Latest / The Jon Sanchez Show / Mortgage Rates Hit 7% Today: 8 Strategies Homebuyers Can Use Right Now
Transcript
- Jon G. Sanchez: Good Thursday afternoon to you. Welcome to the John Sanchez show on News Talk seven eighty KOH. Pleasure to be with this Thursday. Pleasure to be with my co-host. Around the horn we shall go. I'm gonna save Dwight for last. I was gonna go to him first, but I I Dwight Millard: Ha ha ha. Jon G. Sanchez: I I have a few things to say to the poor man. So Aaron Clark eventually, we're gonna start with you. How are you, my friend? Aaron Clark, Edge Realty: I'm doing good. That's good because it'll give Dwight a chance to dry his tears. Jon G. Sanchez: Y exactly. Exactly. Yeah. Yeah. Bring bring back from you Dwight Millard: Yeah, yeah. Jon G. Sanchez: know the the ledge as we like to call it. Aaron Clark, Edge Realty: Yeah. Dwight Millard: Yeah. Jon G. Sanchez: All right, Dwight Millard on Q Home Loans. boy Dwight Millard: Yeah. Jon G. Sanchez: boy, this show is about you today. Today was about you. I pray for you and other mortgage professionals and real estate professionals. This was a tough, tough day that you went through today. Dwight Millard: Yeah, yeah. John, I've traveled down a lot of roads in 40 years, and this is a rough one. This has been, you know, it's just it it's been a difficult. We've talked about this on you know, with Aaron and with Corey. You know, this is more difficult than the meltdown, right? Because it during the meltdown, at least you had a consistent model. There was little refinances, there was some short sales, some foreclosures and activity. Here it's just now we're over seven percent. We're just gonna it, we're just this whole thing's just gonna. Jon G. Sanchez: Yeah. Yeah. Well Dwight Millard: Yes, yeah, yeah. And and I I I'm sure you're gonna share what the percentage now of a Jon G. Sanchez: yeah. Dwight Millard: interest rate increase is. It's what is it, ninety something now, for next Wednesday. So I mean, i we're Jon G. Sanchez: Yeah. Yeah. It's jumping up. Dwight Millard: we're just in a wrong wrong place, wrong side of the fence right now. We can't get over the other side. Yeah. Jon G. Sanchez: Exactly. Exactly. Well, we we have a jam packed show for you today, folks, because if you have not heard, and as Dwight will allude to here in a moment, the thirty year mortgage crested the seven percent mark, actually quite a bit above seven percent. so we we had problems in the market today. We had oil prices surge, we had bond yield surge. All this came about after a month over month not a bad PPI number. It it it The bright side is as it came in line, as I'll go through the details. It was in line with the expectation. Bad news is you look at the year over year and it's a very scary number. they are expecting some very tough data that I also will share with you in regards to the CPI report tomorrow. Today was PPI, the wholesale inflation. Tomorrow's gonna be CPI, the retail side of it. But you know, I made some comments, guys, this morning when when I was doing my stock updates that The market really had a had a a muted reaction when the data came out at 530 this morning. The futures we were already pretty weak on the Nasdaq side, down over 300. But but the Dow side and the S P side just kind of took it in stride. So the first reaction was, hey, this again was pretty much in line. I actually I'm gonna say in line, it was right it right in line, a four-tenths of a percent increase month over month, with Wall Street's expectation. So what was the problem? Well, as I made mention on the stock update. watch it closely. There's I I I told Ross Mitchell this morning, I said there is no way this market's gonna hold with this. And and sure enough, there was no way that it could. I mean, you had too many influences. But I'm I'm gonna, you know, like Dwight and and Aaron, we always try to find the bright side of something. I think we can, you know, thank our lucky stars that we walked away with a fairly modest loss in the market after, you know, c considering what happened with oil and what happened with the bond market. That you know the losses again were not all that bad on a on a percentage basis. Problem is, is we, you know, we we've had four days with the market going down now. So we we've got a we've got a trend going in the wrong direction. so this you know brings us to what are we going to be talking about with you today? Well, of course, with it being a real estate day, we've titled today's show Mortgage Rates Hit 7%. But you know, instead of us just giving you bad news, we're gonna help you, right? We're gonna give you eight strategies the boys have come up with. Eight strategies home buyers can use right now because Just because mortgage rates are at seven percent plus, that doesn't mean that you need to stop shopping. That doesn't mean you need to not buy that home that you finally found that Aaron found for you. we got to move on. And and our job is to give you strategies to survive these time periods, right? It's easy to sit here when things are good, but our job is to help you when times are tough. Just like we do when the stock market's going down. I'm always here to help you. And same thing on the real estate side. The boys are here to help you when in when things are getting a little bit tough. And boy, they are tough right now. So let me get the the the the market news out of the way and then we're gonna we're gonna get over to to the oil side and the bond market side of things. So first thing I'm gonna actually go back a little bit further. now we all know that the Republicans you know in the midst of a convention, today's the last day of a of a convention, midterm convention in in Dallas, right, Dwight? Right, right, right around the corner in in in Dallas. Dwight Millard: Yes. Jon G. Sanchez: We were talking off air, excuse me, we were talking off air, and I said, you know, this is the there's only been one other time in history that the Republicans and and even the Democrats have had a midterm convention like this. And many strategists are saying, and I have to agree with them, does this mean that the Republican Party is scared as to the results of the midterm election? Now we had the president come out yesterday and say gasoline prices are gonna drop to two dollars or below per gallon, but after The midterm elections after the midterm elections. Guys, I gotta be honest with you, I searched high and low everywhere that I possibly could to see if he continue that on with some explanation as to why he picked $2 per gallon, but more importantly, why until after the election? And this news came out yesterday, right? And the street didn't pay much of attention to it. I made this comment also this morning on the stock updates. I said, it doesn't make any sense. Why would would if you read between the lines, if he's saying it's not gonna drop to $2, you know. until after the midterm election. So we're talking mid-November. So that means what he's saying, if you read between the lines, is the war is going to continue, not a conflict, it's a war. The war is going to continue until mid-November. And then why mysteriously is it going to come to an end after the midterm elections are going to be over? Because to get two dollar a gallon oil or gasoline, the war's got to come to an end. There's no other way. It and it I don't even know honestly if it's even possible to get it down to two dollar a gallon. So that's kind of how the the tone was coming into today's trading session. Then everybody was anxiously anticipating again the the PPI number. But what ended up happening was you know, bond yields, yes, they moved up a little bit, nothing substantial on the 10 year, considering everything. But what we saw happen was oil prices began to take off like we haven't seen in a long time. And I'll just tell you, we finished up, if you can believe this, six dollars and thirty two cents a barrel. That was the gain today on oil. Six dollars and thirty-two cents in one day, closed above the hundred dollar mark at one two thirty-nine per barrel. 102.39 per barrel. Now this goes back to, of course, feeding into the whole inflationary argument and of course interest rates, the Fed's decision, as Dwight just alluded to for next week. again, according to the FOM, the Fed Watch CME FedWatch tool, there is now a 73.1% probability of a rate hike at next Wednesday's interest rate decision. It was 61.2% yesterday. So now it's gone, you know, up what, twelve basis points plus just in one day because of the PPI report, but also because the oil. And it it guys, it almost feels like the oil traders are trying to drive oil prices higher because I didn't see anything in the news today in regards to any new you know, our ships being attacked, us attacking their ships, that type of thing. There was nothing new today, at least that I saw. Maybe there was behind the scenes. But it seems like these oil traders are trying to get this oil up there. That's going to drive inflation. That's going to drive interest rates higher. And of course, we know what's happening on the other side of the trade. You're going to get a lot of people out there that are shorting the market. There's a lot of cross currents that I won't bore everybody with. in regards to the dollar versus the yen and some of the currency moves, it's getting very complicated. You you really have to pay attention to what's going on with the yen in Japan. That's why we had Scott Besent, our Treasury Secretary a couple days ago, intervene and say, Hey, we're gonna go Dwight Millard: Okay. Jon G. Sanchez: from a two billion dollar a month bond buyback program. which is what our normal is to four billion. That's what he said on August 19th, to Tuesday's Dwight Millard: Mm. Jon G. Sanchez: comments, which is we're going to double that to six or double it or more than double from our original two billion to now six billion a month. Well, we've seen interest rates, right? Dwight go up every single day since he made those comments. And then today was this Dwight Millard: We live, we live, and Jon G. Sanchez: kind of the icing on the cake. So we've got this convoluted mess between currency, between oil prices going up, between interest rates going up. And the other thing I want to allude to when when we get to Dwight on the the tenure and then the mortgage rate, Dwight This and Aaron, this was this was not a a focus just on the 10-year treasury yield. This was a an increase across the board. the the the shorter end of the curve, and I have to keep emphasizing this to everyone, you we don't talk a lot about the two years, the three years, the five years. But if you want to figure out what the Fed's next move is, watch the two-year, right? That is the one that is the most sensitive or correlated to the anticipation of what the Fed's gonna do. the two-year today, guys, up twelve. Basis points, 12 basis points. Now remember, folks, there's 100 basis points and 1%. So 12 basis points to a yield of 455. That's now bringing it to a yield where the 10-year was just a few weeks ago, right? So so that that two-year is telegraphing. Hey, we got an interest rate increase coming our way. Now the European Central Bank this morning they raised the rates a quarter percent, first time in quite some time. the three-year was up 13 basis points, the five-year was up 12 basis points. And then Dwight, let's just get it out of the out of out on the open. 11 basis point increase on the 10 year at a yield of 494. So we came close today, we're up even more than that. We came close today to hitting 5% on that on that 10 year. And then the 30 year, which is more of a gauge of how the economy's doing overall, up eight basis points to yield of 536. So Dwight, I set the table for you. So when we come back, let's Dwight Millard: Yeah. Jon G. Sanchez: get right into this 10 year in more detail. And then most importantly, of course, the theme of today's show, the mortgage rates hitting seven percent. And then after our bottom of the hour break, we'll get into s eight strategies the guys have put together to help you help you survive these times because it is, as Dwight said, in his forty years of doing this, this is a tough, tough situation. right, here we go. Welcome back to the John Sanchez show on New Stock 780K with Aaron Clark of Intriality, Dwight Millard of Encue Home Loans. All we're going to get to our topic: mortgage rates hitting 7%. Eight strategies homeowners can use, or home buyers, excuse me, can use right now to combat this. All right. Once again, let's go back to what happened in the market today. Very tough day. Not so much on the market side, but the bond yield side, i.e., interest rates and oil. So again, we finished down 316 on the Dow 0.60% loss. Our close is 52,064. NASDAQ gave up 172.65%, closing at 26,081. And the SP lower by 45 points, or 0.58%, to close at 7,598. Now, before I get to the commodities and we get on the interest rate topic, I do want to mention this because maybe some of you own Oracle. highly anticipated earnings report came out. Company did pretty well. they made $1.92 per share. Estimates were $1.74, revenue $19.35 billion, estimates 19.14 billion. there were their revenue grew almost 30 percent year over year in the first fiscal quarter, which ended August the 31st. Net income 4.68 billion or about a dollar fifty-six a share. that's up from 2.93 billion or a dollar and a penny a share a year ago. So that's what's going on with that one. Now we were chatting off air. The other thing that got the street kind of in a bit of a tizzy today was the president's comments at the convention yesterday, that If us Republicans win the House and the Senate in the midterms, we're all going to get a $5,000 check. They're calling it a dividend check. I don't know if it's a dividend on what. But a $5,000 check. the economists on and on both sides of the aisle came out and said, Mr. President, you you probably don't want to make that promise. Number one, it's illegal. But number two, that would cost the government one trillion dollars. Dollars to send a check to every person in this country that is over age 18. Because you see, there's about 270 million Americans that are over age 18. Vast majority, of course, are citizens. Yeah, $5,000 to each $270 million comes out to about a trillion dollars. So everyone got really confused on that one today, also. All right, now you're up to date. Let's go to what happened again today. Oil prices surging. No specific news on it. $6.32 increases, I said, at $102.39 a barrel. Goal give up $51.80 to $4,408 an ounce. But here we go. The 10-year Treasury Dwight, as we said, up 10 basis points today to a yield close of 7.07%. Dwight Millard: I mean Yeah. Jon G. Sanchez: I'm sorry, not seven points. That's the mortgage side. The 10-year up 11 Dwight Millard: Yeah. Jon G. Sanchez: basis points. Got my notes screwed up. 11 basis points increase on the 10-year to yield close of 494. Now I just let the cat out of the bag. Let's go to the mortgage side. Dwight Millard: Yeah. Yeah. John, we haven't seen seven point zero seven since May twenty first of twenty twenty five. So that's yeah, I mean year over a year ago and and here we it Jon G. Sanchez: Ooh. Over two years ago. Or a year ago. Dwight Millard: here we here we are and and we're there was hope, you know, first of the year as we were getting in you know into the low six is, you know, going dipping into the fives, you know, the five Jon G. Sanchez: Yes. Dwight Millard: nine nine right before the conflict or the war. And man, this has just been I you know, I was wondering today when I saw this, I go, I wonder how many loan officer renewals we'll see in January. You know, probably not very many, you know. I mean Jon G. Sanchez: What what do you mean, loan officer renewals? What Dwight Millard: renewing their license for the next year, you know. I mean, Jon G. Sanchez: okay. Okay. Yeah. Dwight Millard: w we've we've lost, I mean, we have cut From almost five hundred thousand, I think we were below a hundred in a in you know, this is last year. I mean, it's just Jon G. Sanchez: Yeah. Dwight Millard: and it but it's just not the loan officers that we've talked about before. You know, it's Aaron, it's the realtors, it's the title companies, it's the appraisers, the inspectors, it's all of that. And this is just really, really unfortunate you know, timing all the way around for for for many reasons, John. But we're you know, we started and we we keep talking about this. We started this in in in embarking on these higher interest rates March of twenty two. Right. So here we are. We're, you know, clearly over four four and a half Jon G. Sanchez: Yeah. Four years pless. Dwight Millard: years into this. And now here we're going, you're telling me I got a seventy three percent probability of a rate increase next Wednesday. I I just it's it's hard if you asked me that Jon G. Sanchez: And let's and let's be clear, let's be clear, like we touched with Corey on Tuesday. If we get that quarter percent cut, which again, the odds are showing that it it can happen, but Lord knows it's still a ways away. that doesn't mean that you could see an increase in bond yields, i.e., mortgage rates either. We've seen we've seen opposites happen. Dwight Millard: True. Yeah. Jon G. Sanchez: so we don't know, but you know, the bottom line is I I think more importantly, guys, is how the bond traders are reacting to Vincent's aggressive bond buying, bond back, bond buyback program. Right. They're laughing at it. he threatened Wall Street and basically said, Don't bet against me. I'm now the house. Those were his words. I'm now the house, saying he's controlling the bond market. Well, the bond traders are like, excuse me, Mr. Treasury Secretary, but we control the bond market. And that's indicative by the rate increases that we've seen, or yield increases we've seen these last couple days. Aaron, w Where's the pressure point? Dwight brought up, you know, being a realtor in the in this environment. Where's the pressure point for your industry right now? Aaron Clark, Edge Realty: What do you mean pressure point? Jon G. Sanchez: Well, I mean, are there realtors out there going, honey, they're sitting at the d kitchen table for dinner and they're going, Honey, we're not gonna have a Christmas this year because I'm not gonna be selling any houses this year. or clients aren't gonna be buying any houses because we just broke seven percent on the thirty year mortgage and there's gonna be no business. I is that conversation going on? Does is it that serious from from that standpoint? Aaron Clark, Edge Realty: I would say that there's definitely a lot that have fallen off in the last couple of years. I think there was a stat that I read that t in 2026 it's something like it was like don't quote me exact, but it was in the high 70% of realtors nationwide did zero transactions so far for year to date for 2026. So that is a real concern. It's a real issue Jon G. Sanchez: Yes. Aaron Clark, Edge Realty: right now. You're seeing less people and continu less realtors in continuing education classes. You're seeing, you know, Facebook marketplace. I just was looking at it the other day and I noticed that realtors are selling their lock boxes. Which is kind of like a it's like, whoa, I haven't seen that. And you know, I mean, Facebook wasn't really around in two thousand eight. But, you know, I mean, when when Jon G. Sanchez: no kidding. my gosh. Yeah. there's an indicator. Right, right. Wow. Aaron Clark, Edge Realty: realtors are starting to sell their their lock boxes, you know, things are getting tight. So Jon G. Sanchez: Yeah. Aaron Clark, Edge Realty: yeah, it's it's tough out there for everybody right now that's in the industry. And the reality of it is we've talked about this so many times since the crash of 08, you know, nine, 10, whatever. We have seen nothing but basically a parabolic increase in everything since then. We've we haven't seen any pullback whatsoever. And now Jon G. Sanchez: Right. No, no. It's like the stock market. Yep. Aaron Clark, Edge Realty: we're experiencing it all at once, really. Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: And that's what we're seeing, and so. Hopefully those people that were smart enough to live through that time period and and see the consequences of of the situation that we were in took that experience and learned from it. And those agents out there socked some cash Jon G. Sanchez: Meaning didn't over leverage and Aaron Clark, Edge Realty: away and you know, like, okay, yeah, it's I mean, you gotta scale back. It's like any business, you know. When the when the going's good, you better hide some acorns and when it's not, that's when you're pulling from them. Jon G. Sanchez: Right. Yeah. Yeah. Do do you Aaron Clark, Edge Realty: So yeah. Jon G. Sanchez: you've lived through a lot of cycles. do you and I how can I say this without you sounding like a jerk, but I'll just say it anyways. Do you almost welcome times like this where it gets rid of excess capacity as far as agents are concerned and you know, the ones that are sustainable, that have experience, that have been around a while, that's kind of what you're left with? If that makes sense. Aaron Clark, Edge Realty: I mean, yes, in the sense of it just like any of our jobs, right? People people see the fruit of our jobs and then they go, that's so easy. Anybody could do it, right? Jon G. Sanchez: Right. Right. Aaron Clark, Edge Realty: And because of it, when things were really good, as long as you had a pulse and you could answer a phone, you could probably squeeze out a few deals once you got your license. And that was the market that we were in. Now that's changed. And so we've had those situations that have actually kind of hurt the industries a little bit. I think it's all for all of our industries, we've seen that. Jon G. Sanchez: Mm-hmm, mm-hmm. Sure. Aaron Clark, Edge Realty: Where people are getting bad advice. And I mean, I I've had clients that I've closed deals with them 10 years ago and said, Hey, if you ever have any questions, if anybody tries to bug you about anything, call me first. Cause I not because I'm trying to sell you anything, just run it by me first. And then they call me 10 years later, they're Hey, we've popped out a couple of kids, are ready to upgrade. And I'm like, Great, man, you bought this house for 200,000. You got to have like six hundred thousand dollars in well, we refied it five times. What do you mean you refied it five times? Jon G. Sanchez: No yes. Yeah. Aaron Clark, Edge Realty: Well, this one lender called us and said this, and this one lender called us and said this, and now we only have a hundred thousand dollars in equity, and it's like that predatory thing, and it's on the real estate side too. It's with realtors. Jon G. Sanchez: Sure, sure. Aaron Clark, Edge Realty: So, you know, because of that, we like to see not like that's the wrong word. This is a good time to see who's the good ones that are gonna make it through and who are the inexperienced ones that are gonna have to move on. So yeah. Unfortunately Jon G. Sanchez: That's my point. Yeah. Right. Right. Right. Right. That's my point. Okay. All right. Very good. Aaron Clark, Edge Realty: we do kind of welcome it, I think. Dwight Millard: Mm-hmm. Jon G. Sanchez: Yep. Like like like you said, any any economic downturn in any industry, it's it gets rid of the excess capacity, as the saying goes. Excess inventory, right? Okay, Dwight Millard: Mm-hmm. Jon G. Sanchez: Dwight, it's gonna be all about you when we come back. We're gonna get into our eight Dwight Millard: Yeah. Jon G. Sanchez: strategies home buyers can use right now. this is gonna be very interesting, folks. You don't wanna miss this. And again, when times get tough, that's when money is made. And that's what we hope to help you try to do today when you get these strategies under your belt. We don't want you to sit back and sit on your hands and go, I'm not doing anything at seven percent. We're gonna show you some strategies and try to convince you that now actually can and probably not right at this moment, but here soon, if these if this trend continues, could really be some incredible opportunities in the real estate market. And these two gentlemen, of course, will show you what those are when we return. Welcome back to the John Sanchez show on New Stock 780K away so with Aaron Clark of Vegas related to White Millard of on Q Home Loans. Again, down 316 on the Dow. NASDAQ lost a 172 and the SP down 44. But it was all about oil and yields. 10-year note again up four basis points today. very, you know, again, very, very substantial, painful day. But it was on the mortgage side of things that we're going to get into as far as our discussion is concerned. Or excuse me, I screwed it up again. 11 basis point increase on the 10 year two yield of 494. Jeez. Gotta get my notes square here. yeah, yeah, exactly. Yeah, be five. Yeah, I thought it was gonna happen today. I really did. Dwight Millard: Be five before you know it, John. Be five next week. Yep. Yeah. Aaron Clark, Edge Realty: It's all those numbers. Jon G. Sanchez: but again, it was the the 30 year mortgage today that you know, that we were talking about that cresting, you know, 7%, 7.07%. So the first reaction is, okay, what in the heck's gonna happen to the housing market? Yeah, we we've got fears of inflation, we have rising Aaron Clark, Edge Realty: Mm-hmm. Jon G. Sanchez: oil prices. Now we have a 30 year mortgage that's above seven percent. So do I, here we are. Yesterday it was 697 on the 30 year. Today it's 707. Tuesday it was 689, just slowly moving up. Dwight Millard: Yeah. Jon G. Sanchez: So, what do I do? Do I take out an arm? Do I put more money down? Do I buy a cheaper house? Do I ask for a closing cost? What do I have Aaron negotiate for me? I mean, all these questions now are going through the buyer's mind. So Dwight Millard: Yeah. Jon G. Sanchez: that is a reason that we want to kind of set the table straight today. And I just want to say this real quickly. People still are very confused, guys. And you know this as well as I do. The Fed does not directly set our thirty year mortgage rate. It is, again, Dwight Millard: Yeah. Jon G. Sanchez: based upon a number of factors. The ten year treasury is a very important benchmark. It is not the only thing. But Divide, if you could allude very quickly to, you know, if you're a mortgage you know, wholesaler, how are you determining your rates today? Dwight Millard: Yeah, yeah, John, that's a tough one. I I think you're probably leaning on the conservative side, but we've talked about this too. You got two two sandboxes, right? You got the US Treasury, you got the treasure market, you got the mortgage back security market. And as you start to see these inflation, right, that nobody wants to play in those sandboxes, right? And then to your point earlier, these these oil traders want the prices to go up. It's everything's counterintuitive to what you're trying to accomplish. Or actually, even what Trump was going to accomplish Eddie talked about, you know, before we went into Iran. You know, we're have this booming economy. And and so, but I I think, you know, we've said this before, right? You marry the home and you date the ring, right? You marry the home and you date the ring. So that at some point in time you'll be able to restructure. But to to off air we were talking and and and Aaron, you know, we we may have some opportunities you said leading up to the break, there may be some fantastic opportunities around the corner. for those that to have the patience to wait because it it we are getting into an uncomfortable it'd be interesting to see John how many cancellations you get Jon G. Sanchez: Yes. Dwight Millard: in the coming weeks on especially and I hate to say it because these are my dearest friends are the new home builder, you know, the new construction type of Jon G. Sanchez: Yeah. Yeah. Dwight Millard: things. Because if you're still out three, four months or five months or your house haven't been started, I you know, this may be you you would be very uncomfortable right now. Yeah, yeah. Jon G. Sanchez: you'd be terrified. Yeah. Yeah. The the buyer the buyer would be terrified. Well, Aaron, we had existing home sales today, released for the month of August down two percent month over month. That's existing home sales down two percent. And that we weren't all that bad, and mortgage rates were slightly upright, Dwight, for August. I mean, we edged up a little bit, but nothing like what we're seeing so far. So all right, time's wasting, let's get to it, boys. Strategy number one, Aaron, Dwight Millard: Yeah, yeah. Jon G. Sanchez: negotiate the house, not just the rate. Let's talk about negotiation. It's our first strategy. Aaron Clark, Edge Realty: Yeah, that's a fun one. So here's the thing. Right now, a lot of people are sitting back hearing these numbers or getting freaked out. I've got a handful of buyers now that we're being very strategic at this time. And so what we're doing is we're targeting specific homes that let's say they've been on the market for a while. We're n we know we're heading into our off season here pretty soon, once the f the leaves start to fall and you start hearing those sleigh bells jingling, right? All of that stuff leads to that time period, which if stuff is still sitting on the market, sellers are desperately wanting to move that inventory. So we're targeting targeting those specific ones that are 90 plus days on the market, knowing that sellers are in that position, watching those homes. And the thing is before it was like if we found something we liked, we would try to get in on it pretty quick and try to negotiate. And now a lot of the strategy is sit back and do nothing and wait and watch. Jon G. Sanchez: Wait and see. Wait and see. Aaron Clark, Edge Realty: And when they do a price reduction, Dwight Millard: Mm-hmm. Aaron Clark, Edge Realty: see what kind of price reduction they do. And then based on what the price reduction is, then we know how to come in for the next part. Because the thing is what a lot of people don't understand is when you're utilizing a loan to purchase a home, if you're trying to beat up on the sales price, and that's the only place that you're trying to beat up, the savings per month on a even a twenty five thousand dollar price reduction is negligible. You won't even feel like you won. You Jon G. Sanchez: Your point. Yeah. Yep. Dwight Millard: Mm-hmm. Yeah. Aaron Clark, Edge Realty: know, it's just on paper. But if you're utilizing Dwight Millard: Yeah. Aaron Clark, Edge Realty: a loan and we can get that $25,000 into a credit towards closing costs, rate buy down, doing upgrades to the home that you would come out of pocket, you're Jon G. Sanchez: Repairs, yeah. Dwight Millard: Mm-hmm. Mm-hmm. Mm-hmm. Yeah. Aaron Clark, Edge Realty: saving that $25,000 from coming out of your pocket. And instead it's coming out of the seller's prop pocket. And if we use that to do rate buy downs and things like that, now we're saving instead of $20 Jon G. Sanchez: That's a great point. Aaron Clark, Edge Realty: a month, we're saving $350 a month or whatever it is. Now, obviously there's different caveats to that. Dwight Millard: Yeah. Jon G. Sanchez: That's great point, right? Aaron Clark, Edge Realty: But now, because of this situation and targeting those specific homes that are 90 plus days on the market or 60 plus days on the market, we can not only negotiate the price, but we can also negotiate that rate buy down and get a credit for closing costs and kind of get all of it because it's cheaper for the seller to throw $30,000, $40,000 at the Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: buyer than it is for them to keep reducing price and have Dwight Millard: Right. Aaron Clark, Edge Realty: the constant issue of time, the time Jon G. Sanchez: Right. Aaron Clark, Edge Realty: pressure on the backside plus the price. So that's a great opportunity for buyers right now. You're gonna Jon G. Sanchez: I I love your Dwight Millard: Yeah. Aaron Clark, Edge Realty: pay for it if the rates are low, then you're gonna pay way more for the home. If the r if the rates are high, you're gonna pay way less. The the scales of justice balance. Dwight Millard: Mm. Yeah, yeah. Yeah. Yeah. Jon G. Sanchez: Right. Yeah. Yeah. I I love your philosophy that you know the amateur out there right now again is freaking out, hence why we wanted to do this topic today. They're freaking out saying, Mr. Real it or Miss Realiter, don't call me. You know, rates or something I'm out of the game. You're looking at it going, you know what? You're rubbing your hands together like you're real hungry, saying, This is when some of the best opportunities are out there. So I commend you for that. That's beautiful. Dwight, let's go to strategy number two. Ask the seller Dwight Millard: Yeah. Yep. Yep. Jon G. Sanchez: to buy down your rate. Dwight Millard: Absolutely, John. Go get as much money as you can. Use someone like Aaron who knows the strategies of going and it's a concession, right? On on FHA, you get up to six percent. This is off the sales price, John, not the loan amount. So you get six percent on FHA, you can get four percent on VAs, and you can get anywhere from three to nine percent in conventional. Go get as much money as you can. And to Aaron's earlier point, let's hit the let's get the closing costs out of the way and then let's start looking at temporary, permanent rate buy downs, you know, two two one. Buy down those type of get creative right now. Get creative right now. Yeah. Jon G. Sanchez: Okay, I I wanna go back to get creative, but I wanna go back to what you just said. So you would you say about six percent on FHA? Dwight Millard: So an FHA you can get a six up to six percent concession. So if it's a four hundred thousand dollar sales price, 24 Jon G. Sanchez: Up to six percent concession. Okay. Dwight Millard: grand in concession. I can get a long ways with that. I can, you know, I can pay off the closing costs and still have 18,000, 17,000 to to utilize towards whatever I want to get creative to get you to that. The the the unfortunate real quick, John, problem with the two one buy downs and those type of things. We used to qualify you at that so you're not getting the benefit of the qualifying, but you do get the benefit of the lower payment for at least the Jon G. Sanchez: Mm-hmm. Yeah. Dwight Millard: whatever duration you're you're doing, whether if it's a temporary Jon G. Sanchez: Okay, beautiful. All right, we'll come back with strategy number three. Dwight just mentioned it, the two one buy down, something Dwight Millard: Yeah. Jon G. Sanchez: many people may not have any idea what we're talking about, but we're gonna discuss it as a possible strategy for you. Welcome back to the John Sanchez show on New Stock 780 KOH, Mr. Aaron Clarkovage Reality, your phone number, so Aaron Clark, Edge Realty: six seven three sixty seven under Jon G. Sanchez: Very good. Mr. Millart. Dwight Millard: Yes, sir. Two four zero two zero two two. Jon G. Sanchez: All right, perfect. All right. once again, time's not our friend. We're trying to hammer through eight strategies. I think we're gonna get to about maybe three or four if we're lucky. Dick, gotta remind you one more time. We're looking for a big increase tomorrow in CPI. This could be you know, tied exactly into this topic today with that set that thirty year mortgage finishing at seven point zero seven percent based upon data from mortgage news daily. CPI is expected to be four tenths of a percent month over month tomorrow. it's August data, obviously. July to August was one tenth of a percent. So That would be a really hot number, guys, if if we get that. So it's gonna be important day. Okay, Dwight. Strategy number three, the two one buy down. What the heck is this? Dwight Millard: Yes. Yeah. Yeah. So absolutely. So what when Aaron's able to go and negotiate your concession, part of your concession, like we talked about, is pay your closing costs first, then you're gonna have this pool of money to do what do I do with it? Right now, the two one buy down has been very effective for the last couple, three years. What it does, John, is it'll give you an interest rate lower than the going rate, right? So a two one means you'll buy it down. So we Off air, we talked about it. So if you could just squeak out a 6.875, let's just say that's your rate today. I'm going right right under our seven percent. Jon G. Sanchez: On a thirty year. Yeah. Dwight Millard: Yeah. Two percentage points below that would be a four point eight seven five start rate. That's your two percent. Then you go up one percent the next year to five point eight seven five, and then you'd be at six point eight seven five there out. There is a three two one out there, John. These get very costly. That's why the In no way would the buyer ever want to pay this. They the seller must pay the they don't have to, but you're prepaying your savings. So the seller needs to pay for all of this. Otherwise, it doesn't make any financial sense. Jon G. Sanchez: Pay for all of what? Dwight Millard: Whatever you're using, whether you're using the temporary buy down 21, 321, or even a permanent buy down. but the three two one. We'll buy down three percentage points. So let's take the same 6.875. Now you're at 3.875 as your first year start rate. The problem with that one is it's about four and a half points, John. So that gets very costly. If the buy if the seller's paying it, absolutely. So Aaron will Jon G. Sanchez: But what do I care if I'm getting the the buyer to to to Yeah. Dwight Millard: go negotiate an FHA. He'll use the one and a half to pay your closing cost and the four and a half to do the three two one buy down. Win-win for the buyer. That's exactly what we're talking about where the sell where the buyer's winning. Jon G. Sanchez: Are you are you qualifying people on the the first year, the second, the third? Dwight Millard: No, th that's the unfortunate part. They changed those rules back, I think, in the nineties or early two thousands. We have to qualify them at the fully indexed rate, whatever it moves to. Yeah. Jon G. Sanchez: Okay. So do you know what your maximum is that third year, that is your maximum rate that you can bump up to? Dwight Millard: yeah, yeah, we yeah, because we we just picked whatever rate we use, we got we we buy down from that rate. And so we know what the qualifying rate will be. So it Jon G. Sanchez: Aaron, where would you propose this to a client? Aaron Clark, Edge Realty: If if the only way they can get in is payment, if payment is the surrender point. So if payment is a surrender point and you can get the seller to pay those fees, then it makes perfect sense for a buyer because it's just just softly getting them used to that whole world to exist. And then it gives them an opportunity where if six months later rates drop not that this would happen, but drop two percent, Jon G. Sanchez: There you go. I was waiting for you to say that. Yep. Dwight Millard: Yeah. Aaron Clark, Edge Realty: then the buyer can pay for their refi, but they're not Dealing with the repayment side of the cost of buying Dwight Millard: You know, okay. Aaron Clark, Edge Realty: doing the two one buy down or the three one buy down 'cause the seller Jon G. Sanchez: Right. Aaron Clark, Edge Realty: paid for it. Jon G. Sanchez: Right. Right. Dwight Millard: And on those buy downs, John, you don't lose that money. It goes, it applies. So any money you the seller paid for you up front for those savings and you refinance this thing, it goes off your principal balance. So you never lose any of that money. Jon G. Sanchez: So our other four strategies should I pay points. That was our our our our fourth strategy. strategy number five, real quickly, if I can get my computer to work. shop the mortgage. Dwight Millard: Yeah, on the points, John, don't as the buyer, don't pay points unless you're getting a significant difference for an extra point. Let the seller Jon G. Sanchez: Okay. All right. Dwight Millard: pay it all. Jon G. Sanchez: Strategy six was should I take an arm? Strategy seven, put more money down or don't. And number eight, buy less house. To me, I think the the buy the three two one or two one is probably the best strategy in this environment. Am I right on that? It's just my two cents worth. Okay. Dwight Millard: I would agree with you. Yes, I would agree. Aaron Clark, Edge Realty: Yeah, absolutely. Dwight Millard: And we actually have a one and a half half arm, John, two on by down. So it's it's a one and a half half by down, which is half the price. So there's some creativity out there. Just talk it over. Jon G. Sanchez: That's why they need pros like you too. These are things people do not know. Excellent job, boys. There you Aaron Clark, Edge Realty: We're working these deals right now with people. Jon G. Sanchez: go. There you go. This is real life stuff. Excellent job, boys. Thank you so much. Reach out to Dwight and Aaron. God bless. Have a good afternoon. We'll see you tomorrow.