Latest / Connor with Honor: AI, Real Estate and Real Life / How to buy a Santa Clarita home podcast - first steps by Connor with Honor Realtor January 2022

Transcript

How to buy a Santa Clarita home podcast - first steps by Connor with Honor Realtor January 2022 · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: This is going to be a little dissertation on a buyer's briefing.
• 0:03
  SPEAKER_00: So when somebody wants to buy real estate and they contact me, this is some of the banter that goes back and forth.
• 0:10
  SPEAKER_00: So let's uh let's try this.
• 0:12
  SPEAKER_00: Yeah, I'm Connor McGyver.
• 0:14
  SPEAKER_00: Very nice to meet you.
• 0:15
  SPEAKER_00: Uh I understand you're looking to potentially buy a house.
• 0:20
  SPEAKER_00: Actually, yes, uh, wife and I, we've been looking into real estate.
• 0:23
  SPEAKER_00: You know, I have a pretty good job and I just don't know where to start.
• 0:28
  SPEAKER_00: So a good first step in real estate is always to find out about the financial aspects.
• 0:34
  SPEAKER_00: So, what type of loan would you qualify for and look at what kind of down payment you might be prepared to make, and then also talk about other things like closing costs.
• 0:44
  SPEAKER_00: Okay, well, that makes sense.
• 0:46
  SPEAKER_00: Um, what are closing costs?
• 0:49
  SPEAKER_00: Yeah, closing costs, a lot of people don't really discuss those, but it's basically involves for a real estate buyer three things.
• 0:57
  SPEAKER_00: So it's going to be the fee your lender charges you to get you a loan.
• 1:00
  SPEAKER_00: It's then going to be your part of title insurance when you purchase the house, and then your part of the escrow fee.
• 1:07
  SPEAKER_00: The seller shares those, but that lender fee is all yours.
• 1:11
  SPEAKER_00: Okay, so that's something we can finance, or how does that work?
• 1:16
  SPEAKER_00: Well, in actuality, closing costs can be financed if the seller allows it, but here's how that would work.
• 1:23
  SPEAKER_00: So let's say closing costs, each of those three items is 1% each, which is common.
• 1:29
  SPEAKER_00: Let's say the house price is$300,000.
• 1:34
  SPEAKER_00: So if we break that down, 1% would be$3,000 each.
• 1:40
  SPEAKER_00: So the closing costs on a$300,000 residence are roughly going to be around$9,000.
• 1:46
  SPEAKER_00: So then the question is, is the seller going to allow those to be financed?
• 1:50
  SPEAKER_00: And how would it happen?
• 1:53
  SPEAKER_00: So let's say the house is priced well at$300,000.
• 1:57
  SPEAKER_00: And let's say we go to the seller and we offer them$309,000.
• 2:03
  SPEAKER_00: That extra$9,000 we would ask to come back and allow us to include the closing costs in that figure.
• 2:10
  SPEAKER_00: But the reason why the seller might not want to do that is because very simply, maybe the house won't appraise at$309,000.
• 2:17
  SPEAKER_00: Or the seller has other offers that might exceed the list price where they're not asking for anything with regard to closing costs.
• 2:26
  SPEAKER_00: Okay, so that makes sense.
• 2:27
  SPEAKER_00: So how how do we pay the closing costs then if the seller's not going to allow it?
• 2:33
  SPEAKER_00: Well, then how that would work is you can pay them with part of the money that you have saved up to purchase real estate.
• 2:40
  SPEAKER_00: So if you do have the$9,000 in an account, you can use that and pay towards the closing costs.
• 2:46
  SPEAKER_00: Now, one thing that a lot of people don't mention is they can also be split.
• 2:50
  SPEAKER_00: So maybe you only have$4,500 of the$9,000 that are required with regard to closing costs.
• 2:58
  SPEAKER_00: Maybe you can go to the seller, maybe the house is priced a little high, and maybe give them a full price offer and subtract half of the closing costs.
• 3:07
  SPEAKER_00: So the seller would then net$295,500 and then credit you$4,500 for closing costs, and then you would have to come in with the other$4,500 if that makes sense.
• 3:23
  SPEAKER_00: I know it's a little confusing, but closing costs have to get taken care of.
• 3:27
  SPEAKER_00: Now, if you happen to be a veteran buyer, a lot of times there are other ways to take care that the lender potentially could maybe increase your interest rate and then cover those closing costs as well.
• 3:38
  SPEAKER_00: Sometimes in with other borrowers, they can do it also.
• 3:42
  SPEAKER_00: But you have to look at that payment.
• 3:44
  SPEAKER_00: That's why stopping at the financial place after you speak with me first, then talking to the financial people, either a bank or credit union or whomever you bank with or one of my lenders, that makes that will make everything more understood and make you feel a little bit more comfortable.
• 4:02
  SPEAKER_00: Okay, so I understand closing costs.
• 4:04
  SPEAKER_00: So you mentioned your lender, bank, credit union.
• 4:08
  SPEAKER_00: So what types, what should I be looking for in a home loan, and what different types of lenders are there?
• 4:16
  SPEAKER_00: So my first step is typically there's mortgage brokers.
• 4:20
  SPEAKER_00: So the mortgage broker can pull on a few hundred or over a hundred different lines of money.
• 4:26
  SPEAKER_00: So there could be they could go to uh hedge funds, they could go to regular banks and pull money from them, they can get financing through a lot of different areas.
• 4:34
  SPEAKER_00: They're a broker, so they have a lot of access.
• 4:37
  SPEAKER_00: It's like being an insurance broker.
• 4:39
  SPEAKER_00: When you go to one, they have different insurance companies that they can use.
• 4:43
  SPEAKER_00: Now, back in the day, my dad would have said never, you never want to go to a broker because they end up being more expensive.
• 4:48
  SPEAKER_00: Now they're so competitive, and a lot of times they're a lot less expensive.
• 4:52
  SPEAKER_00: Then there's the regular banks, your Bank of America's, your Chase, your Wells Fargo banks, they also loan money.
• 5:00
  SPEAKER_00: So they're also pretty competitive.
• 5:02
  SPEAKER_00: And then finally, credit unions.
• 5:04
  SPEAKER_00: Credit unions for origination seem to be pretty good.
• 5:07
  SPEAKER_00: But again, you always want to see the breakdown of the fees and costs, not so much the interest rate, because they're going to lock you when you find that residence.
• 5:17
  SPEAKER_00: So if they're giving you an interest rate that's that's wonderfully too good to be true, usually that's called a teaser rate.
• 5:24
  SPEAKER_00: But you want to see the costs, and then you can compare the costs of the different lenders with each other and find out who the actual best deal is.
• 5:31
  SPEAKER_00: Okay, that's good.
• 5:33
  SPEAKER_00: So, with regard to a lender, and let's say I go to my regular bank, would you suggest I go to somebody else also?
• 5:39
  SPEAKER_00: And what if they run my credit?
• 5:41
  SPEAKER_00: I heard that's not good.
• 5:42
  SPEAKER_00: Well, when you're shopping for a home loan, it's kind of understood that your credit might be ran a couple times.
• 5:49
  SPEAKER_00: But just understand that if in fact your FICO score diminishes because of extra runs by mortgage brokers typically, and you'll have to talk to the lender about this before you even have them run your credit and make sure it's not going to impact it.
• 6:05
  SPEAKER_00: But if it does, there's something that a lender has, a mechanism called a rapid rescore, and they're able to actually get rid of those inquiries and have that FICO increased.
• 6:14
  SPEAKER_00: At least that's in theory.
• 6:16
  SPEAKER_00: But really asking the source and making sure they back that up in writing would be extremely helpful if you're going to interview different mortgage brokers and if you're going to give them your social security number and that information in order for them to each pull your credit.
• 6:30
  SPEAKER_00: If maybe the first one that runs it, you have a deal with them saying, Listen, if you're going to run my credit, I want a copy of that entire credit report.
• 6:37
  SPEAKER_00: What they might say is there's some kind of uh it's proprietary information or it's information that's guarded in such a way that they have some kind of an agreement with their service provider that gives them the credit report where they can't share it.
• 6:54
  SPEAKER_00: How true that is, I don't know, but if they want your business, I have a feeling they'll give you a copy.
• 6:59
  SPEAKER_00: Then you can use a copy of that at another lender, say, listen, I don't want you running my credit, but look at this and tell me what you can do.
• 7:06
  SPEAKER_00: Okay, so that makes sense.
• 7:07
  SPEAKER_00: So let me ask you one more question.
• 7:09
  SPEAKER_00: How much do you cost me to use?
• 7:11
  SPEAKER_00: What's your fee?
• 7:13
  SPEAKER_00: That's almost like the best secret in the world.
• 7:15
  SPEAKER_00: What ends up happening is you don't pay my fee.
• 7:18
  SPEAKER_00: My fee is not part of any of your costs.
• 7:20
  SPEAKER_00: So I get compensated by the seller, whether it's my listing or another agent's listing.
• 7:25
  SPEAKER_00: The seller always builds in two sides to that.
• 7:27
  SPEAKER_00: So they're going to build in the side that pays their agent to represent them.
• 7:31
  SPEAKER_00: And they're also going to build in a side of the agent representing the buyer.
• 7:35
  SPEAKER_00: So I think the first good step now, because you don't pay any of my costs, let's have you speak with a lender.
• 7:41
  SPEAKER_00: I can do a conference call with you.
• 7:43
  SPEAKER_00: We can do it on a Zoom with you if you're more comfortable, and I can ask other questions in there as well, if you give me permission.
• 7:49
  SPEAKER_00: And then, of course, we want to follow up that particular connection with an email, especially if the lender's giving us stuff that really sounds too good to be true, just to make sure that they're not, well, that they're being completely upfront and honest.
• 8:05
  SPEAKER_00: And then we'll wait to get a response to that email.
• 8:07
  SPEAKER_00: How's that sound?
• 8:08
  SPEAKER_00: Yeah, actually sounds good.
• 8:09
  SPEAKER_00: Let's uh let's do it.
• 8:10
  SPEAKER_00: I think Zoom would be good, and then you can sit there on Zoom with me.
• 8:14
  SPEAKER_00: So, do you have a lender you recommend and you can call?
• 8:17
  SPEAKER_00: Absolutely, I'll be more than happy to.
• 8:19
  SPEAKER_00: And it's during the process, I'll be there every step of the way.
• 8:21
  SPEAKER_00: So you don't have to worry about maybe not having the right question or forgetting some of the questions I gave you earlier.
• 8:27
  SPEAKER_00: You'll know exactly what to say to them.
• 8:29
  SPEAKER_00: So that's kind of an idea as to what's talked about in that first buyer meeting that I conduct in my offices or over the telephone or on Zoom or FaceTime or whatever you're comfortable with.
• 8:42
  SPEAKER_00: But at the end of the day, really, that knowledge is incredibly important.
• 8:46
  SPEAKER_00: And there are a lot of people out there that are looking to take advantage of people buying real estate.
• 8:51
  SPEAKER_00: So be careful with that.
• 8:52
  SPEAKER_00: You should always follow up everything in an email.
• 8:55
  SPEAKER_00: If somebody's telling you something, if I'm promising to give you the world on a plate and including a brand new Lamborghini, you might want to go ahead and follow up that email.
• 9:04
  SPEAKER_00: Hey, Connor, you said you would give me the world on a plate and a brand new Lamborghini.
• 9:07
  SPEAKER_00: I just want to make sure I heard you correctly.
• 9:09
  SPEAKER_00: And then have me respond.
• 9:10
  SPEAKER_00: That's good advice and that'll keep you safe.
• 9:13
  SPEAKER_00: And also throughout the process of real estate, it's not bad to keep everybody in check with those follow up emails after you have conversations with them.
• 9:22
  SPEAKER_00: Anyway, that's what I see.
• 9:23
  SPEAKER_00: I'm Connor with Honor.
• 9:25
  SPEAKER_00: Thank you so much for watching, and it has been a pleasure.
• 9:28
  SPEAKER_00: We'll talk to you soon.