dan Smithson: Mortgages, HELOCs, Credit Scores, and Navigating Today's Home Buying Market

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Retire Right Radio – Dan Smithson: Mortgages, HELOCs, Credit Scores, and Navigating Today's Home Buying Market · WCHS Network Podcasts

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Speaker 1: The views and opinions expressed on this program do not
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Speaker 1: necessarily reflect the views and opinions of 580 WCHS, its employees,
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Speaker 1: or WVRC Media.
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Speaker 2: RetireRight Radio is on the air. John Burdett from 4th
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Speaker 2: Avenue Financial is here each week to answer your questions
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Speaker 2: about financial planning, investing, and building the retirement you deserve.
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Speaker 2: Find 4th Avenue Financial in downtown Charleston at 170 Court
0:27
Speaker 2: Street or online at 4thAvenueFinancial. com. Call 304-345-5858 or text 304-935-5008
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Speaker 2: to join the conversation. Now let's go live to the
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Speaker 2: studio with John Burdett.
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Speaker 1: Good morning, everyone. You are listening to 580 WCHS, the
0:48
Speaker 1: voice of Charleston. I'm Dale Cooper.
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Speaker 3: Thanks so much for tuning in on this Monday morning.
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Speaker 3: John Burdett is out of pocket a little bit this morning.
0:54
Speaker 3: He is not available for us. John will be back
0:56
Speaker 3: next week. However, we do have a special guest for
0:58
Speaker 3: you coming in once again, filling in for John Burdett.
1:02
Speaker 3: He's regularly done this a few times in the past.
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Speaker 3: We'd like to welcome into the program. It is Dan Smithson.
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Speaker 3: He is the CEO of Star USA Federal Credit Union
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Speaker 3: here in Charleston. He joins us now on the radio.
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Speaker 1: Dan, good morning. How are you doing this morning?
1:16
Speaker 4: Good, Dale. How are you?
1:17
Speaker 3: Doing very well. I appreciate you taking some time out
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Speaker 3: to join us this morning. And we're going to shift
1:21
Speaker 3: gears just a little bit from talking about purely from
1:24
Speaker 3: financial planning for retirement and for the future. And we're
1:28
Speaker 3: using the element of that that has to do with,
1:30
Speaker 3: of course, your mortgages, interest rates, different things along those
1:34
Speaker 3: lines and where the industry stands right now. It's a
1:36
Speaker 3: really interesting time to be having these discussions because you're
1:40
Speaker 3: in the industry. You would know this better than me,
1:42
Speaker 3: but I don't know that we ever fully came back
1:44
Speaker 3: to where we expect it to be as far as
1:48
Speaker 3: interest rates and things like that goes?
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Speaker 4: No, we really haven't, Dale. And it looks like potentially
1:56
Speaker 4: the Fed is going to raise the overnight rate. I'm
1:59
Speaker 4: not sure that that will necessarily change interest rates much
2:02
Speaker 4: from where they are now. But it's a tough time
2:06
Speaker 4: for consumers with inflation being higher and people need to
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Speaker 4: focus on Some of the basics like budgeting, knowing their
2:14
Speaker 4: credit score, and just smarter financial habits in times like this.
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Speaker 3: So let's start a little bit with that and let's
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Speaker 3: walk a little bit through some of the best practice
2:24
Speaker 3: for folks that are trying to get to evaluate mortgages,
2:27
Speaker 3: look for the best situations. And maybe if it's been
2:30
Speaker 3: a little while since they've had to tap into the
2:31
Speaker 3: mortgage market to do a refi or to do a
2:34
Speaker 3: new home purchase or something like that, some of the
2:36
Speaker 3: things that may have changed along the course of time.
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Speaker 3: So generally speaking, let's take a look at when someone's
2:42
Speaker 3: looking to either buy a house, either upgrading from like
2:45
Speaker 3: a starter home or something that they're in, they're looking
2:47
Speaker 3: to get into their first time, maybe purchasing a home
2:50
Speaker 3: for the first time, or if they're maybe into a
2:53
Speaker 3: home and they're not looking to move and they're looking
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Speaker 3: to refinance the house, they have a little bit of
2:56
Speaker 3: equity or something like that in it. What's kind of
2:58
Speaker 3: changed over the last few years? What are folks needing
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Speaker 3: to be aware of as they start to look into
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Speaker 3: these things once again?
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Speaker 4: Well, in our area, it's... little bit more of a
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Speaker 4: seller's market than it has been in past, over those
3:14
Speaker 4: past 20 years. And really, as far as homeownership, it
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Speaker 4: still comes down to having a little bit of money
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Speaker 4: set aside, having your budget in place, making sure you're,
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Speaker 4: what's called payment to incomes in line, and keeping track
3:32
Speaker 4: of your credit score. There are a lot of free
3:35
Speaker 4: credit score options out there. For instance, we have what
3:38
Speaker 4: we call Savvy Money that's free to all our members.
3:41
Speaker 4: You can track your credit score at any point in time,
3:44
Speaker 4: and it will give you advice on upgrading it and
3:47
Speaker 4: updating it. But you need to have your ducks in
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Speaker 4: a row before you're ready to dive into the mortgage market.
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Speaker 3: You bring up something really good there, and unfortunately this
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Speaker 3: is one of the sort of– and you offered how
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Speaker 3: Star USA Federal Credit Union has some free tools that
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Speaker 3: they can use for credit scores– This is unfortunately one
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Speaker 3: of the burdens that as consumers that we have to
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Speaker 3: take on for ourselves because the credit agencies, they do
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Speaker 3: the best that they can, but we know that they're
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Speaker 3: not perfect. And there's things that sometimes shows up on
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Speaker 3: your credit that's either old, outdated, something that you've paid
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Speaker 3: off and shouldn't be a problem, or sometimes something that
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Speaker 3: doesn't even belong to you to start with. And it
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Speaker 3: does help to clean those things up a little bit
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Speaker 3: before you start tapping into your credit, especially for something
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Speaker 3: that's a large investment like a house.
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Speaker 4: Absolutely, and if you see something that is not correct,
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Speaker 4: it's not an automatic process that you can just fix overnight.
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Speaker 4: That's why you need to be aware of your scores
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Speaker 4: as you move along and be prepared before you get
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Speaker 4: into the situation where you sign a contract on a
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Speaker 4: home and you find unexpected things on a credit report.
4:49
Speaker 4: So it's something that the consumers definitely need to stay
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Speaker 4: on top of and know where you stand. Develop a budget.
4:57
Speaker 4: know what you can afford for a home, set aside
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Speaker 4: what you can, avoid things like, unfortunately, we see a
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Speaker 4: lot of gambling these days, and that's a huge problem
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Speaker 4: in people's budgets. So having your ducks in a row
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Speaker 4: is your best bet.
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Speaker 3: Yeah, it's one of those situations where you have to
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Speaker 3: be aware of what you're entering into, of course, and
5:21
Speaker 3: making sure that you have your credit and everything cleaned up.
5:24
Speaker 3: And And there's one of the things I wanted to
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Speaker 3: make sure that we mentioned is folks start to look around.
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Speaker 3: I really would not suggest necessarily that you go to
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Speaker 3: one of these sites on the Internet where you can
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Speaker 3: type in all of your information and you wait for
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Speaker 3: all the people to call you with all the great
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Speaker 3: deals that you're going to get. Because I tell you what,
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Speaker 3: if you try something along those lines, you have no
5:42
Speaker 3: idea who you're going to get phone calls from. You
5:43
Speaker 3: have no idea what institutions that they're going to be representing.
5:46
Speaker 3: And I think that they've cleaned this up a little
5:48
Speaker 3: bit since I was in the mortgage industry. But there's
5:50
Speaker 3: still a lot of programs out there. that nibble around subprime,
5:54
Speaker 3: that nibble around some of these areas with people with
5:58
Speaker 3: credit scores somewhere not quite perfect, but that are good
6:01
Speaker 3: enough that you can get some programs that may not
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Speaker 3: be necessarily the best for the potential buyer or for
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Speaker 3: the refinance person from a company that may not have
6:11
Speaker 3: all of the tools available to them that someone like
6:13
Speaker 3: Star USA Federal Credit Union could have. So you have
6:15
Speaker 3: to really be careful of the programs that you're being
6:18
Speaker 3: approached with out there.
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Speaker 4: Yeah, and that's a really good point, Dale. People don't
6:22
Speaker 4: realize that when they're applying online for something like that,
6:26
Speaker 4: they're not going necessarily to a mortgage broker. They're going
6:29
Speaker 4: to a marketing company. They're going to a marketing company first,
6:34
Speaker 4: and they're going to shoot those out to many institutions
6:38
Speaker 4: and not necessarily even institutions, but many mortgage firms and
6:45
Speaker 4: they're going to continue to market you. In many cases,
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Speaker 4: after you make a decision, even if you tell them, no,
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Speaker 4: I'm not interested, they're going to continue to market you
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Speaker 4: because your name is out there in that marketing queue.
6:58
Speaker 1: Yeah, absolutely true.
6:59
Speaker 3: And you never know. Just to interject here, I used
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Speaker 3: to be in this industry years and years ago. I'm
7:04
Speaker 3: sure it's changed some. But when we signed up for
7:07
Speaker 3: this type of thing, I worked for a mortgage broker.
7:09
Speaker 3: We had several lenders that we were able to tap into.
7:11
Speaker 3: And so what we would get is you could actually
7:13
Speaker 3: enroll in one of these firms that that that presented
7:16
Speaker 3: themselves as, hey, this is a great place for you
7:18
Speaker 3: to get a mortgage, get your quotes for free, et cetera,
7:19
Speaker 3: et cetera. We would then get lists of these people
7:22
Speaker 3: that signed up for this, and then you could contact
7:25
Speaker 3: them on them. And the thing is, we had, say,
7:27
Speaker 3: 15 different lenders that we could go through, so we
7:29
Speaker 3: could give them 15 different offers if we wanted to
7:32
Speaker 3: from different perspectives and stuff. Now, we try to do
7:35
Speaker 3: things above board, and we didn't spam people as far
7:37
Speaker 3: as that goes. But that doesn't mean that there's not
7:38
Speaker 3: companies out there that does that constantly. You have 15
7:40
Speaker 3: different lenders, different people getting a hold of you. You
7:43
Speaker 3: don't like this deal?
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Speaker 1: Well, try this one.
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Speaker 3: Or they try you from a different number or claim
7:46
Speaker 3: that they're representing a different financial institution, whatever it might be.
7:50
Speaker 3: There's a lot of crazy stuff that could happen out
7:52
Speaker 3: there once you get your name and the folks start
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Speaker 3: calling you.
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Speaker 4: And you never know where your servicing is going to
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Speaker 4: end up. And we see a lot of folks with
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Speaker 4: buyer's remorse that come to us after the fact. And honestly,
8:05
Speaker 4: in most cases, there's not much we can do once
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Speaker 4: they've signed those documents and got things in place, it's
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Speaker 4: an expensive undo. Let's put it that way.
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Speaker 3: Yeah, it's very difficult to get out of that situation.
8:18
Speaker 3: So let's talk just a little bit. We talked about
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Speaker 3: making sure credit was cleaned up a little bit. Let's
8:22
Speaker 3: talk about sort of what the target should be for
8:25
Speaker 3: a borrower. Of course, everybody's situation is a little bit different.
8:28
Speaker 3: Not everybody can fit into a perfect scenario. But when
8:31
Speaker 3: you're looking for someone who's coming to the table and
8:33
Speaker 3: trying to make it as beneficial for them as well,
8:38
Speaker 3: One of the big things I know is you have
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Speaker 3: your great credit. You've cleaned that up and everything. And
8:43
Speaker 3: there are programs out there where you can get into
8:45
Speaker 3: homes without bringing in your fully 20 percent down or
8:48
Speaker 3: something along those lines. And, you know, that might be
8:50
Speaker 3: great for particular people. But you have to understand when
8:52
Speaker 3: you're not putting down enough money, there's extra insurance you
8:55
Speaker 3: have to pay, which raises your rate a little bit.
8:56
Speaker 3: You know, there's there's when you're talking to a professional
8:59
Speaker 3: like yourself and and you're getting all the options that
9:02
Speaker 3: are out there, you really need to find out exactly
9:04
Speaker 3: what your target is and the type of loan that
9:06
Speaker 3: you're looking to apply.
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Speaker 4: That's a good point, Dale. There are many programs out
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Speaker 4: there that allow for you to buy a home without,
9:16
Speaker 4: in some cases, even without anything down. So you shouldn't
9:22
Speaker 4: discourage someone from looking if they don't have a large
9:25
Speaker 4: down payment, particularly if they're in a situation where they're paying,
9:29
Speaker 4: for instance, and everybody's situation is different. But let's say
9:32
Speaker 4: if you're paying high rent and it's just a lot
9:35
Speaker 4: wiser for you to purchase, then go ahead and obviously
9:39
Speaker 4: in that case, take the plunge without having a large
9:42
Speaker 4: down payment. One thing that people keep in mind, and
9:47
Speaker 4: it has kind of a bad reputation, is purchase mortgage insurance.
9:54
Speaker 4: You know, many folks go that route. They get the
9:58
Speaker 4: purchase mortgage insurance, which covers them for not having the
10:01
Speaker 4: down payment. It doesn't end up being as expensive as
10:05
Speaker 4: they think it's going to be, and it helps them
10:07
Speaker 4: get in that home and start building equity. I know
10:11
Speaker 4: in my case, you know, I had PMI insurance when
10:14
Speaker 4: I bought my first house, and I'm glad I made
10:17
Speaker 4: the plunge, and it worked out really well for me.
10:19
Speaker 1: Me too.
10:19
Speaker 3: Yeah, absolutely. And to talk about that just a little bit,
10:22
Speaker 3: there's options you can get to. And what PMI simply is,
10:25
Speaker 3: is it still 20%? So generally speaking, you're expected to bring,
10:30
Speaker 3: or 20% keeps you from getting into the PMI area.
10:33
Speaker 1: Is that generally correct?
10:35
Speaker 4: That's correct. Basically, if you don't have 20% down, and
10:40
Speaker 4: that number varies from place to place, but that's the
10:43
Speaker 4: industry standard. You simply purchase this insurance that you pay monthly.
10:49
Speaker 4: and it covers the financial institution or the broker, whoever
10:54
Speaker 4: you may be talking to in the case of default,
10:56
Speaker 4: and allows you to get into the home without the
11:01
Speaker 4: actual down payment.
11:03
Speaker 3: And that is something that you maintain on the home,
11:07
Speaker 3: and then you can get, once you exceed the amount
11:11
Speaker 3: of equity that you need, do you have to refinance
11:13
Speaker 3: to get PMI off there, or is that something that
11:15
Speaker 3: you can get evaluated and taken off?
11:17
Speaker 4: Well, I can't speak in every case, but more reputable outfits,
11:23
Speaker 4: and I know our credit union and most credit unions
11:26
Speaker 4: and banks are going to automatically eliminate that payment when
11:31
Speaker 4: you hit 20%.
11:31
Speaker 3: And at Star USA Federal Credit Union, these are tools
11:34
Speaker 3: that you have that are available to you as well.
11:36
Speaker 3: So if somebody is a little short on the 20%
11:38
Speaker 3: and they need to get some PMI or they're looking
11:40
Speaker 3: to get into that perfect house, like you said, if
11:42
Speaker 3: your situation stacks up perfectly enough where you're paying rent,
11:45
Speaker 3: all these different things, and you're looking to get into
11:47
Speaker 3: the house, the PMI is relatively a modest investment to
11:49
Speaker 3: make sure that you can get into a home that
11:51
Speaker 3: you own instead of renting.
11:54
Speaker 4: That's exactly right. And really, the best thing to do
11:59
Speaker 4: is call us or reach out via email. Our website
12:05
Speaker 4: is mystarusa.com. And our mortgage folks can walk you through
12:13
Speaker 4: a lot of different options. I mean, there's lots of
12:17
Speaker 4: folks that have got into their first home in an arm,
12:20
Speaker 4: adjustable rate mortgage, and it's worked out great for them.
12:25
Speaker 4: Because people don't realize, they go into the home, they
12:28
Speaker 4: think this is going to be my forever home, and
12:30
Speaker 4: particularly a first home, it's highly unlikely that your first
12:35
Speaker 4: home is going to be your forever home. And getting
12:38
Speaker 4: started and being in an arm where you don't have
12:40
Speaker 4: to have an adjustable rate mortgage, excuse me, where you
12:43
Speaker 4: don't have to have the PMI's, It's a great way
12:45
Speaker 4: to start, build a little equity and gives you options
12:49
Speaker 4: from that point forward because you can always refinance. There's
12:53
Speaker 4: plenty of tools and options out there for you.
12:56
Speaker 3: You bring up a great point there. Are there still
12:59
Speaker 3: options available for folks looking for adjustable rate mortgages where
13:02
Speaker 3: you have a fixed mortgage to start with and it
13:04
Speaker 3: comes adjustable later on to give you some headroom like
13:06
Speaker 3: in two or three or four years where you can refinance?
13:10
Speaker 4: That's correct. In fact, most arms nowadays are locked for
13:14
Speaker 4: a period of time. For instance, ours is locked for
13:17
Speaker 4: five years. You don't have to worry about the adjustable
13:20
Speaker 4: rate until after five years, in which case you have
13:24
Speaker 4: plenty of time to watch the market refinance out, or
13:27
Speaker 4: maybe you just like it where you are with the
13:30
Speaker 4: arm and you become comfortable with it. But most have
13:33
Speaker 4: either a three- or five-year lockout period. And there are
13:38
Speaker 4: some that are still out in the market, but not
13:41
Speaker 4: very many that are called one-ones where you're only locked
13:43
Speaker 4: for a year and then you adjust annually after that.
13:47
Speaker 4: But most market adjustable rates in this day and age
13:51
Speaker 4: are three and five years.
13:52
Speaker 3: And just to give folks an idea, and of course,
13:54
Speaker 3: for your individual situation, you'll want to contact Dan and
13:58
Speaker 3: ask questions. But as far as, you know, sometimes people
14:01
Speaker 3: are a little bit afraid of arms of adjustable rate mortgages.
14:04
Speaker 3: It's like, well, after that five years, though, it goes
14:06
Speaker 3: way up. And that's not necessarily how it works. It's
14:08
Speaker 3: indexed against the market. It doesn't necessarily– even if you
14:12
Speaker 3: go over your lock period, it doesn't necessarily mean that
14:15
Speaker 3: your rates are just automatically going to shoot up to
14:17
Speaker 3: the moon.
14:18
Speaker 4: No, that's correct. They have caps, and they have safeguards
14:22
Speaker 4: in place. And most lenders, reputable lenders, are not going
14:27
Speaker 4: to put a borrower in– you know, a loan that
14:31
Speaker 4: they're not going to be able to pay later. There's
14:33
Speaker 4: absolutely no benefit to anybody to do that. And, for instance,
14:38
Speaker 4: if you apply for a justful rate mortgage with us,
14:40
Speaker 4: we're going to run you through a series of tests
14:43
Speaker 4: that run your data through a series of tests to
14:46
Speaker 4: make sure that, hey, if market rates do change and
14:49
Speaker 4: this is the worst case, is this person going to
14:52
Speaker 4: be in jeopardy or are they going to have issues
14:54
Speaker 4: paying this loan? So we vet folks for that as well.
14:58
Speaker 3: And this is one of those situations, of course, you
15:01
Speaker 3: referred over here to carry the show this morning from
15:03
Speaker 3: John Burdett at 4th Avenue Financial. And this is one
15:05
Speaker 3: of those situations where your two industries can really work
15:07
Speaker 3: pretty well together, where you can put together the different
15:10
Speaker 3: loan packages that are available for someone based on their credit,
15:13
Speaker 3: the amount of down payment they have, locations they're looking for,
15:15
Speaker 3: whatever there might be. And they can work with their
15:17
Speaker 3: financial advisor like John to see exactly what kind of
15:20
Speaker 3: payment and everything that they can. They have to be
15:21
Speaker 3: aware of maintenance for the house and different things like
15:23
Speaker 3: that that they're budgeting for for the future. Those two
15:26
Speaker 3: industries combined can really help somebody out here.
15:29
Speaker 4: Yes, they can. And we see probably more of that
15:31
Speaker 4: on the home equity market where someone's looking at possibly hitting,
15:38
Speaker 4: God forbid, hitting their retirement fund or they're looking to
15:41
Speaker 4: maybe liquidate some of their savings. And A home equity,
15:46
Speaker 4: in that case, might be a better fit for them
15:48
Speaker 4: where they can possibly get the tax deduction, have flexible terms.
15:54
Speaker 4: So we've probably worked more closely with John on home
16:00
Speaker 4: equities than we do first mortgages. Not that we don't
16:02
Speaker 4: do both, but home equities often come into play in
16:06
Speaker 4: that scenario for that reason. They give folks flexibility.
16:10
Speaker 1: Well, let's talk just a little bit. Well, let's do
16:12
Speaker 1: this first.
16:12
Speaker 3: Let's take a break first, and then let's come back
16:14
Speaker 3: and let's talk a little bit about home equity lines
16:16
Speaker 3: of credits and things along those lines. I'll use myself
16:18
Speaker 3: as a stand-in here. I have a situation where I've
16:20
Speaker 3: been kind of flirting around with that for a little while,
16:22
Speaker 3: so I'll just ask some questions as a listener would
16:24
Speaker 3: as far as how HELOCs work now, different options that
16:27
Speaker 3: are for that, and what folks can look out for.
16:30
Speaker 3: We can talk about that a little bit when we
16:31
Speaker 3: come back and anything else that comes on your mind
16:33
Speaker 3: as well. You're welcome to give us a text this morning.
16:35
Speaker 3: Our text line number is 304-935-5008, 304-935-5008. You can call
16:37
Speaker 3: as well, 304-345-5858, 304-345-5858. Dan, do you mind holding on
16:38
Speaker 3: for just a minute? We'll take a break and come
16:40
Speaker 3: right back.
16:48
Speaker 4: Great. Thank you.
16:49
Speaker 1: Sounds great.
16:49
Speaker 3: We really appreciate that. Dan Smithson is with us this morning.
16:52
Speaker 3: He is the CEO for Star USA Federal Credit Union
16:55
Speaker 3: here in Charleston. Named the best credit union in West
16:58
Speaker 3: Virginia by Forbes recently. So you want to check them out,
17:01
Speaker 3: you can go to mystarusa.com. That's starusafcu.com is an alternate
17:07
Speaker 3: address that you can go to. You can find all
17:08
Speaker 3: the information there for Star USA Federal Credit Union. Let's
17:11
Speaker 3: take a break and we'll be back right after this.
17:13
Speaker 3: You're listening to... Retire Right Radio on 580 WCHS, the
17:16
Speaker 3: voice of Charleston.
17:17
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17:20
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17:51
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17:54
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17:56
Speaker 5: purpose of avoiding use, federal, or state tax penalties that
17:59
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18:03
Speaker 5: should seek advice from their tax advisor or legal counsel
18:06
Speaker 5: on topics that arise from the show. John Burdett is
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Speaker 3: You are listening to The Voice of Charleston, 580 WCHS.
19:34
Speaker 3: This is Retire Right Radio. John Burdett is not in
19:36
Speaker 3: studio with us this morning. He's not on the air
19:38
Speaker 3: with us this morning. Instead, his often fill-in, Dan Smithson,
19:42
Speaker 3: has joined us. He is the CEO of Star USA
19:44
Speaker 3: Federal Credit Union here in West Virginia in Charleston, and
19:47
Speaker 3: we are talking about mortgages, primarily the morning and exactly
19:51
Speaker 3: what that means in this era that we're in as
19:54
Speaker 3: far as the market and everything goes. Still plenty of
19:57
Speaker 3: programs out there for you and to refinance for new
20:01
Speaker 3: purchases or anything that's along those lines. But one of
20:03
Speaker 3: the things I wanted to focus in and talk about
20:05
Speaker 3: this morning, and you can get your questions in as
20:07
Speaker 3: well if you want to send us anything, 304-345-5858 is
20:08
Speaker 3: our phone line number. 304-935-5008 is the text line. 304-935-5008
20:10
Speaker 3: is the text line number. Dan, I was wanting to
20:18
Speaker 3: talk a little bit about home equity lines of credit.
20:20
Speaker 3: And first of all, I thought maybe you could set
20:23
Speaker 3: up exactly what a HELOC home equity line is. And
20:26
Speaker 3: is that different from like a standard second mortgage? What
20:29
Speaker 3: are the different programs that are available there?
20:33
Speaker 4: Sure. Our home equity program makes it really easy for folks.
20:37
Speaker 4: We've got fixed rate, which are just your standard second,
20:40
Speaker 4: where you have a set payment. There's no line of
20:43
Speaker 4: credit attached. And Great rates there. And then we have
20:48
Speaker 4: what's called the HELOC, the Home Equity Line of Credit.
20:51
Speaker 4: And in our case, that is a line of credit
20:55
Speaker 4: we can go up to 90% of the home value.
20:57
Speaker 4: No appraisal required unless something comes up with the value
21:05
Speaker 4: that we see in the valuation report we run online.
21:09
Speaker 4: Really no closing calls in that circumstance. And gives you
21:14
Speaker 4: flexibility because you can make interest-only payments for the first
21:18
Speaker 4: 10 years if you would like. Of course, we encourage
21:21
Speaker 4: people not to do that, but you can if you'd like,
21:23
Speaker 4: and then it converts to a 15-year fix from that
21:27
Speaker 4: point forward. It just gives folks a lot of flexibility.
21:30
Speaker 4: The rate is adjustable, and that's the key difference between
21:34
Speaker 4: most standard second mortgages and HELOCs is the fact that
21:39
Speaker 4: HELOCs are generally adjustable, but our rate is prime minus 0.25%,
21:44
Speaker 4: which is a good solid rate.
21:47
Speaker 3: That is good. And that gives you a lot of
21:49
Speaker 3: flexibility to do things. And I have a situation and
21:52
Speaker 3: I'll just help you walk me through that because there's
21:55
Speaker 3: a lot of people out there that's probably.
21:56
Speaker 1: Similar to this.
21:57
Speaker 3: I had some damage done to my house a few
22:00
Speaker 3: years ago before I got my new roof put on.
22:01
Speaker 3: I have a brand new roof that I put on
22:02
Speaker 3: the house. but I did not repair some of the
22:05
Speaker 3: water damage that was done around my windows and one
22:07
Speaker 3: of my walls and stuff. It wasn't massive, but obviously
22:10
Speaker 3: to resell or something in the future, I'm going to
22:12
Speaker 3: have to get this repaired before I go to do it.
22:14
Speaker 3: And it's kind of affecting my moisture barrier a little
22:17
Speaker 3: bit too. So I have a little bit of a
22:18
Speaker 3: problem there that's going to take some actual work to
22:23
Speaker 3: get done to get in there and get it taken
22:24
Speaker 3: care of. I have tons of equity in my house.
22:29
Speaker 3: I think I only owe about 60% of the home's
22:31
Speaker 3: value to something along those lines. And I have an
22:33
Speaker 3: extraordinary low in the 2% as far as my primary
22:37
Speaker 3: mortgage goes. So I really don't want to touch that thing.
22:40
Speaker 3: I don't want to touch my main mortgage whatsoever. Is
22:43
Speaker 3: this something where a HELOC or a second mortgage would
22:47
Speaker 3: really help me out, where I'm looking to do active
22:49
Speaker 3: improvements to my home?
22:52
Speaker 4: Absolutely. And there are so many folks around the country
22:55
Speaker 4: in that same situation, Dale, and that HELOCs are one
22:58
Speaker 4: of the fastest-growing loan segments in the country, and just
23:02
Speaker 4: for that reason. No one wants to touch that first,
23:04
Speaker 4: which they shouldn't. It's a smart move. And then you
23:09
Speaker 4: can use the second mortgage to meet those needs. In
23:14
Speaker 4: our case, both our mortgages and HELOCs, folks can apply online.
23:19
Speaker 4: In fact, that's what we encourage, and it's so much
23:22
Speaker 4: easier in this day and age to spend five minutes
23:25
Speaker 4: applying online versus 15 minutes filling out a bunch of paperwork.
23:30
Speaker 3: Let me just interject real quick here, Dan. When you
23:32
Speaker 3: fill in one line with Star Federal Credit Union, it
23:34
Speaker 3: only goes to Star USA Federal Credit Union.
23:36
Speaker 4: That's absolutely right. That's a really good point. It only
23:41
Speaker 4: goes to the credit union. And, you know, we're obviously
23:45
Speaker 4: actively working those cues as they come in. One other
23:50
Speaker 4: item that is important with home equity, and I'm not
23:54
Speaker 4: giving tax advice by any stretch of the imagination, but
24:00
Speaker 4: your interest off of home equity could very well be
24:04
Speaker 4: tax deductible, which could be, if someone is itemizing, could
24:08
Speaker 4: be a big factor.
24:11
Speaker 3: And just briefly, like you said, you're not a tax advisor,
24:15
Speaker 3: but just briefly, how does that work?
24:16
Speaker 1: Is it if it's being used for home improvements?
24:20
Speaker 4: That is correct. If you're using it for home improvements,
24:24
Speaker 4: I think there are other little breakouts within the code
24:29
Speaker 4: as well that I'm honestly not that familiar with.
24:32
Speaker 3: Yeah, I understand. But if somebody's interested in that, they
24:34
Speaker 3: can ask their tax advisor, ask their financial planner, take
24:36
Speaker 3: a look at the documents and see what it is.
24:39
Speaker 3: If you're doing some massive improvements, that might be a
24:41
Speaker 3: good thing to look into.
24:43
Speaker 4: That's correct. Consumers will receive, in our case members, will
24:48
Speaker 4: receive a 1098 to go along with their first mortgage
24:51
Speaker 4: interest and simply add it on to their interest and
24:55
Speaker 4: they can use that for the deduction. Obviously, if someone
25:00
Speaker 4: is not itemizing, that's probably not going to be of
25:02
Speaker 4: any assistance to them, but certainly it helps folks.
25:07
Speaker 3: And if folks want to look at– obviously, you can
25:11
Speaker 3: go to– let's see. It's MyStarFCU.com, I believe, is the website.
25:16
Speaker 1: Is that right? MyStarUSA.com.
25:18
Speaker 3: I'm sorry. Yeah, MyStarUSA.com. You can go to MyStarUSA.com. You
25:22
Speaker 3: can find all the information here for locally. If you're
25:24
Speaker 3: looking– if you have a question about any of these things,
25:26
Speaker 3: and we've talked a little bit about primary mortgages this
25:28
Speaker 3: morning and about the HELOCs and what you need to
25:32
Speaker 3: have planned to go into– into that. And I wanted
25:35
Speaker 3: to briefly just reset that just for a moment when
25:37
Speaker 3: we start talking about whether you're looking to refinance or
25:40
Speaker 3: you're looking to purchase for a first time or something
25:42
Speaker 3: along those lines. We talked about having down payment and
25:47
Speaker 3: having that, where there could be PMI if it's under 80%,
25:50
Speaker 3: having something to put down. Generally speaking, as far as
25:52
Speaker 3: a qualified homeowner goes, I haven't looked at the qualifications
25:56
Speaker 3: for things like that in a while.
25:58
Speaker 1: If somebody.
25:59
Speaker 3: Like when you're looking at employment and different things along
26:02
Speaker 3: those lines and also around credit scores that a target
26:05
Speaker 3: should be, what are we looking for as far as
26:07
Speaker 3: that goes? Are you still looking for uninterrupted employment? And
26:11
Speaker 3: what kind of credit scores are we generally looking at
26:14
Speaker 3: when we're trying to get somebody into a prime loan?
26:17
Speaker 4: Well, a credit score is tough to gauge in this
26:20
Speaker 4: day and age because we're going to look at so
26:22
Speaker 4: many other factors. We're going to look at your debt structure.
26:28
Speaker 4: And I don't want to discourage anybody by giving a
26:31
Speaker 4: score because we've got programs in place where we can
26:33
Speaker 4: go out and help folks as well. We've got a
26:38
Speaker 4: partnership with another organization that we can go and help
26:44
Speaker 4: folks as well and also offer FHA and VA loans
26:49
Speaker 4: through that partnership as well. So I don't want to
26:53
Speaker 4: discourage anybody, but.
26:57
Speaker 4: Basically, you should avoid having collections on your credit report.
27:01
Speaker 4: You should avoid, you should try to clear those things up.
27:05
Speaker 4: And you should avoid having a bunch of credit card debt.
27:08
Speaker 4: If you can pay down and restructure credit card debt,
27:12
Speaker 4: that is usually a huge help as far as a
27:15
Speaker 4: mortgage credit score.
27:17
Speaker 3: You mentioned about making sure collections are cleared off there.
27:21
Speaker 3: And one of the things that I'll bring up here,
27:22
Speaker 3: there was, It seems like it was a moving target
27:24
Speaker 3: for several years with medical collection. For a long time,
27:28
Speaker 3: it was thought that medical collection was going to go
27:31
Speaker 3: off your credit report, then it was going to be
27:33
Speaker 3: counted again, then it was going to go off. I'm
27:35
Speaker 3: honestly not even sure where that stands right now, but
27:37
Speaker 3: I know that medical collections are showing on credit reports
27:40
Speaker 3: right now. So you want to make sure you get
27:42
Speaker 3: those things paid off as well as you can or
27:43
Speaker 3: make payment arrangements for them to get them off your report.
27:47
Speaker 4: Yes, and I think, Dale, that the medical collection reporting
27:51
Speaker 4: is much better than it was, say, five years ago.
27:55
Speaker 4: But it's still not a perfect science. And, you know,
27:58
Speaker 4: a lot of folks, and that's, I hate to keep
28:01
Speaker 4: harping on knowing your credit score, but the fact is
28:04
Speaker 4: a lot of folks don't know that a medical collection
28:09
Speaker 4: is on the report until they go to pull it
28:11
Speaker 4: because they've not seen anything. And that's why it's so
28:15
Speaker 4: important to use these credit score apps and these, in
28:21
Speaker 4: our case, our free credit score program. So you're on
28:24
Speaker 4: top of it all the time.
28:27
Speaker 3: Yeah, and so that's an important thing to do. And
28:31
Speaker 3: you have no idea, and that's to kind of finish
28:34
Speaker 3: up where we left off as far as credit goes–
28:38
Speaker 3: That's something that there are monitoring systems and different things
28:40
Speaker 3: like that out there. But years ago, before I talked
28:43
Speaker 3: about how I have this great first interest rate that
28:45
Speaker 3: I don't want to change, it's in the 2%, my
28:48
Speaker 3: score went up significantly after I found some incorrect reporting
28:51
Speaker 3: on my credit report. And it took me a few
28:53
Speaker 3: weeks of working with the reporting agencies, getting the documentation
28:58
Speaker 3: that I needed and stuff like that. There was a
28:59
Speaker 3: little bit of paperwork involved, administrative work that I had
29:03
Speaker 3: to do.
29:04
Speaker 1: But you know what?
29:04
Speaker 3: My credit score ended up going up. 90 points or
29:07
Speaker 3: something after the whole thing was said and done and
29:09
Speaker 3: got a lot of that stuff worked off there. And
29:11
Speaker 3: it significantly saved me money in the long run with
29:14
Speaker 3: the interest rate I was able to get. So it's
29:15
Speaker 3: worthwhile for folks. If you get into one of these
29:18
Speaker 3: free credit programs where you can get your list of things,
29:21
Speaker 3: if you have inaccuracies on there, you should work them
29:23
Speaker 3: out because those really can help you out in the
29:24
Speaker 3: long run.
29:25
Speaker 4: Right. And Dale, the other side of that is the
29:29
Speaker 4: fraud prevention that you get by knowing your credit score.
29:32
Speaker 1: Yeah, yeah.
29:33
Speaker 4: For instance, our app will send you if there's an inquiry.
29:36
Speaker 4: it will send you an email or a text letting
29:38
Speaker 4: you know there's an inquiry on your credit report. So therefore,
29:41
Speaker 4: if someone's trying to do something nefarious on your account,
29:45
Speaker 4: you're going to know right off the bat. And that's
29:49
Speaker 4: a huge help from the fraud standpoint as well.
29:52
Speaker 3: You can find out more information about Star USA Federal
29:54
Speaker 3: Credit Union online at StarUSAFCU.com. StarUSAFCU.com. You can find out
29:59
Speaker 3: all kinds of great information there, including the phone number
30:02
Speaker 3: here locally. The phone number is 1-800-628-2120.
30:03
Speaker 6: 1-800-628-2120.
30:03
Speaker 3: 1-800-628-2120 is the number for Star USA Federal Credit Union.
30:05
Speaker 3: If you have any questions about a mortgage that you
30:08
Speaker 3: might want to look into, a primary, first-time lender, home buyer,
30:16
Speaker 3: you're looking to refinance or get into a new home,
30:18
Speaker 3: whatever it might be, Star USA Federal Credit Union and
30:21
Speaker 3: Dan Smithson can help you out. Of course, they were
30:24
Speaker 3: referred over here to us this morning with John Burdett
30:26
Speaker 3: from Fourth Avenue Financial online, fourthavenuefinancial.com. You can find out
30:30
Speaker 3: more information over there. John is usually our guest every
30:32
Speaker 3: Monday morning right here on Retire Right Radio on 580 WCHS. Dan,
30:36
Speaker 3: thank you so much for your time again today. I
30:38
Speaker 3: appreciate you coming back on the airwaves and educating folks
30:41
Speaker 3: about the mortgage industry and where it stands right now
30:43
Speaker 3: from the perspective of Star USA Federal Credit Union.
30:47
Speaker 1: Thank you, Dan.
30:48
Speaker 4: I hope you have a good week.
30:49
Speaker 1: I hope you do the same, Dan, and we'll talk
30:50
Speaker 1: to you again next time you come on.
30:51
Speaker 2: All right.
30:52
Speaker 4: Sounds good.
30:53
Speaker 1: Thank you.
30:53
Speaker 3: Thank you so much. I really appreciate that. Once again,
30:55
Speaker 3: that's Dan Smithson from Star USA Federal Credit Union. You
30:59
Speaker 3: can check out this podcast. It'll be up online a
31:01
Speaker 3: little bit later on.
31:02
Speaker 1: That's it for us today. Have a good day listening
31:04
Speaker 1: to 580 WCHS. We're proud to live here, too.