Speaker 1 0:00

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

Speaker 2 0:20

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

Speaker 1 0:35

Welcome to the Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with Anette Realty Advisors and the majority owner of Anette Mortgage, where my individual NMLS ID number is 2 5 9 6 1 0. And I'm here today, again, along with my son David, who is our senior loan consultant with ANet Mortgage, also our Chief Client Experience officer. And David's NMLS ID number is 3 2 8 8 4 7. 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. And re remember, you can get a podcast with today's show or any of our other past shows wherever you love to get your podcast. Well, David, kind of a repeat this week of last week where Hmm . Rates inched up yet a little more officially to their highest levels since , um, November. Yeah , you gotta comment on that already.

Speaker 3 1:28

The way I was just looking at the chart here and what's funny about, you know, bonds rates, the stock market, actually, if you look at the chart, if you woke up on Monday, looked at rates, and then went to sleep for four days and woke up on Friday, they were in the exact same spot. Oh , okay . With some gyrations in the middle.

Speaker 1 1:46

In the middle. All right . Well that's, that's a worthy observation of course. We're we have our, our , our noses pressed to the windshield of mortgage rates every day . Yeah. And, but not , most people don't, even, most home shoppers do not, nor should they. And , uh, the , the cause of the angst this week was a , um, report by the Commerce Department. Uh, they let it be known that the US economy, the largest economy in the world did you read, by the way, what percentage is the United States economy? Of the entire global economy?

Speaker 3 2:17

Uh, 20%. Yeah .

Speaker 1 2:19

26. Okay . On some, you know, there's all kinds of different ways to do that, but it's like, dang, that's big. Um , anyway, the US economy grew at a lower than expected rate. When I saw this headline on Thursday, I thought, oh , rates are gonna drop because the economy only grew at 1.6%. Yeah . Over and against an expectation of 2.4. That's an annualized rate. And this is, again, during the first three months of 2024. And I'm thinking, oh, well here we go. The economy's starting to slow down. But wait, smart people looked, popped the hood on that report and saw a little clue on inflation. 'cause I didn't know this. Along with that report, the Commerce Department reports, what was the inflation using? The fed's preferred measurement? The personal consumptions expenditures index. Yeah . Yeah . And that was hotter than expected at , uh, 3.4%. And , and so people are freaking out and thinking, oh, 'cause the other big number from this past week in economic news was Friday when the Commerce department officially announced the March Personal Consumption Expenditures Index or PCE Index, which again, is what J Powell and the Fed is really looking at. And that came in at, what was it, David two point , uh, four,

Speaker 3 3:42

2.8 core PCE year over year . I'm

Speaker 1 3:45

2.8 over against an expectation 2.7. And so the bottom line is the market went well, that's not as bad as we feared on Thursday. And so we actually got better.

Speaker 3 3:53

Yeah.

Speaker 1 3:54

Alright . But, but here's where we ended the week. If you wanted to buy a $320,000 home and you wanted to borrow 75% of that , you're gonna make a 25% down payments. So you're borrowing $240,000. Your friends at low overhead Acumen mortgage could give you a 30 year fixed at 6 9 9, but you have to pay one and a half points or discount points. That's one point half percent of the loan amount in order to fetch that trophy rate. And that would give you an a PR of 7.155. How does that work, David? How do the points, which would be $3,600 money upfront Yeah . To get that 6, 9, 9

Speaker 3 4:32

Points is an investment to lower the rate for the life of the loan. And points are, broadly speaking, optional, which is what I, I've begun to describe to my clients. Come at it the other way. It's like, how much do you want to spend on the rate, because the answer to that question drives then the, the rate as the answer, right. Because you're saying spending this modicum amount of points gets you to 6.99% with an APR of 7.1 something. Yeah,

Speaker 1 5:05

1 5 5 because those points are spread out over the whole 30 years of the loan when the annual percentage rate is calculated. Alright . But here's the real life number, and I know you're doing this every day with clients. Yeah . The principal and interest payment at 6 9 9 is 1,595 bucks at seven and a half percent, which sounds awful compared to 6 9 9. Yeah. The payment is exactly $83 higher. So the real question is, should I spend the 3,600 bucks to save $83 a month? And the only way you should do that is if you think rates are not gonna come down for the next 3.6 years. Nope. I I am certain that rates are never, they're never gonna come down to 6 9 9 in the next 3.6 years. Great. Write the check for the points. Yeah. By the way, the deal, if you go up just another notch to 7, 6 2 5, it's like what NUS call would do that? Well, that makes the payment another $20 higher, but it is the cheaper option for the first 3.6 years of the loan. Yeah ,

Speaker 3 6:07

Yeah, yeah.

Speaker 1 6:08

Hey, I , I know you, you got a story. What , what story do you wanna tell when we come back? Well,

Speaker 3 6:12

I wanna , you were describing that break even analysis. It's the real life payment difference that I, I wanna pop the hood on with a particular client. So let's dive into that after this first break. You are listening to the Acuate Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2 6:33

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 6:42

Welcome back and thanks again for tuning in today. Dave , before you get to your story, I was looking at an article online , uh, talking about how , um, home values are dropping somewhat precipitously in parts of Florida. Hmm . And , uh,

Speaker 3 6:58

Florida's a big state which, like, which part?

Speaker 1 7:01

Well, they , uh, uh, uh, it was , um, Cape Coral right up the road that's just on the other side of the river from Fort Myers and then also up by , um, Sarasota. And one of the things they were citing is, and I, I don't actually believe this number, they said the average homeowner's insurance premium in Florida is now over $11,000 a year. I'm like, that cannot be right. No way . This was a , this was a report from Redfin. But anyway, to , to , to the point , uh, being that okay, well, may maybe things and this , uh, the measurement was how many listings , um, dropped their price. Okay. And it was like 51% or something had dropped their price in the market. But go ahead. Yeah, you , you , you're , you're holding your head and pain .

Speaker 3 7:45

No, it just makes me wanna stand on my chair because the list price is a made up number. I'll dad , I'll sell you my house for a billion dollars. Yeah.

Speaker 1 7:53

Oh , are you gonna cut

Speaker 3 7:53

That? Well , yeah. Okay. But I'll give you a 99% discount. But boy , home prices in David's neighborhood are plunging

Speaker 1 8:01

Well, but remember, this is all broader data. So just to say the a number that I saw quoted in there, I think San Jose, 76% of homes sold for over asking . Okay. Well, you know , so it's just all, where , where are people putting the number? But you got a story to share about people getting, you had a lot of accepted offers this week, David. Thank you. Good job. Of course. We had a busy week. So once again, let's do our weekly check-in our highest are the highest rates since November keeping people from buying homes?

Speaker 3 8:32

Nope. And I , and I'll maybe we'll get into a couple stories. I , I have had, I've had one couple who they've been aggressive and they've written about four or five offers, but they are looking in what has got to be one of the most difficult submarkets in southeastern Wisconsin. Like they're looking south side of Milwaukee. So think like Oak Creek, Franklin, Franklin, CUDA Hay , uh, in the three 50 to four 50 range. And I think every time on the Monday after they write the offer, when I circle back with their agent, like, Hey, how many offers were there? The answer is nine. It seems to be the number.

Speaker 1 9:15

Okay .

Speaker 3 9:16

And they, like, they in a bubble themselves are strong. Right. Great jobs , uh, qualified on income, good down payment, great credit.

Speaker 1 9:30

It's been how big is the down payment? How , how good is

Speaker 3 9:33

10%?

Speaker 1 9:34

Okay, so that's okay, but its not as good as 20%. Can we get 'em ? Well, yes. Can we get 'em to 20%? Verify some No. Some retirement? No, they don't have it . Okay.

Speaker 3 9:44

And it's just, that's the thing. It's, and then you must go forth out into the world and get a seller to say yes to you . Mm-Hmm. <affirmative>. And you know, it's emotional, right? Like when you're writing the third or fourth offer and you, it's , when you look at a house, I always think like, and then the pages in the book of your life unfold in front of you, right. Because here we will be for some chapters , uh, going forward and they're getting heartache, right? Yeah . Because they keep losing. And ultimately, you know, when you have heartache, it always makes it feel a little bit easier when you got something to blame. And so, sure. You know, rates are always a good punching bag. Okay. Wow . For, but, but to your point , uh, early in the first segment, okay, yeah, sure. Maybe a couple weeks ago we were talking more 6 9 9, and now we're talking more seven and a half . Boy. Yeah, that looks ugly, but it's an $83 decision. Yeah . More than anything else. And for them, that is not the thing holding them back from getting into the winner's circle.

Speaker 1 10:55

It's , there's not a , it's supply that , that story sounds to me like they have understandable home shopping fatigue 'cause they can't win due to where they wanna live.

Speaker 3 11:06

I think, I think a lot of about like what would I do personally? And part of the heartache is when you're shopping in the part of the market, new listings first weekend, you know, in the price range that you're looking at, everyone else is getting those alerts at the same time too. And so if it were me, I would start looking in different pools. Like , okay , like , hey, what house has been on the market for the , what's the third weekend? Yeah . Maybe what's, 'cause they could reach, you know, maybe they reach for a $500,000 house. That's a little, that needs a little love, which is actually above their preferred budget. But maybe it gets them, you know, into because they're trying to buy, you know, 2000 square feet, three bed, two bath in that meat of the market, which

Speaker 1 11:57

Is a lot of people that's been updated or Yeah . Nothing has to be done to it. Yeah. Mm-Hmm. <affirmative> , that's a tough one to bring into the winner circle. Um, when, when we come back, I've got a story of a couple moving from , uh, Wauwatosa where , uh, their house is for sale this weekend. And I wouldn't be a bit surprised if I find out tomorrow on Monday that they have an accepted offer and they're moving to the Chicago suburbs. And so interesting conversations about how much home can I afford? Let's talk about that and your stories as well. David, when we come back your are listening to the Academic Mortgage and Realty show on Wisconsin's radio station AM six 20 WTMJ

Speaker 2 12:35

Getting you into the home of your dreams. Here's more of the Accu Net Mortgage and Realty Show with Brian Weer on WTMJ.

Speaker 1 12:44

Welcome back and thanks again for spending part of your Sunday with us for some of your minutes later in the week on a podcast. But that's David over there, the younger David Wicker. I'm the older Brian Wicker on this side of the table. And , uh, David and I had a nice , uh, uh, couple who owns a home in Wauwatosa and uh , the wife in this case got a great new job in the Chicago suburbs and so they're fixing to move down there. And of course we always do the discovery of can you buy before you sell? Yeah . And in their particular case, the answer is , uh, what does it say on the , uh, crazy eight ball decidedly No <laugh> , no could not do it. But we went down the road of okay, you know, the , 'cause the husband doesn't have a job down there yet. Well, could he get permission from his employer to work remotely? Mm-Hmm . <affirmative> , you know, they have two small kids, I think. Uh , and , and so, you know, and the answer was yes, but he kind of wants to get a better paying job. So I got this email from him , uh, in middle of last week saying, Hey, can you tell me how much home we can afford if I get a new job that pays 70,000 versus 80 versus 90 along with my wife's, you know, new, new salary that she's gonna be enjoying. Yeah, yeah. Yeah . And so I did the math and smart. Yeah. Yes . Good question. And the answers , uh, were, you could afford a payment of check this out, five, $543 a month if you get a $70,000 job, if you get a $80,000 job that goes up to $5,900 for a payment per month, don't , don't do that. And if you get a $90,000, you could enjoy a payment of $6,300 a month. That's principle interest, taxes and insurance. And notice how I gave the answer in monthly payment. Yeah . 'cause then the other constraint was, and pretend that we have $200,000 to put down from the sale of our home. 'cause again, it's in tosa it's in beautiful condition, it's gonna sell in a heartbeat. But then what I did is I gave 'em an example for each one. Well, you know, a $5,500 payment could equal a $750,000 purchase price with $200,000 down. And I'm assuming you want , you think people think the taxes in Wisconsin are higher, they are higher in Illinois. Yeah . So I did a little math and a couple houses, $19,950 for taxes. $150,000 home in this particular suburb where they're looking in Illinois and insurance at 2,600. So my, the point of this story is twofold. Whenever a home shoppers, I think, and tell me if you agree with this, wanna know what is the dollar amount of the sales price I can afford to buy on my new house? True.

Speaker 3 15:33

Well, yeah. 'cause they're looking at the pictures like, what do I get? And where , you know, what you described is you were kind of reverse engineering. Yeah . And here are the pictures based upon all these numbers in the math. These are the pictures you can look at on Zillow. Right. And , and , and home shoppers come at it the other way. I'm looking at these pictures on Zillow. Tell me what the payment is in reverse and we meet 'em . Well, they

Speaker 1 15:55

Don't even wanna know what the payment is. The real simplified question I think is tell me if I can afford a 750,000 home <laugh> yes or no . And the answer, you know, so what I did gently and you know, I said it's really about the payment. So here's a link to our super cool calculator online and you can calculate the payment on any home you're looking at. Okay. Because it really depends what if they find a home that only has $15,000 of taxes that frees up a lot of monthly payment to go towards

Speaker 3 16:26

The , they can allocate more toward mortgage. Right . If it's not getting eaten up, chewed up by property taxes.

Speaker 1 16:31

Correct. So it, that's a big part of it. And you know, I would say that's a part, you know, let's bring it back to our primary market here in southeastern Wisconsin. It matters if you're buying a $400,000 home in the town of Oconomowoc, which has very low property taxes versus Wauwatosa , which is in Milwaukee County and has a lot higher property taxes for that same purchase price. So it's, it's a , that amalgamation, that's where we earn our stripes, I think is helping people understand. Yeah. It's a combination of your income, the , your down payment and the property taxes. Uh , that really determines how much home you can afford to buy. So hopefully Are

Speaker 3 17:15

They, go ahead in , in going getting into the Chicago suburbs, are they also reaching for a little more house Yes . Than what they had here in Milwaukee? Okay.

Speaker 1 17:24

I believe they are in terms of square footage. Yes. Yes . Yeah. So, so you know, it's the natural progression. And are they, you know, worried about the interest rate being 6 9, 9 or seven quarter ? Nope. Nope . They just want to know.

Speaker 3 17:37

Well , I was , I was gonna say yes to my new job offer. You know, that advances my career. But honey, I don't wanna anymore 'cause rates. No one has ever said that. Well ,

Speaker 1 17:47

And , and he actually had a job offer. He was negotiating and his answer when he came back, you know, through the email was, you know, thanks for those numbers. We kind of did our own budget. This is real life. And he said, really? We don't want to have a payment over 5,500.

Speaker 3 18:03

No. Oh

Speaker 1 18:04

God . Okay. Yeah. But then he says, so does that mean we can buy a $750,000 house? And I'm like, yes. As long as the property taxes aren't greater than 19,000 in change. Alright , what are we gonna talk about when we come back, David, after the news?

Speaker 3 18:18

I wanna talk about, I had a client get an accepted offer be , I think I helped because I was on a text group text with the buyer's agent and the listing agent talking about no appraisal needed. Let me get into that story. Now it's time to turn it over to the breaking news center. Don't break

Speaker 2 18:37

The fact to get into a house. Back to the Accu Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 3 18:44

Welcome back to the Academic Mortgage and Realty Show. Thanks for hanging out with us. Uh, dad, as always, we have clients getting accepted offers and this past week I got looped in on a listing that wasn't even public yet. Like when I pulled, when I pulled this address up, I online, I was like, I don't see that this is listed anywhere.

Speaker 1 19:06

Not even pre-list. No. As they do sometimes now . Okay.

Speaker 3 19:10

But it must have been that couple, I'm sure the listing agent reached out to a couple buyers agents that they knew put some feelers out, you know, hey, my sellers would welcome anyone who might want to come see this home. And my client looped me in that they were writing this offer and dad, the tone of voice that my client had, she was ready to pay almost any number for this house. And, and I used a phrase that we've shared before, a no regrets offer. And she really liked that because you know what? For the right house man, it's worth it. You set aside , uh, don't care what rates are, not any price necessarily, but but a strong aggressive price. Aggressive price. And as soon as I got looped in my , uh, you know, I started investigating myself because per , with regards to this property, my clients had shared that they were ready and we had documented that they can put 20% down. And so I immediately crack open my computer. 'cause I'm like, man, if we can get the appraisal waiver Mm-hmm . <affirmative> through the mortgage software, if that, if that might be the thing that helps our client, you know, just rise to the top for these sellers, that would be awesome.

Speaker 1 20:33

Yeah. You don't have to worry, you don't have to worry Mr. Seller that you get this over your, your your wildest dreams offer. But then it's gonna get rained on because the appraiser says, well, I can't do ,

Speaker 3 20:45

And my client was actually , was actually , they were offering an enormous amount of wiggle room on the appraisal, like $40,000 and they could do it. Yeah . But at the same time, like, you know, if they don't have to, they didn't want to. Right. Yeah . Right on using that wiggle room. And so I , uh, jump into the software and I , in 10 minutes I did not just their price that they had shared that they wrote at I , but then, 'cause I got the appraisal waiver right away. Okay, cool. But they were still in negotiations where I think the seller was still reviewing offers . So I'm thinking like, okay, well what if the, my client wrote at this number, let me check the software to maybe see if it goes at 5,000 or 10,000 above that . And it did.

Speaker 1 21:30

Aha .

Speaker 3 21:31

When I ran it 15,000 over their initial price didn't work.

Speaker 1 21:36

Didn't work. Okay. So there is a limit. Yeah ,

Speaker 3 21:38

There was a limit. But then I was able to text the buyer's agent with the listing agent to be like, Hey Bob, not his real name. David Wicker from Anette Mortgage on behalf of Jim's clients who just wrote an offer on your 1, 2, 3 main Street listing. I can confirm no appraisal is needed up to this price. Literally no one will walk through the house. You can would love to work together on this. Yeah. Please call or text anytime .

Speaker 1 22:11

Did you give them the price over their asking price or just at their asking price?

Speaker 3 22:15

I did . I I gave the maximum too . Oh,

Speaker 1 22:19

Okay. And so what happened? Did they get it at their original offer price or did they take you

Speaker 3 22:23

To the They got the accepted offer at their original price.

Speaker 1 22:26

Perfect. Good job David. How does that work? How do we, why do we get appraisal waivers on some properties, but not others?

Speaker 3 22:34

Fannie Mae and Freddie Mac have the mortgage software and they've got a lot of data. They're doing a lot of mortgages every year. And what they're , it's in a black box. So we don't have access, but we can, you know, knock against this software all the time when we run a particular address through 1 2 3 Main Street sometimes. And in this case, Freddie Maxx software says, I know that address and I have enough data about that home and surrounding homes. Did you say that house is worth 400,000? I believe you believe that No need, no need to send a human appraiser through the property. We, Freddie Mac in the software, we have sufficient data that we're good on value at that. At that value for this address.

Speaker 1 23:26

So the, and and , and I'm just gonna say this little added nugget. It's because Fannie and Freddie are snaring up data from appraisals. So every time a mortgage lender sells a loan to Fannie and Freddie, they deliver the appraisal and a thousands of data points about not only the subject property but the comparables that were used. Then they have public records data, you know, from the assessor's office and they've got big computers probably with artificial intelligence that are sure , you know , coming , coming to a conclusion as to the risk of, you know, do we believe this value? And it's cool. What's the second? There's sometimes we get something less than that. What is that called again?

Speaker 3 24:09

A property data report. A-P-D-R-I have an , uh, an example on that too if you want to get into that a little bit. Let's, let's just dive in. 'cause this is the artistry right of getting to the closing table, getting the accepted offer and getting to the closing table. We'll dive in on that. Uh , after this break, you are listening to the Accu Nett Mortgage and Realty Show. On the biggest stick in the state AM six 20 WTMJ.

Speaker 2 24:33

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

Speaker 1 24:43

Welcome back and thanks again for tuning in. I'm Brian Wicker, the elder. That's David Wicker. The younger, taller , more handsome of the wicker men. And uh , luckily there's only two of us, you know, 'cause then what would the third wicker person be? It would be

Speaker 3 24:55

Jack will have us both , both beaten No time .

Speaker 1 24:57

Okay. Yeah. Young Jack. Alright, so David, give us a , just a quick , uh, you know , this is all in the category of giving sellers a greater degree of confidence that our buyers can perform. And you just told a great story about the ultimate, the appraisal waiver. It doesn't get any better than that. Right . But there's this thing in between called a, what is it again? A property

Speaker 3 25:20

Property data report.

Speaker 1 25:22

Okay. And what does that

Speaker 3 25:23

Do? Same thing. We run the specific address with a specific buyer through the software. Hey , 1, 2, 3 Main Street, the in-between, as you described it is we don't get the full waiver, but we get the PDR property data report, which to summarize says value. I'm good on value, but we'd like to send a human through the home to confirm the particulars, the data about the house. And my example to realtors is, you know, the Freddie Mac database thinks pretty sure, you know, maybe this house has three bedrooms, but let's send a human through to make sure that, you know, the seller didn't turn two bedrooms into one and we have the wrong data about this house.

Speaker 1 26:10

I see. Yep .

Speaker 3 26:10

It's confirming that. But but to your point, the comfort level to a seller is hey, value not something that's gonna get analyzed. 'cause we're doing, I call it appraisal light too when I on

Speaker 1 26:24

The phone light . Yeah , yeah , yeah. Just conditional. We're , have

Speaker 3 26:26

We confirming we're ing data not value?

Speaker 1 26:29

Have we had any of those go wrong? Like the person, and it is typically an appraiser. It doesn't have to be an appraiser as I understand it, but typically it is goes out there and says, well wait a minute. Well , you know ,

Speaker 3 26:41

I see some problems here , condition , but can go wrong. Yeah. If you walk through the house and the appraisal light notes, hey, there's a hole in the roof. It's like, okay, well that needs to be addressed.

Speaker 1 26:51

Okay . So ,

Speaker 3 26:52

Because that's not about value necessarily, it's about condition. Condition

Speaker 1 26:56

In that case. Right . Um, the, the other , uh, story that I forgot about until just now , uh, has to do with your brother-in-Law. My son-in-Law. Tim Holdman sometimes co-host of the Academic Mortgage and Realty Show. Yeah . And he was working with the , um, daughter and son-in-law of a good friend of mine. And they were on , I think this was their fourth offer had lost out on three. And their agent was like, I think they were buying a new Berlin. It was like, you , you gotta try and make this a cash offer. Really. But luckily they had enough in retirement or maybe in inheritance or something that they could document a cash offer. And so that took care of the , um, you know, any angst that the seller would have . And they got the offer accepted. Um, no appraisal contingency, but folks on the standard Wisconsin contract , uh, there's a provision that says, Hey, just because this is a cash offer, you Mr. And Mrs. Seller will still allow an appraiser to come through the home because the yes buyer still has the option of obtaining a mortgage. But again, it's not gonna be debated as to the value for the

Speaker 3 28:05

But the convenience. Yeah. Right. Yeah . If you wanna get the loan, you just gotta open the door. Yeah.

Speaker 1 28:10

So they got a accepted offer a week ago today, Sunday. And , um, and so , uh, the dad was texting me and saying , I don't know if you heard but daughter's name here just got an accepted offer. I said , oh, I didn't know that. Let me start looking into it. And , uh, what we came up with there and , and the dad is a financial advisor. So I said, so Jim, how are you feeling about interest rates? Yeah , I'm a little worried, you know, but I think they will eventually come down. Okay, great. So I laid out a 6 9 9 where they would have to have paid on their particular transaction, $2,660 of interest upfront to get that trophy rate versus a 7 3 7 5. That was with on their, again, kind of larger loan. And on the day we were looking at pricing, I could have done not only no points but no loan costs. Cool. Okay. Yeah . And , and so that's, that's a statement that says I think rates are coming down. So I am gonna spend $0.

Speaker 3 29:03

Well,

Speaker 1 29:03

Yeah. You know, to obtain this mortgage.

Speaker 3 29:05

Yes.

Speaker 1 29:06

This is a disposable mortgage. And then the third option that I had Tim show them on Monday was a transaction where it's a 7.6 2 5 30 year fixed rate. But then a , it takes money that we will receive for selling the World Wall Street, a slightly higher interest rate on that mortgage. We'll take that money and put it in a escrow account and it will subsidize the payment for the first 12 months of the loan, such that they will have a $267 lower payment than if they went with the door number two, the 7 3 7 5. 'cause they're effectively gonna be making a payment that's 6 6 2 5. Yeah. So they're gonna rack up 12 months for sure of $267 month savings. And then if the worst case happens and rates are not down by then, their rate would go to the actual note rate of 7 6 2 5 and their payment would go up 91 bucks from where they could have had it. Sure . Had they gone with that? No point, no loan cost rate. This is the , this is the technical word for the term for this is a one Oh , temporary buydown because we're lowering the rate for by 1% for the first year. It's the lowest option for the first 4.7 years of the loan. So that's what they're going with, that , that was the right tool for the job on that day. These are all the things that good mortgage practitioners, you know, should be doing with their clients. And that's what we do every day . Uh , David, when we come back to you about , uh, one more story to share.

Speaker 3 30:41

I do maybe one and a half. We'll tackle that , that and a half after this last break. Uh, you're listening to the Acuate Mortgage and Realty Show on AM six 20 WT mj.

Speaker 2 30:51

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 30:59

Welcome back. And, you know, we started off the show David, talking about how rates are high-ish compared to where they were earlier this year. You know, we're sitting around, you know, general neighborhood 7.5% on a 30 year fixed rate with no points and all the other Right stuff. And , and yet that is not scaring people away. And what we're helping a lot of our clients realize is that the mortgages they're getting now to buy their homes in May and June of 2024, they could be thought of as disposable es especially if you're buying in Wisconsin or Illinois, where mortgage refinancing is extraordinarily cheap compared to other states that we lend in like Minnesota and Florida. Um, and and to that end, well let's do your story first You go,

Speaker 3 31:48

Well, I had this exact analysis with a client this week. They're buying a lovely home in Waukesha County making a , a huge down payment. And it was, as I've posed many times before, hey client, what do you think interest rates are going to do in the next two years? Because then their answer and his answer was, I think they're gonna come down. And so I said, I said, okay, well why would you spend any money to get a lower rate today if you just told me, Hey, I think rates are gonna come down all on their own.

Speaker 1 32:23

Yeah.

Speaker 3 32:24

Why force I tell my clients too . Well, yeah, I I tell clients, I was like, I realize that makes for a terrible story. Like when you go see, you know, your in-laws over the weekend, like yeah boy, David and Brian over at acting , they got me that ugly rate. But the reason why is because we're trying to keep, if the answer is, I think rates are gonna come down, it's like, well then the analysis is we should keep your costs down.

Speaker 1 32:47

Well, and you can then provide them with the math that says, well you know what, here's the good news. This option with the low cost is really the lowest cost option for the first fill in the blank , whatever the math is. Of course, three and a half years. Yes . So you have a margin of error, you know, built in . You're not gonna , you know , very small chance that that you're gonna lose. I have this , uh, client we've talked about before, who is actually buying a vacation home in Naples, Florida. Mm-Hmm . <affirmative> . But after talking through, you know, should he finance in Florida or he happens to own his home in Waukesha County, free and clear, I I was able to educate him that let's put the mortgage on your , uh, home in Wisconsin.

Speaker 3 33:32

Well you're, you're saying where is the smartest least aggravating, cheapest, best way to get this pile of money.

Speaker 1 33:38

Correct. And and the problem is that Florida is an expensive state to borrow in because two things, they don't have an income tax, therefore they tax mortgages every time you get one. Yeah . So there is a, what do you call that , uh, impediment. A cost a barrier. There's a friction. Friction. That's the economic friction of refinancing in Florida. Plus title insurance is extraordinarily expensive. And , and so I'm like, you know, whatever mortgage you get, if you put it on Florida, you , it's gonna take a lot of rate movement to uh , refinance it as opposed to Wisconsin in six months. So that , that was the , the literally the words that we said to each other on Wednesday. Uh , you know, Stu remember this is a disposable mortgage, so let's lock in the rate. I told him about the personal consumptions in , uh, expenditures index coming out on Friday. Said, is it really worth gambling to see? 'cause we're now within the window where we need to close up this , um, this

Speaker 3 34:35

Refi. He needs the cash,

Speaker 1 34:37

He's gonna need the cash in the second half of May. So I'm like, why don't we take risk off the table? So we went, because it's a cash out refinance with 7.625% , uh, with like really minimal cost . I think it was $499. And I'm like, you know, once six months passed , he's gonna lose the scarlet letter of being a cashout refinance. So the pricing on his mortgage is gonna automatically improve when he goes from being a cashout refi to a regular refi. And then hopefully rates will be down too. You gotta comment on

Speaker 3 35:06

That. And, and well, and no doubt you showed him it was like you highlighted 7, 6, 2 5 with Yeah . Minimal cost. It's like if you want 6, 9, 9, man, I can burn your steak and serve it to you. Yep . But, but here's the analysis. This is why we're not just, you know , mortgage

Speaker 1 35:25

Order

Speaker 3 35:26

Taker . Exactly. It's like, let's talk about when you're deciding numbers, you are making a statement about what you think you know, the numbers are going to

Speaker 1 35:37

Achieve. Yep . So, so he was up in DOR County at the time, I had texted him, you know, the, Hey, I just sent you an email with a summary of your three options and I think we should lock. And he is like, I'm all about it. Well, that's all the time we have for today's show, David. Next week it's gonna be may already hard to believe that , uh, four months of the years is already gone. Thanks for tuning in again today, folks. You've been listening to the Accu 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 host or guests of Accu Mortgage and Acuate Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.