Speaker 1 0:00

The following program, the ENT , mortgage and Realty Show is paid for in full by ENT mortgage, LLC and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, LLC, and not WTMJ or Good Karma Brands.

Speaker 2 0:20

Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Net Mortgage and Realty. And now here's Brian and David Wickers.

Speaker 1 0:35

Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with Academic Realty Advisors and majority owner of Academic Mortgage. Along with my son David, who's the , uh, academic Mortgage Chief Client Experience officer and senior loan consultant. And for the first time ever, we're gonna have a three person show because we have Son-in-Law, Tim Holdman in the house, who was by the way, our top senior loan consultant in 2023. Congratulations,

Speaker 3 1:01

Tim . Ooh , thank you very much Brian. Happy to be here.

Speaker 1 1:03

Alright , well if you remember, if you've got a question or a comment, you can call or text on the Old National Talk and text line, old National Bank Talk and text line , which is 8 5 5 6 1 6 1 6 20 Old National Bank. Get old and you can also grab a podcast at today's show or any of our past shows, wherever you normally get your podcasts. So here we are, new Year's Eve 2023, which is probably the most difficult , uh, year for both real estate and mortgage lending in recent memory

Speaker 3 1:33

For sure. In recent memory.

Speaker 1 1:35

Yep . Uh, and probably , you know, because the change was so great from what preceded 2023, which was super low rates and no inflation and you know, covid and all that stuff to then all of a sudden inflation got outta hand interest rates up. Uh, you know, nobody wanted to list their house for sale, all that crazy stuff. So, hey, goodbye 2023

Speaker 3 1:57

<laugh> and good riddance.

Speaker 1 1:58

We are happy to have survived you. And so now we turn the page and we look at 2024 and thankfully rates are down from, what was their fevered , um, what do we want to call it? Uh hmm .

Speaker 4 2:14

The Fevered Peak Fever Peak , yeah ,

Speaker 1 2:16

Yeah, yeah. Fevered Peak, that's what it's, thank you. Of near 8%. And now we're back down comfortably in the mid sixes. I'd say, David, you're gonna tell us about somebody later in the show who's locked in at what rate? On a 30 you're fixed ,

Speaker 4 2:30

Uh , 5.99% and the A PR is 6.20599, but five nine ,

Speaker 1 2:36

Are you , are you outta your mind? Yeah, that is , uh, that is way better sounding than even 7, 9 9, I've gotta say. Oh yeah . So we , we've got that working for us . So let's, let's kind think about what do we think is gonna happen and what did all the big smart people think in our industry that's gonna happen in 2024. And I was looking around the internet, Redfin, which is a large publicly traded brokerage headquartered in Seattle I believe. But they do have , uh, an office in Milwaukee and their model is a little different. Just by the way, their , uh, real estate agents, I believe are employees, not independent contractors.

Speaker 3 3:10

Oh, interesting. Okay. Of , of

Speaker 1 3:11

The company. And I think they offer discounted , um, uh, commissions if , if I recall correctly. But anyway, they got a bunch of really smart economists and they are predicting that 2024 will be quote , the year home buyers catch a break with home prices falling. Whoa . And new listings rising. Ooh . Alright . So let's take that unwrap that one at a time. Uh , they're predicting home prices are gonna fall 1%.

Speaker 3 3:39

Uh , there you go. <laugh>,

Speaker 1 3:41

Not

Speaker 3 3:41

A whopping

Speaker 1 3:42

1%. And that's nationwide. Uh , by the way, Fannie Mae and others think home prices are gonna rise between two and 3%. Mm-Hmm . <affirmative> in 2024, but there's no such thing as a national housing markets . So that's all bogus. The real question is what is going to happen in the market that you own in or that you want to buy in? Right. Which can be vastly different. Um, they make no specific prediction on inventory being up, but then they do say that , um, uh, they think that home sales, the number of home sales in 2024 will be 5% higher.

Speaker 3 4:15

Okay?

Speaker 1 4:16

I got bad news. The best guys at predicting things are Fannie Mae and they think that , uh, existing home sales are gonna be flat. Ugh . Exactly the same in 2024 as 2023. Now I look back and this, to me, this is all about you gotta have listings in order to have sales, you gotta have listings <laugh> . Right. Alright . Hello. I may not a real economist, but it seems kind of fundamental. So I went back and I looked at , uh, number of listings in January in the five county metropolitan area of both condos and single family detached. If you were ever wondering what percentage of the national market our five county corner of the world makes up, the answer is less than one half of 1%. Oh

Speaker 3 5:04

Yeah . Okay .

Speaker 1 5:05

Okay. So we are not small fish Exactly. Moving the numbers here, but anyway, there might be 17,000 home sales this last year, just roughly. We'll cover that next week on the show. But if you go back to 2019, there were 1700 new listings that came on the market. A little under 1100, sold the 30 or fixed rate was around four and a half percent. Yeah . Then in 2020, guess what? We also had 1700 new listings , um, you know, give or take a couple dozen and about the same number of sales, 30 year fixed rate was at 3.75. Then in 2021 we had , uh, covid , well , 1500 new listings. Guess what? That was the same in 2022. Mm . Okay. Long comes last year only 1200.

Speaker 3 5:51

Right.

Speaker 1 5:52

So last year we're down 300 from the previous two years,

Speaker 3 5:56

Which we're down a a couple hundred from the year before that.

Speaker 1 5:58

Yep . 500. Uh , overall, so where do you guys think, what do you think listings are gonna look like in January, 2024? David? We'll swing it over to you.

Speaker 4 6:06

Uh , I'm gonna say 1500. 'cause I think I , I , I think home sellers are going to grow impatient and say, I don't care because they want to get on with their lives.

Speaker 1 6:21

Tim ,

Speaker 3 6:23

Uh, I'm gonna say 1600. Whoa . Uh , just because I think, I think David is onto something where I think the rate shock is wearing off a little bit. Uh, where sellers will be, you know, maybe a little bit more willing to give up whatever rate they have, whether it's three, three and a half , four. Alright ? And then, you know, rates tickling down from their peak is gonna help them be more willing to buy, I think as well.

Speaker 1 6:46

Alright , I'm gonna go with 1200. We'll see where we are . Pessimist , I like it . The month, we'll let you know. Alright , when we come back, we're gonna start telling some stories from the front lines of mortgage lending. We're gonna start out , uh, guess what, people are still buying homes right now , uh, here even at the end of December. And David's got a story about somebody on how he helped them get over his own fears. We'll cover that when we come back. You're listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2 7:15

Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 4 7:24

Welcome back to the ACU Net Mortgage and Realty Show. 2023, you know, summary edition. I'm David Wicker , uh, joined by dad, Brian Wicker and Brother-in-Law. Tim Holdman. Uh , dad, I was , uh, regaling you of a client who I connected with this week who got an accepted offer. 'cause as you said, people are doing that even here at the end of the year and a referral from their real estate agent because that real estate agent loves working with me and the whole academic mortgage team. And when I Smart agent, hey, smart agent. Uh, when I connected with this buyer, though, he was not struggling with, he was afraid of the possibility that, man, I might buy this house 'cause I want this house. I close in January, my first payment then is March 1st, but I'm currently renting and my rent, I will have a rent payment on March, April, and May. So there might be this overlap where I might have both a new house and a new mortgage payment and also a rent payment. And , and that was making him nervous.

Speaker 1 8:42

That's pretty common for first time home buyers,

Speaker 4 8:45

Right ? Absolutely. Very common.

Speaker 1 8:47

Everybody's gotta wrap up their old lease.

Speaker 4 8:50

And, and so for him it was concern on like, do I want to possibly endure? Do I like this house enough? Am I ready right now at the end of December to, you know, jump into this specific home?

Speaker 1 9:04

Also , maybe it was a little too early for him.

Speaker 4 9:07

I think, you know, like a lot of things, it depends on the house, right? For the right house, you , you're willing to consider things that you aren't willing to consider for the wrong house, let's put it that way. Sure . So as, as you taught me and all loan consultants and we share with clients, let's quantify it, right, because it feels like this scary monster, but we gotta double payments. Double payments. But let's turn the light on. I have a 2-year-old at home. Can you tell, we gotta turn the light on. So I , what I asked, I said, what's your rent payment? Oh , it's a thousand dollars a month. I said, okay, well worst case, you'll have a thousand dollars March, April, and May $3,000 that you might have to spend in addition to your mortgage payment. He qualifies all day to buy this house. He also shared with me that in his mind he had earmarked $20,000 for his down payment, closing costs , the whole kitten caboodle. What I shared with him was, I said, that's great. 20,000 was more than he would need to get to the closing table comfortably. I said, if you're concerned about the double payments, let's consider this. You have the 20,000 earmarked in your mind. Why not consider only using 17,000 of the money you have allotted

Speaker 1 10:37

Genius

Speaker 4 10:39

And then set aside over here in your mind, you know, on the left this extra $3,000 so that if the worst comes to pass, you've already got the money set aside. Well ,

Speaker 3 10:53

Wait , David wouldn't, wouldn't that increase his monthly mortgage payment <laugh> because he's reducing his down payment by $3,000?

Speaker 4 11:01

It is, it would cost him the equivalent of about $16 a month in payments.

Speaker 3 11:07

Tim. 16 a month.

Speaker 4 11:08

$16 for, because here's the other thing too. If his landlord finds a new tenant, the tenant takes over. So if he gets really lucky, the landlord finds a new person, he never has to make double payments, right ? But maybe there's one month of double payments and then the , you know, his rental gets a new person and he gets to go keep air quotes, keep the $2,000 then that he didn't have to spend on double payments.

Speaker 1 11:41

And maybe as a new homeowner he'd have something that he would want or need to buy. Uh, you know, if it's a single family home, he might need a lawnmower. You know, things like that, right? So, yeah, that, that's a , that was a very clever , uh, solution. And so did this ease his mind and allow him to proceed forth with , uh, confidence and joy? It

Speaker 4 12:00

Totally did. So we, we connected on Wednesday, talked through all that. And I mean this is why, this is why advice is key, right? Because this isn't about what's on the spreadsheet. It was what makes him comfortable. And yes, the answer was a numbers based answer. But what we really came to was you can do this and be comfortable in this transition time. So he got the accepted offer because in teaming up with this real estate agent, then like all ACU net loan consultants, I David called the listing agent, texted the listing agent to be like, this buyer's a slam dunk. Really safe choice for your seller gets the accepted offer. Then we get into discussing different rate and cost options, more meat on this bone because a real life example, let me tell you more about this story when we come back. You're listening to the Accu Mortgage and Realty Show on six 20 WTMJ, getting you into

Speaker 2 13:05

The home of your dreams. Here's more of the ACU Mortgage and Realty Show with Brian Weer on WTMJ.

Speaker 1 13:12

Welcome back to this , uh, new Year's Eve edition of the Anette Mortgage and Realty Show. And we're talking about , uh, one of David's clients who just got an accepted offer. We helped him figure out how he could bridge possibly having , um, to pay his rent payment whilst also making his first few mortgage payments by reducing his , uh, downstroke by three grand, which is a great idea. David has off to you. And now we wanted to tell us a little bit about the rate and closing cost choices that you presented and he REITs her down. So let's hear it.

Speaker 4 13:47

Yeah, so this was, I really enjoyed option 1, 5 9 9. Smells, tastes so good. Yeah , 5 9 9 paying some points to get there. Uh , and there was some , uh, PMI on this 'cause he was putting less than 20% down, but functionally, the a PR was about 6.2 middle column and

Speaker 1 14:08

Points are what are points, again,

Speaker 4 14:09

Points is interest paid in advance. It is an investment to lower the rate, I'm gonna say lower than what the general rate would be.

Speaker 1 14:20

Well, because you're gonna give them door number two, what was door number two?

Speaker 4 14:23

Door number two, 6.25%, kind of not too hot, not too cold . Some points but not, you know, not paying as much to suppress the rate down all the way to 5 9 9. And then door number three, 6.5% no points. A PR 6.6, no points. Because that's the give and take . And that's what, you know, Tim and I and all loan consultants share with borrowers is like, there's not just the rate. You have options. And I, what I've begun to do with clients to just try to get the conversation in the right framework, I ask, what do you think interest rates are gonna do in the next year? Because like sports and weather, I think, does everybody have an opinion about what interest rates are gonna do or is that just what we talk about when we, you know , hang out? I

Speaker 1 15:16

Think if you're in home buying , if you're in home buying mode, yeah, you probably do have some sort of an opinion. You at least have it as a topic on your mind. And yeah, what did this chap , uh, what was his answer? He ,

Speaker 4 15:27

He shared, he must listen to the Anette Mortgage and Realty show on 10 AMS on Sundays on TMJ. 'cause he was like, oh , you think rates are probably gonna come down, you know, sounds like the Fed is gonna, are they gonna take their foot off the gas? They're gonna , they're gonna rates whatever , break gas the Fed. They're gonna help us out. They've been hurting us now they're gonna help us out. So I said, well if you think rates are gonna come down, picking something where you're paying points, you're never gonna make your money back. As I, as I say to folks, when you decide to pay points to lower the rate, you're actually hoping that rates stay the same or get worse and go up.

Speaker 1 16:12

And if you're not hoping, you're betting, you're placing your bet, bet that hey, I would rather pay money now to get a lower rate than accept a slightly higher rate in payment for a period of time while I wait for rates to come down. And generally, or Tim, what , what's the typical when we're showing people the break even ? Meaning if you pay points to get the lower rate, how long will it take you to recoup that versus the no point option?

Speaker 3 16:38

Yeah, I mean it varies a little bit based on loan size and things like that , but generally around four to five years, if not longer is , is the breakeven. So, you know, David hit it right on the head, but it's like if I'm reviewing those options with a customer and we have a nice little table that we show them that shows that breakeven calculation, it is, do you think you're gonna keep this particular mortgage for at least four years? Right ? Because if you don't, then technically you're not making a good fiscal investment of your money to buy down the rate all the way to 5.9. Now if in real life you wanna brag to your coworkers at the water cooler that you got a rate with a five, I got 5, 9, 9 by all means yeah , spend the money to do that . But you're probably not gonna follow that up. You're like, oh yeah, but by the way, I paid, you know, two points to get that rate . Yeah . That , that's that , that's never brought up at the water

Speaker 4 17:22

Cooler. Right? So the other side , what does the guy

Speaker 1 17:24

Choose ?

Speaker 4 17:24

So the other side of this story wa that my client ended up choosing 5 9 9 paying the points because he wanted the sure thing that, that yes he might be foregoing, you know, let's say next year or you know, eight months from now, race her at five and a half . He might just be like, eh , shrug, like, you know, it doesn't really move the needle for him because the savings isn't as much. But what made him comfortable, and this is right, this is mortgage lending. It's both numbers and real life. Real

Speaker 1 17:59

Life. It's emotion. Yeah.

Speaker 4 18:00

Emotion. He single guy, you know, working, got some savings but felt most comfortable that he's got the sure thing and not the hope or the expectation that refinancing in the future would rescue him. Sure.

Speaker 1 18:19

Fine. We're all about, hey, whatever makes you feel

Speaker 4 18:21

Comfortable, it's , I'm gonna cook your steak how you want it, 'cause you gotta eat it. But I'm gonna tell you how it tastes

Speaker 1 18:27

<laugh>. Right ? Alright , so when we come back, you know, rates have now fallen enough we're , we have some people that we can refinance 'cause they , um, what, you know, bought homes at higher rates. So I'm gonna come back with a story , uh, on that. I'm gonna call it the Bird in the Hand story. We're gonna get to that right after the news. You are listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2 18:53

Don't break the bank to get into a house, back to the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1 19:01

Welcome back to the second half of today's show. I'm Brian Wicker, the elder. That's David the son and taller and even taller than David is Tim the son-in-law. Tim and even younger Tim and even younger. There you go. And more handsome, you know, than I ever was. Okay. So , um, about a , a year ago in November of 2022 , uh, after an more than a year long search, so this started, this story goes back to 2021. Yeah. When a , uh, a young couple , uh, was introduced to us by their , uh, her father , uh, for this home search. And, and I I lost track of how many preapproval letters we wrote <laugh> . Uh , and and finally last November they got a house under contract. And this was at the exact bad time of that year 'cause rates had been going up in the fall just like they did this last fall. And so at that time we were faced with, Hey, would you like to have a um , rate of 6.625 or we can give you this thing called a temporary buydown where you're going to enjoy a rate of 6.125 for the first year. And , and that was a big payment savings. I'm gonna say that was a couple hundred dollars a month, right? Yeah . Uh , versus , uh, the other alternatives. And, and so that is what they chose the and and the , the fathers in the financial world. And so at that time, he and I both thought rates are gonna go down in 2023. Well they, they didn't, they did not. But this young couple was able to enjoy the 6.125 , uh, payment rate I'll call it for the full year. And now starting in January 1st, their payment will go off to the rate of 7.125. Okay. And so just like a miracle rates came down in the second half of December just the right time. And so I reached out and said, you know what, I can refinance you back down to 6 6 2 5, which would reduce your monthly payment by $123 a month

Speaker 3 21:13

Compared to the 7.125. Correct . That their payment's about to be correct.

Speaker 1 21:16

Okay. Correct. And uh, and that'll cost you 972 bucks. Okay. Now it's interesting 'cause you just heard David said you got somebody 6.5, you know, with no points. This was with no points and only $972. But the reason the rate was a little higher is one of their credit scores was in the second highest tier. Okay? Sure . And so folks, that's what rate you get depends on a lot of factors. Uh , two of the most important are what is the qualifying credit score and if there are two borrowers, we get to use the lower of the two. Right . And then the other thing is how much equity you have. Now, amazingly , uh, this house is over in Janesville and uh, they bought it for uh, $290,000 in 2022. Oh , I was putting it through the computer system and playing around with what value will Fannie Mae's Auto Automated Auto Rating system accept,

Speaker 3 22:15

Let us use for the purpose of the refinance,

Speaker 1 22:17

The answer is $327,000. So up like $37,000. Let

Speaker 4 22:24

This be an example. They bought it . Yeah . What did, what did Redfin say? Okay, well they were okay . Yeah . Wrong they were wrong.

Speaker 1 22:32

Well, and you know, you had people last year at that time wondering if they overpaid, right? Yeah. For their real estate. And uh , so the good news is we did not need an appraisal waiver and this allowed them to get to 25% equity. Right. Which is so huge . Which is which gave 'em the as good a pricing as I was able to offer. Well, and then I also gave them an offer 'cause they had additional funds that they did not put down when they bought.

Speaker 4 22:59

Is the, wait is the summary. Did they say, Brian , that sounds great. Let's do it <laugh> . Well,

Speaker 1 23:05

Not exactly what there , there was some hamming and hawing actually , um, that, well you know, is this enough? Is this enough of a savings and gee, I wish it , it wasn't costing $972. I was like, yeah, I wish it wasn't costing that much too . And I didn't bring this up, but it was, you know, in part because of this credit score. Um, so long story short, I gave him a couple of other options and in the end though, what I reminded them of was there is a cost of waiting. If you say no, this isn't enough, now you are going to be paying $123 every three month

Speaker 3 23:46

More, more than you could have Yeah.

Speaker 1 23:48

While you wait and you then have to make that back, you know, with some, you know, how much more do you think rates are gonna come down? And by the way, my opinion , uh, is that this rate drop that we've seen here in the second half of December is all we're gonna get for a while .

Speaker 3 24:06

Right.

Speaker 1 24:07

Because it was this big relief that okay, you know what, we think we've got inflation beat. You know, we think that the Fed is definitely not gonna raise rates and maybe they're gonna start to cut rates. That's all baked into today's

Speaker 3 24:20

Right . That reaction is all baked into current pricing. So it's not like rates are gonna magically drop more when the fed cuts actually happen in 2024 . Correct .

Speaker 1 24:27

That's exactly, bingo. Alright , when we come back, Tim, I'm gonna have you tell your interesting story Alright . About that's a home buying story. Um , where we came across an unusual , um, clause in a contract that we hadn't seen before. And I'll tell you, I figured out why we hadn't seen it by the way. Oh, okay. All that. When we come back, you are listening to the Aced Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ.

Speaker 2 24:52

Important home buying questions and answers you can count on. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ. Alright ,

Speaker 3 25:02

Welcome back to the Anette Mortgage and Realty Show. Uh, this is Tim Holdman , senior load consultant at Anette Mortgage joined by Brian and David Wicker. We are the three headed triple threat radio show this morning. Uh, and I wanted to bring it back to tell an interesting story of a , a past customer of ACU nuts who reached back out to me this week. And , uh, and David and , uh, I'm sure all of us would agree, we wear many hats , uh, <laugh> as loan consultants, not just mortgage related . He actually had some questions and concerns about his purchase contract. Uh , and we ended up doing a three-way call with him and his agent that he was using. But he, he came to me and said, Tim, I have an accepted offer. And I said, congratulations, the hardest part is already over for you 'cause you have an ao Yeah . And he's like, yeah, I wrote an offer contingent on the sale of my current home. And I said, wow , that's great. Uh , don't see that very often,

Speaker 1 25:55

Kind of the kiss of death. We usually call that. Yeah . Nobody wants that,

Speaker 3 25:59

But apparently the seller said, no problem. And , uh, we review the contract together and at first glance it was a little alarming because it said that this gentleman had to not only have an accepted offer on his current home, but actually sell and close on the sale of his current home by no later than January 2nd, 2024. And , um, I said, well, Mr. Customer, do you , uh, have , uh, someone who's willing to close FS No. I just listed my property a couple days ago. I was like, okay, well if I'm reading this contract correctly, basically means that if you don't have someone buy your home by Tuesday, you have to deliver proof to the seller of your new home that you're about to buy. That you can either be a cash buyer or get financing in place without and then and waive your home sale contingency

Speaker 1 26:47

Yeah. Without having to sell your home. Right. Okay. So this is like a little different , um, task for you, which Right. Could you, could you approve him to buy without selling his house? Oh,

Speaker 3 26:59

Absolutely. Super strong buyer. Okay. Excellent. You know, debt to income ratio, excellent credit score. Plenty of money for a down payment without, you know, home sale proceeds. So he checked all the boxes and I told him that. I was like, listen, this isn't a matter of can you or can you not buy this new home without selling your current home? 'cause you absolutely can and if you like the property enough, you can , we can do this for you.

Speaker 1 27:21

But he was not aware, just to clarify, he was not aware of the provision. Right. Because he , he looked at the headline, I'm looking at the form right now that says, yeah, it's contingent upon closing of buyer's property. Mm-Hmm. <affirmative> . But what he didn't look at was by the 2nd of January <laugh> , he kind of missed that detail. Yeah , yeah. Which is a totally different kettle of fish. Okay. So, so go on.

Speaker 3 27:48

So I said, you know, this is about if you are comfortable potentially waving this contingency in a couple days, in two days. Right. Because that's basically what we're looking at having happening here. Yeah . Unless, and at that point we had not done the group call with the agent yet. So he said, okay. Yeah, I'm gonna have to think about that, Tim. So then we, we got on the phone with the agent and the agent , uh, brought a lot of clarity the situation. Apparently the seller is super flexible and super easygoing with the offer for whatever reason Mm-Hmm . <affirmative> . And they said that they're happy amending that home sale contingency to match whatever the closing date will be once our customer gets a buyer on the line to, to buy his current home.

Speaker 1 28:30

Okay. So this is ,

Speaker 3 28:31

So he said that amendment will be coming. He said he , he simply made it one two of 2024. 'cause he didn't want to have to amend the , uh, contract several times as they were pushing out the date.

Speaker 1 28:42

Okay. Which, I mean, this , you know ,

Speaker 3 28:44

Struck me as kind of odd, but honestly, I I I told our customers, you know, if you, you simply have to be you willing to take his word on it, you know, 'cause likely the, the 2nd of January is going to come and go before you even have a buyer on the line for your current home.

Speaker 1 28:59

Well, yeah. How long has he been on the market?

Speaker 3 29:02

Uh , two days.

Speaker 1 29:03

And this , this is a form that we don't often see because it's in a , uh, it's in , uh, one of the shoreline counties north of Milwaukee. Right. And they use a different addendum. A so yeah, this was interesting to see this , uh, provision in there that

Speaker 3 29:18

A little different flavor, you know , you know , he's gonna proceed. 'cause ultimately I showed him some options that made him realize the numbers aren't really that scary at the end of the day anyways. Even if he doesn't have a buyer for his current home, you know, on or before the date he's set to buy the, the new home. So I , as a bottom line, if you like the new house enough, you're gonna be able to, you know, buy it without putting yourself in a unnecessarily, you know, risky financial situation.

Speaker 1 29:43

Okay. And the good news is, we could have helped him even if he had to , uh, you know, be able to prove that he could buy without selling his home. But that wasn't one that's in his head. And so now we can just proceed as, as normal. And,

Speaker 3 29:56

And the other thing that's funny too is, you know , it may actually turn out the other way where he doesn't even need us for a mortgage on the new place. Oh . If he sells his home for enough money and, and you know, so he was appreciative of the consult , uh, and the , and the information. Even if though we may not end up doing a mortgage

Speaker 1 30:10

For him . Oh yeah . Okay. It's gonna be mortgage free . Well , I hope not. Yeah. We'll

Speaker 3 30:13

See . We ,

Speaker 1 30:13

We believe in our product. That's right. Alright , when we come back , um, got , uh, one other interesting refinance story to share. You are listening to the Acade Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2 30:26

Find a place to call home without the headache. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1 30:34

Thanks again for tuning into today's show. I'm Brian the Elder, that's David over there, the younger Wicker. And Tim Holdman , our senior loan consultant. David's brother-in-Law. My son-in-Law. All teaming up here to hopefully give you some useful information , uh, for, for financing and refinancing. And this story that I wanted to share has to do with the refinance and has a couple of aspects to it. This is a refinance caused by our age old friend divorce <laugh> . So unfortunately this uh, homeowner is going to have to give up his 3.99 mortgage and um, and we're getting him a 6.5 30 year fixed rate. Uh, and that was with only $218 of total loan costs . Yeah . Not bad because he's got great credit and a lot of equity in the house. Luckily he does not have to pull any equity out of the house to pay off his ex-spouse, which is often the case in a divorce situation. Yep . Um, but the interesting wrinkle here is we were kind of going through the numbers. Um, we were using a existing loan balance of like 190 and then I update his credit report and it's like, it's reporting 210,000. Oh . And I look at it a little longer. Right . Look at it . Oh, there were no payments made back in 2021 for a period of time because of

Speaker 3 31:55

Forbearance.

Speaker 1 31:56

Forbearance. You wanna give us a working man's definition of forbearance?

Speaker 3 32:00

Sure. So basically during COVID , uh, forbearance came about as a tool to help , uh, borrowers that, you know, were potentially down and out financially speaking for a variety of reasons. Basically , uh, the way they could raise their hand and say, Hey, I'm having a really hard time paying my mortgage right now. Uh, so they were allowed to do forbearance, which means they could pause their mortgage payments, but it was not the thing that maybe people thought it was, it wasn't free money. Uh, basically the entire balance of those for forebear payments, deferred payments were tacked onto the mortgage in the form of uh , what's known as a silent second lien. Yeah . Uh , which basically means they didn't have to pay on it, but it needed to be paid off when they either refinanced the mortgage or sell the property.

Speaker 1 32:45

They should have called it like postponement is what they

Speaker 3 32:47

It is

Speaker 1 32:48

What it really is. Yeah . Right. Right. And so just to be technically accurate, it didn't become a second lien. It, what they said is it's still part of the first mortgage lien from a technical standpoint. Sure. But you're gonna get to pay this at the end, <laugh> . Okay. And in the meantime though, the cool thing is they're not charging any interest on that. Wow . And it was like $19,800. Yeah. So after grieving, it was a very fast grieving process. Mm-Hmm . <affirmative> that we went through with this client because he was able to look up online or he found his statement and oh yeah, one 90 is my principal balance, but then there's this other $19,800. Oh

Speaker 3 33:25

Yeah. I remember not making my mortgage payment for six months or whatever.

Speaker 1 33:28

Not interest bearing mean a portion of it. So , um, so we're gonna have to pay off both, you know, there was this Well can I leave that? No . Mm-Hmm . You gotta pay it all off. Yeah . You can't just leave that little SCHs nibble out there interest free . That's not the way that program was designed. And um , then the other interesting thing is this time of year is when taxes get paid. Right . Well, his tax escrow account was also short 'cause of the forbearance. Right. And so at first we thought, well, you know, how do we want to handle that? But because it was a contentious divorce, it turned out that the best thing for him was to have the existing loan servicer pay the taxes Okay. And create a deficit in the tax escrow account. 'cause if there had been a surplus in the

Speaker 3 34:17

ES account , so then we could , we could loop up that deficit as part of the payoff anyways, right?

Speaker 1 34:20

Yeah . Correct . Correct. So we're gonna handle it through the re the deficit we're gonna handle through the refinance process. Right . When we get back on track for the new loan, the problem would've been, had there been an , uh, excess or leftovers in that escrow account, he would've gotten a check back payable to him and his ex-wife. Oh right. 'cause from that loan servicer's perspective, both on , she's still on the loan. Right . Yeah. Which is why we're doing the refinance and there was no way they could get her to cooperate. Uh , yeah. So this turned out to be a very happy ending in terms of , um, you know, things just coming together. A little bit of luck and we'll take it

Speaker 3 34:56

Very lucky than good. I will say too, that refinancing, because of a divorce, there's always some unexpected curve balls that are gonna come up that can make the process a little bit more stressful for the borrower. So it , it's definitely worth having a really good experienced team on your side. Oh yeah. When you're trying to refinance due to a divorce

Speaker 1 35:14

Specifically. Yep . That, that is something that we are unfortunately pretty good at. Yep . Happens a lot. Um , alright , well here we are starting 2024 in the phase . It's gonna be, it's supposed to be better. Uh ,

Speaker 3 35:28

Gonna say that and ,

Speaker 1 35:29

You know , we'll see what happens. That's , and, and I, I think it will be at least, you know, what's gonna come back for our industry anyway is there, I think will be more refinancing. Right. Simply because , uh, rates are gonna continue to hopefully come down a little bit. They're already down from where they were, we're in the mid sixes. Uh, David has shared earlier in the show, we locked somebody in 5.99 because they were willing to pay a little bit extra upfront . So things are looking pretty good. That's all the time we have for today and we're gonna see you back here next week. You've been listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Accu Mortgage and Realty Show are solely that of the host or guests of academic mortgage and Academic Realty advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.