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The Mortgage Myths Costing Home Buyers Thousands · The Jon Sanchez Show

• Jon G. Sanchez: Dwight Millard on Q Home Loans. How are you, my friend? ⁓ Dwight Millard: I it I'm doing fantastic, John. I I'm so happy you're the stape stable staple one all the time. But it is your show. yeah, Corey and I do find the ways to get out, don't we? It's just it's it's it's just crazy, you know. Like as you know, there's just so many obligations pulling you everywhere. You get the same thing, but yeah. So it's that's a pleasure to be with you. yeah. ⁓ Jon G. Sanchez: Yeah. I know, I know, I know. It it is. It's so busy for everybody. Uh-huh. Uh-huh. Yep. But likewise, my friend. Likewise, my friend. Great to be with you as always. it's it's interesting times that we have right now. Dwight, what kind of day was it today on the Dow Jones Industrial Average? Let's start with that. Let's just get that news going. Dwight Millard: You know, I'm gonna guess, John, it's another record setting day. I don't know if it's a trifecta. I've just been crazy today, but know it was another record setting. I saw the morning. It's yeah, it's kind of crazy. Good for you. Good for us, right? Good for all of us, right? Yep. Jon G. Sanchez: Ha ha. Yeah, yeah, yeah, yeah, definitely. Good for us. The amen to that one. Amen to that one. Yes, it was a record setting day on the Dow. And we, of course, are gonna tell you all about that and it what it all means. ⁓ a little bit, ⁓ little bit sloppy on the Dow or excuse me, on the NASDAQ and on the SP side of things. But again, I'm gonna give you the the overview of what's happening. But let me tell you what our topic's gonna be. Speaking of Millardin, ⁓ Mr. Edge is tied up in an appointment. He's not like he has the day off, he's ⁓ tied up in an appointment right now. So here's what we're going to be doing. I don't think, Dwight, correct me if I'm wrong. Your memory seems to be better than mine, but I don't think in the 20 years plus that you've been with me that we've ever done a show on this before. And so I have been looking forward to this all day long. What we're going to be talking about is we're going to expose what we call the mortgage myths could be costing you as a home buyer thousands and thousands of dollars. Things like do you really need a 20% down payment? Is a 15-year mortgage always better than a 30-year mortgage? you wait for interest rates to fall before buying? So, Dwight, these just a few of the myths. I mean, you've put together, let me count them here. ⁓ we got at least seven of them, and we'll see if we get through all those, or maybe we'll throw a few more in because your industry, like mine, is fraught with myths, right? People have misconceptions in their mind of how this works, how that works, that type of thing. And many it gives them. ⁓ Well, you know, analysis paralysis, it stops them from doing the things that maybe they should be doing. you know, as far as getting into a a ⁓ or refinancing or buying that first rental, because again, they have these preconceived notions in their mind that, wait a minute, interest rates are not where they used to be. And ⁓ wait a minute on this, and wait a minute on that. And you know what? That of course can be ⁓ absolutely devastating, right? You you miss out on things. And so that is the goal of today's show that you have put together, which is creating these or or d these myths so that no one makes a wrong decision or hesitates to make a decision because they don't have the information, right? Never can happen on this show. Dwight Millard: Yeah. And and John, it's it it comes back to your world as well. I mean, everybody has a specific need, right? Now we don't all get the same haircut, right? You know, so it it's not all going to be the same when you go in. I mean, there are gonna be some clients that are 15, absolutely. There's some clients a reverse mortgage, right? There's some clients, they're just it really depends on the situation. But I think when people research or they hear things, what they're hearing is the generalization, right? Jon G. Sanchez: Mm-hmm. Right, right. Exactly. Exactly. Dwight Millard: the averages, right? ⁓ the this person put 20% down and this, you know. Yeah. So we'll we'll get it, you know, my favorite loan program, we've talked about it, and I can get in the reasons why is a 5% down conventional. know, I mean if you have high credit scores, I'll I'll I'll tell you the reasons why. But yeah, it's it's a interesting topic. You get this ⁓ I get this question almost every day, right? What am I what is my best, what do I need to do? How do and I'm hoping that the 40 years I've been doing this Jon G. Sanchez: So I need to do that. Yeah. I know it. I know it. Mm-hmm. Dwight Millard: helps eliminate some of that confusion for people, right? Because I'm I mean it's it I always say more vanilla product you can get, the better off you'll typically be, right? If you've got to add sprinkles and all this other stuff it attached to it, it not going to be the right thing for you. You know, I mean if you don't if you have a nice hefty down payment for ⁓ either you saved or you have from your parents, got a gift or something, a first time home buyer program. Jon G. Sanchez: Yeah, exactly. I like that. Dwight Millard: probably typically won't be the one you you want to go with. So I mean, yeah, those are the things that you want to just people need to understand because it just doesn't make a lot of sense. You're kind of going, it's like a veteran. It's like a veteran putting money down, putting 10% down, kind of defeated the purpose of the ⁓ and there might be a reason why, John. So we can, you know, you can argue that, but historically, traditionally speaking, ⁓ you're the purpose by putting any money down on a VA loan. Jon G. Sanchez: Right, right, right. Of the V alum? Yeah, yeah. Yes, yes, yes. Dwight Millard: You know, unless you're trying to buy out of the funding fee or something. But I mean, for the most part, that kind of goes against why are you putting if you're gonna put ten percent down, let's do a conventional. Keep your VA. Jon G. Sanchez: So so I've got it I've got a I've got a quick question for you, then we'll get to the stock market recap and then all all about you. is this. I don't think I've ever asked you this. Are people shocked, Dwight, when you they come into your office or virtual, you know, nowadays, and go through all the preliminary questions, et cetera, and then you come back with your recommendation, which is, let's say, a five percent down payment. Are they shocked when they're like Wait a minute here. I was coming into this deal expecting to put twenty percent down 'cause that's what I've heard, right? Again, one of the biggest myths that are out there. What's their reaction when you tell them they only gotta do five percent? I bet. Like, ⁓ my god, I got all this money left over. Dwight Millard: They love it, John. And th they they absolutely love it. You know, yeah, I I gotta keep my ⁓ and I always say, you know, and I think you're a bid big advocate of this as well. Cash is king. It the more you can keep if it's not making any difference in your payment, why are you tying up the cash? You know, if you can do something, you know, I mean you can a long ways with it, just you know, with you. And so ⁓ just I but it is it it ⁓ are the good surprises 'cause I go, Man, that's amazing. I didn't realize I could do that. And and so there are some Jon G. Sanchez: Yes. Right. ⁓ absolutely. Absolutely. Yeah. Dwight Millard: Really good you know, tools out there that people can use. But that that's a great one, you know. And then a lot of times they're payments they like it when their payments cheaper, you know, 'cause they went on these calculators online and it over calculated everything and and and so that's always a another pleasant surprise for ⁓ So Jon G. Sanchez: Yeah. Absolutely. Absolutely. Yeah. Yeah. Absolutely. No, that's great, man. That's great. And again, I'm so excited to go over this topic with you. So let me let me get my side of the business out of the way for you and then turn things over to you. So let's get this going. Well, we said just a few moments ago, it was a record setting day for the Dow, but a little bit sloppy on the NASDAQ and on the SP side of things today. So here's how we finished up. 329 gain on the Dow to a record close of 51,000. You know what, Dwight? I'm gonna round it up. I'm gonna round it up and I deserve what to do it. I'll tell you why. ⁓ The Dow at 51,999.67. Now you're a numbers guy. I think we deserve to round it up above fifty. Yeah, right to 52. Exactly. First time ever in history, obviously. just miraculous. And again, I have to remind myself that when I got started in this business, you know, 35 plus years ago, we're at the 2300, 2400 on the Dow. And here we are, 52,000. Just absolutely amazing. NASDAQ, had a little problem there, and I'll explain why. Dwight Millard: Yeah. W fifty two. Jon G. Sanchez: NASDAQ finished down 304 points, 1.15%, closing at 26,376. The SP 500 for the day, down 43 points or 0.57%. So nothing too major there. was the problem? ⁓ problem was the chip sector, information technology sector, down about 2.3%. Finished the widest loss by a considerable margin. And this is why we had a 3.4% gain yesterday, right? So this is that cyclical profit that we see in the semiconductors. They in particular were really at the forefront of the profit taking. The Philadelphia Semiconductor Index today down 5.7% back all of yesterday's gains. We had stocks like Lumentum, L I T E's the Symbol, down $81.88, 8.55% loss to $875.36. Monolithic Power down $155.77. 9.43% loss ⁓ to Nvidia gave back. loss there down 2.37% to 207.42. The just goes on and on. Not saying fundamentally changed, not like you had a bunch of analyst downgrades. There was really no news behind it. This is again, I had a discussion with ⁓ with a client about this yesterday. You gotta be careful with the semiconductors. Man, they ⁓ they can you a lot of money when they have the momentum on the upside, but they can lose you a lot of money really fast, like you experience today when they have the downside. So you have to use them as part of a diversified portfolio. not put all of your eggs into semiconductors. Even though it makes sense, sure. Yeah, no, go right ahead. Dwight Millard: John, can I ask you a quick question? Sorry to interrupt. Yeah. ⁓ you do you I I I mean, I I hear you i i I again I'm being layman on this 'cause I I hear you. this have a potential to be a dot com type of or is it just too s widespread? I mean Jon G. Sanchez: You know, I asked myself, ⁓ you know, Dwight, I I asked myself that question literally every single day. Is this a dot com? It has it has so many similarities to it. difference versus dot-com really comes down to the number one driver behind a stock price, which is earnings, right? We had no earnings for the most part in the dot-com era, right? Companies were just coming public. ⁓ They'd been around for a year. They're they're being, you know, their CEOs, a 19, 21-year-old kid that still has pimples on his face. side of it is different, Dwight. These companies, for the most part, are making money. What I think is gonna happen, it's not gonna be a dot-com bubble burst, but what I don't like seeing, you know, underneath the surface right now is we are seeing the likes of, well, use the most recent Nvidia yesterday, going to the bond market, borrowing $25 billion. Right? seen them now them. We had Meta announce that ⁓ a few weeks ago. gosh, who else? Google's started the whole thing. ⁓ So this has got a lot of analysts kind of looking, going, okay, we know this is a money making area, meaning the world of AI, data centers, et cetera. But these companies are starting to either they're being very financially prudent, meaning take the risk with someone else's money, i.e. the bondholders, they they really are starting to feel the pinch that is starting to impact free cash flow. And therefore they want to cushion the bank account and bring in some proceeds from a debt offering, i.e. a bond offering. If that's if accelerates to white. then yes, it's going to be very similar to the dot com. I mean, we're at strata stride le stride start what's the word on my we're we're at high levels, where I'm trying to get to level ⁓ on the on the on many of the evaluations of some of these stocks. So again, you can see these, you can use these as an excuse to take profit like today for no reason whatsoever. What you got to be careful about ⁓ when a day like today, and we've had numerous of them recently, turns into two days, turns into three, turns into five, Dwight Millard: Yeah. Jon G. Sanchez: And then like what we experienced, like I said, early last week, things got so cheap that you have to step in and buy them. When you reach that point where you don't have to buy them anymore because maybe there's other areas of the market doing well, or you've, you know, kind of closed the books for the year and you go, Hey, you what? I made a bunch of money in AI, I made a bunch of money in semiconductors. I'm gonna kind of walk away, which is what a lot of institutions will do. Then selling pressure continues and we go from there. Not saying we're anywhere near that at this point, but That's that's really what can happen. So some similarities, but for the most part completely different than the dot com era simply because they're making Dwight Millard: It kind of reminds me of the housing, right? When we had a bunch of subprime, we didn't qualify people. Now, even though you do have some late pays and even some foreclosures, everybody had to qualify now. So you're gonna get a little bit of you know, the you know, the delinquencies and the foreclosures, but not nearly what you get. So that's kind of the same thing, right? That's yeah. ⁓ Yeah, yeah. Jon G. Sanchez: Yeah. Right, right. Sure, sure. Yep. Yep. It's just kind of scratched on the surface. Yeah, from a negative standpoint. No, great analogy. Great question. right. When we come back, we'll hit the commodities, the bond market, the mortgage rates, and then we're gonna delve right into our topic again, the myths of the mortgage world with Dwight Millard of OnQ Home Loans. Welcome back to the John Sanchez show on News Talk 780 KOH with my dear buddy, Mr. Dwight Millard Von Q Home Loans. Again, Corey is ⁓ tied up in a meeting. again, a record setting session for the Dow Jones Industrial Average. We finished up 329 points on the Dow. 51,000. We're gonna go 52. We're right there, 52,000 closing level. NASDAQ 308, ⁓ 1.15% and the SP lower by 43 points or 0.57%. Dwight Millard: Mm-hmm. Jon G. Sanchez: All right, Mr. Millard, let's talk a little bit on the mortgage side of things. ⁓ and how we did was good today, four dollars and forty eight cent loss, seventy six ⁓ six. Can you believe that? Seventy six dollars now. Gold up four dollars and eighty cents, four thousand three fifty six. So ⁓ yeah, let's let's ⁓ let's turn things over to the bond market side. Dwight Millard: Mm-hmm. Hm. I know, right? I would have thought, John, you would have saw a little more movement today. according to Mortgage News Daily, you only got a two basis point decrease in the 30 year from ⁓ yeah, six point five six to six point five four. So I mean, you know, the the word I guess John is stubborn. You know, you use you you like ⁓ yeah, you you like the Teflon market. This has been stubbornly high, you know. ⁓ you know, when you look at the mortgage backed security market. Jon G. Sanchez: Okay. Mm-hmm. Like we said, yep. Yes. Dwight Millard: Again, remember we priced up, we moved up to the five and a half range. It was up know, the five percent was up twenty two basis points. I mean, it was a good day in the mortgage backed securities, but it's just not it's not transferring. And now I think you're gonna get some comments out of the feds, right? Aren't we doing ⁓ and I don't I what do you I mean, we don't expect anything, right? ⁓ Do think the commentary's gonna be different? Jon G. Sanchez: Well, we got a Fed interested decision tomorrow. Yes. They're not gonna do anything. Yeah. No. ⁓ it's gonna be different. I mean, this is the this is the first meeting led by Kevin Worse, our new Federal Reserve chairman. So I I have no idea. I I mean be I I I I don't I don't know the man well. ⁓ you know, w that's one thing with these chairmen. They sit on that position for quite some time and you get to learn their mannerisms and you know, fairly predictable of what they're gonna say and do. But somebody like this, yeah, he's been around a long time, very well respected by the street, but Dwight Millard: Is this gonna be good or bad? Is he gonna put his foot in his mouth or what? I mean, i does he realize everybody's gonna dissect every comma and period and Jon G. Sanchez: Yeah, I don't know. Do I he's I think he's I mean, there's no one on the street saying he's gonna do anything, you know, to to the rates tomorrow. But again, as you said, it'll all be about the commentary and you know what he has to say about the potential because you know the street right now is still still banking on the fact that we're gonna see ⁓ you know the first move is gonna be an interest rate increase, not a decrease. Now, ⁓ things changing now, and I you you know, you can't tell me that this didn't have anything to do with the president. Dwight Millard: Right. Jon G. Sanchez: Urging Iran, which in my opinion, I'm gonna probably talk about this a little bit tomorrow when I do my estate planning topic, but my gosh, I I can't believe the things that he is handing over to Iran. It's like, did we go through all this? Why did you put the world? ⁓ you know, I don't care about the world, I care about us. Why did you put us through this? He's releasing hundreds of billions of dollars and giving them oil. And I mean, on on and on. So Bottom line again, as I said, four dollar and forty eight cent loss on oil today. Get off my soapbox. you know, so we got a nice loss there, which we know the importance as we've done many shows on about oil impacting inflation and so on and so forth. So I you know, Dwight, I think Kevin Wars is probably gonna play it very close to the vest. He's gonna say, Yeah, okay, oil prices are down. We should see some relief in inflationary numbers going forward, but way too soon to tell. And, you come back in another month or two and and Dwight Millard: That would be a safe play, right? Just hey, things are changing. That yeah, things are changing. Yeah, yeah. Okay. Yeah. Yeah. Yeah. So I I think, John, with that said, I think we're gonna see probably the third year fixed, least for the next, probably throughout the summer, right? ⁓ in that stubbornly six and a half, maybe six point three four range, which doesn't give anybody much relief. You know? Yeah, yeah. Jon G. Sanchez: ⁓ yeah, he he's not gonna he's he's not gonna upset anybody with that. That's what the street's expecting at this point. Yeah, that's what the street's expecting. So Yeah, at least. Yep. Yeah. No, no, not one bit. Not one bit. And we were a four basis point decline on the tenure today, two yield of four forty-three. I forgot to mention that side of it. Okay. Dwight Millard: And that's still four four forty three, still that's a long ways out to get inside that four. I mean, that's that's months, you know. Yeah. Jon G. Sanchez: It really is. Yes, yes. That's months. That's right. That's right. my friend, let's get down to your topic, which again are a of issues going through people's minds right now. And we're calling them myths, right? So Dwight's put together a great list of of mortgage myths that potentially could be costing home buyers thousands of dollars. Well, hopefully not you guys, not our dear beloved listeners. Dwight, we're gonna start with the first one. We touched on this briefly. Let's start with myth number one. You need a twenty percent down payment to buy a home these days. Dwight Millard: Absolutely no. That's a that's factually incorrect, John. I actually people to look and weigh the benefit and option of putting less down. Again, ⁓ conventional, ⁓ can away with you just don't you're not getting enough ground for tying up the money. You're just not gaining enough. I mean, they can take that money, John, and go put it with you and make I I you know, I I just there's just they're not gaining enough ground with it to tie up all the capital. And then what you find, John. Jon G. Sanchez: Mm. And what's your rationale? Let's let's break down. What's the rationale? This is a Yeah, go go ahead. Go ahead. Dwight Millard: I is people get in and they put that money down, then all guess what? I need a new couch. I need guess what they start using? They're credit cards. Yep, they start using credit cards. So Jon G. Sanchez: Yeah. Car breaks down, whatever. Yep, that's right. This is a great time for you to give one of your excellent reminders about the correlation of roughly ten thousand dollars and what it really does as far as ten thousand as far as the down payment and the the minimal impact it has on the payment amount. Let's go through that. Dwight Millard: Yeah, I mean, John, you're looking at about fifty bucks, fifty, fifty-five bucks ⁓ for every for every 10,000. Right. then then all of a sudden you get into the house, your ⁓ goes out that you didn't have under warranty or something, and you go charge a credit card at 18, you know, 23, whatever percentage. So just am a bit the the where it really becomes super effective, is if you have high credit scores. So if you're the 750 plus range. Jon G. Sanchez: Ten thousand downs equals a fifty dollar a month savings. Dwight Millard: And you're doing either typically a 5% down conventional, you will find that the mortgage insurance. Now we have really aggressive tiers with all these mortgage insurance companies. The mortgage insurance is almost next to nothing with great high credit scores than 5% ⁓ ⁓ you have the ability to remove it, self-initiate removal of the mortgage insurance down the line. So it ⁓ just doesn't make sense to tie up all the cash. Jon G. Sanchez: No kidding. Mm-hmm. It and I think, no, I I completely agree. And and that's the beauty of real estate, right? Over the stock market over other things, it's the leverage value of the dollar, right? That's that's that's the beauty of it. ⁓ here's a little exercise I always like to tell people, Dwight. So let's use your ten thousand dollar down payment. Let's make it really simple. All so you put it down, you say fifty dollars a month. Fifty times twelve months, that's six hundred dollars a year. So ⁓ you're six tenths of a percent essentially on your money, right? Can you beat that six tenths of a percent if you invested that money? Dwight Millard: Yeah. Mm-hmm. Yeah. Jon G. Sanchez: Probably so, even in a in a very safe, you know, savings account, right? So know, so so we not six yeah, yeah, six tenths of percent. so so that's what have to look at, right? That's that's how the big money does it. They go, What's my return on investment with going into this, paying down debt or you know, putting it as a down payment versus investing it? And I don't care if you're invested in a more real estate or you know, to me, I I think and I haven't ran the numbers, so correct me if I'm wrong. But let's say you you you didn't put that 10,000 down, right? You save that and you invested it. And then in maybe, I don't know, five years, hopefully you've got some good growth out of it in the stock market. And then you take that into a principal reduction, right? It's another way to do it. Dwight Millard: Correct. Correct. You can always, yeah. Yeah, I mean, most investors' agencies allow for a minimum of one principal reduction. you can even recast if you want, if it's significant enough, meaning a principal reduction where you can ⁓ your payment. But John, I've never broken it down like that, but you're absolutely correct. I mean, if you can't make more than six tenths somewhere, yeah, ⁓ and you got to be a little disciplined. You got you know what I'm saying. But yeah, but but yeah, I just have never really seen the benefit. Now, if you have a lower credit scores, Jon G. Sanchez: Right. Sure, sure, absolutely. Dwight Millard: Then I mean now you're looking at FHA, you're looking at some different other products that may you know, but still tying up FH there's no sense in going to an FHA putting fifty percent down at all. You know, you know, you put three and a half, maybe five percent on an is the max you'd probably wanna go. Yeah. Jon G. Sanchez: Mm-hmm. Right. Right. Yeah. Right, right, exactly. right, there's myth number one. Do you need 20% down payment to buy a home? The answer is absolutely no. Now, to Dwight, what just Dwight just mentioned a second ago, a lot of this depends upon your credit score. So next that we're gonna demystify when we come back is do you need perfect credit to get a mortgage today? Welcome back to the John Sanchez Show on News Talk 780KOH with Dwight Millardov on Q Holms. Again, Corey's tied up in a meeting. it was a record setting session. If you just joined us with the Dow Jones Industrial Average for the first time ever in history, hitting 52,000, up 328 points on the day. NASDAQ sloppy. Again, semiconductors rolled over, lost 308, and the SP down to 43. All You're up to date on the market as we spent a lot of time talking about that. We're just beginning our topic today, which again is a very important topic, which is breaking the myths of the mortgage world. Mortgage process. did a great job on the myth number one, which is you need 20% down payment to buy a home. Absolutely not true. ⁓ we discussed that. Myth number two, Dwight. You need perfect credit to get a mortgage. Demystify one. Dwight Millard: Absolutely, absolutely not. Another myth, right? John, the cool thing about today's environment is even you don't have great credit scores, let's say you have mid 500s, even just say we have now, probably artificial intelligence, right? You like the AI, that will tell you how what you need to do, because it's analyzed your credit report to start moving up your scores. So it's never been easier to move your credit scores up. You know, if you have the will and the desire and the means, ⁓ yeah. Jon G. Sanchez: I'm sure. Yeah. And you've offered this for twenty years. Yeah. And now I bet it's even better with it. Yep. Dwight Millard: Yeah, yeah, yeah. It's we call it a rapid rescore, but now AI's gotten even stronger, better, bigger, faster to help you identify the weak areas and get stronger in it. I would tell you that right now, I think just I would like to see at least over 600. And which is not ⁓ there's lot of programs out there that kind of go off of 600, 620, ⁓ even your first time homebuyer. You know, there's just different things, but Jon G. Sanchez: Okay. Yeah. Right. Dwight Millard: Typically on an FHA loan, if you get above a 600, you can typically get an automated approval if all your other variables are are good. So if you if all your variables are bad, your credit score, you're you don't have any down payment, you've been on your job a year, things like that. It may be, but if your only if only downside to your complete application is your credit score, if you get over 600, I think I can get an FHA approved. So Jon G. Sanchez: Dead income. Dwight Millard: I would just tell you that that's what I I mean, that's what I'd shoot for is that y you know, get it above six and then higher. Jon G. Sanchez: And and And and and above six and higher, exactly. And for those that may be new, I mean you and I obviously and most of our audience knows this, but I'm sure there's a few out there. Why does the credit score have such an impact? What? Dwight Millard: Well, because now everything's risk-based pricing. Ever since the great meltdown of ⁓ eight, ⁓ nine coming out of the Dodd Frank, everything has an add on. So it it all ties into your loan to value and your credit scores. So credit scores dictate not only what your rate's going to be, it's gonna dictate what products you have available. Not only that, after you as you go into this, you're gonna see that your homeowners insurance is they're gonna run your credit score. I mean, there are so many variables throughout the home buying process, you're gonna your credit score is gonna become Very important. one thing that I do like about a mortgage loan, a good paid up mortgage loan affects your credit scores really, really good. So you know, if somebody has a weak credit score like say six, let's just say six twenty, and we them into an FHA loan and a six or eight months from now, good payment history with that mortgage, you'd be surprised what their credit score would be. So it's yeah, yeah, it's a great, great that and ⁓ you know, ⁓ that's the actually. Jon G. Sanchez: No kidding, no kidding. Interesting. And as a reminder, things like the your your homeowner's insurance, also a lot of the factors based on credit score and so on and so forth. So it's everything. Dwight Millard: Yeah. Yep. There are so many things that base it and and it's just a it to your point, your original point, you're wasting thousands of dollars all the way around if your credit score is in the six hundred, six ⁓ five, six ten. You can get that up to six eighty, even greater, you're gonna save a lot, a lot of money. Jon G. Sanchez: And just real quickly, 'cause this is a whole nother show, what's some of the fast ways for people to improve their credit? Dwight Millard: pay pay down anything that's outstanding balance, pay it down or pay it off. you know, I I would run a credit score if you can. Go to those, there's free ones to get an idea. But I the the best way is to just try to chew at the balances. Any collection accounts, anything that's derogatory, just get it current. I mean, there's still a lot of student loans, John. Start still a lot of student loans out there. Members where they thought it was forgiven that it was and now it's once you get that. Jon G. Sanchez: Yes. Dwight Millard: Current, it starts the the healing process. So just anything that is outstanding right now, just yeah. And and just pay yeah, yeah, yeah. Jon G. Sanchez: Just get it done. Get it done. Okay. And I again, I love your idea. And for those of you that may be new to the show, ⁓ a reminder, Dwight has always been generous generous enough over the years to offer this, and I'm sure he'll do it again. If you need to know where you are, let Dwight know. They can run the credit. It's a soft pull. It's not gonna ⁓ us a credit pool, et cetera. ⁓ then this the the the the software, basically now AI, will come back and say, you need to pay down that $3,000 discover card and you need to pay it down to One thousand two hundred and twenty dollars. You'd be amazed at the crazy things, but that's the power of that software. And then if you're not ready net yet, great. Now, like you said, I love your your words. You started the healing process, right? And you set your sights at maybe six months or a year, you'd be ready. So Dwight Millard: Mm-hmm. Yeah. Yep. Yep. Yep. It's just a you know, John, and it's a pre application process. Doesn't call you if you don't it doesn't cost you anything if you don't close, but we get you prepared, we get you in motion. ⁓ to your point, we had one I think I told you once before that we I was trying to do a rapid rescore and it actually said go out and get an account, you know, and go charge. So yeah, so it's not always pay down, it's like you need a little more credit. So yeah. Jon G. Sanchez: Yeah, absolutely. Yeah, there you go. Go charge. Yep, absolutely. right. I don't want to beat this one up 'cause we talk about it all the time. Should wait for rates or or why should you wait for rates to come down? And that's not necessarily the case at all. So real quickly that. Dwight Millard: Yeah, I I I mean, we always say you marry the house and date the rate. So I mean we're gonna you're gonna have opportunities throughout tenure with your loan to probably redo it a couple of times even if you've been in it, right? So ⁓ yeah, wouldn't I would focus more on what the the the ⁓ the is it what you want ⁓ and it ⁓ can you afford it? Like Corey always talks about. And then what yeah, yeah, yeah. Everything else will fall into place. Mm-hmm. Jon G. Sanchez: Yeah. Yeah. And as a good value. Yeah. Yeah. You're not overpaying that type of thing. Absolutely. Myth number four. A fifteen year mortgage is always better than a thirty year mortgage. Dwight Millard: I'm going to give you my opinion. I like, I don't think you yeah. Yeah, I think I don't think you got a big enough spread today to justify taking down a 15 versus a 30. What I like is paying the extra, the extra. I can always calculate what your 15-year payment would be. Take a 30-year mortgage and pay a 15-year payment. Have the flexibility on your own, because come Christmas time or your transmission goes out or whatever, you're not locked into that. Jon G. Sanchez: Dwight is smiling, folks, if you could see him. There you go. Dwight Millard: fifteen year payment, but you have flexible so there's no accelerated penalty on these loans. So you can pay more. And John, the other thing too is do not get by into one of those pay buy bi monthly payment deals. Yeah. Yeah. Yeah. Because it they're so hard to unwind. They charge you to do the same thing you could do on your own. Yep. Yep. Very hard to unwind. Jon G. Sanchez: Bi weekly or bi monthly, yeah. Yeah. Okay, not a good deal, huh? ⁓ yes. Yep. Exactly. And just to give you comparison, according to Mortgage News Daily, as of today, fifteen year mortgages at six point one one percent nationally. And as Dwight said earlier, the thirty years at six point five four. So yeah, not ⁓ not a significant difference there. But boy, talk about higher payments. Yeah, I love your idea and we always recommend that to clients. If you can afford it, if you got the cash flow, turn your thirty into a fifteen, you have that flexibility. And you can always do more. I mean, it is amazing. You start it's a lot of fun if your numbers n nut like I am, or geek. Dwight Millard: Yeah. Mm mm. Yeah. Yeah. Jon G. Sanchez: Get an amortization schedule. There's all kinds of online sites like that. And just play around where watch and see how that 30-year mortgage, how you can bring it down to 18, 19 years just by making a few thousand dollars principal payment reduction each and every year. It's mind-boggling because of the compounding effect. ⁓ that point, Dwight, here's something you need to let everybody know. Quickly explain how. Dwight Millard: Yeah. Jon G. Sanchez: simple interest on a mortgage loan works is a lot of people have no idea that it's front loaded versus the back end on the interest rate. Dwight Millard: Yeah, and it's just cal and it's calculated on your balance. So the lower your ball. And so, John, to your point, I like the two thousand, but spread it over twelve months. You know, get that, get that, you know, unless you have the two thousand, you can do it often. But yeah, the the so each month in theory, your your interest ⁓ calculation goes down a little bit of dollars than what it did because your balance is less. So the more you can attack that balance up front, up front, yes, yes, yes, more the more you can attack that interest up front. Jon G. Sanchez: Right. And and and it's and it's daily. And it's daily, right? Because mortgages yes, the the the interest is assessed on a daily basis. Dwight Millard: The better off you are. So if you have the discipline now and may not have it later, do it now because that will make a bigger difference than down the line to your Jon G. Sanchez: And folks, I can tell you from a financial planning standpoint, looking back at thousands and thousands and thousands of clients I've I've had over the years and that I currently have, the one of the key ingredients, there's two key ingredients to financial success. Well, three, start early. two, live a budget. And number three, get out of debt. So ⁓ you aggressive ideas where you want to retire relatively early, I'm you I'm talking early 60s, something like that. way beyond normal retirement age, get the house paid for. I know it's not the best use, but let me tell you, have that stress relief you're not having to make that two, three, four thousand dollar mortgage payment. So again, if if you plan your retirement, say 15 years in advance, great. Meet with Dwight, meet with your mortgage company and go, hey, I want to pay this thing off in 15 years. Mortgage companies love this. I want to pay off my mortgage in 15 years. What do I need to do? They'll come back and go, they'll play with the amortization table and come back and go, ⁓ okay, do I you need to pay an extra three hundred dollars a month? And now you cut your thirty into a fifteen. It's literally that simple. But you're talking hundreds and hundreds of thousands of dollars of interest savings doing that. Dwight Millard: And John, to your point, you could do it anytime in the game. So if your kids are out of college now and all that, it's no, it's not too late to start right now. You couldn't do it when they were in college or whatever's going on. Do it when you can. And and you know what, John? If you can't just pay whatever I think the minimum is thirty-five or fifty dollars per month to go to principal, start there. Start there. Start there. Jon G. Sanchez: Anytime. Anytime. You try it. Nope. Yep. Yeah. Yeah, I was gonna say about thirty bucks. Yeah, that's right. It all adds it's like Dwight Millard: Yeah. Yep. Yep. Jon G. Sanchez: your four hundred one K. Start with something. That's right. Yeah. Welcome back to the John Sancho show on New Stalk seven eighty KOH mister Malard, your phone number, sir. Dwight Millard: Yes, sir. two four zero two zero two two. Jon G. Sanchez: Very good. Thank you. right. We've been talking about myths in the mortgage world. Yeah. So many, so many that are heard. And again, we we go on and on, you know, Dwight again put together a great seven point list, but yeah, multiply that times a thousand, you probably still have more. All right, so we talked the 15 year myth number four. let's go to number five. The lowest rate is always the best loan. Dwight Millard: Well, you y you think so, John. You d but here's the problem. you always trade off cost for rate. So meaning that you know, during the refinance craze as you hear companies advertise no cost refines. Well, they did was trade off the rate to give you the cost. ⁓ So you will have that as an option. What you really want is the middle ground. You want to get the most attractive interest rate you can and maybe minimize some costs. So if you can find the sweet spot in there and that's where your loan counselor ⁓ Jon G. Sanchez: Yes. Is this? Dwight Millard: should come in and kind of give you that Hey, if you go up just an eighth in the rate, and again, it's the spreads different every day, John. So if you go up just an eighth in the rate, I can give you maybe a fifteen hundred dollar credit, you know, type of thing. So they just have to really, it's just not that easy. A sophisticated or longer person in the business will have more information on that. But yeah, it's not always the best. Jon G. Sanchez: Right, right, right. Well, y and again, th we could probably do an entire show on how a APR is calculated because a lot of times that's where they'll get you too. They need you need to pay attention to the APR, which is your loan interest rate, plus all the other junk thrown in, I'll use the term, right? and so that's really what you gotta look at. You gotta look at points, you gotta look at the co closing costs, the structures we discussed, fifteen thirty. Look everything versus the advertised rate, right? That is that is the bottom line. Dwight Millard: Yeah, yeah. And and John, I think, yeah, and I think most people that pay over a point, now if the seller pays, it's a different thing. you as the consumer, if you pay over a point, I'm gonna guarantee you most of the time you're not gonna recapture your benefit. It's gonna take you too long. Jon G. Sanchez: Amazing. And explain very for those new, explain ⁓ very quickly a point. Dwight Millard: Yeah, so so let's say you're gonna pay a point and a half to buy your rate down. Let's just say I I don't even know if you can get a half a rate today, but let's just say you're gonna pay a point and a half. Yeah, point and a half, you're gonna get a half better in rate. The savings that you're gonna get is gonna take about maybe, in that particular case, let's just say five years to break even. So it's gonna take you five years before you even feel the benefit of buying the rate down. Well, if rates drop or something happens or you move, I that's what I say. Most people don't. Jon G. Sanchez: Yeah, s let's keep it simple. Yeah. Okay. There you go. Right. Dwight Millard: Take advantage of the rate by now. They don't get there. They don't get the long the longevity out of it. Jon G. Sanchez: Yeah. Yep. And and remember, I was hoping you're gonna say, you know, a point is remember there's a one point is one percent. So when you're saying a point and a half to white, if it's a hundred dollar loan, one and half points that'd be a fifteen hundred dollar that you're paying. That's your that's your ⁓ your buy down. So okay, very good. ⁓ Dwight Millard: Right. And you get up to the five hundred thousand dollar range, John, you're paying $7,500 for a point and a half. And and you're and again, if you don't even feel the benefit, if you don't even feel the benefit the buy down, which is just the savings divide by the cost, if you don't even for six sixty months, I I don't know if it's worth it. Jon G. Sanchez: That's right. There you go. Well, y you know, what what happens a lot too, Dwight, is you know, we know that a mortgage isn't is an ego-driven thing for a lot of people. They want to be at that barbecue on fourth of July and go, Hey, I've got a five and a half percent mortgage, you know, versus you know what do you what do you have? Six? ⁓ you poor sucker. again, you don't know that the buy down did that. And it did not maybe it did not make financial sense. So don't try to keep up with the Joneses, you know, keeping up with their mortgage rate versus yours, because there's a lot of factors. Timing, how much money down, you know, buy down ⁓ credit, I mean a number of different things. So ⁓ Dwight Millard: Mm-hmm. Yep. Yeah. ⁓ John, I found many times it it was a temporary buy down, not a fixed rate, when they said, ⁓ so and so got X. X didn't exist. Yeah, X didn't exist. Jon G. Sanchez: Yeah, makes a big difference there. Yep, yep, that's right. That's right. Absolutely. All right. Do I'm gonna handle myth number six, kind of come down my bailiwick. You know, renting is always throwing money away. is not the case. I I've had many situations over my career where I've recommended to a client the best thing to do was to rent, right? Especially if they're you know in their retirement or years into their retirement, they don't want the time, they don't have the physical capabilities, so on and so forth. They can afford it. They don't want to go hire gardeners and mess with home maintenance and everything else. So Dwight Millard: Okay. Mm-hmm. Jon G. Sanchez: Go rent somewhere. Let somebody else have the headache, right? So don't always think that renting is just throwing your money away. Younger people, yeah, most likely. But yet up in age, it's quality of life is the way I look at it. And wrap us up at number seven. Do I getting pre qualified and pre approved are the same thing? Dwight Millard: Yeah, no, you really want to get pre-approved these days. I mean, you're actually getting it ran through an automated system, you know, all the variables in there and it's ran through a system. And John, you know, knowledge is power, right? So, you know, to your point, this is what this show is all about. what you have in front of you, know your facts. Jon G. Sanchez: We got it. Yeah, absolutely. All right, my friend. Excellent job as always. We'll have to continue this one on because we just barely scratch a list. Dwight Millard Q Home Loans. Thank you, my friend. Always a blessing to be with you. God bless everybody. We'll see you tomorrow on the John Sanchez Show.