Latest / Designing and Building the Midwest One Community at a Time / Designing and Building the Midwest the Realtor Segment with 1st Choice Realty Pros: Featuring Brooke Drum

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Designing and Building the Midwest the Realtor Segment with 1st Choice Realty Pros: Featuring Brooke Drum · Designing and Building the Midwest One Community at a Time

• 0:00
  SPEAKER_03: Hey, welcome to designing and building the Midwest, one community at a time.
• 0:03
  SPEAKER_03: I'm Chris Hartzuk with Big Dog Construction, your local window depot.
• 0:07
  SPEAKER_08: And I'm Caitlin.
• 0:08
  SPEAKER_08: This is the show where we bring you real insights, expert input, and a lot of entertainment along the way.
• 0:13
  SPEAKER_08: It's the podcast you didn't know you needed.
• 0:15
  SPEAKER_03: Hey, every week, our main focus is bringing you the best advice on home improvement, remodeling, and how to take care of your biggest investment.
• 0:22
  SPEAKER_03: But we don't stop at the property line.
• 0:24
  SPEAKER_08: Exactly.
• 0:24
  SPEAKER_08: We also dive into our realtor segment to cover the ins and outs of buying and selling locally.
• 0:29
  SPEAKER_08: And our community segment where we talk about giving back charity and what's really happening across the Midwest.
• 0:35
  SPEAKER_03: Plus, we regularly sit down with some fantastic guests from all walks of life to hear their unique stories and perspectives.
• 0:42
  SPEAKER_08: Whether we're talking blueprints or community roots, we've got you covered.
• 0:45
  SPEAKER_08: Let's get into today's episode.
• 0:48
  SPEAKER_05: Hey there.
• 0:49
  SPEAKER_05: I'm Lisa Miller, managing broker and owner of First Choice Realty Pros.
• 0:54
  SPEAKER_05: We don't just help you find a house, we help you discover home.
• 0:58
  SPEAKER_05: My team and I are passionate about taking care of your needs, making the process smooth, and ensuring you get the personalized attention you deserve.
• 1:08
  SPEAKER_05: Ready for the next step?
• 1:09
  SPEAKER_05: Call us at 217-825-3999.
• 1:14
  SPEAKER_05: With First Choice Realty Pros, you've got a team that's got your back.
• 1:18
  SPEAKER_03: Hey, welcome back to another episode of Designing Building the Midwest, one community at a time.
• 1:24
  SPEAKER_03: It is our Realtor segment with our lovely 10X friends from First Choice Realty Pros, Lisa and Lydia.
• 1:31
  SPEAKER_03: And also with us today, we have a familiar name and guest with us, Brooke Drum.
• 1:35
  SPEAKER_03: She is a mortgage loan officer, and she is with Northwest Mortgage, correct?
• 1:40
  SPEAKER_07: Yes, sir.
• 1:41
  SPEAKER_03: Awesome.
• 1:42
  SPEAKER_03: Awesome.
• 1:43
  SPEAKER_03: Hey, well, we are going to be talking about a lot of things today.
• 1:48
  SPEAKER_03: Understanding what's happening with banks, interest rates, down payment assistance, HELOCs, and ways sellers can help buyers afford a home.
• 1:56
  SPEAKER_03: Because of the last couple weeks we were talking about, interest rates are on the rise for some reason.
• 2:02
  SPEAKER_03: But we know why, but we're going to find out a little bit more for Brooke Drum today.
• 2:06
  SPEAKER_03: So, Brooke, jumping right into this, why don't you give us a quick reminder for our listeners and followers of who you are and what you do?
• 2:14
  SPEAKER_07: Hi, everyone.
• 2:15
  SPEAKER_07: My name is Brooke Drum, and with Northwest Mortgage, I am a mortgage broker.
• 2:19
  SPEAKER_07: So what that means basically is I can look and shop around for the best rate for you.
• 2:24
  SPEAKER_07: I know with the the market the way it is right now, everybody's looking for the lowest rate possible or the best terms.
• 2:30
  SPEAKER_07: So I can help you get there.
• 2:32
  SPEAKER_03: Awesome.
• 2:32
  SPEAKER_03: And I believe you are licensed in all 50 states.
• 2:36
  SPEAKER_07: Correct.
• 2:36
  SPEAKER_07: Yep.
• 2:37
  SPEAKER_07: I am.
• 2:38
  SPEAKER_03: That's amazing.
• 2:39
  SPEAKER_03: That's amazing.
• 2:39
  SPEAKER_03: All right.
• 2:40
  SPEAKER_03: So, Brooke, tell us what is happening with banks right now.
• 2:44
  SPEAKER_03: Everyone hears something different about interest rates and banks.
• 2:48
  SPEAKER_03: What are you actually seeing in the lending industry right now?
• 2:51
  SPEAKER_07: Yeah, I mean, there's gonna be a couple different things.
• 2:54
  SPEAKER_07: So, banks in general, you have banks and then you have mortgage brokers, which is what I am.
• 2:59
  SPEAKER_07: Um, technically I am backed by a bank, so I am a little bit unique in the fact that I have both options available.
• 3:05
  SPEAKER_07: But the primary difference is going to be that banks are going to give you rates that are in-house and usually they service their own loans as well.
• 3:13
  SPEAKER_07: Um so they keep your loan after closing and then they have their own set of options.
• 3:18
  SPEAKER_07: And usually with mortgage brokers, we can go out and shop around and we can look at different investors, not just one place like a bank does, to get you the best options possible for your mortgage.
• 3:30
  SPEAKER_05: So, Brooke, are you seeing more hesitation in buyers right now as we are?
• 3:36
  SPEAKER_05: You know, they're they're just holding off a little more.
• 3:40
  SPEAKER_05: Is that what you're seeing in your area as well?
• 3:43
  SPEAKER_07: Yeah, it depends on the area, definitely, because each market is going to be a little bit different.
• 3:48
  SPEAKER_07: But overall, I would say that there is some more hesitation just due to rates and affordability than there has been in the past.
• 3:55
  SPEAKER_06: Yeah.
• 3:55
  SPEAKER_07: Are banks making it harder to qualify?
• 3:58
  SPEAKER_07: Uh great question.
• 3:59
  SPEAKER_07: So a lot of times with banks, they look not, I wouldn't say that they look for cookie-cutter people, but they um go more towards the conventional 20% down, um, more straightforward loans.
• 4:10
  SPEAKER_07: Whereas um for me, example, for example, I in this market specifically have been dealing with a lot of people maybe that have higher debt in debt to income ratios, more unique circumstances.
• 4:21
  SPEAKER_07: Um, so I would say banks maybe look for a little bit more straightforward loans that they can easily close.
• 4:27
  SPEAKER_07: Whereas mortgage brokers are for me, I tend to be a little bit more creative as far as getting getting deals for my clients or getting them in the best situation possible.
• 4:37
  SPEAKER_06: What are the biggest reasons someone might be turned down?
• 4:39
  SPEAKER_07: Debt to income ratio is really popular in this market just purely because of inflation and just how hard it has been for families and individuals in the last few years.
• 4:48
  SPEAKER_07: Debt increasing has been really frequent.
• 4:51
  SPEAKER_07: And so I would say that debt to income ratio would be one, credit scores could be another more popular thing that I've seen as well.
• 4:59
  SPEAKER_03: What would you tell someone who's waiting for rates to drop before buying?
• 5:03
  SPEAKER_07: I would say it's worth a conversation with a lender.
• 5:05
  SPEAKER_07: At the end of the day, what I would tell people who are looking to purchase in this market right now is one, does it make sense?
• 5:12
  SPEAKER_07: I would say having a conversation early with a lender just to see one what you're approved for and if you're comfortable with that payment, because there is a lot of deals going on right now as far as it is more of a buyer's market.
• 5:23
  SPEAKER_07: I would say in years past, it might have been harder to get like seller concessions from sellers, maybe the the rate buy down from the seller, even um lowering the purchase price.
• 5:34
  SPEAKER_07: But if you're able to do it right now, you can get a good deal.
• 5:37
  SPEAKER_07: It's just all about being comfortable.
• 5:39
  SPEAKER_03: Excellent.
• 5:40
  SPEAKER_03: And and being comfortable, and I know Lisa talks about this a lot, making sure you're comfortable in your monthly mortgage payments and it doesn't strap you for cash every month.
• 5:49
  SPEAKER_03: Okay, hey, let's talk about a program a lot of people may not know about.
• 5:54
  SPEAKER_03: IHDA.
• 5:55
  SPEAKER_03: What is that?
• 5:56
  SPEAKER_03: Are we asking me?
• 5:58
  SPEAKER_03: Yeah, I'm sorry, Brooke.
• 5:59
  SPEAKER_03: Oh, okay.
• 5:59
  SPEAKER_03: No, you're good.
• 6:00
  SPEAKER_07: This is IHDA.
• 6:02
  SPEAKER_07: I didn't know if anybody wanted to jump in.
• 6:04
  SPEAKER_03: Before you answer that.
• 6:05
  SPEAKER_03: Before you answer that, yeah.
• 6:06
  SPEAKER_03: So so let's let our listeners and followers know.
• 6:08
  SPEAKER_03: So Brooke is a recent new mother again.
• 6:11
  SPEAKER_03: Yeah.
• 6:12
  SPEAKER_03: And this is your fourth third, third, third, yeah, third boy.
• 6:16
  SPEAKER_03: Right.
• 6:16
  SPEAKER_03: So so you are on like still major mommy duty right now.
• 6:20
  SPEAKER_03: So there's no bad in there.
• 6:22
  SPEAKER_03: So we just want to listeners and followers to understand that she is actively glad she's doing this for on taking the time today to educate our listeners and followers, our buyers and sellers.
• 6:32
  SPEAKER_03: So, Brooke, what is IHDA?
• 6:35
  SPEAKER_03: What is that?
• 6:36
  SPEAKER_07: I've I always call it IDA.
• 6:38
  SPEAKER_07: It's easier for me to say than just IHDA.
• 6:41
  SPEAKER_07: But basically, what that is is a down payment assistance program.
• 6:44
  SPEAKER_07: It is aimed at both first-time buyers, but you can also be uh, you don't have to be a first-time buyer in order to utilize the program.
• 6:51
  SPEAKER_07: Basically, they give you a varying offering as far as how much down payment assistance they'll give you, whether it's a bond or a non-bond, whatever that may be, but they do give you options to get your foot in the door if you don't have that down payment set aside to purchase.
• 7:07
  SPEAKER_05: So if a buyer only has a few dollars or, you know, a few thousand to put down, can they still qualify for any of this?
• 7:19
  SPEAKER_07: No, that's a really great question.
• 7:20
  SPEAKER_07: So, yes, I have had buyers who just come in with their earnest money deposit in order or to buy a home and they do actually do that.
• 7:28
  SPEAKER_07: What I would say though is obviously it's always important to have a savings set aside just in case something happens after closing on buying a home, but you can't absolutely get your foot in the door.
• 7:38
  SPEAKER_07: They do offer it up to 10% down payment assistance.
• 7:41
  SPEAKER_07: So that does help you get not only your down payment cover, but your closing costs as well.
• 7:46
  SPEAKER_03: Is that assistance free money or does the buyer have to pay it back?
• 7:50
  SPEAKER_07: So the way so there's always a catch and there's nothing considered free.
• 7:55
  SPEAKER_07: But what I would say is they do charge you higher rates.
• 7:57
  SPEAKER_07: So you are gonna see a higher rate going down payment assistance than you would just coming out of pocket with your own down payment.
• 8:03
  SPEAKER_07: Um, and then they also have a little bit increased um closing costs as well.
• 8:08
  SPEAKER_07: So sometimes it's forgiven, sometimes it's repayable.
• 8:11
  SPEAKER_07: Um, and then sometimes it's also deferred.
• 8:13
  SPEAKER_07: So that just means it sits as a second lien on your property until you either refinance or sell or you pay off your current loan.
• 8:20
  SPEAKER_06: What about income limits and credit scores?
• 8:23
  SPEAKER_07: You're gonna have an income limit.
• 8:24
  SPEAKER_07: Um, it depends on the county that you purchase in.
• 8:26
  SPEAKER_07: Your credit score is also going to come into consideration, but it really is gonna be dependent on what program you go with.
• 8:32
  SPEAKER_07: So, like I always say, it's really important to talk with a lender to get exactly the accurate information for your situation.
• 8:38
  SPEAKER_07: Um, and then one thing that they don't that you also don't know necessarily always know is that there's going to be purchase caps too.
• 8:44
  SPEAKER_07: Let's say like the cap for the county is like 500,000, you may not be able to purchase higher than that a property.
• 8:51
  SPEAKER_07: So that's something to note as well.
• 8:53
  SPEAKER_03: Based on the buyer's limits and credit scores, right?
• 8:56
  SPEAKER_03: Income limits and credit scores.
• 8:57
  SPEAKER_07: No, that's just dependent on the program itself.
• 9:00
  SPEAKER_07: So the county is going to dictate how much that is.
• 9:02
  SPEAKER_07: So the higher, like, you know, uh a county that might have more individuals in it or more populated or might have a higher average income is gonna have the higher purchase price for a house.
• 9:12
  SPEAKER_07: Exactly.
• 9:13
  SPEAKER_03: Sure, sure.
• 9:14
  SPEAKER_03: Okay.
• 9:14
  SPEAKER_03: So so for our listeners and followers, explain what IDA, or not explain, but what is IDA?
• 9:19
  SPEAKER_03: IH D A.
• 9:20
  SPEAKER_03: What's the acronym?
• 9:21
  SPEAKER_07: Oh my gosh.
• 9:22
  SPEAKER_07: I always get I always thought.
• 9:30
  SPEAKER_07: Yes.
• 9:31
  SPEAKER_03: Okay, okay.
• 9:32
  SPEAKER_07: There's too many acronyms to keep straight.
• 9:34
  SPEAKER_03: Well, I know we we had that, you know.
• 9:37
  SPEAKER_03: Actually, Lisa and Lydia put Caitlin and I, my co-host, through an exam, a test to see if we knew real estate terms.
• 9:44
  SPEAKER_03: So that was quite fun.
• 9:45
  SPEAKER_03: Maybe we should brook through that.
• 9:46
  SPEAKER_04: Yeah, we she didn't get the buzz or whatever she had.
• 9:50
  SPEAKER_04: She even had clapping.
• 9:51
  SPEAKER_03: Exactly.
• 9:52
  SPEAKER_03: No, no, I appreciate that definition of IDA and how buyers can uh take advantage of that, and how it sounds like some of it could be forgiven.
• 10:01
  SPEAKER_03: How is it determined if it's forgiven or deferred or in in conjunction with the mortgage?
• 10:08
  SPEAKER_07: No, that's a good question.
• 10:08
  SPEAKER_07: So basically, you have four different options with IDA as far as what the assistance amount is.
• 10:13
  SPEAKER_07: So every program is gonna have a different amount of assistance and it's gonna have a different rate.
• 10:19
  SPEAKER_07: So you will work with your mortgage lender at the time of locking your loan after you get into contract, and you'll know specifically which option is which that you're picking.
• 10:28
  SPEAKER_07: So you'll get you'll be the one driving that that decision.
• 10:31
  SPEAKER_03: Gotcha.
• 10:32
  SPEAKER_03: And you had said that it creates the interest rate is higher, correct?
• 10:37
  SPEAKER_03: You were saying if you use IDA and that's on the whole note, the whole mortgage?
• 10:42
  SPEAKER_03: Yes.
• 10:43
  SPEAKER_07: Yes, correct.
• 10:44
  SPEAKER_07: And then so if you pay and also like the the deferred payments, so the ones that don't require a payment is gonna be like your middle ground as far as how much the rate is.
• 10:53
  SPEAKER_07: So like that's your middle ground.
• 10:55
  SPEAKER_07: If you choose a program that's forgiven, um, they're going to charge a little bit more.
• 10:59
  SPEAKER_07: And if you do a repayment one, so you pay it, it's the only one that has a payment monthly associated with your mortgage.
• 11:06
  SPEAKER_07: So you will be paying on that second lien.
• 11:08
  SPEAKER_07: That's gonna have the least rate associated, just because there's less risk associated with it.
• 11:13
  SPEAKER_07: So you have like options.
• 11:15
  SPEAKER_03: Perfect.
• 11:16
  SPEAKER_03: I appreciate you explaining that a little bit further for our listeners.
• 11:18
  SPEAKER_03: So now let's talk about uh homeowners who can't uh or who aren't necessarily looking to sell.
• 11:24
  SPEAKER_03: Brooke, explain what a HELOC is.
• 11:27
  SPEAKER_07: Yeah, a HELOC is a home equity line of credit.
• 11:30
  SPEAKER_07: You can kind of read about it.
• 11:32
  SPEAKER_07: Yeah, I know that one.
• 11:33
  SPEAKER_03: That one is really I pulled up as a backup too.
• 11:36
  SPEAKER_03: I don't know if you saw that, right?
• 11:38
  SPEAKER_04: No, that one, I don't know what this stands for.
• 11:40
  SPEAKER_03: Oh, I do want it stands for, but I'll make sure I was ready.
• 11:43
  SPEAKER_03: I wanted to make sure we were good.
• 11:45
  SPEAKER_07: No, it's the down payment assistance programs that always gets me because there's just so many of them.
• 11:49
  SPEAKER_07: But yeah, so the HELOC, what that does, you can kind of think of it as I like to say you kind of think of it as a credit card, but for your home equity.
• 11:57
  SPEAKER_07: So basically, let's say your house is worth$300,000 and you only have a mortgage of$200,000 on it.
• 12:05
  SPEAKER_07: Essentially, you have$100,000 of equity that you can go and take a HELOC out for.
• 12:10
  SPEAKER_07: Given, you know, would have to apply just kind of just like you do with a normal mortgage and get qualified and make sure not always are you able to borrow 100%.
• 12:20
  SPEAKER_07: Um, that's very rare, I would say, actually, with HELOCs, you can't, but you can access a great amount of that equity in order to pay off debt potentially, high interest debt, credit cards or loans or whatever it may be.
• 12:33
  SPEAKER_07: Um, you can also fix up your property, but just gain access to that to use it however really you please.
• 12:39
  SPEAKER_07: And to go a little bit more in depth on that, of what the HELOC actually is.
• 12:44
  SPEAKER_07: But the way that ours work, and I don't know if everybody does it the exact same way, but the way the product that we have is you it's a 30-year term.
• 12:52
  SPEAKER_07: Um, the first 10 years you can use it like a credit card, so you can pay it back or you can charge it.
• 12:57
  SPEAKER_07: After that 10-year period, it becomes a installment loan.
• 13:00
  SPEAKER_07: So you pay for the following 20 years and pay it off, essentially.
• 13:05
  SPEAKER_05: So did she say that you could use it for anything?
• 13:10
  SPEAKER_05: Yeah, yeah, you can.
• 13:11
  SPEAKER_05: Okay, it doesn't have to be just for the house.
• 13:13
  SPEAKER_07: Nope.
• 13:14
  SPEAKER_07: A lot of people I've had a lot of borrowers right now who unfortunately have racked up a lot of higher interest debt on their credit cards.
• 13:22
  SPEAKER_07: And so I've had a lot of people reach out to me because obviously the HELOC is going to be a longer term than a credit card is going to be, and it's gonna be lower interest.
• 13:30
  SPEAKER_07: So they go and take out a HELOC, pay off all their credit cards, um, hopefully not charge them back up.
• 13:36
  SPEAKER_05: But I was just gonna say, do you talk to them about that?
• 13:39
  SPEAKER_05: If they're gonna do credit card, yeah, don't, you know, don't get rid of those credit cards because this is only gonna get you in deeper in debt.
• 13:46
  SPEAKER_05: Yeah, that makes much sense.
• 13:47
  SPEAKER_07: Yeah.
• 13:47
  SPEAKER_07: Yeah.
• 13:48
  SPEAKER_07: And a lot of people will say, hey, I don't want to close my credit card because you know it's gonna hurt my credit.
• 13:52
  SPEAKER_07: Well, okay, then go put a a lock on the account.
• 13:55
  SPEAKER_07: So you if you really are tempted to use them, then it doesn't make it easy to swipe.
• 14:00
  SPEAKER_07: Take it off of your Apple Pay so you can't go and just swipe your card or tap your tap your phone.
• 14:06
  SPEAKER_07: But it really does, it really does help borrowers or buyers and people in general, um, if that's what they're looking to do, is just kind of consolidate.
• 14:17
  unknown: Okay.
• 14:18
  SPEAKER_03: I love it.
• 14:19
  SPEAKER_03: I love it.
• 14:19
  SPEAKER_03: What's the catch?
• 14:20
  SPEAKER_03: What are the risk homeowners need to understand about a HELOC?
• 14:24
  SPEAKER_03: Are there risk and a catch?
• 14:26
  SPEAKER_07: So typically for the first 10 years, it's interest-only payments.
• 14:30
  SPEAKER_07: So you're not paying down the balance necessarily unless you choose to.
• 14:34
  SPEAKER_07: Um, but it one thing it does make it.
• 14:37
  SPEAKER_07: I will say, so if you're doing interest-only payments and you're truly doing that, obviously your balance isn't going to go down.
• 14:43
  SPEAKER_07: Um, however, but it is great if you're trying to throw as much money as you can at how much you owe because you're really in control of there's no prepayment penalties or anything like that.
• 14:55
  SPEAKER_07: It's truly like a credit card.
• 14:56
  SPEAKER_07: So you can go and just pay it down as quickly as possible.
• 14:59
  SPEAKER_07: Your rate is gonna be higher than you would with just a traditional mortgage loan.
• 15:04
  SPEAKER_07: But if you're not trying to get rid of that two to three percent rate, it's gonna be way better than just refinancing, especially a cash out refinance right now.
• 15:12
  SPEAKER_07: The rates are not gonna be very friendly.
• 15:15
  SPEAKER_07: Well, so those are the catch.
• 15:16
  SPEAKER_07: Yeah, yeah.
• 15:17
  SPEAKER_03: Gotcha.
• 15:18
  SPEAKER_03: And and and talking about rates, and I appreciate you explaining the catch on that, but talking about rates, Lisa, I know there's something you've been wanting sellers to understand about helping buyers with their interest rates.
• 15:28
  SPEAKER_05: Absolutely.
• 15:29
  SPEAKER_05: When when a home isn't selling, the first thing people want to do is to reduce the price.
• 15:35
  SPEAKER_05: But I want sellers to, I want to give them different options.
• 15:39
  SPEAKER_05: What other options can I throw out there to them so that we're not just crash, because we keep crashing that price, and that's doing something to the market that really isn't happening, you know.
• 15:52
  SPEAKER_05: So we need to do other things to get buyers interested, incentives, I guess I'm trying to say.
• 15:59
  SPEAKER_07: Yeah, yeah, absolutely.
• 16:01
  SPEAKER_07: So, right now, one of the biggest problems we have is we have a ton of inventory, but we don't have a ton of buyers.
• 16:07
  SPEAKER_07: So for sellers, it's really difficult because it's like, how do you get people interested in my home when there's five other ones down the stuff like along my street, which is an exaggeration, but you know what I mean.
• 16:19
  SPEAKER_07: So one thing that is really popular because of rates being so high is getting seller concessions or seller credit in order to buy down your rate.
• 16:29
  SPEAKER_07: So with so let's use, I always like to use this this$10,000 example.
• 16:34
  SPEAKER_07: So basically, if you have a house that's listed at$300,000, if you lower that by$10,000 to make the house more attractive, obviously the purchase price is gonna do something for some buyers, but it's not really fixing the problem, which a lot of the problem is, is that the affordability of buying a home because of the rates and dump in the monthly payment.
• 16:54
  SPEAKER_07: So I would say take that$10,000 and offer it to the client and say, hey, buyer, I have an option for you.
• 17:00
  SPEAKER_07: I have a house listed at$300,000.
• 17:02
  SPEAKER_07: Here's$10,000 to use however you want.
• 17:05
  SPEAKER_07: Because a lot of times, too, maybe it we go back to the affordability thing, and a lot of people don't have money for down payment or closing costs, and that could help that situation.
• 17:15
  SPEAKER_07: But more importantly, buying down your rate is going to greatly impact your monthly payment, more so than lowering by$10,000.
• 17:23
  SPEAKER_07: So when you drop the rate, let's just say you drop a rate by the by a point, it could be, you know, a hundred plus dollars difference.
• 17:31
  SPEAKER_07: Whereas if you drop$10,000 off on like the purchase price, it could be like a couple cups of coffee a month.
• 17:38
  SPEAKER_07: So you're really gonna see a lot, you're gonna see a lot more impact when you go and use that to buy down the rate versus lowering the purchase price.
• 17:48
  SPEAKER_07: Now I have a question off the script here.
• 17:51
  SPEAKER_05: When you're doing that, do you guys have how much does it cost to buy a half percent down or a whole percent down?
• 17:59
  SPEAKER_05: Yeah.
• 18:00
  SPEAKER_05: How do you calculate that?
• 18:02
  SPEAKER_07: Uh it's not necessarily something that I calculate per se.
• 18:06
  SPEAKER_07: It's something that's determined by how much you're financing.
• 18:08
  SPEAKER_07: So the loan amount is going to come into play there.
• 18:11
  SPEAKER_07: And then it's also going to be determined by how much you're buying down.
• 18:14
  SPEAKER_07: So it's hard to say like how much exactly it could be.
• 18:17
  SPEAKER_07: Um, it could be a couple hundred, it could be a couple thousand.
• 18:19
  SPEAKER_07: So there is limitations on certain loans how much you can buy down to pass points and fees.
• 18:25
  SPEAKER_07: Um, so again, you'll want to talk to your lender and see what makes sense for you.
• 18:29
  SPEAKER_07: But there is a lot of opportunity within a lot of people's budgets.
• 18:32
  SPEAKER_06: So, does that mean the buyer gets a lower payment for the entire 30 years?
• 18:36
  SPEAKER_07: If you choose a permanent rate buy down, yes.
• 18:40
  SPEAKER_07: But there are temporary buy downs as well.
• 18:42
  SPEAKER_07: A lot of them that are popular.
• 18:44
  SPEAKER_07: There's two options really is the two to one buy down and the one zero buy down.
• 18:49
  SPEAKER_07: So basically what that means is for the first year, for a two to one buy down, let's say the rate is seven percent that you lock in at.
• 18:57
  SPEAKER_07: Well, for the first rate or for the first year, your rate would be two points lower.
• 19:01
  SPEAKER_07: So it'd be five percent.
• 19:03
  SPEAKER_07: And then that would go for a year.
• 19:04
  SPEAKER_07: And then the following year, you'll have one percent.
• 19:07
  SPEAKER_07: So it'd be six percent for that year.
• 19:10
  SPEAKER_07: And then finally the last year, you'll grow and realize your full payment, and then you'll have that 7% for their life of the loan.
• 19:16
  SPEAKER_07: Same thing goes for the one zero, it's just a temporary one percent for one year lower.
• 19:22
  SPEAKER_07: But that would be the idea of temporary buy downs, and it was really popular when everybody was saying, you know, date the rate, marry the house.
• 19:30
  SPEAKER_07: You would go essentially and have that short-term solution in hopes to have a market that's a little bit more friendly to refinance in later.
• 19:39
  SPEAKER_03: Brooke, can you give me a quick example on what a monthly payment difference would be on a one-point difference on a like a$250,000 mortgage?
• 19:48
  SPEAKER_07: I would need to, if you give me a minute, I can calculate it.
• 19:52
  SPEAKER_07: But I was like, I can't, I can't pull it out out of out of thin air really quickly, but I'm happy to you know look that up while you guys discuss something different if that's helpful.
• 20:01
  SPEAKER_03: Gotcha.
• 20:02
  SPEAKER_05: Well, we we talked about this before um uh with a$250,000 uh mortgage, the mortgage at 7% was something like$1,600.
• 20:16
  SPEAKER_05: It was somewhere in there.
• 20:17
  SPEAKER_05: So we're just gonna use, you know, that as a sixteen hundred dollar mark.
• 20:23
  SPEAKER_05: Then if somebody was to buy down a percent, because we even looked at that, it it took like I think it was seven hundred dollars off per month.
• 20:36
  SPEAKER_05: I didn't bring those and she's she's figuring out.
• 20:38
  SPEAKER_05: No, you're good.
• 20:39
  SPEAKER_05: I'm I have to look it up.
• 20:41
  SPEAKER_07: It's my I I can't not do it.
• 20:44
  SPEAKER_07: Yeah.
• 20:45
  SPEAKER_07: Okay.
• 20:46
  SPEAKER_07: So for a$250,000 house, assuming what do we say?
• 20:50
  SPEAKER_07: 7%.
• 20:51
  SPEAKER_07: Yeah.
• 20:51
  SPEAKER_07: We'll we'll do minimum down to okay.
• 20:54
  SPEAKER_07: So 7%.
• 20:56
  SPEAKER_07: Given this is giving like a relative homeowners insurance is taxes, it's about$2,000 a month.
• 21:02
  SPEAKER_07: Given that can change depending on taxes and homeowners insurance.
• 21:06
  SPEAKER_07: But that same using those same numbers and doing a six percent, you're looking at about yeah, about a hundred dollars difference, hundred, hundred and fifty dollars difference is what you're gonna for one point.
• 21:19
  SPEAKER_07: But that is, I mean, relatively that's a low loan amount as well.
• 21:23
  SPEAKER_07: So when you get into a higher loan amount or a higher purchase price, you're gonna see a greater impact, and vice versa.
• 21:29
  SPEAKER_05: Right.
• 21:29
  SPEAKER_05: But if you look at that as a whole, that's twelve twelve hundred a year, and then times thirty years, that's that's huge, which we hope we don't have to stick at seven percent or eight percent for very long that we can continue to bring that down.
• 21:44
  SPEAKER_05: So are there limits what they can contribute?
• 21:49
  SPEAKER_05: What a buyer can contribute.
• 21:50
  SPEAKER_05: Yeah, yeah, yeah.
• 21:51
  SPEAKER_07: Oh, so uh as far as rate buy downs, like for a buyer to contribute a seller, sorry.
• 21:57
  SPEAKER_07: Oh, a seller, okay, yes.
• 21:58
  SPEAKER_07: I was like, there is technically limitations for buyers too but it's hard to dictate how much that is it's really coming down to calculations there but for sellers it's gonna depend on the loan program with FHA you have a six percent limitation for sellers um conventional it's a it's a sliding scale depending on how much down payment is but with minimum down it's gonna be three percent a seller concession gotcha and that's that's determined by this uh the purchase price and not the loan amount so that's one thing to know well and could an offering a rate buy down actually help a home sell faster yeah so if you if you're a buyer and you're looking at a house and they're relatively similar size, square footage, age whatever it may be, but one of them is saying hey hey buyer I'm gonna buy down your rate by 1% obviously that's gonna be really attractive to a buyer and catch eyes.
• 22:48
  SPEAKER_07: So I would say yes.
• 22:50
  SPEAKER_03: And that and that would probably be on the agent's shoulders to explain the math to potential buyers.
• 22:56
  SPEAKER_03: Because not everyone knows what buying a point down mean right over a 30 year note.
• 23:02
  SPEAKER_07: Yeah yeah absolutely I would say it's on the seller or the the agents to properly disclose that to buyers because obviously they'll be the ones to let them know that that offer is available.
• 23:12
  SPEAKER_07: But I always say it's worthwhile to talk to a lender too to see how it would benefit you, whether the rate is the best way to use the money and buying down the rate or just using it towards closing costs or a mixture of both.
• 23:24
  SPEAKER_07: Who knows?
• 23:25
  SPEAKER_03: Right.
• 23:25
  SPEAKER_03: Right.
• 23:26
  SPEAKER_03: Yeah well Brooke let's finish with what you're what you're personally seeing in the market today.
• 23:31
  SPEAKER_03: I know I heard you say that it's a buyer's market right now, but what are you personally seeing in the market?
• 23:36
  SPEAKER_07: No, that's a good question.
• 23:38
  SPEAKER_07: So obviously there's a lot of uncertainty in the market but I would say that everyone that I am working with is getting deals right now.
• 23:45
  SPEAKER_07: So if you are comfortable with the numbers of buying a house relative to closing costs or monthly payment what whatever's important to you, there's opportunity out there.
• 23:55
  SPEAKER_07: There's always going to be opportunity.
• 23:57
  SPEAKER_07: It's just whether or not you want to you know jump into it and take the risk.
• 24:01
  SPEAKER_07: But like I said every deal I have there's some sort of seller concessions associated with it or maybe someone's a seller is buying them a home warranty or you know paying their appraisal whatever it may be.
• 24:16
  SPEAKER_05: And we weren't seeing that four or five years ago.
• 24:18
  SPEAKER_05: We weren't seeing any of this it was it was here's the price pay it or you lose out because there's five others behind you.
• 24:27
  SPEAKER_07: Absolutely and you don't have to put as much money down for the seller to feel confident anymore.
• 24:31
  SPEAKER_07: And you don't have to come in with as much earnest money.
• 24:35
  SPEAKER_07: I mean there's just a lot of flexibility.
• 24:37
  SPEAKER_05: So do you see buyers qualifying for a less of a house than they were four or five years ago just because of this all going on?
• 24:46
  SPEAKER_07: Yeah I would say that there's a mix of different factors there.
• 24:49
  SPEAKER_07: One debt to income ratio among buyers in general is just higher right now.
• 24:53
  SPEAKER_07: So that is limiting people on what they can qualify for.
• 24:56
  SPEAKER_07: And unfortunately the rates being higher is also being um an additional risk um that is keeping people from qualifying for as much.
• 25:05
  SPEAKER_07: So yes I do see that.
• 25:07
  SPEAKER_07: Okay.
• 25:08
  SPEAKER_07: What's the biggest financial mistake you're seeing buyers make before applying for a mortgage I would say a lot of people just assume they're going to get approved and they start looking and then they and then they fall in love with something that may be out of their budget.
• 25:21
  SPEAKER_07: And the tough conversation for me to have is a lot of times people will have a$2,000 rent, let's just say for an even number they pay$2,000 in rent every month, but they can't qualify for the same amount for a house because rentals don't necessarily look into your debt to income ratios.
• 25:38
  SPEAKER_07: They don't dig through your assets, that sort of thing.
• 25:41
  SPEAKER_07: They a lot of times just purely look at how much income you make and they don't look at how much is going out.
• 25:46
  SPEAKER_07: And so it's tough for me to have to have the conversation of I know you make money I know you have assets but unfortunately at this point like you just don't qualify for that much.
• 25:58
  SPEAKER_07: And so I would say that that's tough.
• 26:00
  SPEAKER_05: Tough to do but unfortunately a common conversation I have to have and when we're working together and the buyer sends me what they want to see and then I send those to you we're already ahead of the game because we've got those numbers ready for them when they call you and say hey I found this house and you're like okay here's the numbers you know this is what it's going to actually cost you to do it.
• 26:24
  SPEAKER_05: So that's what's so cool about our relationship and how we work together.
• 26:29
  SPEAKER_05: Not only do we just talk about lending but we also hey how you doing what's going on and you know just just you're always reaching out so you're always approachable you always answer your phone.
• 26:42
  SPEAKER_05: That's what I tell everybody.
• 26:44
  SPEAKER_05: If you want to talk to somebody who's gonna talk to you like I'm talking to you right now, I'm giving you the real estate side I'm gonna let you talk to Brooke who's gonna give you the lending side because she knows her stuff listen to her and she can get you through to a closing.
• 27:00
  SPEAKER_05: And so they love it when they can talk to you and they always come back and say we really like her.
• 27:05
  SPEAKER_05: And and we do a lot of deals together.
• 27:07
  SPEAKER_05: So that that helps too.
• 27:09
  SPEAKER_07: Well thank you yeah no I take pride in being approachable but also I always tell my clients give me a call if you have a question.
• 27:16
  SPEAKER_07: That's what I'm here for.
• 27:17
  SPEAKER_07: I'm here to support you in the decisions that you make.
• 27:20
  SPEAKER_07: I'm here to give you the proper tools in order to make educated decisions because realistically it can be really hard to go through the process when you're not having an open line of communication because you don't know what you're doing.
• 27:32
  SPEAKER_07: And there's a lot that goes on in a transaction between the real estate agent, the lender, the title company, whoever it may be but if you just sit there and say I'm overwhelmed, I need help, give me a call and I will answer the phone.
• 27:45
  SPEAKER_05: Right.
• 27:45
  SPEAKER_05: And what's so cool about you and Lydia is that you're you're young, you're both moms of littles, you know, and so when people call they may hear screaming in the background this is real life.
• 27:57
  SPEAKER_05: You're not in an ivory tower and just waiting for those calls to come in.
• 28:02
  SPEAKER_05: You are right there doing life at the park like Lydia taking her kids to the park somebody calls and wants to see a house she's beating feet to try to find a center to watch the kids so she can show and and where you say hey if you'll give me a couple minutes I'm gonna run home and I'm gonna run these numbers and get right back to you and you do she does too I do too we get back to our clients as fast as we can.
• 28:27
  SPEAKER_05: So people love real you know it's not somebody that that's the ice queens you know they it's hard to talk to all of that kind of stuff.
• 28:37
  SPEAKER_05: It is real people doing life and doing business and helping others and that's what's so cool about the relationship that we have and and Brooke speaking of real keeping it real.
• 28:49
  SPEAKER_07: Speaking of real where do you see the lending market heading over the next six months six months it's probably gonna continue being rather volatile shut your face I you you asked for honest I I I did hey I'm the host I'm the host so I'm asking so let's hear the volatile volatile let's hear the straight stuff so they're ready to go yeah and and help our buyers and sellers I would say right now um what's important if you're looking to purchase in the next six months or even a year it's about strategy.
• 29:23
  SPEAKER_07: So making sure that you're set up properly your loan you're picking out the perfect loan for you in your situation because every loan is going to be different.
• 29:31
  SPEAKER_07: You can have you know down payment assistance obviously with higher rates you can come in with your own down payment but putting together a strategy that sets you up for success is what's really important.
• 29:41
  SPEAKER_07: I would even say it's more important than what the rate um or the market is doing because they're always gonna change the market's always gonna change it's gonna flip on a dollar or a what's the saying I can't even think of it now.
• 29:52
  SPEAKER_07: But like it's gonna just change with a flip of a coin.
• 29:56
  SPEAKER_07: So just setting yourself up for success is just going to be incredibly important.
• 30:01
  SPEAKER_03: Perfect perfect I love that and I appreciate that.
• 30:03
  SPEAKER_03: And we're gonna we're gonna run you through the big dog rapid fire questions.
• 30:08
  SPEAKER_03: I've got six questions it's just quick answers is all we need okay no wrong or right answer it's it's your opinion on these right so do you really need 20% down to buy a home absolutely not most don't check in your credit automatically hurt your score nope I only do soft polls up front so that is kind of like checking like your credit karma but more accurate.
• 30:29
  SPEAKER_07: So no gotcha can you buy a house if you have a student loan debt absolutely okay can you buy a home if you're self-employed oh yes yes definitely there's a lot of options available for self-employed individuals okay I'm waiting to hear the answer to this one so what's worse before closing buying a car or opening a new credit card I've seen both which one's worse buying a car because the car payments nowadays are insane and they will wreck your debt to income ratio whereas credit cards are a lot more feasible to pay off if necessary.
• 31:00
  SPEAKER_03: Gotcha last question what's one thing every buyer should do before house shopping get pre-approved get pre-approved gotcha yes sir you got a round of applause from Lydia on that right that's what they preach in here right all the time I appreciate that absolutely well hey I want to pay a few bills here I want to talk about First Trust Reality Pros and for bringing us this a realtor segment week after week and educating our buyers educating our sellers and quite frankly educating the community here in the Midwest and by bringing on experts like you Brooke along with their expertise it really is why we at at designing building podcasts want to partner with them and you can reach them at 217 825 3999.
• 31:47
  SPEAKER_03: Or you can find them on that beautiful interweb at firstchoicerealtypros.com that's the number one stchoicerealtypros dot com and they are there to help you all the way on that okay so here's one last little big dog bite for us so understanding your financing options before you start house hunting can make all the difference.
• 32:06
  SPEAKER_03: Ask questions know your numbers and surround yourself with professionals who can help you make informed decisions like Brooke, Lisa and Lydia everyone that's that's here helping out right all right so Brooke, I want to thank you for joining us today and really helping out on this I think we've all learned a lot more about financing a home than just looking at the interest rate.
• 32:29
  SPEAKER_03: So and Brooke Brooke is bringing coming to us from Northwest Mortgage company and we appreciate everything she does out there as a mortgage broker correct?
• 32:39
  SPEAKER_07: Yes sir.
• 32:40
  SPEAKER_03: Okay awesome awesome all right I love it and also Lisa and Lydia with First Choice Reality Pros being with us today.
• 32:46
  SPEAKER_03: So remember whether you're buying your first home selling your current home or just wondering what your options are it never hurts to have a conversation with the right professionals.
• 32:55
  SPEAKER_03: Thanks for tuning in to another episode of Designing the Building the Midwest one community at a time the realtor segment.
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• 33:58
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• 34:54
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