The Accunet Mortgage and Realty Show
The Accunet Mortgage & Realty Show 7-14-24
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. Welcome
Speaker 1:To the Aced Mortgage and Realty Show on Brian Wicker, licensed Real Estate broker with AADE Realty Advisors and the majority owner of a Cadet mortgage, where my NMLS ID number is 2 5 9 6 1 0. And I'm here today, again with my son David Wicker, who's one of our senior loan consultants and the Chief Client Experience Officer at Academic Mortgage. And his NMLS ID number is 3 2 8 8 4 7. So if you've got a question or comment, remember you can text us or call 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 copy of this , uh, or recording of this , uh, show anywhere you get your podcast. So David, we had a pretty favorable , uh, week , uh, for mortgage rates this last , uh, week. Uh, what day was it that we got the Consumer price index, which is a
Speaker 3:Widely
Speaker 1:Thursday? Okay. And tell us what happened when we , uh, what was this ? The Consumer price index measurement of inflation for the month of June. Yes .
Speaker 3:7:30 AM We got the two numbers the year over year, you know, hey, this year compared to last year, forecast was 3.1%. Came in at 3.0%, which is down from the previous month of 3.3. Hey, cool. You know, we are less making progress inflation fat, but the real everyone said, whoa, was the month over month was negative 0.1% versus a forecast of positive 0.1 , which fantastic. Well , a negative number is like, yeah, hey, it ain't going up, and it might be either staying the same or shrinking just a little. That sounds , so markets are excited about that.
Speaker 1:So that's helpful to mortgage rates. Yep . Because , uh, inflation is the arch enemy of , uh, of mortgage rates and, and interest rates in general. We also had Fed P Share , Powell do some congressional testimony where it seems like they might make their first cut , uh, to their overnight rates that the banks charge each other in September. They do have a meeting coming up in July with her widely expected to do nothing. And by the way, when the Fed actually does cuts rate cut rates for the first time, that won't do anything to mortgage rates. We're already seeing mortgage rates slide down ever so slightly just based on, on the economic dues . It, it always works that way. The Fed is gonna be late, you know, when they take their action and there's no real correlation between what the Fed does to their overnight rate and the long 30 year fixed rate. So anyway, at the end of the week , uh, low overhead, accurate on , oh, I gotta , I'm gonna tell you here in a few seconds what the new median sales price was uhhuh for the Mil five county Milwaukee area. It did set a record in June, but if you're putting 25% down and that had seven 80 credit and all the other right stuff, you could fetch yourself a 6.875 interest rate with an A PRA 6.93 as of the close of business on Friday. So, not a whale of a lot better than where we were, but better than a sharp stick in the eye as a good old uncle Frank would say <laugh> . So let's turn , uh, the page and talk about, well, what's going on with home sales? And I've got the numbers from the multiple listing service, which I'm a card carrying member and , uh, through academic realty advisors. So interestingly, closed sales, do you think they were up or down in June? David?
Speaker 3:Compared to what?
Speaker 1:Compared ? Oh, ah , love a good , uh, a smart , uh, radio host compared to June of , uh, 2023 mm .
Speaker 3:Flat,
Speaker 1:They were down 11%. And I was kind of surprised at that. Only 1,613 single family detached , uh, homes and condos changed hands with the help of a member of the National Association of Realtors. That's 208 fewer than in June of 2023. And by the way, that's the first month of 2024. That's been significantly down compared to the prior month of 2023 , uh, June sales, by the way, were also down 140 from May you over there. You got a , a question or a comment?
Speaker 3:I , I literally, I just pulled up my June calendar. Do we think at all that the decline is because there were only 20 business days in all of June rather than, I don't think so . 21 or, okay.
Speaker 1:I don't, I don't think, you know, because those days at the beginning of the month are like, whatever. I don't think it's the number of business.
Speaker 3:11% . That's ,
Speaker 1:Yeah, that's kind of surprisingly, you know, now it's 208 transactions. Um, I , I , I can't explain it. I don't really have a readily available explanation.
Speaker 3:Well, it is what it is.
Speaker 1:It is what it is. But now here's kind of the shocker. The median sales price for the month of June set a record and came in $21,500 higher than June of 2023 to $361,500. That's also an increase of 17,500 from May, what
Speaker 3:You think . But Dad, I saw a YouTube video that said, some guy in his basement told me that, you know, home values are gonna come tumbling down. He told me that last year, and then I waited to buy, you know, till this year,
Speaker 1:<laugh> . Yeah . Uh , you know, and, and you know what, I'm sure home prices are coming down somewhere in the country, right? And , and I know they are . I've been in Florida, they , they've gotta be going down. I haven't checked the numbers lately, but, you know, it's all about supply and demand. And , uh, let's talk a little bit more about the supply side and then also , uh, find out , um, how much over asking are people paying or what percentage of people are still paying over asking and a little glimmer of hope for buyers there. We'll cover that when we come back. You're listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ
Speaker 2: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 1:Welcome back to the ACU Mortgage and Realty Show. I'm Brian the elder that stayed with the younger over there of the Wicker Men, and we're just talking about June home sales in the five county metro area from the multiple listing service. And so we did, the good news is that on the listing side, there were 2018 new listings came on the market and we just said in the prior segment, there were only 1,613 closed sales. So the good news about that is there were 405 more listings than sales. So that means inventory is growing. However, June's number of new listings is, guess what? 200 fewer than June of last year. Hmm . Also 216 fewer than May on a percentage basis listings in June. Were down 9% in the five county metro area compared to June of 2023. You know, so it's, it's supply and demand. You were, we were talking on the break, ah , maybe we've gotta look at more than one month. And just by the way, April and May of this year we're better , uh, than last year by quite, its bit 12% better in April and 6% better in May. So, you know, maybe
Speaker 3:April , let me just say, we're talking about, as we say a lot, we're talking about the whole Milwaukee market. Well, but if I'm looking in Shorewood between four 50 and six 50 , that's the only market that you're, you know, or new listings that you're really keeping an eye on. You don't really care about new listings in Franklin or
Speaker 1:Hartford. That's right. Good point. And let's, let's just go down to that local level because all real estate is local, hyper-local hyperlocal. Let's talk about days on market, because on average that did stretch out a little bit. Uh, the average days on market was 25 days from the point the house went on the market to the point they got an accepted offer. That's where the entire five county metro area. But let's talk about the hottest markets that had at least 10 sales during the month. Uh, new Berlin and Greenfield were tied at 13 days on the market before they got an accepted offer. Uh, Greendale 11, wauwatosa at nine, all tied with Cuda hay also at nine. Then we had three municipalities tied at eight days. Sussex, Cedarburg and Brookfield. Two tied at Whitefish Bay and Shorewood at seven days. And then the fastest selling , uh, municipality in the five county metro area in June was St . Francis at just six days. So it really does depend where you are. One other thing that I wanna , um, point out before we get to the stories, 'cause one of the stories I wanna transition to here is a first time buyer I talked to this past week who's not, you know , alone and thinking, well, you know, maybe I should wait until the market softens a little bit. Another measurement that I always like to look at is percentage of home buyers who are paying over asking. And in the month of June , uh, 58% of home buyers paid over the asking price, which means 42% either paid the actual listing price or under , um, and by the way, the , the under is only 27%. Only 27% got the , uh, listing under asking what do we all say about the listing price, David,
Speaker 3:It's a made up number. Another way, another way to phrase the how many buyers paid over asking would be to say how many sellers had the courage of their listing price?
Speaker 1:Hmm . I like the way you said that. Now, interestingly, compared to June of last year, though this June is 58%, last June, 64% of home buyers paid over asking. Then I also like to look at how many people, what percentage of buyers paid 10 grand or more over asking. Yeah , yeah . This unit was 42% and last June it was 47%. Again, the variable is what are people asking? And remember, a week or two ago, I said , uh, I was talking to one broker friend of ours who said, I don't know where these people are getting these listing prices from. They're way too high. So, you know, are , is that why the percentage of people paying over asking is lower because the sellers are starting out too high? Don't know. Yeah . But , you know, it's, it's at least a bit of a positive sign , uh, for, for home buyers. Alright. Um, a couple of other nuggets. Still 25% of , uh, home buyers paid cash according to the multiple listing service data. And uh,
Speaker 3:I have 63 asked. Yeah, go ahead. I have asked several agents about if you write cash, but get financing. What do you put in the MLS and I ? Yeah, what do they say? I've gotten mixed answers.
Speaker 1:Yeah. I think the official answers you're supposed to input as the listing agent what they actually did. But I'm sure there's a, that's a gray area. Hopefully they're consistently inconsistent. Um, 63% of people got conventional fixed rate mortgages. 4% of people got FHA financing. Adjustable rate mortgages only accounted for three and a half percent of total close transactions. Why is that number so low? David?
Speaker 3:Uh, adjustable rate mortgages are generally viewed as more short-term lending. 'cause not a lot of people hold on to the loan long enough for it to actually adjust. And if your lender wants to actually make money during the initial period that the loan is fixed, before it starts adjusting, they're gonna charge you more. 'cause short term interest is higher than long-term interest 'cause inflation is hot right now, but won't be hot in the future. That is the fastest definition I have ever given for adjustable rate mortgages.
Speaker 1:Alright, so , uh, when we come back, let's transition and tell a couple of , uh, stories. I got one I wanna start with. Uh, let's talk about that first time home buyer who's reluctant to act. You are listening to the Academic Mortgage and Realty Show on a six 20 WTMJ
Speaker 3:Getting
Speaker 2:You into the home of your dreams. Here's more of the ACU Net Mortgage and Realty Show with Brian Weer on wtmj.
Speaker 1:Thanks again for tuning in today. And , uh, so we just got done talking about , uh, the conditions in the , uh, southeastern Wisconsin real estate market , uh, for the month of June. And you know, basically the good news is there's more listings than , uh, closed sales by the tune of 400 or so. So we got inventory growing a little bit, but yet sales were down in June compared to the previous , uh, June of 2023. Um, so I , I was talking to a first time home buyer, a single guy who's got, you know, plenty of money saved up and he's been thinking about buying for quite some time. Uh , but he's kind of hesitating, you know, it's like , uh, I don't know, is now the time to do it. Uh , now to his credit , uh, because he's a handy guy and he's a machinist, what he really wants to buy is a garage that happens to come with a house.
Speaker 3:Sure.
Speaker 1:Right. And he doesn't need a big house. He doesn't anticipate, you know, having a family anytime soon. So he's gotta sleep
Speaker 3:In the house. He's got a shower in the house, you don't even need to sleep in the house. You could sleep in the shed if you really wanted to. Yeah,
Speaker 1:There you go. So he's looking for, you know, a smaller house doesn't , and , and the good news is he's really handy so it doesn't have to be in great condition. So we had the conversation about, okay, you're, you're in a better spot than a lot of first time home buyers because you're not gonna necessarily be interested in those perfectly conditioned, you know, recently rehabbed gonna get 12 offers on the first weekend. You know, he's gonna be in that market where he can look at homes that have been on out there for two or three weeks, kind of the ugly ducklings. You gotta comment on that.
Speaker 3:Did you walk down the path of like, let's turn on the lights and look at this boogeyman that he is afraid of? Like, is it a good time? It's like, okay, well, well what does that mean? Like, what's your worst case outcome? Did you , that's a good point. Did he like quantify that for you? Or it was just this like implicit emotion so far? I ,
Speaker 1:I think it was more emotion, right? Because he kinda wants to do this, but he's just, it just never seems like it's a good time. So we did have the conversation though, about what's gonna happen , um, to the demand side of the equation when interest rates do come down, right? And they have already started to slip down a little bit here this last week. Is that gonna bring out more buyers or fewer? And obviously the answer David, is
Speaker 3:More buyers. And was that an aha for him as you? No,
Speaker 1:You know, he's a smart guy. I think he, he knows that he's just needs somebody to help, you know, pull him into, to getting active. And so the other thing that he was waiting
Speaker 3:For, well, can I just also say it just sounds like he doesn't have a good enough reason yet. He's doing this on a cerebral level almost rather than a real life reason. Like, hey, I'm trying to impress this person who I would like to marry and I'd like to, you know, show them that I'm advancing in my life kind , you know,
Speaker 1:Route. He did say to me interesting that he had a goal of, you know, buying a home by the time he was 33, I think you said, and he's now 35, but it's just kind of an arbitrary, you know, goal. And really what he wants to do is to have his own place and to be able to do side jobs in his garage. So, you know, my, my goal is I'm gonna try to help him connect with a good buyer's agent. 'cause so far he is just been searching on Zillow, right? Yeah . And to say, okay, let's kind of get this notched up. And at first I misunderstood. I thought that his lease went through , uh, January. So I was like, well, you know what, maybe a delay and don't start seriously looking until , um, you know, November when there are fewer buyers. But he could really start looking anytime because he was, if he clarified, he can get out of his contract anytime or he only has to give like 60 days notice to his landlord. Yeah, he , he doesn't have to re-up for a whole year. So stay tuned for more on this folks. Uh, I'm gonna try to help him , uh, get to the point where, you know what, why don't we go ahead and start looking now. Go ahead David .
Speaker 3:I'm not, I'm not sure that you can, you know, it . He , I'm gonna give him opportunity . He's been on the sidelines beyond his own self-imposed deadline. And I'm not sure that data's gonna pull him into acting,
Speaker 1:But he did call me, you know? Well , yeah, he could reach out to me kind of on the , on the, on the , uh, nudging of his aunt who, who is a friend of mine. Yeah . Stuff like get going on . So at least, hey, he took the step of talking to a real mortgage person, right? So he did do something. I'm just going to invite him. We kind of had a low key , like, why don't you upload your pay stubs? I won't even check your credit right now, but, you know, I think I'm gonna go back to him. Say, you know what? I think you should get in the game. 'cause rates are starting to come down. Let's ,
Speaker 3:David , let's and , and let's back up. It all changes when he, if he finds a house that he wants, it's amazing how that can turn it from, I don't know , to like, I will move heaven and earth to buy this house. It all comes down. A mortgage is a tool and what he's actually trying to do is find a place he can be excited about. Clearly that place has not popped up yet, but he needs to be ready. Like you're saying, when if that place pops up, he's gotta be ready.
Speaker 1:And he was asking, well, isn't checking my credit gonna hurt my credit? Uh , let's cover that. And then David, you got a story you want us , uh, I do share . I , okay, we'll cover your story next. And , uh, right now though, it's time to turn it over to the WTMJ Breaking News Center.
Speaker 2:Don't break the bank to get into a house. Back to the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back to the Academic Mortgage and Realty Show . The , uh, middle of July , uh, edition here, July 14th. And so , um, David, I was just finishing up, you know, another objection to, well , you know, I don't know if I'm ready to really get pre-approved right now. You know, hey, when you check my credit score, that's gonna hurt my credit. And the answer is no, it's not. It's not the first time that you check your credit. Uh , it's the next time. So credit reports are good for 120 days. Yep . And then we have to re-up them. And, you know, it's, it's not a big dinger. If you've got a robust credit profile, having your credit checked a second time isn't really gonna diminish it by more than a couple of points in most cases. David, you got a comment on that?
Speaker 3:My clients who ask that question are usually the people who have 800 credits. So I'm always humored by like Yeah , you know, the reason you have great credit is 'cause you're cautious about it and credit is a tool and when you're ready to use the tool, you've been cautious about it so that you can use the tool. So let's use it.
Speaker 1:Let's use it. Alright , what , uh, what story do you wanna share with our listening audience today?
Speaker 3:Alright , so this one was a flex, the mortgage puzzle solver muscle. So I got introduced to a client by their financial advisor who closed on a home in Milwaukee in late May.
Speaker 1:Wait , so these people already closed on a home?
Speaker 3:They are done. They, they have closed on the home. I don't know if they've moved in yet. I think they've moved in. So
Speaker 1:Where are they moving from?
Speaker 3:They currently reside in the Chicagoland area and own a home in Chicagoland, which is an important ingredient
Speaker 1:In the story . I'm confused, David. They're talking to you now in July, but they already bought the home in May. How did they pull that off?
Speaker 3:Well, and so the way that they pulled that off to be competitive in the market, to get into the winner's circle, they paid cash.
Speaker 1:Wait, wait . Whoa . And they had cash
Speaker 3:No <laugh> . Exactly. Or
Speaker 1:Was this mom and dad's
Speaker 3:Cash? They used this , this was mom and dad bringing the suitcase of money to pay cash.
Speaker 1:Okay.
Speaker 3:So there is no mortgage on the Milwaukee house right now.
Speaker 1:Ooh .
Speaker 3:That's a little
Speaker 1:Sticky for us.
Speaker 3:Well they are, I talked to them about a month ago and they just updated me that they have an accepted offer on their Chicago house that is set to close in August.
Speaker 1:Okay. Alright .
Speaker 3:And the timing on all of this, or the goal is they would like to reimburse mom and dad for the cash
Speaker 1:Totally allowed.
Speaker 3:And one, and so they're gonna do that or they'd like to do that with two piles, right? They're about to sell the Chicago house. They're gonna have some nice proceeds from the, let's just say they owe mom and dad $300,000 for the cash that mom and dad had outlay to close on the Milwaukee house. Right ? Okay. They're gonna get one 50 from the sale of Chicago. Right? Then they'd like to go to the Milwaukee house and they would like to extract the equity. They'd like to borrow the money against the Milwaukee house so that they could give mom and dad the rest of the money that they owe them.
Speaker 1:Okay.
Speaker 3:So there's two elements on this dad. One is timing and the other is classification. So yeah , the 'cause they in , they asked me a month ago , Hey, can we take the money out of the Milwaukee house last month? At the time they still owned the Chicago house and they owned the Milwaukee house. What was my first draft back to them on that question?
Speaker 1:Do they , uh, have enough income to support , uh, both payments on both properties? No. No.
Speaker 3:And so that, you know, delayed punted being able to finance be , because as I shared with them, I was like, look, you, you own two homes right now. If you would like me to put a mortgage on the Milwaukee home and you still own the Chicago home, I have to count both mortgage payments. That's right . So that you qualify to swing both in perpetuity. Yep . I understand. You know, you've listed your Chicago home, it's yo your agent tells you it's gonna go quick. But if you still , until the buyer pushes away from the table, even if the buyer's driving to the closing, I still have to count the payment on the Chicago.
Speaker 1:You if , if you have a clear Nicole's
Speaker 3:Commitment letter could for the sake of could
Speaker 1:Possibly excuse them . But
Speaker 3:Go on. So , so the, so that delayed our conversation, but then the other one dad was , uh, the classification. Hey, I have no mortgage on this Milwaukee home. I have , I have sold Chicago that is, you know, has been expunged. I have no mortgage on my Milwaukee home. And here was my prompt to them. I was like, I have a game plan. Let me, I'm gonna set this up and we'll cover the rest of this After this break. I have a game plan that would allow you to get an interest rate that is over a half percent lower if your parents are willing to help me with a little bit of paperwork on your Milwaukee house.
Speaker 1:Ah , okay. I I know where you're going with this. Okay . But we won't , uh, we won't give it away. We will come up. We'll reveal that plan , uh, when we come back. You are listening to the Acade Mortgage and Realty Show. On the biggest stick in the state 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:Welcome back to the ACU Net Mortgage and Realty Show. I'm David, that's Brian over there. Dad , uh, telling you a story about a client coming from Chicagoland back to Milwaukee. And we are in the , uh, top of the fifth inning. Not when I first talked to them, obviously that was the top of the first inning, but now we're closer 'cause they're about to sell their Chicago house next month,
Speaker 1:I think you said.
Speaker 3:Yes. And so they're trying to reimburse mom and dad who footed the cash in order to uh, uh, close and win win and close on the Milwaukee house. What I, what I highlighted to my client, I said, I was like, not that you're gonna do this, but I believe contractually you are under no obligation actually to reimburse your parents. Like if you wanted to be uninvited to Christmas for forever, you don't have to reimburse your in-laws. Okay . Because it's only our clients who are unentitled to the Milwaukee house.
Speaker 1:Okay. That's what I was wondering. Okay, so you've already confirmed that. Yes . Our , our , our new owners. Alright , so interestingly just let the record show that, you know, some seller decided back in May, it was okay to accept the cash offer from somebody who really didn't have the cash because it was their parents who had the cash. Yes . Not the, not the kids. And I've seen that happen more than once. I've also seen it though, where sellers say, well wait a minute. The money is coming from somebody who's not a party to the contract and I'm not comfortable with that. So small detail, but how are we gonna solve the puzzle on this ? What's the classification? Uh , on the
Speaker 3:Refund ? So , so if you have no mortgage on your house and you want to put a new mortgage on the house, extract that equity, Fannie Mae and Freddie Max say, Hmm , that's a cash out refinance.
Speaker 1:Right. 'cause you're pulling cash out.
Speaker 3:Yeah. Well in a cash out refinance in the list of risks that is more risky than if you had a current mortgage and you were trading in the mortgage for a lower rate of shorter term that's called a rate and term refinance. And so what I said to my client, which is
Speaker 1:Just all theory by the way, I don't know if Fannie and Fred can actually prove the cash out refinances of everything .
Speaker 3:These are the rules of the road ,
Speaker 1:But that's how they price them. So we're kind of stuck with that. And you're saying the interest rate difference between a regular rate and term refi and a cash out refi , uh, is about a half a percent.
Speaker 3:Exactly. And so, you know, I prompted my client, I I I said Would your in-laws be willing to record a , a debt at the county from the bank of , you know, mom and dad
Speaker 1:Yeah.
Speaker 3:For a dollar amount. So that when I go to get you a new mortgage, I'm not just giving you a pile of money, I'm actually swapping out the old loan to mom and dad with a new loan from acuate . Yeah . And by doing that, we change the classification of the refinance from cash out , worse rate to regular refinance, which is the better rate. Hmm . And my client was like, let me call, let me call my family and make sure that that's okay. He called me back 13 minutes later and said Absolutely whatever paperwork needs to get done so that they can get that improved rate refinance plan, just
Speaker 1:A tip, whatever they put in that mortgage. And then they should also probably sign a note. Mm-Hmm . <affirmative> , you know , the promise to pay back the money. If there are payments then we gotta make sure that they've made those payments. So I'd recommend , uh, making it a balloon mortgage. Yeah . Where they just say, okay, we loaned you the money. Now they have to worry about the interest rate on it. There's a thing called the applicable federal rate where if the parents charge less than the applicable federal rate that's published out there on the internet, then that's considered a gift. And they probably don't want that. So they gotta have a interest rate that's just Right. Um, that they charge . But then they can say, Hey, you'll pay me the interest that you owe on this , uh, at the end of the mortgage when you pay it off, rather than having monthly payments that we have to document 'cause they haven't been making any. So just to no, to tip out loud here on the radio.
Speaker 3:Uh , well , but imagine if these people had just called, you know, a bank with a skyscraper, right? Yeah . They would've gotten , uh, without thinking through , if they had an unthinking mortgage lender who lived, who worked in a skyscraper downtown, it'd be like, yeah, let me get you that worst rate. Be happy to get you your, you know, cash out refinance. Sure . Because
Speaker 1:Then we can do your loan again in another six months. Right ,
Speaker 3:Exactly.
Speaker 1:Uh , and call it a rate and term uh , deal. Alright , well good job. It's all about the details. Hey, I had talked to a, and maybe you got another story maybe we're gonna gonna have to flip for it. No , but I talked to another first time home buyer late last week. Uh , this a 20-year-old, 21-year-old woman was looking to buy her first home. Has an amazing a hundred thousand dollars to put down. And so she clicked on the blue button. It was actually her dad that called , uh, vis-a-vis his financial advisor. You know, I had actually texted him the blue button to share with his daughter three or four weeks ago and now , uh, she did fill it out. Let's cover that when we come back 'cause it's an interesting tale. You are listening to the Academic Mortgage and Realty Show on , uh, Wisconsin's radio station 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 today. Uh, so David, on uh, Friday last week, I had the pleasure of talking to a very ambitious , uh, hardworking 21-year-old woman who's looking to buy her first home. Uh , somehow or another she's amassed over a hundred and a thousand dollars for down payment. And because the money's already in the bank, I didn't have to ask her where it came from if, if I were to guess, my thought is some kind of an inheritance maybe from a okay grandparent or an uncle or an aunt or something like that. But so that's unusual to have such a large , uh, down payment and a big advantage for her and what she was looking to do is buy something like a $300,000 loan a home rather in Waukesha County and Finance 200 grand and uh, okay.
Speaker 3:At 21 years old at TI mean, yeah, I was useless at 21, but may good
Speaker 1:For her. I wasn't gonna bring, I wasn't gonna bring that up. But , uh,
Speaker 3:<laugh> ,
Speaker 1:Uh , so, so I I went ahead. She filled out our really easy to fill out online application and which gives us permission to get her credit report . So I get her credit report and it has exactly one trade line on it, a credit card that was opened , uh, in February. So she's made four payments on that thing. So what do you think my problem is,
Speaker 3:She either has a poor credit score for lack of history or none at all.
Speaker 1:She has none. She has none. 'cause that's the only , well , she's invisible.
Speaker 3:Only thing or almost invisible.
Speaker 1:Almost invisible. Just recently visible. So , uh, so wait a minute though. You turn to the chapter in the Fannie Mae and Freddie Mac , uh, Bible and you say, well wait, I could use non-traditional credit, which is, hey, if I can verify two things , uh, I have to verify at least two other credit accounts that are not on the ,
Speaker 3:Uh , credit report. Well , can can we back up if, if you do not use credit or stop using credit, Equifax, Experian and TransUnion will stop calculating your payment history because you are invisible to them either because you are young and have not begun. Or I had a client a couple months ago who pays cash and doesn't have a credit score and because the bureau stopped calculating for her.
Speaker 1:Yeah . Everything is so far in the past that it doesn't count. Is that what you're saying? Right.
Speaker 3:Yeah. Yeah. So for her, she needs to become, we need proof that she pays bills on time. Credit score's the easy way. Correct. To know that.
Speaker 1:So, so then the other uh , it ended up being a roadblock is all right , Hey, I could verify your cell phone , you know, payment. I gotta do 12 months of verification on that. You know, maybe you give me your canceled checks or your bank statements to show that. But then this is where we ran into another intractable problem. The other thing that's required is you have to have a a 12 month verification of on time housing payments. And guess what? She lives with mom and dad.
Speaker 3:Aha .
Speaker 1:So she has no rental payment. Now we are gonna try to find, oh, what if she started paying rent to her parents now? Yeah . And established a 12 month track record. You know, could we use that? It
Speaker 3:Would be easier to get a credit score.
Speaker 1:Well that's what I'm thinking. So, so my advice to her was, and this is hard for people, you know, to kind of get their mind around, it's like, okay, you gotta get another credit card. 'cause the credit scores are based on your past credit record and the scoring algorithm needs to have a history and it likes to have uh , a variety. So a credit card is called revolving credit. Mm-Hmm . <affirmative> . So she's got one. I'm saying, why don't you go ahead and get another one. And interestingly, David, she kinda had to beg to get the first one 'cause Right. She didn't have any credit score.
Speaker 3:Just go to Kohl's. That's what mom did a hundred years ago. Right. It was get a Kohl's credit card. It
Speaker 1:Was JC Penny or Sears. Um , so, so now Sears so though that she's got the one credit card, guess what she's getting offers for others. Uh , so I'm like , open up another credit card. Yeah . Then I'm saying, do you own a card ? Yeah. It's free and clear. I don't have a loan on it. Okay. Let's have you look into getting a small car loan. Yeah , let's find out. And I'm trying to help her figure this out. What's the smallest car loan that she can get , uh, from a bank or credit union for the shortest amount of time? Um, 'cause the interest that you pay really doesn't matter when you're paying off a loan over such a short period of time because you're paying almost all principle on a short amortizing loan. So she's gonna go down that road as well. However , um, the one other interesting wrinkle, she's got a full-time job. She also has a part-time job. She had that as a full-time job and switched to part-time in January of this year. Can we count that income David?
Speaker 3:Nope.
Speaker 1:Nope. Why
Speaker 3:Part-time requires a two year history of consistent receipt. It didn't matter if you were full-time before. It's all about the New world. That's right . Her new part-Time
Speaker 1:World's. That's right. So there you go folks, if you or someone you love would like to have help from mortgage professionals who love what they do and love to find ways to make things happen, even if it's not right now. 'cause you know, her situation is, I can't give you pre-approval now, but I will at some point in the future. Oh yeah. Tell 'em to click on the blue button a unit.com or give us a call. The phone number's right there at the website, which is A-C-C-U-N-E t.com. That's all we have time for on today's show. We'll see you back here next week. You've been listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Accu 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.