The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 5-12-24
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 Wicker.
Speaker 1:Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with ACU Realty Advisors, and also the majority owner of Acumen Mortgage here at , oh , you know what? My individual NMLS ID number is, David. It's 2 5 9 6 1 0. And David, your individual NMLS ID number is 3 2 8 8 4 7. And you are Acumen's one of our awesome senior loan consultants and also our Chief Client Experience Officer. If you've got a question or comment, you can call or text us on the WTMJ talk and text line , which is 8 5 5 6 1 6 1 6 20. Well, David, as I always do, I Google housing market news. Mm-Hmm . <affirmative> . And you will not be surprised to learn A CNN. Um , late last week , uh, was reporting on a gala poll that revealed what percentage of Americans, David, do you think, say it's a good time to buy a home?
Speaker 3:Uh, is the answer zero no ? Is that, what , is that what the real answer is anyway?
Speaker 1:21%. Okay. 20% say it's a good time. I say that's not
Speaker 3:Bad. Is that the word? Is that the word? Do they say, is it a good time to buy?
Speaker 1:That's right. That's, that's what I read in the article. So , uh, the converse of that , uh, is that 76% say it's a bad time. So there must be some people that don't know. Right. You got 21%. It's a good time. 76 A is a bad time, by the way, though , and I like this. It's all about context. In April of 2019, the last time Gallup asked this question before covid, 61% of people said it was a good time to buy. Okay . So, you know, this is all about supply and demand. Uh , by the way, here's, this is also interesting in that same poll ,
Speaker 3:Can I, wait , wait , wait. Let's just, I just wanna pick at Gallup, good and bad is the wrong because we do this every day . Those are the wrong words. Okay . Is it a hard or easy time to buy? Might be another way to look at it. Like, because we have clients, I'm , I'm getting ahead of ourselves. We've got lots of stories of clients getting accepted offers succeeding, and it's for them, it's not good or bad. It's, we're doing this, can we get it done? Yeah . There's , that's
Speaker 1:The , is now a necessary time to buy a home? Yes.
Speaker 3:Yes. Is it a , is there a doneness , uh, survey that we can do? Can I get it done? But anyway, go on. I'll I'll step down from my chair now.
Speaker 1:Okay. That was, I'm glad to get you excited. Um, 68% of US adults expected home prices in their local area to increase next year. Hmm . And that's up from 56% a year ago. Yeah. So, I, I think the persistency of home prices going up is finally seeking into the public psyche. 'cause remember there was a while , I think last year where it was like, oh , home prices are gonna come down. Right. I think home prices are gonna come down. Well, they haven't. Yeah . And it's the , the simple law of supply and demand. Although , um, Redfin, I dunno if we talked about this last week, but in areas where there is new construction going on, like in lots of parts of Florida, some parts of Texas Mm-Hmm . <affirmative> where you have an increase of supply, there is actually a , uh, decrease in , uh, values and in purchase prices for existing homes. 'cause they're competing Yeah . Against builders.
Speaker 3:Yes. Alright.
Speaker 1:So that, and now here's one other quick news , uh, nugget that I thought was informative and, and you may get on your chair again. National Association of Home Builders estimates that if mortgage rates were to fall 1% from seven and a quarter to six and a quarter and additional 4 million buyers would qualify to buy the median priced new home.
Speaker 3:Yeah. That's a lot. Yeah. That's more the National Association of Home Builders cannot go build the 4 million homes for those people that would come back.
Speaker 1:That's right. Because we actually in America , uh, sell less than a million new construction homes. I'll look at that number on our first break. Yeah. So , uh, yeah, no issue in supply and demand. You've got people out there , uh, looking to buy , uh, homes and you're helping 'em succeed , uh, yeah . This past week, just like you do every week. Um, what do you wanna start out with for your first story when we come back after this first break?
Speaker 3:Uh, the first story that I want to talk through is , um, I have a client moving from the East Coast back to , uh, not the Milwaukee area, more like Mm . I'm gonna call it Madison ish. Okay . Because , uh, not , not because of what rates were , uh, you know, not because of what home values were, but because new job and they're originally from the Wisconsin area and they wanted to come back and be closer to family.
Speaker 1:I know a guy who did that back in 1989.
Speaker 3:Yeah, exactly.
Speaker 1:With his 1-year-old son.
Speaker 3:Yeah . And , and , and tied up in all of this, these real life elements were , it's about crafting the plan because they're , they're , they've got their home sale as part of getting back to Wisconsin. And some unique elements. Person is a former Marine as well. So we're gonna be tapping into that VA benefit. But I wanna give you more of those details and the story of kind of how it began in February and how we're gonna get to that closing table here in June. After this first break. You're listening to the Acuate 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.
Speaker 3:Welcome back to the ACU Net Mortgage and Realty Show. I am David the younger , that's Brian the wiser over there. Uh, dad, I've got a client who first reached out to us in February because they <inaudible> from the Charlotte area back to Wisconsin, like Madison ish. Uh, because new job and they wanna be closer to family. A tale as old as time. There you go. And part of the timing on all of this, of course, was they've got a home in the Charlotte area that they need and want to sell or , and need to sell need ish. Okay . Is an important element in all this for them. The other real life element, they've got kids who are school aged, so they reached out in February, but they don't really wanna rip their kids outta school before the end of the school year. Well, hey, it's the middle of May at this point. They're ready. They listed their home for sale at the end of April, immediately got an accepted offer, which was great news for them. They are closing on the sale of their soon to be old home in the Charlotte area, the end of May. Okay. And so last weekend they got on an airplane and flew to the Milwaukee area to look for a house. And there's nothing more motivating than honey. Our flight leaves Monday at 7:00 AM we probably, we need to have a house. Did they bring their kids with 'em or did they leave them at home ? No, I think they, they made it a couple's weekend as well. Oh , they , oh, okay. So they were motivated. And of course, as all ACU at loan consultants, do I get looped in on, hey, they're writing this offer listing agent calls me because this borrower is a former Marine Corps gunnery sergeant. I looked up and saw, okay , he knows his way around a firearm and listing agent called me, you know, Hey, va, veterans Administration, VA loan, pre-approval , uh, you know, had a question for me about termite inspections, which are required on all VA loans in the state of Wisconsin. Now, you know, I , I'm, I'm relaying all the things. It's like, yeah. Hey, that's my name on the preapproval letter. Turns out everything on that preapproval letter is true. Amazing. Okay . These people, and best of all, given this specific home, I was able to write their pre-approval letter, their VA loan, pre-approval letter, not contingent on the sale of their home. Aha . Which was important. But here's the crazy thing. I was qualifying them for their VA loan pre-approval with a debt to income ratio of You ready? 62%.
Speaker 1:Let me translate that. That means that if the person was making $10,000 a month , uh, we told the computer system, you know what, between their old home and their new home and any car loans releases that they have or student loans, they're burning up 6,200 a month. Okay. But with a VA loan, there's this other thing called residual income. Yes. And so they passed that with flying colors.
Speaker 3:They also passed the residual income test. Okay . And yet, which , but, and so I was able to write the pre-Pro. Right. This is about being competitive, but for at the price point where they were looking at if they were using a conventional loan, no way that Right, that ceiling is 50% 5 0 50. Right . Not 60 or 60 61 . And to be able to get them that pre-approval letter to be able to write that offer and make the sale of their home independent from the purchase of the new home, is what got them in the winner circle.
Speaker 1:Well, and my question is, when they wrote this offer without the sale of their home contingency, what kind of a down payment were they offering in the
Speaker 3:Office ? Zero. They were using the, because the va the full benefit permits. Yeah . The full benefit. You can do 0% down and there's no mortgage insurance on that VA loan. Correct.
Speaker 1:Part of the benefit of risking your life on the behalf of, of all the rest of us. But yeah . So, and that 0% down didn't , uh, scare the seller or the seller the listing agent?
Speaker 3:No. Um, if only because I think their buyer's agent did a particularly good job communicating that all was going well with the sale of their Carolina home.
Speaker 1:Yeah. Their departing residence as we
Speaker 3:<crosstalk> , they're departing. And, and that they're also behind the scenes was they had the money to get to the closing table using the 0% down VA loan. But they're , they also had some of their own funds. They didn't particularly, they don't want to have to use that. 'cause they're , you know, as I was joking with these clients, they got the accepted offer. They've got real life things that they want that they've gotta tackle now. Like packing up all their worldly possessions and moving Sure . From the East coast to the Midwest. But after this break, I want to get into just quickly the, the thoughtful way in which we're gonna go about getting their loan approved. 'cause the key dates in this dad are, they got the accepted offer in the middle of May. They will be selling their old home at the end of May and buying the new home in June. But that the thing that neither I nor they control is making extra sure that the home is sold in the Carolinas. And I want to talk through how we're being savvy about lining up their plan for their Wisconsin house after this break. You're listening to the Anette Mortgage and Realty Show on AM six 20 WTMJ getting
Speaker 2:You into the home of your dreams. Here's more of the Anette Mortgage and Realty Show with Brian Weer on wg. mj
Speaker 1:Welcome back to today's session of the Academic Mortgage and Realty Show. David, you're telling us a story about a veteran who is moving from Charlotte, North Carolina , uh, to the Madison area, and you're helping them do a VA loan. And miraculously you were able to get their pre-approval issued without requiring the sale of their existing home in, in North Carolina. Um, so they're able to withstand both payments simultaneously, but in real life, they are actually gonna sell that home in North Carolina Yep . And have some proceeds from that about how much money do they expect to clear from that sale and how are you factoring that into the actual loan approval in Wisconsin?
Speaker 3:Yes. So they expect to walk away from that sale with about $150,000. And what was key in planning this out? Nobody wants to think about this Dad. Nobody wants to think when they've, when they've listed their house for sale, they have the accepted offer. You know what, they're through the inspection, they're through the appraisal. They might even be through loan commitment on the sale of their home. But as I told my client, well, what if the buyer of your Charlotte home, you know, gets laid off from their job two days before they're supposed to buy your house? What if they get injured? What if they get struck by lightning or a golf ball? You know , uh, yeah . It hits them in the head. Right. Nobody wants to think about that. But it is important that we begin the Wisconsin plan almost ignoring what's happening in North Carolina.
Speaker 1:Right. 'cause you have two choices. You can either assume the best, right. That it's gonna close on time and you're gonna have the money and we, and we get the loan approved that way. Or you can assume the worst that that house won't close that something will happen. Which one did you choose?
Speaker 3:We chose the , uh, did you describe it as the worst case scenario? Yeah . That we began, you know, the , what I sent out to them for e-sign was you were gonna do 0% down on the purchase of your new Wisconsin home. Then if on, you know, if on May 31st at 7:00 PM you call me and you say, David, we officially have, I , it's in my bank account. I officially have $150,000 from the sale of my home. I'd like to put a hundred of that toward the , uh, down payment on the Wisconsin house. Yeah . I'm gonna say, first congratulations on the sale of your home. And two, I'd be delighted to update the mortgage game plan. Now that we have definitive, what'd you call it ? Evidence proof . You got
Speaker 1:Money in the bank .
Speaker 3:Yeah . Money in the bank that it is sold, but until the ink dries on the sale of your Charlotte home, we need to be prudent about not having, not having that hangover. Yeah. We're gonna proceed as an element of hope.
Speaker 1:Yeah . Yeah. We're gonna get your loan approved. We're gonna issue a loan commitment assuming that that house doesn't sell. Right . Did, I'm curious, did they have to, in the Madison general area, did they have to , uh, offer over asking ? They
Speaker 3:Did about 20,000 over the list price.
Speaker 1:Okay. 20,000 over. And , uh, what about inspection contingency? That's the other lever.
Speaker 3:Uh, they provided about, I think it was about 5,000 in inspection gap. Wiggle room .
Speaker 1:Wiggle room, yeah. Gap. Yeah. Okay. That we will pay for the first 5,000 of anything that comes up on the inspection. Alright. So that's, that's the kind of creativity , uh, that has to happen. Um, you got something else or I , I was gonna , I ,
Speaker 3:I , well, thi this is a good version. I'll this, because it reminded me of the quick story. This was, I read this , uh, at the end of last week. You know, guy gets hired to come fix a boat. He's, well , I , I won't get into that story, but it's part, part , it's not just knowing how to put the mortgage together. It's knowing the, the cautious way in order to line up to get to the closing table should anything unexpected pop up . Right. That's what we're trying to reduce that any curve balls along the way, don't strike us out.
Speaker 1:So, so, you know, this is a general topic of how are we helping existing homeowners get from their current home to their next home? And you might recall, our listeners might recall, I have a client that is selling their home in Wauwatosa very hot market, and they got like 10% over their asking price. Um, and , and then they all of a sudden got hot to trot to go look at homes in the Chicago area where they're moving to. And I had to kind of say, well, just wait a minute, you know , um, let's talk about this. How are you going to , um, do that? Because I need your, at least the loan commitment letter on the sale of your Wauwatosa home, which is due on May 21st.
Speaker 3:Oh . But it's not, it , it is not May 21st right now. Right,
Speaker 1:Right. So , uh, because they cannot stand both payments at once. Right . So, so they are going down the path of , uh, the bank of mom and dad. Yes . And , uh, her dad is gonna help 'em write a cash offer. And guess what? Now , now they have found a home that they may be writing an offer on over the weekend. So I , I want to tell you some interesting things that I learned about that related to homeowners insurance of all things. And I'll tell you that right after we get back from this , uh, news break. But right 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 Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back to the ACU Mortgage and Realty Show. And we're kind of on a theme right now of helping people get from their old homes to their new homes. And so these really nice , uh, home owners who are guess what, moving, not because interest rates are so low <laugh> , they're moving because , uh, the, the , uh, wife and this couple , uh, got a great new job in the Chicago suburbs. So that was the genesis of their move. It turns out in this case, David, that the , uh, dad, the the husband , um, got his dream job as well. But , uh, this is one of those cases where, ooh , his new employer wants to make him a 10 99 employee, or not employee a 10 99 contractor Yeah . For the first six months to kind of try him out. Can you ex briefly explain what the problem with that is?
Speaker 3:Well, 10 99 at least, you know, the money is real. It's just in the lending world. 10 99, you may as well call the guy self-employed. Well ,
Speaker 1:I think he is . You know , you , which
Speaker 3:Requires guy self-employed . Yeah . Which, which requires history. You know , there's no, it sounds, if this guy's going from being W2 to being 10 99, mortgage lending is about looking backwards in order to look forwards. Yeah . And if we're looking backwards and you're saying, I became self-employed 10 minutes ago, it's like, well, I, that doesn't really help me understand your ability to make the monthly payment going forward.
Speaker 1:I had to chuckle when I got the email , uh, from really good, good guy, the the buyer ,
Speaker 3:Because to them, but dad, in real life, to them, it's, the job is real. He's making money. I , and
Speaker 1:I , and I, and I totally acknowledge that. 'cause he emailed me and he said, here, you know, I wanted to forward you the 10 99 contract, which is like a 10 page document. Mm-Hmm . <affirmative> along with the comment from his employer that, you know, please have your mortgage lender call me or email me, because I'm happy to tell them just how solid this income is and you know that you should be able to use it. Right. So here we have this man's future guy who's gonna be writing him the , the checks every month telling us like , you know , Mr. Mortgage lender , you got this all wrong. This is just fine. So I copied ,
Speaker 3:Copied past , oh , well now that you said that, you know what I called Fannie Mae and I told him that you told me it was all , all okay, all good. And they , they said fine . Said , sounds good. You're right.
Speaker 1:Sounds good. So I did copy and paste the , uh, part out the Fannie Mae underwriting manual that says, no, you gotta have your two year track record. Oh , you can, you have to actually, the, the detail, and you know, this is you have to show one full year of self-employment income on your tax returns. Yeah. In order to use self-employed income of less than two years. And I said, you aren't gonna have that until 2026. So, I'm sorry. I know it makes a lot of sense. And, you know, yours is a contract for goodness sakes, your wife whose income we're using only has a letter. But somehow we can use that because that's what the rules are. But anyway, that's only part , part of the, that's the setup . So we get to leave him off the application. And by doing so, by the way, we don't have to count their car loan and also some student loans so she can actually qualify for more mortgage. And , uh, and so they found this house online that , um, they're looking at here this weekend. And in , in the run up to this, the , the homes, they're kinda looking in the wauwatosa ish area of Chicago. Okay. Okay . Because these homes are a hundred years old. And , and so what I got educated on in , in trying to get a handle, because we're pushing her financial blood pressure to the limit, right. Since she's a sole borrower. And so I thought I better do a little investigation on what homeowner's insurance is like on 100-year-old homes in this Chicago suburb. And the answer is, it depends a lot on the roof. So I sent two , uh, listings that they had been , uh, interested in to our insurance broker friends. And , and , and , and just by looking at the pictures, he says, well, this one house has a three tab , uh, roof and , uh, flat shingles, asphalt. And I can't really tell the age, but there's a possibility that it may not be insurable. He has actually had, if you have a really old roof these days, some in , remember insurance carriers are looking for reasons not to insure homes right now. Yep . In the Midwest because of all the claims they've paid. And , and so my caution as they are preparing to make a cash offer not contingent on any , um, financing, is, you know, talk to the attorney. 'cause remember in Illinois, every buyer has an attorney. So does the seller. You may wanna have a separate provision that you write in that says something along the lines of my offer's contingent upon being able to obtain homeowner's insurance at a cost of less than fill in the blank. $3,500 a year, three grand a year. Something. Because without a mortgage contingency, which if you were unable to get insurance, you could say, well, my lender won't lend unless we can get insurance. You have a way out if you're writing a cash offer and you fail to address this. 'cause there's no standard provision in either the Wisconsin or the Illinois offer to purchase that addresses insurability. So we'll see about whether they do that, but in the meantime, it turns out I can approve her for a $350,000 mortgage. Nice. And so her dad isn't gonna have to write a big check. He may just might have to fill in with a $60,000 gift. I got a little bit more detail on that. You also have a great story about a condo that I want to make sure we get to. And also somebody who can qualify for a lot more loan on an FHA than conventional. All that more coming up right after this break, you're listening to the Academic Mortgage and Realty Show on Wisconsin's radio station. A six 20 WT mj,
Speaker 2:Important home buying questions and answers you can count on. This is the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Welcome back to the Accu Net Mortgage and Realty Show. I'm David, that's Brian over there. Dad, you're describing your client moving from Milwaukee to greater Chicago area. And you know, they're reaching for that tool, you know, of I , I wanna show someone's cash to be as strong as possible. And it sounds like they're gonna have, I'd like to buy your house and here's my dad's bank statement, proving that we can show up with cash at closing. Yes. Don't
Speaker 1:Have to necessarily show that on a , in on the Illinois offer to purchase. Whereas in Wisconsin, there's a pre-written provision that says if you're , uh, writing a cash offer, you gotta show me the money No such provision in Illinois.
Speaker 3:But go on . Can I But but to your point, there's no , um, oh, but I can't get homeowner's insurance, so I don't, I I don't want to do it. Right, right. Which , um, what I was gonna say was you are not, if you pay cash, you don't have to have insurance on the house. And so the seller's gonna say, I don't care. Show up with a bag of money. Yeah. Okay. That's key . There was nothing in that day . That's the key. I don't care that you can't get insurance.
Speaker 1:And that's why I said maybe you wanna make sure, since it's gonna be a cash offer that you add a write in provision that says, Hey, this is contingent upon me being able to get insurance.
Speaker 3:Which if , if I'm a seller, I'm like, well you then it doesn't really feel like cash. I mean it's cash
Speaker 1:Cash , but they're also probably gonna say, well, I have it insured so that it's not gonna be a problem. Right. But that could be, I mean it's just we're
Speaker 3:Talking about insured for how much insured for what kind of coverage insured and at what cost.
Speaker 1:Yeah . Right . Because yeah . Anyway, so, so the , the other tidbit on this was , um, the timing. Right? So remember I said earlier, oh, they're gonna have their loan commitment on the sale of their home in Wauwatosa on May 21st. They're actually closing on the 28th. Um, and so I could not actually approve a loan until we at least had that commitment letter from the buyer, which by the way, they haven't even made it through inspection contingency. And did we mention their offers for 10% over the asking price or you know , they gotta make it through that hurdle. Uh, but this was a timing matter. They're not gonna be buying the Illinois house until June, so they will have the proceeds from the sale of their home as long as it closes .
Speaker 3:Like hopefully.
Speaker 1:Yeah . Right, right.
Speaker 3:Or is this like the cousin of my client Yeah . Out
Speaker 1:Of Charlotte. This is like the Yeah, yeah. Right. So there are worst cases . Dad would actually front all the money, in which case we would help him put together a , um, you know, a , a recordable mortgage and a note. Because when , when we go to refinance it, if the worst case happens, we wanna pay off , uh, an existing mortgage, we don't wanna do a cash out refi.
Speaker 3:Yep .
Speaker 1:Yep . Because those are, those are hard to do, especially right after you buy. So , um, but if all goes according to plan, which it likely will , uh, they're going to, you know, close in mid-June using $350,000 of AC units money, their proceeds from the down payment of their home and a bit of a gift , uh, from, from dad. So this is all about putting the pieces together, but you know, people only know what they know. Right. And so I got a very nice email from the dad , uh, saying, Hey, thanks, this is so helpful. 'cause it kind of laid out, you know, for them the various steps and you know how this is actually gonna work in real life. Yeah. And , and so it's fun. We like what we do. Right.
Speaker 3:It's, it's a puzzle. Well, but this is, this is why there are lifeboats on cruise ships. It's like, do we think it's all gonna go well? Yes. Uh, but if it doesn't, we want to make sure that we've got alternative plans and a safety net to make sure that 'cause 'cause ultimately home buyers, you know what they want more than anything to buy the house Yeah . And move in. Yeah . And , and sometimes, not that they don't care how you get there, but like the North star is, can you help me get into my house? Yep . And being mindful that there's always a path or a backup path or a backup to the backup path to the ultimate goal of like, Hey, my kids need to get to daycare. You know, that first week of July, can you help me make that happen? The real life
Speaker 1:Illness ? Yes, we can. Alright, so now you've got somebody you were telling me on the break that started out applying for, you know, there's different flavors of loans. We talked about a VA loan that's guaranteed by the Veterans Administration. Most of the loans that we do are regular old fashioned 30 year fixed rate loans that ultimately get sold to Fannie Mae and Freddie Mac. Those are called conforming conventional loans. But then there's this other kind of loan called FHA that's guaranteed by the Federal Housing Administration. And you've got a story that you're gonna share with us next about somebody who, what?
Speaker 3:Well, so here's the metaphor. I was driving into the office on Friday, and here's the metaphor that I told my client. Mortgages are like pairs of pants, some fit tighter and some are a little more forgiving in the waistline. FHA. So our previous story, that VA loan loosey goosey in the waistline. That's like post Thanksgiving sweatpants loose. There you go. FHA little more modest in the looseness. And conventional can be tight. Little more tailored. Exactly. Thank you. A tailored pant. And for these clients, their mortgage pants, would they, their conventional loan budget was smaller than the budget for if they wanted to go on the house hunt with an FHA pre-approval. Let me give you those details after this last break. You're listening to the Accident Mortgage in Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the ACU at Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Thanks again for joining us this morning. I'm Brian Wicker, the elder. That's David Wicker, the younger, taller , more handsome of the wicker men . And , uh, David, you're setting us up to tell us about a client who , um, we took a look at two different , uh, pairs of, what do you call it ? Mortgage pants. A uh , <laugh> , a conforming, which even sounds form fitting when you say it tailored ,
Speaker 3:I like your word. A tailored pants.
Speaker 1:Tailored third , third of your fixed rate. And, and I'll say this about that, you know, when it comes to traditional 30 year fixed rate loans , uh, a lot of it, what rate you get , uh, depends on your credit score. Um , depends on your down payment, the combination of those two things. But that can also affect the cost of private mortgage insurance. Um, because if you put less than 20% down, which it sounded like these people were gonna do Mm-Hmm . <affirmative> , you need PMI on a conventional loan on an FHA loan. You don't have PMI you have government mortgage insurance. Tell us what , what are some of the nuances that went into your recommendation for the semi stretchy FHA pants,
Speaker 3:Mortgage pants? Well, the , the most important part is that FHA is agnostic. Don't care what your credit is. FHA mortgage insurance is the same whether you got 8 20, 7 20 or six 20 for a qualifying credit score. Private mortgage insurance cares a lot about, you know, that kind of big swing. And so my clients were in the 6 77 range. Okay.
Speaker 1:Not , which is not terrible. But if you combine it with some other things like a low down payment, I bet they're getting murdered on the cost of PMI.
Speaker 3:They are. And so for them, when the PMI the private mortgage insurance goes up, it, that's money that cannot be allocated toward mortgage, toward borrowed money. Yeah. Right . And so for them, it came down to this, it's like, okay, if you want a conventional loan, the most house you can buy is two 50. But if you will consider an FHA loan, you could buy up to $350,000. Ooh . For house. That is he, that's a lot of house.
Speaker 1:That's a lot of house difference. Alright . My big question is, but listing agents are afraid of FHA loans David, because of why and how are you gonna deal with that?
Speaker 3:FHA has a history of being, I'm gonna say the word picky, but I hate using that word about things in the appraisal. Like broken glass, chipping paint, handrails for safety when you have more than like three or four steps in a row and when And trip hazards. Trip hazards.
Speaker 1:Uneven payments. Uneven uneven payment. Yeah . When
Speaker 3:This comes up, I tell my clients, turn the table on the seller . Be like, wait, your home is in such dilapidated condition that you're telling me there's broken glass all around your house. You're telling me that there's chipping paint on the side of your home that you have intended to before you listed it for sale.
Speaker 1:Well, and aren't you going to head this off when the offer is being submitted by you, Mr. Senior Loan Consultant? Oh , of course owner . You're gonna call the listing agent and assure them that, you know, let's, let's talk about this property this
Speaker 3:Well, because ultimately for my client, this is what is the best mortgage tool that we should be reaching for given their specifics Absolutely. An FHA loan. But like we say, many times you must go forth into the world and get a seller to say, yes. I would not want my client to go out alone and try to get a seller to say yes that I will walk with them side by side if I get looped in with the listing agent when they submit that offer. Absolutely. To call and be like, we're using FHA 'cause it's the smartest, not because we're trying to like, get you on chipping paint.
Speaker 1:Well and , uh, have you already connected with their buyer's agent?
Speaker 3:In fact, they were referred by their buyer's agent.
Speaker 1:Okay. Right . So you'll explain this to him or her Oh her as well and assure them no . Okay, we gotta deal with this. But you know, here's the game plan. When you're submitting that offer, let me David Wicker, call the listing agent and explain why not to worry. Yeah . About this. F-H-A-F-A
Speaker 3:Should not be a swear word. Not, not by a long shot. In my personal opinion. I think we, we won't win that battle, but we'll win one by one. We won't win the war. Maybe we'll win a couple battles.
Speaker 1:Well, yeah, yeah. It's all about perception. So , um, the market is still good . Hey , rates are down a little bit from where they were , um, a few weeks ago. Um, so that's good news. Uh , there's still not enough inventory. Would you agree with that, David?
Speaker 3:Yes. I had one client come in second against 16 other offers last week and second. Feels the same as last.
Speaker 1:Yeah, you don't get lucky . No prize ribbon, no prize. That is the problem. So if you're looking to have somebody on your team that can help you get to the winner circle faster, that's us Accu Mortgage. All you gotta do to get started is click on that blue button@accunet.com. That's all the time we have for today's show, folks. Thanks for tuning in. You've been listening to the Academic 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 Mortgage and Realty Show are solely that of the hosts or guests of academic mortgage and Academic Realty advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.