The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 4-21-24
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: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:Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with ACU Nett Realty Advisors, and the majority owner of Anette Mortgage, where my individual NMLS ID number is 2 5 9 6 1 0. And that guy over there is my son David. He's one of T'S Senior Loan consultants and also our Chief Client Experience Officer and his NMLS ID number's 3 2 8 8 4 7. If you've got a question or a comment, remember you can call or text us on the WTMJ talk and text line , which is 8 5 5 6 1 6 1 6 20 . And you can also get a podcast of today's show and any of our past shows wherever you normally get your podcast. So David , uh, late in the afternoon on Thursday , the Wall Street Journal , uh, which I read every day , sometimes twice a day, had this headline housing market slumps as mortgage rates top 7%. And then they go on to quote Freddie Macs weekly , uh, rate publication that comes out on Thursdays where they said, Hey, you know what, the 30 year fixed rate was 7.1%. Mm-Hmm . <affirmative> , do you wanna say what's uh, wrong with this picture so far?
Speaker 3:Well, this, this number that Freddie Mac puts out is old data. You know, it used to be that it was like a maybe two or three days out of date, but it's been, it's become worse. This Freddie Mac number is a synthesis of like the past two or three weeks of what rates have
Speaker 1:Been. No , it's actually , it's one week now. I I looked into that. Oh , okay . They got it down to one week of data and they're looking at what rates are mortgage lenders putting through their loan approval software. Go ahead. The ,
Speaker 3:So the Freddie Mac survey is, what's the average weather been the last week? Yeah. And we believe that the better resource is Mortgage News Daily, which is a, let me look out the window and see what the weather is right now. Yeah . Update on what rates are
Speaker 1:And where did , where is that number as of Friday? Seven . I know the answer . 7.44, is that what you're seeing ? Okay.
Speaker 3:Yeah, exactly.
Speaker 1:And , and the other difference is the mortgage news daily , um, is the best possible scenario as close to zero points as possible, and points are interest paid in advance in order to get a lower rate. So that number 7.44 with no points, that's like if you're borrowing $300,000 with 40% down. So even that is not close to a majority of scenarios. Yeah. Uh, the Freddie Mac number, by the way, they don't tell you what , how many points are being charged, but the point is , uh, that actually on Tuesday , um, 30 year fixed rate mortgages reached their highest level since November. How come?
Speaker 3:Well, it was a continued reaction to , uh, inflation reports from the previous week. Am I not remembering a specific event on Tuesday? I thought it was just this continu retail
Speaker 1:Sales. No . Oh , okay . It was retail sales. So, so, you know, at the beginning of the month, we had a much hotter than expected jobs report. Yeah. Then the following week, we had a slightly higher than expected inflation report. Right. Uh, and now this past week we had, and retail sales came in way higher. So what that means is then , I think it was on Wednesday Fed Share , Powell finally came out and said, you know what, we may not have any rate cuts in 2024. Yeah . You know , uh, because remember at their March meeting, they all put out their little dot plot and said, you know what? We think we're gonna have, we're still gonna have three rate cuts in 2024. Uh, you know, as long as inflation keeps coming down and, and the economy begins to cool, well, guess what? The economy is not cooling and inflation is not coming down. It's going up a little bit. Thank goodness. Nobody's really talking about them raising rates anymore than they already are. Mm-Hmm . <affirmative> And remember folks, the Federal Reserve only controls one rate, the rate that banks charge each other overnight. It's called the Fed Funds rate. And I believe that's at five and a quarter .
Speaker 3:Yes.
Speaker 1:And then is the, the , the rate that correlates in consumer world most closely to that overnight rate is the prime rate. And I believe the prime rate currently rests at, I'm gonna say 8.5,
Speaker 3:Eight and a half . Yep . Eight
Speaker 1:And a half . Right. So that's the rate that people pay on their credit cards. It's , uh, the most common index used for home equity lines of credit. And , uh, and then you've got the 30 year fixed rate, which is kind of a cousin , um, of all the other rates. But we're all worried about the same thing. Inflation, the 30 year fixed rate's not gonna come down now until we see some better inflation reports. You got a comment over there, sir?
Speaker 3:I'm just, the , the tagline for all of this, dad , is how many of my clients called me up this past week despite retail sales reports on Tuesday and said, ah , David, ah , were pa the house, hun . We, we were gonna buy a bigger house for both of our babies. But then I looked at rates and I said, my kids deserve small rooms.
Speaker 1:Yeah. Right.
Speaker 3:None of my clients, zero of my clients.
Speaker 1:0%. And we had, we had a kind of healthy , uh, week of new applications. People are out there writing offers and we're helping 'em get accepted. What do you got a story?
Speaker 3:I wanna tell you the story. So when, after this first break of someone who got an accepted offer this week on a nice home because they have a two week old at home and the conversation, yes, we picked a mortgage game plan, but I wanna tell you all the real life reasons why they are proceeding with their home purchase that story, and many others after this first break, your listening to the Anette Mortgage and Realty Show on AM six 20 WTMJ
Speaker 2:Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ. Welcome
Speaker 1:Back and thanks for tuning in. And we are just debunking the , uh, headlines in the popular media , uh, most notably the Wall Street Journal, talking about the housing market slumps as mortgage rates top 7%. Well, mortgage rates are actually higher than that, folks closer to seven and a half on a 30 year fixed scenario with all the right stuff and no points. But David, you said you've got, somebody got an accepted offer this week and it doesn't seem to us at the front lines of mortgage lending for home buying that , uh, people are hitting pause. So we are not seeing the housing market slump in our neck of the woods. But tell us a story about your happy , uh, couple who got their offer accepted this week. How'd they do
Speaker 3:It in Indeed ? So their agent , uh, they made the introduction and because they were on a timeline, the in conversation with the listing agent , uh, it sounded like the seller was gonna be considering at least one other offer coming in the door. And our clients were on the clock to get their offer in by , um, noontime. This was on Thursday. 'cause the seller was in Europe actually. And so, you know, the seller's gonna go to bed and they'd like to say yes to a buyer, hopefully, you know, before it's, you know , midnight wherever they were. Uh, and because we're quick on our feet here at Acuate , I was able to connect with the client and put together the mortgage game plan. They've got great income and they were dad , they were doing what I think is a , uh, not common, but a , a tool we've seen before where they were going to be writing a cash offer. I'm not sure if the proof of funds was their funds. It might have been someone else's funds
Speaker 1:Mom and dad's funds somehow,
Speaker 3:Or Yeah. Which is a , which is
Speaker 1:A kind of a stretch. Yeah.
Speaker 3:Yeah. That , that's
Speaker 1:Not the way the contract reads. It doesn't say, Hey, you gotta show us that you or your parents have enough money to pay cash. The actual offer to purchase says you the buyer have to show us the money. Yeah. But go on. So some, some kind of a version of that. So is cash offer any appraisal contingency?
Speaker 3:Uh, I, no , because they were putting more than 50% down , uh, because these young folks were the , the conversation that I eventually got into them. So they, they got the accepted offer because they were just, you know, it on paper, it was a cash offer. They wanted some comfort that they could actually get mortgage financing for themselves. Sure. 'cause they didn't want to actually stroke the check . Yeah. Yeah. Uh, and so I ended up sharing, you know, with them a preapproval letter that they did not use with the seller offer. Right, right. Uh, but the conversation that we got around to was they were , uh, from the sound of it, they were going to be gifted a large amount of their down payment. And it was this classic conversation of like, look, I know that the monthly payment is influenced by what rates are today, but you've got wiggle room in the amount of money you actually can decide to show up with at the closing table. Mm-Hmm . <affirmative> . Right . It's like, okay, you want to put 50% down, let's go. And the other interesting piece about this is one of the clients is a financial advisor. Oh . But it's like, I understand, you know, you wanna be able to sleep at night and I love sleep, but why not 49% down? Or why not 48% down or Yeah . The slippery slope of, Hey, you've got, because as I noted in the previous segment, they have a newborn, ah , newborns cost money. I Yeah, they do. Can declare definitively they cost money. Uh , and so do things like school and college and years to come. First time home buyers , by the way, it sounds like. Yes. First time home buyers. Um, and ultimately what's fun about how we actually go about manufacturing the mortgage, and I tell almost all my clients this, they proceeded with a, a game plan. Um , they , we got going at the, they wanna put 50% down, but what I told my, okay , let's get the train started. Yeah, exactly. What I tell them is, you can consider this as the first draft because when you get the accepted offer, it's a whirlwind. You know, you're bas you know, not only are you lining up for them the mortgage, they got real life stuff that they're, you know, thinking about in their mind too. And I tell clients I wanna pick a first game plan, but you've got some time to sleep on it and get comfortable with the numbers that if you call me up until about one week before you're gonna buy the house and you say, David, I know my first, you know, draft of the game plan is I wanted to do 50% down, but as we look at things we wanna do to the home or money we want to have left over when we actually are moving in, we'd like to modify the game plan to 40% down to keep some of their cash. And I tell clients we can update the game plan, we're fine the game plan up until about one week before closing. And I think they really like that . Lock it down . Okay . So they like the flexibility. Well, or just the ability like we can get going without them feeling like they're pouring something in concrete. You know, the nanosecond that they get the accepted offer.
Speaker 1:Alright. So when we come back from this next break, let's talk a little bit more about the relationship between mortgage pricing and , um, the down payment. 'cause there are some levels that you can hit that improve the pricing on your mortgage. Sure. And then let's also talk about, you know, what these people, if you , if you have an idea, you were also telling me before we recorded this segment on the last break about you closed on a two week closing Oh yeah . Just , uh, on Friday. So let's talk a little bit about that as well. You are listening to the ACU net mortgage and a realty show on Wisconsin's radio station AM six 20 WTMJ,
Speaker 2:Getting you into the home of your dreams. Here's more of the ACU Net Mortgage and Realty Show with Brian Wicker on WT mj.
Speaker 1:Welcome back and thanks again for tuning in. I'm Brian Wicker, the elder. That's David Wicker over there, the younger teller , handsome of the wickeds. And , uh, David , uh, we were talking a little bit in the last segment about , uh, the relationship between down payment and , uh, the kind of terms that you get on a mortgage. And I just wanna quickly cover that. You had this first time home buyer couple looking at putting 50% down, half down. And so I just wanna throw out there this interesting fact. I used a $320,000 purchase price three 20, that's the median sales price in, in the five county Milwaukee metro area. And , uh, we could still deliver, by the way, folks, despite rates going up to as high as they've been since November, for a person putting 50% down, we could do 6, 9 9 , uh, they would have to pay $1,800 in points or interest in advance to snag that 6 9 9 rate making the a PR 7.12. And I said, let's look at the difference in payment between putting half down 50 and putting 40% down. The difference is $212 and 68 cents a month. So it's not nothing. Right. That's , that's a number. And , um, the the thing though, though you have to remember is, oh, but if I put 10% less down, I get to keep the $32,000. Yeah.
Speaker 3:Don't forget the hammer. Oh, I can keep $32,000 in my checking account.
Speaker 1:Yeah. And so I oftentimes , I don't know if you do this, but because it's right in our calculating software that we built, if you look at the difference between cash out of pocket and monthly payment, if you took that 32 grand and just left it in your checking account, you could take the difference in payment out, let's round it to $213 and supplement your monthly payment for only 12.3 years
Speaker 3:<laugh> .
Speaker 1:So Yeah .
Speaker 3:Yeah .
Speaker 1:You know, and then, and then people will often do things like, well, yeah, we're gonna put all this fif we're put half down, but then we're gonna wanna do some remodeling. So can we open up a home equity line of credit? Then it's like, no. I mean you can, but you're much better off just putting less money down Yeah . And enjoying that on a fixed rate. Alright . So that's my illustration of, oh , and by the way, you, you do get a, a better , um, deal if you put um, 25% down or more Yeah. On a third of your fixed rate. And then, you know , there are little adjustments based on your credit score and it typically goes 5% increments above that. Yeah. You got a comment
Speaker 3:For a lot of first time home buyers, a version of what you just described. I'll get the question. Yeah. Hey, what if we do put more down, you know, you're , our first version was maybe you wanna hold some back. Yeah . And, and the opposite question is, and what if I wanted to do more down? Mm-Hmm . <affirmative> . Yeah . And just to make the math easy, I tell clients, okay, for every thousand dollars that you put more in down payment, it's about seven bucks a month in payment. Yeah. So I was like, let's extrapolate that. What's more important? $10,000 or 70 bucks a month.
Speaker 1:Yeah. That's a little bit more digestible. Yeah. Number. That's a good one.
Speaker 3:Right. And, and many, if not, most of my clients are like, I'll keep my money. 70 bucks is like, I , this , that is not, is a , it's not a material number . Yeah. It's a poultry return given how much you gotta, you know, plow into the house. 10,000 bucks for $70 a month in savings is just, especially for first time home buyers. It's like, I call it almost like the second down payment. Yeah . The first down payment is to purchase the home. The second down payment is the couches and the lawnmower. Yeah . And the second couch and the TV new dishes.
Speaker 1:Yeah. All that stuff stuff. You , you , yeah . You've got other things. And I , I can think of two , uh, clients this year who, you know, started out putting of mine and I don't write that many loans where Yep . They had in mind a certain dollar amount. And then I came back just like you did. And I said, well, you know, do you wanna consider borrowing $25,000 more here? What it would do, here's what it would do to your payment. Yeah . And those people, they just closed two weeks ago. They're like, yep , we're gonna put less money down. 'cause guess what? They had stuff they needed to do to the house. Yes. Right. So why spend your cash? Um,
Speaker 3:Just , just as a point of, just as a point of differentiation, this is why we call ourselves loan consultants. Yes . And not just mortgage order takers because I like, of course, I want to deliver the game plan that our clients feel comfortable with. Yeah. But I'm also gonna be like, can I just tell you like the two and a half other things to consider about the mortgage? Uh , which is why we enjoy the education part of doing this mortgage thing. Because it's not just for us. It's not just like, oh yeah, half down , let her rip. It's like, can I tell you a little bit more detail?
Speaker 1:We're coming up here on the news break. David, do you just wanna tell us a little s nibble , a s nibble about your two week closing that they'll set it up for when we come back.
Speaker 3:We got it done in two weeks. We were ready at a week and a half. Uh, and I'll give you a little <laugh> , couple more details about how , uh, I got a call from the listing agent on that , uh, that closed on Friday. That that fast closing was a definitive element as to why the seller said yes to our client and not the nine others that they said no to. Uh, I'll give you a little bit more on that right after the news. Now it's time to turn it over to the WTMJ Breaking News Center.
Speaker 2:Don't break the fact to get into a house. Back to the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Welcome back to the ACU Mortgage and Realty Show. I'm David, that's Brian over there. Dad. Uh, timelines, quick timelines. No problem. At ACU Mortgage, here's spring of 2024. Uh, two examples. The one we talked about last week and just a little bit earlier, had a client close on Friday afternoon, two week closing, which we were ready on Wednesday , uh, for closing on Friday. We had time to spare. And you know, as I say, as I say to both borrowers and agents, I like tight timelines. It keeps everybody sharp. There you go . There's you no slack in the rope . No
Speaker 1:Dilly dallying about.
Speaker 3:Exactly. Well, and as I, you know, because myself and every ACU mortgage loan consultant, I'm providing weekly updates and particularly a two week closing more than, you know, two week or weekly updates listing .
Speaker 1:Did listing
Speaker 3:Agent , did this
Speaker 1:One require David, did this one require an appraisal? Or was that one of the reasons why we felt comfortable going with two weeks?
Speaker 3:Uh , I felt comfortable 'cause not because of the appraisal , uh, turnaround. We actually ended up getting a limited appraisal, which
Speaker 1:Did Okay. Yeah. The one that doesn't require a value, but rather just , uh, pictures and condition of the property. Okay.
Speaker 3:Uh , but , uh, appraisal, turnaround times, this is in the Milwaukee metro area. So we were not overly concerned about getting an appraiser in and out to get that, even if we did need a full appraisal. Um, the listing agent though, unprompted, you know, when I provided my weekly update was like, Hey, your , you know, quick closing was a definitive element in why the seller said yes to these buyers compared to others. And he, and the listing agent was making actually a referral to me because he is like, I have these other clients who when I ask their lender, Hey, how long do you need? The answer is 30 days.
Speaker 1:30 days. What are they on nation ?
Speaker 3:Not 29. You need , was this a 28
Speaker 1:Question? Was this a bank or a union perhaps that they were going with? Yeah .
Speaker 3:Yes.
Speaker 1:Okay. So institutional , uh, what do you wanna call it? Sluggishness. And Yeah . You know, we're a big factory here. We can't do anything nimbly, but , uh, that's great. So pick up another. So sometimes speed is the definitive factor in this case. Well , the speed of closing, go ahead. And
Speaker 3:I, it's, it's providing the timeline that the seller wants. That's what it is. Fast or slow,
Speaker 1:You know what Exactly. 'cause it could be slowness. They might wanna say, give me the approval. But you know what, I , Hey , I was one of these people on a transaction. I did. Go ahead.
Speaker 3:Well , and I had a client this week accepted offer , they're not moving in until after Memorial Day. 'cause that's what the seller wants. And it was like, cool, what do you , we're the buyer, we're happy to give you whatever you want for timeline . Yeah .
Speaker 1:In this market, we, we will do what you want. So go ahead. You got where you
Speaker 3:Going? Well, and so speaking of quick timelines, we in , uh, previous episodes spoke about a client of mine whose agent wanted to draft a financing contingency that would be delivered within two business days. 1, 2, 2 business days of the accepted offer. That client got an accepted offer this past week and on Friday, a loan commitment two days later with a couple caveats.
Speaker 1:Yeah. One of the caveats, I can predict one of 'em .
Speaker 3:So one of 'em is definitely we put contingent on an appraisal add a value and condition quality. Right. Uh , you know, approved by underwriting because we're magical. But this borrower was doing less than 20% down. So we were not gonna get an appraisal waiver through the software. Mm-Hmm . <affirmative> . And it takes a little bit, still takes a couple days to get an appraiser out and back to a house. So two days we can't do that. But this client did have, in their contract, it was almost, it was a little backwards, innovative, you might say they had a two day financing contingency, but a 14 day appraisal contingency. Okay .
Speaker 1:So , so they are covered. Although I wanna put out point out to folks that in Wisconsin, the only thing the appraisal contingency addresses is the value that comes back on the appraisal report. Yeah. So the only way you as a buyer can cause trouble or object is if the number the appraiser comes up with is lower than the agreed upon sales price, in which case other contingencies come into play. And in this particular one, David, were they offering any appraisal wiggle room? No . Or were they allowing this ? Okay. But were they allowing the seller to lower the price if the value came in low?
Speaker 3:Yes.
Speaker 1:Okay. The only thing that you're at risk then, for as this buyer delivering the financing contingency is what if we as a mortgage lender or the mortgage lending industry sees something in the appraisal that despite the value number coming in, there's something wrong with the property that we don't like from the mortgage lending industry perspective. You know, and we had mentioned this, you know, what if it's knob and tube wiring, you know, old, old electrical system. Yeah. Well do these, do these folks have an inspection contingency?
Speaker 3:Yes, they do. Yeah .
Speaker 1:So that helps 'em there. But they're still, I just wanna point out you're just, they're a little vulnerable in the small chance that we hate the appraisal report despite it coming in at the value. So there's a quality issue that is not, they're not protected on anymore. Correct. You wanna talk about this a little bit more?
Speaker 3:I do. Just a little bit more. So let's a couple little more meat on the bone on this one after this break. You're listening to the ACU Net Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Important home buying questions and answers you can count on. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Thanks for hanging out with us here on Sunday morning on six 20 to BTMJ . This is the Academic Mortgage and Realty Show. I'm David, that's Brian dad talking about timelines, quick timelines, slow timelines, the risks of certain timelines. Our client got the accepted offer and we delivered a loan commitment two days after the offer was accepted. That's
Speaker 1:The fastest, by the way, I think we've ever done it in our 25 years in business.
Speaker 3:So, so what I highlighted is that 'cause this client was rock solid pre-approved, which means we have documented their credit, their income, and their down payment. Yeah. But those elements as I, it's only half of the equation when you're trying to buy a house, a rock solid preapproval is about you as the buyer. I can lend you money, but the, but the whole other element of underwriting is and on what house? Yeah.
Speaker 1:What about that house? Is that the house with the bad roof?
Speaker 3:Well , and , and the
Speaker 1:Mold in the basement.
Speaker 3:This is, this is what I have, have highlighted to some agents who have asked, you know, can I write without a financing contingency because you've provided this rock solid preapproval. And in my opinion, no you shouldn't . Because well if only because it's baked right there into the contract. Like, oh, you don't, you don't require anyone's mortgage money to buy my house. Cool. Prove it to me. Show me the money. Yeah . Right . And, and the financing part, what I can't tell a buyer is I can tell you I can lend you money, but it all depends on which house. And we don't know that until you tell me the address.
Speaker 1:Well, and , and in some cases, just to be clear, we've talked about this on the show and it's our favorite thing is sometimes , uh, we will put the property address that's on which the offer is being written through the computer system and we get an appraisal waiver. Well, now we have a lot more certainty. But you were telling me off the air about homeowners insurance, this is kind of a new wrinkle in, in the modern , uh, home purchasing world. What , what , what was your conversation with one of our favorite insurance people?
Speaker 3:So let me just on your note about getting the appraisal waiver, if it's, if it's 50 50 you and the house Yeah. If we can get an appraisal, you know, relief on the appraisal, either waiver, maybe that gets us to it's 60% about you. We can speak to, you know, definitively. But to your point about homeowner's insurance, I might be able to get you rock solid. I might be able to get an appraisal waiver on the home. But if that 110 year old house in Wauwatosa has knob and tube electrical, you won't get an insurance policy on that house. And if we can't insure the house, there is no mortgage that we can put on it.
Speaker 1:Yeah. Yeah. And that is not, that is not a thing on the Wisconsin offer to purchase. There's not a section that says, oh, I will buy your house as long as I can get it insured. Well
Speaker 3:It's implied. It's implied in the financing. The
Speaker 1:Financing, right. Yeah . But if you waive the financing early, like your clients did and did that in two days, you know, how are they gonna wiggle out of it if it's not insurable that's no longer addressed and they already gave up their financing, you know, contingency. Yeah . Again, we're talking about small probabilities here folks, but that's, you know, we're trying to help people be protective. What else you got on this?
Speaker 3:Uh , so for these clients , uh, because we're always trying to figure out how do we get the lowest rate and cost for , uh, our clients. Uh, the initial plan, there was two of them. One of them had , uh, seven 50 credit and the other one had six 50 credit. Ooh . So what I was able to do was remove, we are proceeding with only one of them on the borrowed money. And the good news is that client is the one who has seven 50 credit. Yeah. And so we are able to, I mean, ignore the , the lower credit score is not part of the recipe then for lining up the rate and closing costs. So and so on paper. Go ahead. Well, I was gonna say, because we're only using one income, boy, it looks like they've got a high debt to income ratio. But in real life they actually, there's two of 'em and there's two incomes that are helping to pay the monthly bills, including the mortgage. But by doing that, NA is narrow. Is that how we The refinement? Yeah. How would you
Speaker 1:Describe it ? Yeah . Yeah . By , by leaving by , by doing the uh , minimalist less is more. We're leaving one borrower or no
Speaker 3:Minimalist mortgage.
Speaker 1:Minimalist mortgage. We're leaving one , uh, home buyer off with a mortgage application. Why? Because in Mortgage World, we don't average the six 50 and the seven 50 and say, well , we're gonna price your loan like it's 700 uhuh. It's the worst of. And so pricing this loan at six 50 would've been significantly less attractive than pricing it at seven 50 . So by leaving that borrower or that home buyer off of the mortgage application, we get to ignore the credit score. We get to ignore any monthly debts that are only in their name. Yes . Yes. But we also do not get to use their income. Okay. And so that , that's part of the best execution Yeah. That , that we do at ENT mortgage to help people get the best deal they possibly can. Hey, when we come back, I've got an update on the , um, Illinois , uh, mom trying to sell , uh, her home to her son and , uh, and a significant other. We'll get to that when we come back. You are listening to the AC Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the Acura Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Thanks again for tuning into today's show. If you tuned in last week, you heard a story about a mom , uh, in northern Illinois looking to sell her home to her son and , um, and his significant other so that she could downsize. And , uh, and , and so the one of the key features was I said, we really gotta consummate that transaction so you have the cash in your pocket. Mm-Hmm . <affirmative> because, and , and I got her , um, agent who's gonna help her search for a home to corroborate this in no uncertain terms that it is not a good idea in a tight inventory market, which she will be shopping in to write offers contingent upon the sale of your home. That is just not a good idea. And so we're going down that path. 'cause originally she thought her home was worth 3 37, according to some online estimates that she'd gotten. So she was gonna give her son and significant other $27,000 off and sell it for three 10. And I'm the first guy that said, let me show you another way. Yep . Um, and, and so the real estate agent, just this last week Tuesday, did a comparative market analysis and came up with a value of 3 6 0 360 50 grand higher. So I said, let's do this. Let's have you set the sales price at 360 and do a $50,000 gift of equity, which blows everybody's mind. What is that? And even the real estate agent is , how does that work? I've never done that before. And that makes sense because real estate agents aren't often involved in for sale by owner family transactions. That's true. Or you have this tool. So I explained it to her. It's just like, it's just another deduction on the closing statement. Just like when the seller gives the buyer a credit for their property taxes that they still owe, they're not handing a check . It just gets subtracted from the purchase price. It's a magical money , magical money. It's just a minus sign in front of there. And, and so I, I laid this out for the sun . I haven't heard back from 'em yet. But if we were to go with their game plan, 'cause they were, they were prepared to put $62,000 down, 20% of three 10 is $62,000. But because of the closing costs in Illinois, high transfer taxes, title insurance, and to get 'em a , well actually 7.375 rate , it would've taken $69,000 to do it their way. Set the price low, no gift of equity. And then I showed 'em , oh, if we set the price higher and do the $50,000 gift of equity, I can massage the numbers so that you need $61,733. Huh. Because you already have that money saved up. Kind of cool, huh? Yeah. And and guess what? The payment would be almost identical in both scenarios. So it's like, do you really wanna come with an extra eight grand to closing? Yeah. You got a question?
Speaker 3:Well, isn't there if you take this all the way, given the value that the agent described Yeah. And maybe what mom, you know, when, when the mom said three 10 in her mind, she's probably got, Hey, and then I'll walk away with a certain amount of money. Right ?
Speaker 1:That's right. Which nobody had calculated until I did it.
Speaker 3:Well, if you take your game plan to the nth, there is a way in which they could show up at closing with almost nothing. You know, if you take, if you take the 360 and she does a gift of equity of the difference between 360 and three 10 . Yeah . Or , you know, wow . Well
Speaker 1:That is mortgage . She's giving , uh, that is the , what she's coming up with is the 50 ,
Speaker 3:Right ? Oh, I'm sorry.
Speaker 1:Yeah. Yeah. 50. Yeah. Alright . All right . You're just getting ahead of me or you're just caught up with me. Alright . Yeah, yeah. So, so we'll, we'll see if they can digest that, you know, because I think the sun is still resistant to this. Oh no. Some other loan officer told me we could just all close on the same day . You can, you can,
Speaker 3:You can
Speaker 1:Only
Speaker 3:Mom if the seller to your mom says okay. Which is exceedingly unlikely.
Speaker 1:Uh , one other thing that came out this last week, Fannie Mae came out with their , uh, latest, I think it was for the first quarter, how much did home values go up in America? And because they have their own index and I believe the number was 7% year over year , I jumped out on the Zillow website. 'cause they have a whole, they got really good data. And so narrowing this down to Milwaukee, using Zillow's data , uh, home values in Milwaukee metro area, were up 7.5% year over year as of March up 6.3% in Madison Green Bay up 7.8 Appleton up 7.2. Um, Shawano where we have relatives up 9.7%. So despite everybody's prognostications last year that home values are gonna go down, the laws of supply and demand remain in good stead. So just remember folks, when you read any headlines about the housing market is slumping and that may be true in some part of the country. Maybe next week David, we will look at other areas where it's negative. 'cause I bet there are some, sure . Looking back here , but in our neck of the woods called Wisconsin , um, the supply and demand points to continued high demand and not enough supply and that equals upward pressure on , uh, values. So that's good news. Alright, that's all the time we have today. Thanks again for tuning in. You've been listening to the Accu Net Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the host or guests of Acuate Mortgage and Accu Net Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.