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Mastering the Mortgage Maze: Your Guide to a Smart Home Purchase in Santa Clarita · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: Hey everybody, our daily show for February 25th, 2024.
• 0:03
  SPEAKER_00: I'm Connor McIver or Connor with Honor.
• 0:06
  SPEAKER_00: Today we're going to talk about some of the things with regard to mortgages.
• 0:10
  SPEAKER_00: I'm going to cover the seven big mortgage loan mistakes and kind of piggybacking on a CBS news article.
• 0:17
  SPEAKER_00: Also with Santa Crita Valley, I'm going to cover that local inventory right now.
• 0:21
  SPEAKER_00: 293 active listings currently for sale in all of our Santa Crita Valley.
• 0:26
  SPEAKER_00: That's going to include the cities of Castac, Canyon Country, Newhall, Saugus, Stevenson Ranch, and Valencia, California.
• 0:34
  SPEAKER_00: And of course, Santa Clarita is the next suburb or city or area north of the city of Los Angeles.
• 0:40
  SPEAKER_00: So our proximity is very, very good for those of you that are looking to commute.
• 0:44
  SPEAKER_00: Also, we have of those 293 active homes for sale, they include condominiums, townhomes, single-family residences, and 13 of those are coming soon.
• 0:55
  SPEAKER_00: Now the big news for today, and the way you can tell how the real estate market starts to get a little bit tight, is when open houses are aplenty.
• 1:04
  SPEAKER_00: And today, ladies and gentlemen, 69 open houses are being held on Sunday, February 25th, 2024.
• 1:14
  SPEAKER_00: That's today.
• 1:15
  SPEAKER_00: So here's the deal.
• 1:16
  SPEAKER_00: When you're out driving around in Santa Clarita today, you're bound to come on a bunch of open house signs.
• 1:22
  SPEAKER_00: The thing is, is this you want to make sure that when you go in, if you don't have somebody representing you and you don't want to get involved with those agents that are hosting the open house, which in a lot of cases are not the actual seller's agent, they're in contract, the agents that are representing the sellers have a contract, you do not have a contract with that particular agent.
• 1:44
  SPEAKER_00: If you want to go in and have your self-protected as far as identity, don't give up any personal information.
• 1:51
  SPEAKER_00: If they're asking you to give up your name and address and phone number and email because the seller wants to see who came in, again, you can question that or you can give it up.
• 2:00
  SPEAKER_00: But just understand this the seller isn't probably going to get any of your information.
• 2:04
  SPEAKER_00: It's going to be the agent that's going to.
• 2:07
  SPEAKER_00: If you are looking to have somebody representing you in this regard, give me a yell and I'll be able to get something set up and potentially meet you at an open house.
• 2:15
  SPEAKER_00: My phone number's online.
• 2:16
  SPEAKER_00: Just look up Connor with honor and I'll be happy to take care of that.
• 2:20
  SPEAKER_00: Also, if you want to have private showings throughout the week, that's also very important.
• 2:24
  SPEAKER_00: I just have to vet the property and make sure that they don't have any offers, find out if there's some kind of a hardship that we can use to our advantage, and so on.
• 2:33
  SPEAKER_00: So there's that.
• 2:34
  SPEAKER_00: So let's talk a little bit about a couple different headlines before we get into the seven biggest mortgage loan mistakes most people make.
• 2:41
  SPEAKER_00: And I do agree with the article that was written.
• 2:43
  SPEAKER_00: But another headline that also came up was home sales rebounded in January after last year's sharp decline.
• 2:50
  SPEAKER_00: Ladies and gentlemen, every year there's a sharp decline.
• 2:54
  SPEAKER_00: Usually house sales are aplenty throughout the spring and the summer.
• 3:00
  SPEAKER_00: School gets back into session, and usually they have a sharp decline.
• 3:05
  SPEAKER_00: Last year was no different.
• 3:07
  SPEAKER_00: But we're watching as our real estate inventory is starting to increase.
• 3:12
  SPEAKER_00: However, we still have plenty of buyer drive out there to keep that inventory low.
• 3:17
  SPEAKER_00: So that's why we're still hovering less than 300 units, as we have been for quite a while in Santa Crita Valley Cities.
• 3:24
  SPEAKER_00: All right, here's the seven big loan mistakes the CBS News was reporting, and I'll explain each one as I'm mentioning it.
• 3:30
  SPEAKER_00: First one is not shopping around for a loan.
• 3:32
  SPEAKER_00: They say that's mistake number one.
• 3:34
  SPEAKER_00: And in essence, that is good advice because you really don't know what if what you're paying is what can be considered normal.
• 3:42
  SPEAKER_00: You can look online, you can search, and you'll more than likely run into a lot of information out there regarding who has the best loan program.
• 3:51
  SPEAKER_00: But as I've seen with some of my clients, some people actually tease people into trying to influence a decision.
• 4:00
  SPEAKER_00: So online, a lender might put that they have these super special, incredibly low, fantastic opportunities to offer.
• 4:08
  SPEAKER_00: But in essence, when you contact them, they're really no different than anyone else.
• 4:12
  SPEAKER_00: So shop around for the mortgage.
• 4:14
  SPEAKER_00: There are basically three lender types.
• 4:17
  SPEAKER_00: You have your big banks, you have your credit unions, and then you have a mortgage broker.
• 4:21
  SPEAKER_00: And the mortgage broker can pull on funds from all different sources.
• 4:25
  SPEAKER_00: So see who is the best fit for you.
• 4:28
  SPEAKER_00: All right, the second one is ignoring your credit score.
• 4:30
  SPEAKER_00: And I know there's a lot of systems out there that give you information on where your FICO score happens to be.
• 4:36
  SPEAKER_00: The FICO score is one part of it, but then they also look at your debt-to-income ratio.
• 4:41
  SPEAKER_00: But with regard to FICO score, you do want to kind of keep abreast of what's happening.
• 4:45
  SPEAKER_00: And if in fact you are getting ready to make a big financial obligation or purchase, like a mortgage or a vehicle, it's kind of good to find out where you actually are.
• 4:55
  SPEAKER_00: So you go in knowing the information, so nobody's able to pull one over on you and say, well, you have horrible credit when in fact you have great credit.
• 5:03
  SPEAKER_00: Because depending on where you're buying or what you're trying to finance, the lower your credit usually means you pay a higher interest rate.
• 5:11
  SPEAKER_00: So it means more money for the people that are loaning you the funds.
• 5:15
  SPEAKER_00: So be wary and have an understanding and understand where your credit score is.
• 5:21
  SPEAKER_00: The third one is overlooking your budget.
• 5:23
  SPEAKER_00: This is a big thing that I harp on with my real estate buyers.
• 5:27
  SPEAKER_00: They get out there and they want to purchase real estate.
• 5:30
  SPEAKER_00: When that happens, they haven't looked at their entire financial obligational motive or financial obligational obligations, financial obligations.
• 5:42
  SPEAKER_00: They're not looking at those.
• 5:44
  SPEAKER_00: So what happens is they go and they maybe buy the house, and a couple months later they're going crazy because they have no money left over to eat out or whatever it may be.
• 5:55
  SPEAKER_00: But the issue is you want to look at all of your budget, not just what you're going to be paying for your mortgage.
• 6:01
  SPEAKER_00: What are those other things you as a home buyer, a new homeowner are going to want to do?
• 6:06
  SPEAKER_00: And then you need to adjust that price that you've been pre-approved for.
• 6:11
  SPEAKER_00: Maybe it's way outside of what you what will make you feel comfortable.
• 6:16
  SPEAKER_00: So then you pull back a little bit and you say, okay, instead of maybe buying a house at$800,000, maybe$700,000 makes more sense.
• 6:23
  SPEAKER_00: And then you find that local agent, that local expert, you team up with them and have them work hard for you.
• 6:29
  SPEAKER_00: The other thing that people overlook is skipping the pre-approval process.
• 6:33
  SPEAKER_00: This is one of the seven.
• 6:36
  SPEAKER_00: Usually you get pre-approved, but you do that when you talk to a lender.
• 6:42
  SPEAKER_00: So I guess what they're talking about, reading a little bit more in the article, they're waiting to do this until it's a little too late.
• 6:49
  SPEAKER_00: They actually start looking at houses before they're pre-approved.
• 6:52
  SPEAKER_00: So it's like putting the cart before the horse.
• 6:55
  SPEAKER_00: My suggestion is make sure that you get the financial end of it secured, and then we can go out and find whatever you want.
• 7:02
  SPEAKER_00: And in some cases, in order to even look at real estate listings, the real estate sellers want the buyers to be pre-approved already and have a valid pre-approval letter by a reputable lender.
• 7:14
  SPEAKER_00: So they know that when they're you're going into their house, that if you did want to purchase it, you have the ability to do so.
• 7:21
  SPEAKER_00: Now, is that stuff able to be enforced?
• 7:23
  SPEAKER_00: Probably not, but it is something that we see quite often when we're showing real estate listings to our home buyers.
• 7:29
  SPEAKER_00: There are sellers out there that are very much wanting to make sure that the people that are coming through the residence actually can afford to buy it if they chose to.
• 7:39
  SPEAKER_00: Ignoring loan terms and conditions, this isn't a small print.
• 7:43
  SPEAKER_00: So a real estate lender is going to tell you, okay, this is your interest rate.
• 7:47
  SPEAKER_00: Usually the loans are 30-year fixed, but again, you want to see how that works.
• 7:52
  SPEAKER_00: Maybe if you purchase a residence now, and I know interest rates are all the buzz.
• 7:58
  SPEAKER_00: So interest rates being higher than what they have been, at least historically within the last few years, people see that as a panic point.
• 8:07
  SPEAKER_00: When you're looking at those though, so people are talking about instead of marrying your mortgage, marry your house.
• 8:13
  SPEAKER_00: So buy a house, don't concern yourself about interest rates.
• 8:16
  SPEAKER_00: However, if they do drop, then you can just do a simple refinance.
• 8:20
  SPEAKER_00: But what if the loan type you're given for the house that you're going to buy happens to be one that you can't pay it off or you can't refinance within a few years?
• 8:32
  SPEAKER_00: Maybe you cannot turn around and refinance when rates drop.
• 8:35
  SPEAKER_00: Maybe the loan program, the conditions of it or the terms of it prohibit you from being able to do that.
• 8:43
  SPEAKER_00: So you want to ask those questions.
• 8:45
  SPEAKER_00: And if they tell you that it doesn't, I would follow back up with the lender and say, hey, Jack, just talk to you.
• 8:52
  SPEAKER_00: I appreciate the information.
• 8:54
  SPEAKER_00: I just want to make sure I understood you correctly.
• 8:57
  SPEAKER_00: And that in fact, when I do not, uh when I do not like the interest rate I have and interest rates drop, I choose to refinance.
• 9:05
  SPEAKER_00: Am I going to be able to refinance my residence?
• 9:08
  SPEAKER_00: Or am I stuck where I have a certain amount of time that limits me from refinancing?
• 9:12
  SPEAKER_00: So you want to find out what those terms and conditions are.
• 9:15
  SPEAKER_00: And that's just one example of many possibilities.
• 9:18
  SPEAKER_00: The other one, opting for the wrong loan type.
• 9:23
  SPEAKER_00: Dad loved a 30-year fixed mortgage.
• 9:25
  SPEAKER_00: I like a 30-year fixed mortgage.
• 9:27
  SPEAKER_00: But there are cases where you might use an adjustable rate mortgage because maybe real estate's increasing in value, and you know that before that rate adjusts and changes to potentially a higher interest rate, you're going to have an ultra-low rate for a period of time.
• 9:45
  SPEAKER_00: And in that period of time, you're going to make your move, whatever it may be.
• 9:48
  SPEAKER_00: So if you're looking to increase your real estate wealth or your portfolio, that would be holding on to the residence for whatever that minimum time frame is before the rate adjusts and potentially adjusts higher and get the house put in whatever shape you need to, sell it, earn some money, and then do another one.
• 10:06
  SPEAKER_00: So that could be a reason to have an adjustable rate mortgage.
• 10:10
  SPEAKER_00: But just understand the loan type you're getting and then understand the consequences of the loan.
• 10:17
  SPEAKER_00: If it's a 30-year fixed, you're going to be paying mostly interest at the beginning, not interest only, but mostly interest, and then more principal later on.
• 10:26
  SPEAKER_00: That's how that loan happens to work in most cases when it's a 30-year fixed.
• 10:30
  SPEAKER_00: But the adjustable rates sometimes adjust more often than others.
• 10:34
  SPEAKER_00: Some have certain periods of time.
• 10:37
  SPEAKER_00: Some can't be paid off early.
• 10:39
  SPEAKER_00: Some have these other conditions and requirements that need to be fulfilled by the person that has the mortgage before they can really make a move.
• 10:47
  SPEAKER_00: Knowing that loan type and explaining, having that explained to you by a reputable lender is very important.
• 10:54
  SPEAKER_00: I know enough about loans to keep my clients safe, but I don't know the super deep inner workings like a loan professional would.
• 11:02
  SPEAKER_00: So I always recommend my people talk to the expert.
• 11:06
  SPEAKER_00: I can give information about escrow, for example.
• 11:08
  SPEAKER_00: I know quite a bit, but not as much as a full-time escrow officer.
• 11:13
  SPEAKER_00: I know things about title insurance, but not as much as a title officer, and so on.
• 11:19
  SPEAKER_00: So I refer people to speak with those sources that are educated and versed in those areas.
• 11:25
  SPEAKER_00: That's how any good agent would.
• 11:27
  SPEAKER_00: We'll give you enough to make you dangerous, but then the other thing has to be followed up with that entity and that professional so they can explain to you the process and how it all works.
• 11:37
  SPEAKER_00: Finally, this is the seventh one that CBS News reported on with regard to the seven biggest mortgage loan mistakes.
• 11:47
  SPEAKER_00: That is not factoring in your closing costs.
• 11:50
  SPEAKER_00: Closing costs are incredibly important to consider because these are things you're going to be paying to purchase real estate.
• 11:57
  SPEAKER_00: For a real estate buyer, closing costs could be the agent's commission that you hire in order to help you secure a property.
• 12:05
  SPEAKER_00: That's a potential closing cost fee.
• 12:08
  SPEAKER_00: But the three standards, depending on, because the sellers sometimes pay the agents, that's been historically accurate, but that's starting to change a little bit.
• 12:17
  SPEAKER_00: But also the other closing costs, typically very standard, are you're part of your escrow fees, which is about 1% or 1 point of the purchase price.
• 12:26
  SPEAKER_00: Your part of the title insurance fees, which is about 1% or one point of the purchase price, and then your lender's fee, which again is probably around 1% or one point of the purchase price.
• 12:40
  SPEAKER_00: Those are the three typical closing costs.
• 12:43
  SPEAKER_00: So you have 3% in a$500,000 purchase, that could equate up to$15,000.
• 12:49
  SPEAKER_00: A lot of cases we see that number quite less than that.
• 12:53
  SPEAKER_00: However, you want to know that number going in, and you can easily have that conversation with your lender or your real estate agent.
• 12:59
  SPEAKER_00: They'll be able to inform you the estimation of what closing costs would be.
• 13:04
  SPEAKER_00: But that's something that people make a mistake of as well when they approach real estate.
• 13:08
  SPEAKER_00: Do you have those funds besides the down payment in the closing costs?
• 13:13
  SPEAKER_00: We can get that from the seller in some cases, but it's going to depend on the market and how many other people are asking at that particular time.
• 13:20
  SPEAKER_00: It's difficult to say whether or not you will be successful, but we are pretty good at getting closing costs covered or at least some of them contributed to by the seller.
• 13:30
  SPEAKER_00: And there's a number of ways to do it.
• 13:31
  SPEAKER_00: We can increase the offering amount on the property if it's priced well, if the price happens to be a little inflated.
• 13:37
  SPEAKER_00: We can maybe give them what they want, but then ask for them to give us closing costs off of that amount or some other way in there.
• 13:44
  SPEAKER_00: I'm Connor with Honor.
• 13:45
  SPEAKER_00: I appreciate you watching this quick, so much for quick, quick Sunday real estate update.
• 13:52
  SPEAKER_00: A lot of open houses out there.
• 13:53
  SPEAKER_00: When you're ready to see something, let me know.
• 13:55
  SPEAKER_00: And be well, everybody.
• 13:57
  SPEAKER_00: Let me know if you have any questions, and I'll see you uh tomorrow during our market Mondays real estate update.
• 14:03
  SPEAKER_00: Be well, everybody.
• 14:03
  SPEAKER_00: We'll talk to you soon.