The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 6-23-24
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 Anette Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Anette Mortgage and Realty. And now, here's Brian Wicker and Tim Holdman.
Speaker 1:Hi, I'm Brian Wicker, licensed Real Estate broker with Acue Realty Advisors, and I'm also the majority owner of Acue Mortgage. And my NMLS ID number is 2 5 9 6 1 0. I'm here today along with my son in law , who is one of a's top senior loan consultants, and his NMLS ID number is 1 5 9 3 1 4 6. If you've got a question or a 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, Tim, I think you and I both saw this article that came out least last week from realtor.com that gave the Milwaukee Metro area the , um, what's , what's a good word for this? The black eye ,
Speaker 3:The , the distinction, the dubious distinction. Yeah.
Speaker 1:The dubious distinction of being the most rent burdened , uh, major metropolitan area in the country in the month of May. And so what realtor.com does is they take a look at all of the rental properties that are listed on their site. Mm-Hmm . <affirmative> . And then they , they look at studio , um, apartments, one bedroom and two bedroom . And so it turns out that in May, the rent to income ratio in the Milwaukee metro area was 27.4% up from about 27% a year earlier, and the national average for that same number. So again, they're taking the rent that people are paying and they're dividing it by their gross income, just like mortgage lenders do.
Speaker 3:Yeah. Just like the DCI . Yep .
Speaker 1:Yeah. The , the debt to income ratio, the , the national major metro average was just a little under 25%. Uh , but I wanna point out interestingly, that the Department of Housing and Urban Development defines affordable housing as anything 30% or lower Hmm . Of a household's income. Interesting . So I'm not quite connecting the dots there. Uh , anyhow, the median rent in Milwaukee, did you happen to look it up? You wanna take a guess at what the median rent is for , uh, studio one bedroom and two bedroom all blended together?
Speaker 3:Oh boy. Uh , I'm gonna go 1400 a month.
Speaker 1:Okay, good. Guess it's 1690.
Speaker 3:1690 .
Speaker 1:That's up . All right . That's a little more than 4% from a year ago. Rising faster than local wages. Um, the two bedroom nationwide median, so this is for the top 50 metropolitan areas, was 2070 $6. That's up 15% from a year ago. But good old Milwaukee we're 300 bucks cheaper than that. Right . The two bedroom median rent, and this is what I wanna compare to buying a house, a two bedroom median rent in the Milwaukee Metro area in May was $1,770. Now, the bad news is that is 11% higher
Speaker 3:Than Europe . Yeah. Than than last year. Sure.
Speaker 1:To put that in context, the most expensive as you would probably expect. Mm-Hmm . <affirmative> along with New York. Yeah . So you got San Francisco, LA, San Jose, all between 3,400 oh and 3,600 , uh, in , in , uh, median two bedroom rent. Do you wanna guess at what the cheapest me ? Major metro area. And they do have an NBA franchise.
Speaker 3:Oh.
Speaker 1:Uh , you wanna take a wild guess? Uh ,
Speaker 3:Charlotte maybe, or Portland? Good guess.
Speaker 1:Uh, Oklahoma City. Uh ,
Speaker 3:Oklahoma City. I was trying to go small market. Yeah. Okay. Yeah.
Speaker 1:Yeah. So get this. So remember we're at 1770. Oklahoma City's median two bedroom rent is the 1100.
Speaker 3:Wow.
Speaker 1:That is
Speaker 3:Not too shabby. <laugh> expensive .
Speaker 1:Yeah . You'd wanna live on the cheap. Alright , so now let's turn the page and say, okay, so if you're spending $1,770 , uh, a month on rent, you know, what could you get if you went out and wanted to become a first time home buyer? Sure. And so, one number now, you know, people always ask us, well , how much house can I afford? And they want us to express it in the form of a dollar amount of the purchase price. Mm-Hmm. <affirmative>. But really what we're doing is we're saying, you're approved for this payment. And, and I'm sure you go through this with all of your customers, probably more so with first time. Uh , so in my example, Hey, you wanna keep your monthly payment when you buy this house at 1770 or less. Well, one combination of numbers is that you could buy a $225,000 home with 5% down if it had annual taxes of $3,400, which is equal to 1.5% of the purchase price. That monthly payment on our special first time home buyer , uh, below market rate, which is currently 6.375. Yep . Uh , if you add stellar credit, the total monthly payment principal interest, taxes, insurance, and mortgage insurance could be as low as 1720.
Speaker 3:There you go. So 50
Speaker 1:Bucks less than renting. Not bad. Now, for 5% down, you'd need about $15,000 total money to buy.
Speaker 3:Yep . Because there's not only the , and that's , that's including everything. Yeah. That's the down payment. It's your closing costs , it's paying a little bit of money into your escrow account, you know, all that stuff . First
Speaker 1:Year of homeowners insurance. Yep . All that good stuff. Now, if, if the , uh, property taxes were 4,500, right. So if you're maybe mm-Hmm . <affirmative> buying in one of those affordable municipalities in Milwaukee County, but they tend to have higher property taxes. Well then your monthly payment would be more like 1,810. Right . But still in the general zip code, if you will. Mm-Hmm . <affirmative> . And by the way, the a PR on that , uh, 6.375 with fabulous credit is 6.554 because you gotta include the cost of monthly mortgage insurance in there. Alright . So there's your kind of look at how things are shaping up in the rent versus buy. I'd say that's pretty good alternative. I think there are a lot of homes out there that are for sale in
Speaker 3:25 . Well , and not to , and not to mention, I mean if you're looking to buy, you're looking to buy for probably non-finance related reasons right now in this market too. So just that bears mentioning as well.
Speaker 1:That's right. Alright, let's take a look at , uh, the latest forecast for where interest rates are headed when we come back. You're listening to the Aced Mortgage and Realty Show on AM six 20 WTMJ
Speaker 2:Home buying advice from the guys who know it best. This is the Acuate Mortgage and Realty Show with Brian Wicker on WTMJ. Welcome
Speaker 1:Back and thanks for tuning in today. I'm Brian Wicker , uh, owner of Nette Mortgage, along with my son-in-Law. Tim Holdman , our senior loan consultant. And , uh, Tim, we've had a nice , um, gentle reduction in mortgage rates. Yeah. Uh , over the past, I don't know , what do you say, four weeks? Two weeks?
Speaker 3:Uh , two weeks, yeah. <laugh>. Yeah.
Speaker 1:Yeah . And that's based on some , uh, good news on inflation. We had inflation at the retail and the wholesale level. We had those numbers come out last week and they were both friendly to interest rates. Remember, inflation is the enemy of interest rates 'cause it eats away at the , uh, lender's rate of return. And , uh, so every month the folks at Fannie Mae, the biggest thing that there is in mortgage lending, and remember, they're the folks that buy , um, mortgages from all of us, 30 year fixed rate loan originators. And then they guarantee the timely repayment of interest and eventual return of all principle Right . To the investment world. So they are kind of what makes the 30 year fixed rate market goes around and they have a group of people , uh, economists that have won all kinds of rewards . Uh , and so every month they come out with their forecast on, Hey, now here's where we think we see interest rates going. And so would you say, I mean, are you quoting a lot of 6.99% right now?
Speaker 3:Yeah. Yeah. A fair amount. There's something psychological psychologically appealing about getting a six, you know , in front of it. So , um, yeah. It depends on the scenario, but generally in , in the high sixes is where we're at.
Speaker 1:Yeah. High sixes, low sevens. Yeah . And so Fannie Mae and their latest forecast, which just came out this past week now, their forecast, however, is as of June 10th, so I guess it is 11 days old in relative to the rate forecast, they see interest rates floating down in this next quarter, which is , um, uh, July, August and September floating down to 6.8.
Speaker 3:Okay . Alright .
Speaker 1:And then they see it going , uh, down to 6.7 by the year, by the end of the year.
Speaker 3:Okay.
Speaker 1:Which, as my Uncle Frank used to like to say, is better than a sharp stick in the eye.
Speaker 3:<laugh>. Absolutely. Yeah.
Speaker 1:And, and then they , uh, this is just kind of an interesting smooth line. They have it going down 0.1% each of the four quarters of 2025 <laugh> , so 6.6 in the first quarter, 6.5,
Speaker 3:6.3, so on and so forth. Yeah.
Speaker 1:And all the way down , uh, 6.4, and then by the end of next year down to 6.3. Um, so how, how does that inform, you know, how you're talking to and counseling and helping people think through their options?
Speaker 3:Yeah. Well, it , it's about trying to balance, you know, a comfortable monthly payment immediately, you know, at the time of buying the home and getting the mortgage. But balancing that with trying to minimize your upfront cost that you're paying for the current rate. Right. Because if the Fannie Mae forecast is right or reasonably right, you know, most people that I talk to agree that we think rates are going to come down. Right. That's the narrative that everyone is, is kind of , uh, hitching their wagon to . So , you know, we can get someone permanently , uh, rate in the mid or even low sixes by paying a lot of points, but that only makes sense if you think you're gonna keep the mortgage several years, you know, generally five or more years. Right. But as we just looked at, it's like if we can get a 6.3% rate for no points, why would they pay two points to get that rate today? It just doesn't make, make sense. And then
Speaker 1:Well, and , and the answer is emotion. Uh , yeah . Because , uh, I was talking to a client , uh, last week who , uh, VA loan happened to be, which VA loans are guaranteed by the federal government and often have Mm-Hmm . <affirmative> better pricing than regular conventional Fannie Mae loans. And so they were all set to close at 6.5% on their new purchase. And uh , and , and then at the last minute they were thinking, you know what, no, we got more money when we sold our house. And , and so we think we wanna come in with an extra $7,700 <laugh> of money in , in order to get a 5.875 rate. Okay. So this is totally emotionally driven. 'cause then Yeah . What do we always do? Yeah . We say, well, let's look at the difference in the payment. Exactly.
Speaker 3:Yeah . And
Speaker 1:Let's figure out how many months of lower payments it would take to for you to make back that big $7,700. And the answer in their case was 49 months, which is a cool four years in one month. Right. Okay. Time . Oh boy, that's a long time. So yeah, let's time a time's talk about where interest rates are going. They , they aren't , they're headed in the downward direction. So don't we think there's gonna be a time some at some point in the next four years where we're gonna be able to snag you that 5.875 rate for a whale of a lot less than 7,700 bucks <laugh> . Yeah . And so, oh , okay. But I, I mean, I have that, that is not an uncommon no . Um , conversation No. By any stretch of the
Speaker 3:Imagination. I'd say it's a conversation I have with almost every customer at the time. We're reviewing loan options. And I even say, listen, the best choice for you is whatever helps you sleep best at night in your new home. Right? I mean, I'll show you the numbers, I'll show you how it breaks down. But, you know, this is , uh, more of a , an emotional or, or, or feeling type decision. Right? So if , if the getting the lower rate makes you feel the best, then who am I to say that that's not the right choice? You know, regardless of the break even . Period.
Speaker 1:Alright, well when we come back, I wanna share a real life story from last week where we had, and this doesn't happen very much despite the red hot market conditions in southeastern Wisconsin, we had a low appraisal. Mm-Hmm . Now I wanna tell you what we did about that when we come back. You're listening to the Anette Mortgage and 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 Mortgage and Realty Show with Brian Weer on WTMJ.
Speaker 3:Alright . Welcome back to the Accident Mortgage and Realty Show. I am Tim Holdman, senior loan consultant joined by Chief Honesty Officer, CEO , uh, aware of many caps, Brian Wicker. Uh, Brian , we are talking about , um, I guess if you had to label the segment, we call this , uh, where math meets emotion , right. We're talking about <laugh> monthly payment and , uh, sort of balancing that with , uh, customer's desire of how bad they want a particular loan , uh, particular loan option or and rate. Uh, but what I wanna talk about is, you know, how that monthly payment desire correlates to maybe how bad they want , uh, a particular house. Right? Right. Um, I had a , uh, a customer this past week that made an offer on a , um, a cute little starter home in , uh, Oconomowoc. And I think the property was originally listed for, well , let's say two sixty nine nine. Right. So we'll call it two 70 . Uh , they wrote , um, a couple grand over just to start 'cause they didn't know what kind of competition there was gonna be. The pro uh , property had been sitting on the market for I think about two weeks at this point. Oh ,
Speaker 1:Good. Good. So not quite the fresh meat, like Steven and I were talking about last week, it's like, Hey, going for something that's been on the shelf a couple of weeks. Exactly . And you might have a little bit more negotiating leverage. All right .
Speaker 3:Right. So they wrote at 2 72, so, you know, two grand above list. But considering there were no other offers, they, you know, they thought that was a fairly decent , uh, starting point. And we reviewed those numbers. They were really comfortable with the monthly payment. They, they were looking in some places in Milwaukee County, some places in Waukesha County. So the property taxes for this home were a lot less than some of the other places they had looked at. And the sellers countered and they said, you know, we've had some other offers come in, we would really like to accept yours at two 80 . Right. So eight grand above their eight grand
Speaker 1:Higher offer price.
Speaker 3:Yeah . Yeah . And they were like, oh , Tim, we really didn't wanna go that high. You know, we , uh, we , if anything, we would consider going up to 2 75. And I said, well, okay, let's take a step back because, you know, jumping from 2 72 to two 80 does sound like a big jump. Eight grand is a big number. Right. But let's look at it in , in terms of what it's gonna do to your money needed at closing and what it's gonna do to your monthly payment. Right. Because those are the real life numbers Yeah . That actually are gonna affect you on a month to month basis. So they were putting 5% down and they were pretty firm on that. So 5% of an eight grand increase, it's 400 bucks more that you'd have to bring to the table. Not terrible much . Yeah . Not , not that terrible. Right. So I said, are , would you be okay bringing $400 more for this house? And they're like, yeah, we, we would, it's worth that. And I said, okay, great. That's part A. Part B is what would, you know, paying a little bit more and , and therefore borrowing a little bit more due to your monthly payment. Right. So an eight grand increase , uh, increase their monthly payment by a whopping $49 a month. Right. Again, not terrible, that's
Speaker 1:Not nothing, but it's, it's
Speaker 3:Not nothing
Speaker 1:200 , you know , or something like that .
Speaker 3:Exactly.
Speaker 1:And , and so yeah. So the dynamic then is, okay, how much do you want this , this , how , how exactly is it worth an extra $400 upfront and temporarily anyway? Mm-Hmm . <affirmative> $49 a month because
Speaker 3:For the immediate
Speaker 1:Future, we know Right. That this isn't gonna be your final interest rate. And how did they feel about that?
Speaker 3:Uh , after we looked at it, they said, you know what? That's not as scary or bad as we thought. And they ended up accepting the counter offer and they got their offer accepted. So f so we're moving forward. Yeah.
Speaker 1:Are they providing any appraisal gap or as we like to call it, wiggle room?
Speaker 3:They didn't need to. Yeah. They didn't need to in this one. Full, full contingencies. You know, it was really the, the price point that, that got them over the hump. They might have wr written a small amount of gap on their home inspection contingency, now that I think about it.
Speaker 1:So, so the, the one that I wanted to talk about next, or maybe set up and we'll, we will talk, finish it off after the news is Mm-Hmm. <affirmative> , uh, this first time , uh, home buyer couple , uh, wrote an offer at the asking price. So again, thank goodness didn't have to go over asking, right? Sure . But remember the listing price is a made up number. And so in this particular , uh, it was just over 300,000 and , um, it's in a , uh, the suburb of in Milwaukee County. Okay . And they're putting 5% down just like your buyer. And , uh, the appraisal came in , uh, $9,000 under.
Speaker 3:Okay. Wow. Okay.
Speaker 1:And so , uh, there's a thing coming about in the mortgage industry that's gonna formalize what we already do, where all lenders are gonna have to provide another disclosure in the upfront package called reconsideration of value that we're doing this already. But Fannie Mae, Freddie Mac and FHA, are now forcing the industry to formalize and inform consumers, Hey, if you don't, if you don't think the value of your appraisal is right, you have the formal right to ask for a reconsideration of value. And as is the case has been the case in the 25 years that we've been doing business, the percentage of times that an appraiser gets this appeal from a buyer, or the buyer in this case, their buyer's agent , uh, where they slap themselves on the forehead and say, oh my goodness, what was I thinking? I overlooked this other silly
Speaker 3:Me
Speaker 1:Sale that you're now telling me I should consider. And they change the actual value. I'd say that happens 2% of the time. Mm-Hmm . <affirmative> one out of 50. Okay. Yeah . And, and so this story we're gonna tell after the news is about such an appeal where they said, oh man, this is nine grand short. We think you should , uh, have considered this , uh, comparable sale and that comparable sale. I'll tell you what happened when we come back. 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 Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back and thanks again for spending part of your Sunday with us. I'm Brian Wicker , uh, the majority owner of Anette Mortgage, along with my son-in-Law. Tim Holdman, senior loan consultant extraordinaire at Anette Mortgage. Good morning . And , uh, yeah, good morning. We're talking about , uh, when appraisals come in low, which thankfully, even though 59% in May of , uh, single family detached condo closings reported in the multiple listing service closed above the asking price. Mm-Hmm. <affirmative>, I , I am so thankful we just have not had many appraisals come in low. And so we're talking about a situation in a Milwaukee County , uh, suburb where , uh, the appraisal did come in low , uh, on a purchase price, slightly over 300,000. And, and the buyers offered exactly at the asking price, got their offer accepted with 5% down. They were offering this , I'm gonna call it the , um, appraisal contingency , um, situation where the seller is allowed to lower the sales price to the appraised value if it does , if it does come in short.
Speaker 3:Okay . So that's Sure . So the , the , the standard plain Jane Yeah.
Speaker 1:That's like the weakest version of appraisal love
Speaker 3:<laugh>
Speaker 1:That a buyer can offer. Right. Uh , the , the next upgrade is to say, Hey, you know what? I I I'll still pay you what I'm offering even if the appraisal comes in $5,000 low or $10,000. That's what
Speaker 3:Yeah . The sellers that a lot more.
Speaker 1:Yeah. That's much better than saying, Hey, I'll let you lower the purchase price. And so what this came down to in this first appraisal was that there was, at the time the appraiser wrote the report , uh, he included a listing, I think it was comparable number seven on the report. He had six closed comparables plus a listing. But at the time that listing , um, price was like two 90 and literally like the day after the appraisal was issued, that place closed for three 30 .
Speaker 3:Oh my goodness.
Speaker 1:Okay. <laugh> . So all the realtors are like, oh , this is crazy. And they did have one other , uh, comparable sale that had closed for three 10 Okay . In the report already. Um, but the appraisal rule , uh, under the uniform professional accepted appraisal standards use Pap is that the appraiser cannot change the report if new information, you know, based on the fact that, oh, this listing became a sale, they are not allowed to go back and change the report and consider that. On top of that, then the listing agent provided two other comparables that I believe were not really comparable <laugh> , they were too far away, too dissimilar,
Speaker 3:A little , a little bit of a stretch. Sure.
Speaker 1:And so appraiser number one, you know, on came back and said, Hey, sorry I can't change my report. So then I ended up getting the call from the listing agent, even though this wasn't my transaction. Um, you know, and I explained, well, you know, even though I didn't have all the details at the time, I said the appraiser can't go back and amend their report because the listing turned into a safe ,
Speaker 3:A closed yeah. Transaction. Sure. But
Speaker 1:Here's the unique thing about Acumen's business model, where we have multiple Fannie Mae, Freddie Mac servicers that we can place the third year fixed rate loan with. And this is different than if you go to a bank or credit union where, you know, once, once they have that appraisal, they're stuck with it. Yep . So what we're able to do in, and I think this all started on Monday of last week, we said what we can do is we can deny this first loan and we can start again and we will order a new appraisal. Because now pretty sure that this closed sale at three 30 is gonna get used as a comparable sale.
Speaker 3:Oh yeah. It's probably the first one that popped up on the appraiser's search. 'cause it's the most recent, you know , and strong comparable. Yeah.
Speaker 1:Pretty similar. And so we were able to maintain the interest rate and closing costs exactly the same as, you know, the first go round . And by Friday morning we had that appraisal report back the new one. And not only did it appraise exactly at the purchase price, because remember folks, the , uh, appraiser gets a copy of the accepted offer to purchase. Uh , and so they know what it was paid for. But not only that, what a lot of people don't know is every appraisal now gets scored by Fannie Mae's collateral underwriter, you know, artificial intelligence, the CU score system. And in that , uh, arena, the appraisal report gets a rating between one, which is, man, I love this appraisal to five, which is, I think this appraisal is garbage
Speaker 3:<laugh>.
Speaker 1:And so it can be, you know, any , any number of decimals in between there. If we get a collateral underwriter score of 2.4 or less, Fannie Mae promises everybody in the future slam
Speaker 3:Dunk.
Speaker 1:Yeah . We will not question this appraisal. We are never gonna make anybody buy back this loan because of a bad appraisal. The appraisal ranking on this particular report, Jim , 1.1.
Speaker 3:Oh, wow. Incredible. So not only did it come in at the value that we needed it to Yeah . But it is a complete, you know, bulletproof appraisal. So Underwriting's gonna accept it, you know, right away.
Speaker 1:And, and just to show you the previous one that was $9,000 lower, had a score of 3.3.
Speaker 3:Ugh . Yeah. So it's gonna , so what
Speaker 1:Difference, just, you know, that one little extra data point really shored this thing up. So we got happy people we're gonna be able to close on time on July 1st. So again, that's a little advantage of our business model. Hey, when we come back, I gotta tell you a story about somebody who's really going all out to win in this market. Uh , we'll give you that story when we come back. You are listening to the ANet Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ.
Speaker 2:Important home buying questions and answers you can count on. This is the Acuate Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Thanks again for tuning in today. I'm Brian Wicker , uh, owner of Nette Mortgage, and along with my son-in-Law, Tim Holden here, and Tim , uh, when we were all together for lunch in the office this last week , uh, one of our senior loan consultants, hi me Surro , said, oh , I gotta tell you about this one. Brian and Brian wanna put this one on, on the next radio show. And so we're talking with a , uh, he , he has a first time home buyer couple and had lost out on a couple of offers and they found the house that they really wanted. And that house was listed for, I believe, two 90, let's call it. Nope, two eighty four. Two eighty four nine, let's call it two eighty five. Sure. And so , um, they're like, this is the house we want. And after failing three times <laugh> , they put an offer in way over that.
Speaker 3:How much over Brian?
Speaker 1:Well, I'm gonna say, oh boy , I wonder if I should say 15, at least 50,000 over five. Oh ,
Speaker 3:Oh my goodness.
Speaker 1:And then , um, they, they put in that offer, their financing contingency was to put like 40 grand down, which is about 12%. Okay. Mm-Hmm. <affirmative>. And then on top of that, they negotiated, you know what, we'll still pay you this number as long as the house appraises for 90% of the asking price.
Speaker 3:Okay. Okay .
Speaker 1:So like, and ,
Speaker 3:And that's a big gap . What's the big Yeah.
Speaker 1:That's a big gap. And , and everybody involved in the transaction is like, there is no way that it's gonna praise up for the number you're offering. Okay. Hmm . But basically , um, if it comes in, in the low three hundreds, they're still gonna pay that much bigger number.
Speaker 3:Sure.
Speaker 1:And , and so part of this was as we do, as you all do, as all of our senior loan consultants do, gets on the phone with the listing agent to explain that it still works , the transaction still works accurate mortgage can still provide Yeah . The financing listed in the offer, even if it appraises out at the lowest number that forces the buyer to buy at the extra
Speaker 3:High price. And a , a smart listing agent is gonna want to know that, by the way. Uh Oh yeah. Ladies and gentlemen, because you know, they're gonna see that and say, okay, well even if the appraisal contingency is waived outright, if there's still a financing contingency, they, they're smart enough to know that well, the lender could just some deny the loan some . Yeah. There there is some number where the, the buyers can't get the loan anymore and then they would exercise their financing contingency and break contract that way. That's right. So this is where having a lender who knows what they're doing and calling the listing agent to give them that assurance, that's crucial.
Speaker 1:Absolutely. And, and on on top of that, we put it in the pre-approval letter highlighted in bold that says, Hey, our dollar amount that we're approving here for the loan is still rock solid, even with an appraised value as low as bold highlighted this number. Mm-Hmm. <affirmative>. And, and you know, a lot of people assume that folks have to come in with the extra money. Yeah . And they don't, they don't. What changes is that instead of being 12% down in the eyes of the lender, that low appraisal turns it into a 3% down. Mm-Hmm . <affirmative> transaction
Speaker 3:<affirmative> . Right. Well, and , and we should clarify, and this is key , not most borrowers don't have to bring the , the difference to closing themselves. If if someone truly only has 3% down to put and they write an appraisal gap, then yeah . They , they would be on the hook for bridging that gap themselves. We couldn't bridge that
Speaker 1:Forum . 'em , that's right . There are some people that are too close to the edge. And you were telling me on the last break about somebody who you have kind of maxed out on their payment. And , and so what is the ram? Because remember folks, when we issue a preapproval, we're we're translating a monthly payment and a down payment into a purchase price. And so what's your situation with this particular buyer?
Speaker 3:Yeah, so I have a buyer who , uh, first time home buyer and she's self-employed and, you know, through , uh, her submitting her tax returns to us and various things we've, we've calculated exactly what you know , her income number is that the mortgage world will let us use, you know, for for qualifying her for the loan. Yep . And because of that, we know what her absolute maximum monthly housing payment can be. And, and that's, you know, principal interest, property taxes, insurance and mortgage insurance. Right. That's that whole total monthly housing expense. And , uh, they're shopping near the top limit that she's gonna be , uh, buying with a fiance who isn't on the loan for, for a couple reasons we won't get into. So their , their actual household income is, you know, better.
Speaker 1:Uh oh . Better . Okay. So , so this is where it looks worse in the underwriting world than it's gonna be in the real world.
Speaker 3:Exactly. And ,
Speaker 1:And typically the reason we leave a co borrower off might be because they have a lower credit score and that would spoil the pricing on the loan. Okay. So, exactly.
Speaker 3:Go on . Yeah. So, so they're, they're really actively looking 'cause they're under kind of a real life timeline on when they want to b uh , buy and move into their new home buy . Um , so I'm literally sending her new , uh, preapproval letters that are property specific because the slightly different property taxes and maybe the slightly different offer price will fluctuate what the monthly payment would be unless we increase or decrease their down payment. Right. 'cause that's the other lever we can pull if you know, if needed.
Speaker 1:That's the variable that you're fooling with to get this one right, is the loan amount. Hey , when we come back, I sent out, we sent out an email to all of our customers a couple times a month. I got such a nice one back on this last , uh, uh, email that we sent out last week. This is a customer of ours whose first loan we did 22 years ago. Whoa . Tell you a little bit more about that when we come back. You were listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back and thanks again for tuning in. I'm Brian Wicker, majority owner of Anette Mortgage, along with my son-in-Law. Tim Holden and Tim, way back when you were just in grade school, you know, <laugh> , when we launched Acuate back in 1999 , uh, we were making loans this 25 year anniversary coming up this summer. Uh, but 22 years ago we made a loan to a woman and her husband , uh, to buy a home. I think the rate was right around 7% at that time , uh, in 2002. And uh , and then we did a scads of refinances , uh, for them. And we in this email that we sent out about, Hey, what's going on in in the real estate market? We said, and by the way, you know , if you know somebody who's already shopping for a home or is about to start, be sure to you know, let us help them because we'd love to do a great job for them like we did for you. And so she emailed back and just wanted to say, Hey, not only have they used us multiple to multiple times, including in 2020 when rates were at rock bottom. Sure. She did help 'em buy a , uh, second home up in Door County at our low low rate at that time. But the benefit of staying in business for 25 years, we helped their , uh, daughter and son-in-Law buy their first home in the Minneapolis area. 'cause not only our licensed Oh , excellent . In Wisconsin, we're licensed in Minnesota, Illinois, and Florida. Uh , but now , uh, we've got her son pre-approved and he is shopping for a home in the southeastern Wisconsin , uh, market. Which, which brings me around to this idea. 'cause in talking with the senior loan consultant that's helping them, that particular home buyer's kind of pressed pause , uh, on this idea that, ah , I think I'm just gonna wait for rates to come down. <laugh> . And so classic. Um , yeah. Yeah. So, so here's the math. Remember we said, Hey, if rates are around 6.99 today and you were putting 25% down on the median sales price in the Milwaukee metro area , uh, in May was a whopping $346,000
Speaker 3:Man.
Speaker 1:Um, if rates eventually by the end of 2025, get down to 6.375, which is Fannie Mae's forecast, it's gonna change your payment by 106 bucks.
Speaker 3:Not, yeah.
Speaker 1:Not that earth shattering. Okay. No . And what's the other thing, Tim, that you think is gonna happen as rates? Yeah . Oh , eventually begin to slide down. Do you think that's gonna increase your decreased demand?
Speaker 3:Uh , probably increased demand, and that's gonna cause property values and prices to even be higher than they already are. So even if we get a little bit of relief on the rate and monthly payment side of things, you're gonna pay more for that same house next year, which is probably gonna cancel out <laugh> the , the lower rate that you're gonna get. So, yeah . You know, we've had this conversation with a lot of folks, it's like, it's actually a better time to buy now because you can deal with a slightly higher rate temporarily, but buy a house at a cheaper price than you would if you waited a year or two from now. Uh , so it's just, yeah, everyone's different. But I, I would , uh, advise people that if the only reason you don't wanna buy is 'cause you want rates to come down, is the best time to buy. 'cause there are other people like you that are on the sidelines and they're not going to , they're gonna jump back into the fray when rates come down.
Speaker 1:Right. They're gonna come off the bench. So , uh, we would love to help you or your loved ones , uh, succeed. And , and you know, I just can't tell you when I see some of the other pre-approvals out there , uh, especially from larger banks and credit unions, they are terrible on details. Uh , yeah . Most people, most of those banks and large credit unions only check a person's credit. Hey man, we need to know you got the money to make the , the income and the down payment. What about checking that out? Do they guarantee them? No, I can , it guarantees them. And then we're doing other stuff. As we talked about during today's show, like calling the listing agent and explaining to them why you can make good on your offer. It's being that advocate and pulling out all the stops. You just heard Tim talking about, you know, customizing various pre-approval letters. You think other banks are, you know, lenders are doing that. I doubt it. Um, you know, we're trying to give you every opportunity to go from home shopper to home owner . All you gotta do to get started is click on that blue button@accu.com for rock solid preapproval, or Hey Rich, maybe you're low enough that it's time to refi. That's all the time we have for today's show tank. It's Tim, thanks again for filling in. My pleasure. And we'll see you back here next week. You've been listening to the Academic Mortgage and Realty Show on the biggest stick in the state 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 academic mortgage and Academic Realty advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.