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: 0:34

Welcome to the Aced Mortgage and Realty Show. I'm Brian Wicker for Licensed Real Estate Broker with ACU Net Realty Advisors and also the majority owner of a CNET mortgage where my individual NMLS ID number is 2 5 9 6 1 0. And I'm here again today along with my son David Wicker, who's our Chief Client Experience Officer at ACU Net Mortgage and also , uh, one of our top producing senior loan consultants. And his N ML S 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. Well, David, the RNC, the Republican National , uh, is that committee?

Speaker 3: 1:10

RNC Convention.

Speaker 1: 1:11

Convention. Okay. Just wrapped up , uh, this past Thursday. A lot of people in town and , uh, I have been surprised in casual conversation from the golf course or just, you know, people in general when they say, well, Brian now's a business. And I say, well, it's okay. And then the next thing outta their mouth is why it's an election year. So I suppose interest rates will be coming down. And I always think to myself that implies that somehow the incumbent president, 'cause certainly the challenging president has no influence. Influence on influence, yeah . Mortgage rates. But it somehow implies that the incumbent president of the United States can manipulate either what long-term interest rates or at best, you know, go strong arm the Federal Reserve Chairman to lower short-term rates, which will ensure , you know, lower the long-term rates. And I , I am, I'm just gonna come right out and say it. I am not a believer in that theory. What about you do , do we

Speaker 3: 2:15

Do

Speaker 1: 2:15

Presidential elections? Drive down interest rates? Because that seems to be a widely held belief. What do you say, son, David?

Speaker 3: 2:22

Well, don't let facts get in the way of a casual conversation topic if only. 'cause then what else are you gonna talk about in between, you know, holes on the golf course? Yeah, because , because it's not, it's not, it's not real life or it's not the reasons, you know, rates are like the weather or the Packer's record. It's something to talk about, but it's not the reason any of our clients, and we've got stories that we're gonna share. None of the people who are actually participating in buying or selling are referencing elections or interest rates. They're deciding to continue to live their life. Of course, commenting on rates. You know, it is the same thing as when I comment about the Bucks roster. It's like, I can comment all I want, but I'm really not gonna influence the outcome of the topic.

Speaker 1: 3:20

Now, one thing I, I popped into a closing on Friday , uh, for a repeat client and was chatting with the buyer's agent, who's a 25 year veteran of the business, a husband and wife team. She's the wife. And I asked her, what's your market? You know, forecast or comments? And she said, well, you know, July is quite typically, and I've heard this from other agents too, is a slow month for transacting, meaning it's kind of a dip in the middle of summer for getting contracts signed , uh, you know , that are gonna then close in August or September. And her theory on that, or her observation, her experience, let's say, is that a lot of times, and she's seeing this right now, and we've heard this again from another agent that we mentioned a couple of weeks ago , uh, sellers kind of get o out over their skis relative to the asking price. Okay? And so then it takes 'em a while to soften, right? They're out there, you know, overpriced. Okay, now I gotta do a price cut. So that takes some time and delays transactions. And then from her vantage point, you know, limited though it is , uh, she's got some buyers who have kind of taken a break , uh, from the home shopping process. 'cause maybe they've, you know , wrote some offers in the spring or, you know, early part of the summer and didn't win. And they're kinda like, eh , you know what? We're gonna just wait a little while 'cause they're worn out. Um, and then though, her other theory is that the presidential election, and she's says she's observed this in her practice over 25 years , um, causes consumer confidence to go down. Like there's uncertainty, right? We don't know who's gonna get elected president. So you know what, I'm, I'm just gonna sit on my hands and I'm not gonna buy or sell my house until that uncertainty is resolved.

Speaker 3: 5:04

An opportunistic person would say, that means I can jump in and while others pause, I will act for anyone who likes to be a contrarian.

Speaker 1: 5:14

That's a really good point because hey, if that

Speaker 3: 5:16

Is true , we say this during, well , yeah, we say this during winter time . Hey, if you, if you are looking across the calendar and you want to discount January is your friend or writing in December to close in January? Yes . 'cause everyone else is at home eating Christmas dinner. You get out there and you can have, you know, the new house for next Christmas.

Speaker 1: 5:35

I did have time to do a two year comparison. 2016, which was the most recent presidential election pre covid . I I thought 2020, I can't look at that. And I compared 2016 to 2019 and sales in the second half of 2016 we're 3.5% lower. But I think there are a lot of variables, you know, that go into that interest rates, you know, who knows what else supply. Yeah. You name it. Alright , so let's let that tees us up for a couple of conversations. David, you've, you've been talking to a couple of actual real estate agents who themselves , uh, are looking to buy. Yeah . And I've got a good first time home buyer story in Illinois. Let's start with your , uh, real realtor, real life professional looking to transact on their own. We'll cover that when we come back. You're listening to the Aced Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2: 6:27

Home buying advice from the guys who know it best. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 6:35

Welcome back and thanks again for tuning in today. David. Uh , you're, you're ready. You've talked to a couple of real estate agents, professionals who themselves are helping people buy and sell homes, you know, every day . And you've got a couple folks who are , um, interested in transacting themselves. How does this fit into our conversation about how interest rates and presidential elections might impact what ,

Speaker 3: 6:56

Uh , and lest we walk past? Because ACU net's about to turn 25 coming up here next. Is that next Sunday? Yeah, yeah, yeah. Next Sunday. Next Sunday . We're a week shy. It'll be 25. It just reminds me either growing up or in the 10 years that I've been doing this with you, I think it's your personal favorite. Whenever a , uh, bank executive would be the one to call to, you know, be like, Hey Brian , can you help me? You know, with my home purchase , uh, you always had a twinkle in your eye. Oh yeah . Love when you got to tell that story. 'cause instead of calling their own mortgage department, they call us. And this is, you know, a version of for real life reasons. You know, who do real estate agents call when they want to get financing us? Not their bank, not their somebody else. Which would be an excellent question. If you're out there, you know, with your agent, you just look at them and you say, so where did you get your mortgage? And you'd be amazed at the answer. And so this past week, for real life reasons, I got two different real estate agents who were like, Hey David, can we talk about me for a second? And, okay, here, dad, here are the, the, the themes. One, we just had our second kid and we need more space, amazing family size . And the second one, and the second one is they're soon to be empty nesters and they can sell their suburban home makeup fist full of money and they wanna get out to Lake Country. Okay ? Not , not because, not because only , not because the

Speaker 1: 8:29

Election

Speaker 3: 8:30

Rates inventory election. Nope. Because they've had some pretty strong years doing what they do as real estate professionals and they'd like to get onto what comes next.

Speaker 1: 8:41

There was, I came across an interesting , uh, article that was actually quoted by realtor.com and the original source was Newsweek. And Newsweek did a torturous analysis of like the average mortgage balance in each state. And then they looked at the average interest rate on the mortgages within that state compared them to current mortgage rates and calculated, you know, which states would produce the highest payment increase for trading in that old mortgage for a new one. Well, saying ,

Speaker 3: 9:13

And I

Speaker 1: 9:13

Look at that and I said, it doesn't matter. No people are gonna, you know,

Speaker 3: 9:18

You're not stuck. You're only stuck in your own mind. Right? That's because you're gonna move on. You know what, honey? I could take that dream job in Oregon, but you know, I guess I don't want to, 'cause I don't want give up our rate. That's crazy. Right ? People don't decide like that. And the, the particulars this kind of goes to , uh, the rock solid preapproval, these real estate agents who call me about their personal stuff, they intrinsically, implicitly realize, you know what, I have some moving parts to my life. Yeah. And I would like, I don't want to just blindly assume like me taking on the character voice of these real estate agents. I do not want to blindly assume that, you know, just 'cause I know how to negotiate to get into this next home in their life, guess what? They wanna make sure that they can actually line up the financing. And when you're a real estate professional, you've got other moving parts, maybe rental properties, maybe your Schedule C self-employed on your personal tax returns. Boy, wouldn't I want Brian or David or an Anette team member to take a look at that before I go walk through a house?

Speaker 1: 10:28

Correct. Because all, almost all, I think the only one that I know of where the agents are employees is Redfin. But I think every other real estate agent , uh, is a independent contractor Yes . Kind of by design, which means they're self-employed and that means we have to look at tax returns and sometimes, you know, year to date information on Yep . You know, what they've been earning so far in 2024 and come up with that analysis. So yeah. That, that is a level of , uh, detail that you want to pay attention to. And they have all the same questions as everybody else can I afford to buy before I sell

Speaker 3: 11:05

A hundred percent? And Right. And to be able to, when you are the doctor and you've seen your clients go through it, like you, you don't want the level of heartbreak that I'm sure they've seen some of their clients go through , uh, by making themselves open to , uh, wanting a new home and then not getting it. And so if they can prepare themselves Yeah . As real estate professionals being themselves buyers , uh, I I have a , I have a feeling, and I'll report back on this. I'll bet you $5, they'll be a one and done . Because when they find, when they find the home that they want and they're ready with the financing from ACU Net Mortgage and they write a strong offer, those real estate agents as new buyers, there'll be a one and

Speaker 1: 11:53

Done. Do you think they'll be successful on the first try? Yeah. That'll be interesting to see. Um, alright , when we come back, let's talk about my, I got a first time home buyer , uh, similar, interesting , um, situation correlated to what you just suggested, but I also have a bank executive who called me this week for while . Oh

Speaker 3: 12:08

Really? So I can

Speaker 1: 12:09

Tell both stories. <laugh> during the show. Alright . You are listening to the A at Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ,

Speaker 2: 12:17

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

Speaker 1: 12:25

Welcome back and thanks again for joining us this morning. I'm Brian Wicker, the elder of the Wicker Men, and that's David Wicker over there. The younger, taller , more handsome of the , uh, wicker male clan. And , and so David , uh, oh , four or five weeks ago I got a text , uh, from a past client who we helped buy a home in Chicago saying, Hey, my daughter and her fiance are looking to buy and , uh, you know, I wanna connect you with them. Mm-Hmm . <affirmative> . So find , text them , send 'em the link to our super cool online application. Um, and which is really cool because all you gotta put in what is a David , the last four of your social security number, your

Speaker 3: 13:07

Name and address

Speaker 1: 13:08

And name and address and bam, it's kind of scary. It pulls in all your information and then all you have to do is verify it. It's kind of cool. Um, anyway , so super easy. Uh, his daughter completed that rapidly and updated up , uploaded a bunch of her bank statements, w twos and , and , uh, pay stubs, which the system automatically facilitates. But then the fiance was kind of dragging his feet. So I'd like, you know, text him every couple of days, Hey, here's that link again. Oh yeah, I'll get it to this weekend. Never did it. Um, and then, wait, can

Speaker 3: 13:40

I guess what , can I guess what this story is ? 'cause I don't even know, but yeah, go ahead. On Saturday at 4:00 PM you got a text, Brian, we just left this house and we love it and we'd like to write an offer. Please help. What's that link again? It

Speaker 1: 13:51

Was, it was a variation of that. Okay. And the, the variation is that , um, I got an email early on Tuesday morning, I think it was that said, Hey, Brian , just wanted to let you know this is from the daughter that we did get an accepted offer and we've decided to go with our real estate broker's favorite mortgage broker. Okay . So thanks a lot and not be one .

Speaker 3: 14:14

You got a dear John is what you got.

Speaker 1: 14:15

I did, I got a dear John email. Oh . And so, you know, it was very nice as congratulations. That's the most important thing that you got the accepted offer. And then I didn't have the details of their offer, but I used , um, what she had applied for in terms of a purchase price and a down payment. Yeah. And I said, you know, let's just keep this mortgage broker , uh, honest. And this goes to your point of, well , she did ask her real estate agent, who would he like to use? So beware if they don't say acuate , then still ask us to get involved because this guy clearly, you know , hadn't heard of us in , uh, Chicago and um , was recommending somebody else. And so I said, let's keep this other, you know, broker at least honest, here's what I could do. And I purposefully and , and

Speaker 3: 15:01

Blind, right? You're this , you're not playing games. It's like, here's what it is.

Speaker 1: 15:04

Right. And so on that day with all those numbers , um, I offered, and I was surprised I could offer this. I offered her , um, 5.99 on a third of year fixed rate. Mm-Hmm. <affirmative> . But it came with like two and an eighth points , uh, 2.125% of the loan amount. But I just wanted to get that out there for the sizzle. Um , and, and then I showed her 6.625 with no points. And then all of a sudden wow . I got a text from the fiance saying, you know what, I'm gonna fill out that, that online app Mm . <laugh> because apparently, well, and then I found out when I connected with them on Tuesday evening, and I I redid the , the numbers because then I found out what they did offer. And let me explain that for just a second because it's kind of interesting. Um, they had written an offer on this same house three or four weeks ago. Mm-Hmm . <affirmative> the house was listed for 6 75 in a suburb of Chicago and Cook County. And so it was listed at 6 75 and they wrote a substantially lower offer and got rebuffed. Yeah . But then they really liked the house. So they wisely kept looking and sure enough, you know, maybe a week ago now, the seller after, oh, what did the real estate agents say in the first segment? Sellers are kind of getting a little greedy. Right? And they are asking too much. Well, they lowered their price from 6 75 down to 6 45. Okay . Okay . And so this nice unmarried couple , um, decided to write a new offer still a little bit below that asking price. And they, and it was accepted. Hey , great. Hey. So, so after they realized that, you know, acuate just isn't your average bear, I , I sent them a whole plethora of choices ranging all the way from 5 9 9 and then an eighth percent increments all the way up to 6.625. And we, we had a conversation on that Tuesday evening and one of the things they said, Brian , this was the, the male, the , the man of the couple, these rates look so much lower than what I'm seeing, like at Wells Fargo and, you know, wherever I look online, these look just a lot better. Are they real? And so my , I said, I

Speaker 3: 17:21

Guarantee you it's a nice way of being like, are you a liar or are these real?

Speaker 1: 17:25

Yeah , I I'm just having a little trouble, you know , uh, uh, believing these. And so the first part of my explanation was, yeah, we've been doing this for 25 years. We built this machine called ENT Mortgage to basically be twice as efficient in manufacturing that perfect pile of PDFs called a mortgage loan file. Yeah . Uh , and so that we can offer you either a lower rate or substantially lower closing costs than what you get at your typical bank. Alright. So let's put a pin in that and when we will come, when we come back after the news , uh, we'll, we'll talk about what choices we offered in which one they selected. And there's a couple of other interesting wrinkles about the Chicago transaction. Okay . But right now it's time to turn it over to the WTMJ Breaking News Center.

Speaker 2: 18:10

Don't break the bank to get into a house, back to the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 18:17

Welcome back and thanks again for hanging out with us and talking about , uh, real estate and home buying. And so we're telling a story about a unmarried couple in the Chicago suburban area, get an accepted offer and switching from their realtor's mortgage broker over to , um, acuate , primarily due to the, our better pricing. I hate to say , um, and, and don't ,

Speaker 3: 18:39

You don't have to. You don't have to. I don't have to to say say that . No. Okay . Well 'cause you are offering it as you described in our, in as you were beginning to tell the story, it was like, okay, I mean, first of all, congratulations as we always say, 'cause getting the accepted offer is kind of the coolest part of the whole thing. Yeah. And here are some numbers from Brian at Acuate and if they're helpful with whomever you're choosing, great. And if you'd like me, if you'd like to follow up with me because you really like these numbers that I gave you, let's talk. And then these clients were like, wow, that looks nice. Tell me more.

Speaker 1: 19:14

Right. So, so I emailed them , um, on Tuesday afternoon and then , um, a whole bunch of choices, not, not too overwhelming as I'm looking at it again now, but, but still a a lot to chew on. I gave 'em every option between 5 9 9, which is what everybody's eye is always drawn to. Right. That's the shiny allure. And by the way, that has an , uh, annual percentage rate of 6.22. Uh , but they would've had two , and I bolded this or highlighted it in orange in this case, said the darn , the drawback to that option is you have to pay me $10,795 of interest in advance to get that right . Yes . David ,

Speaker 3: 19:52

My my metaphor of the week dad, interest rates are like hotel rooms. You get what you pay for and you are offering in this 5, 9, 9, would you like the presidential suite? Well, it costs money and it's really nice. Okay . And you're gonna wanna hang on to that. You're not gonna wanna sleep <laugh> while you're in the presidential suite 'cause you'd wanna absorb it all 'cause you're spending the money on it. Should you? I don't know you . Well you can.

Speaker 1: 20:18

Alright . So, so I I just did the math for them. I , I, you know, even though I had all the increments in between there, I said let's look at the other end of the spectrum. And I don't wanna say this isn't the presidential suite because , uh, it was 6.625 with no discount points. Okay. Yeah . No interest paid in advance to get that. Uh, the difference in the monthly payment is 210 bucks. So you do the math and you find out, and I did it for them, I said, it's gonna take you four years and three months of lower monthly payments at 5 9 9 in order to recoup that upfront cost. And mm-Hmm . <affirmative> kind of break even compared to the 6 6 2 5. And, and I said, so the other question is, do we think that I will be able to get you the 5 9 9 rate at a cost of less than $10,795 sometime in the next four years? And I said, I don't know that for sure I can do that. But you know, all the smart guys with big teams of economists, even though rates have come down. 'cause that's a pretty amazing that I could offer 6, 6 2, 5 no points . By the way, the a PR on that is 6.5, 6.656 at least as of last Tuesday when I locked him in. Um, you know, that's pretty amazing that we can even offer that compared to where rates were just six weeks ago. Sure. You know, we were like seven and a half , weren't we?

Speaker 3: 21:36

Yeah . Uh , all depends on the variables, but Yes. Well, that's right.

Speaker 1: 21:39

That's right. And so, you know , the , the forecast by all the smart people is that , uh, interest rates are gonna continue to tick down. Go ahead. You gotta cut .

Speaker 3: 21:48

What I was gonna say was, yeah, should, should the economists prove correct that rates come down. If you're wrong, being wrong, isn't that bad? Because I saved you $10,000 and I was only wrong by $200 in your monthly payment four years from now. That's right . And four years from now, as I like to say, do you think you're gonna make more money or less money four years from now? Yeah . And anybody with some ego or self-respect says more. I was like, okay, well then you don't care about the payment four years from now.

Speaker 1: 22:20

The , um, two other interesting things. These people happen to have the same last name even though they're not married

Speaker 3: 22:26

Smith. No . Johnson.

Speaker 1: 22:29

Nope . Nothing that common. And , and so

Speaker 3: 22:31

Schitz, a Schitz found another schitz and they No ,

Speaker 1: 22:35

No, it's , it's something in between those exotics. But um, anyway , uh, the way that the contract was written, it made it look like they were married . They said, you know, first name and first name and then the same last name. And so like, I'm the guy pointing out to their attorney. 'cause in Illinois you have to use an attorney. I'm saying, I think you probably wanna be more articulate about that. And the reason we care as mortgage lenders is that's what goes on the deed. That's what goes on the mortgage and is reflected on the title insurance policy. I think it should be, you know, first name, last name, and first name, last name, and then tell us how they're ticking title. Right. Is it, you know, tenants in common or is it joint tenants with the rights of survivorship? Is it something else that you guys like to use in Illinois for unmarried people? But kind of figure that out. And then the other thing for the second time, this is my second Illinois purchase transaction. In as many months, the tax proration between the seller and the buyer for 2024 is at a to be determined percentage of the most recent tax bill. Which is like, isn't that like an important term of the deal you're offering, but

Speaker 3: 23:45

To be determined before closing, I assume Uhhuh <affirmative> , yeah.

Speaker 1: 23:48

Okay . To be determined before closing. So that was another little bit of an oddity. And so in the end they went with the 6.625 and they were super, this is where I'm building, you know, now they love us even more. Right? Because it's like, wow, this guy took the time to clearly and succinctly explained to us our options of course. And help us come to a decision. So looking forward to that one closing here in less than 30 days when we come back, David, you got a story about

Speaker 3: 24:12

A client d debating whether to pay cash or not. We'll cover that after this break. You are listening to the AC net Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 24:23

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

Speaker 3: 24:32

Welcome back to the Accu Mortgage and Realty Show. I am David the younger, that's Brian the wiser over there. Um, dad, I have clients who are current homeowners with a bunch of equity in their property who are deciding for their real life reasons to sell that home and move to a new home. Grandkids being thing number one, right? <laugh> . Um , well do , you know, as I, as I always like to joke, you know, you know, I grandkids, I, I could have watched you grow up, but Mm . I just wasn't willing to give up my 3% rate so I was absent from your life.

Speaker 1: 25:14

<laugh> do these question, do these folks have a mortgage on their existing home?

Speaker 3: 25:19

Uh, yes. Small. Small . But it's small because the value of the home has gone up by so much over the 10 plus years that they've owned it. It

Speaker 1: 25:27

May have been paying on it for a while too. Okay. Right. So relatively small mortgage, are they going to, do they have cash for the down payment? Are they gonna have to sell before they buy the next house?

Speaker 3: 25:35

They do not have to sell before they get into the new one. And the, the message that I got the , the real life , um, internal debate with my client is they're considering they were gonna take out a small mortgage anyway on the new home. $150,000.

Speaker 1: 25:51

Okay. Which

Speaker 3: 25:52

Was, and the the reason air quotes, you can't see me on the radio, but the air quotes reason, oh , David, the rate, oh the rate and the fear, I think of what the rate and payment is, is leaving my client to be like, Hmm , maybe I'll just bring the rest what I was gonna borrow in mortgage. Maybe I'll just bring that in cash. And I, what I and I what I shared ultimately, you know, this is emotion versus reason. Sure. And if, and if it and emotion will win. Right. If that is, if it's a comfort level, if it's asleep at night, it's like cool pay cash. But let me just give you, let's turn on the lights in the room and point at whatever it might be that you are concerned about, right? Because when a client says the rate, yeah, that means payments and what I detailed ,

Speaker 1: 26:49

I was gonna just say that really what they're saying is the payments too bad too high .

Speaker 3: 26:53

Well, and so on $150,000 home, I said, I was like, okay, well for them we were getting 6.99%. I said if the rate were 5.99%, oh oh , that just feels so much better. Yeah . The payment savings is $98.

Speaker 1: 27:11

Ah .

Speaker 3: 27:12

I said if, if it was 4.99% and this is a reasonable loan amount, I realize 150,000 bucks, I'm getting you 6.99%. If it was 4.99%, man, that would feel amazing. Well, it's only $193 a month. Okay . And my client has substantial assets and I very kindly, I was like, I don't think the $193 a month is really the thing that is leading you , you to want to, or that that is leading you to want to pay cash. And dad the , the real kicker. Do you know who the person in my client's life who is kind walking them to like, maybe you should just pay cash

Speaker 1: 27:58

Their financial advisor.

Speaker 3: 28:00

Yes. Interesting . And I, which is interesting 'cause what I said, I was like, okay, the only reason you would pay, and again, this is a cerebral analysis. Yeah .

Speaker 1: 28:11

This is

Speaker 3: 28:11

The brain , this is a spreadsheet answer. I was like, the only reason any financial advisor would tell you to pay cash is if they could not look you in the face and say, I I

Speaker 1: 28:23

In the eye

Speaker 3: 28:25

In the well both that they could get you a rate of return greater than the cost of the borrowed money.

Speaker 1: 28:31

That's right. Well

Speaker 3: 28:34

Over time too. 'cause Right, you , as you described with your Illinois client, it's like, I don't think this is the last chapter of the book. That's if I lend you money at 6.99 percent's Yeah . What if I call you 18 months from now and I can get you five and a half ?

Speaker 1: 28:46

Well David, why not though? Just pay cash. And then if when rates come down, then I'll borrow the money. What's the uh, fly in that ointment?

Speaker 3: 28:54

The pro the fly in the ointment is you don't get the best pricing because that is called a cash out refinance. When you are extracting equity, Fannie Mae and Freddie Mac and their infinite wisdom say, Hmm , that's a cash out refinance. It does not get the same awesome pricing as just a regular refinance where you're basically trading in the current mortgage for a new one at a lower rate.

Speaker 1: 29:17

So this bar , this client was a lot more enthusiastic about the , um, five , if it was only 5, 9 9, then it would be a no brainer. Um, but the 6 9 9,

Speaker 3: 29:27

Yes. But that's to our point, it's although the rate, it's like, well we're only talking about 93 bucks a month.

Speaker 1: 29:33

Right? Right. So , so this is a liquidity play. Right. This is saying, Hey, you know what, what's not, which is also an emotional thing just by the way, right ? Yeah . Some people really like the idea of having their home paid off free and clear because there is no payment associated with that. But it's debt equity. I'm a guy and maybe it's 'cause of the business I'm in, I like to look at the balance in my bank and say, ah , that , that the liquidity makes me more comfortable Yeah. Than not having a , a mortgage payment. 'cause I can always use that money in the bank to make my mortgage payment for a while if I have to. Okay. So good, good story. Uh , when we come back , uh, let's at least start out, well let's talk about the Federal Reserve meeting and then also I've, I got a call this week from bank executive looking to refinance his , uh, vacation home condo up in DO County. We'll get to that right after this. You are listening to the Aona Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2: 30:26

Find a place to call home without the headache. This is the Anette Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1: 30:34

Thanks again for tuning in today on Brian Wicker. That's David Wicker over there. I and , uh, David, I had a , a phone call from a past client who had bought a , uh, condo up in beautiful Dora County , uh, on a seven year arm. And guess what that was seven years ago, <laugh> . So he got the , uh, letter in the mail that said, Hey man, your , your interest rate is gonna be going up from, you know, 4% up to seven in three quarters . And, you know, here's what your new payment's gonna be. And one thing that's true about that is , uh, it was 30 year loan , so it's over a 23 year amortization period at the new hire rate, which further causes the payment to go up. 'cause if you pay it off faster, you gotta have a higher payment. And so he was looking at , well , what are my options? And so I I cooked up , um, uh, three options for him and it's really kind of always the same thing. Question between two. I think the , I showed him a 6, 9 9 rate, but he'd have to pay us , uh, $2,200 in interest upfront on his mortgage balance in order to fetch that rate. And we're fighting what , what's different between a vacation home and a primary residence. David,

Speaker 3: 31:44

Fannie Mae and Freddie Mac don't make the pricing on second homes nearly as nice as the pricing on a primary. That's , and from the way you phrased the question, it sounds like they maintain that do county property as a secondary residence seven years later here still.

Speaker 1: 31:59

That's, that's , that's true. And so I, I , you know, I'm like, you can do that and I don't know yet if we're gonna get an appraisal waiver, we might, because the balance on the mortgage relative to the value of the condo is less than 50%. Yeah . Um , and in order to find out if we get an appraisal waiver, I need to get the credit report and put it all through the Fannie Mae, Freddie Mac underwriting system. So we might save 'em 475 bucks by not needing an appraisal. I said, so you can either do that and, and the mindset there would be, I'm gonna pay you this money to get the 6 9 9 rate because I don't think I'm ever gonna refi this place again. Right. Yeah. Right. And then the , the other choice was, or I can give you 7.625 and I can pay for $750 of your closing costs , not just no interest upfront , but I can chip in seven 50 to your hard costs , uh, which would make his hard cost if we need the appraisal , uh, 9 61. And you know, the payment difference is about , uh, $79 a month. So it's the old, you know, 3.3 years break even Yeah . Between the two choices. So I'm waiting to hear back from

Speaker 3: 33:03

'em , which , and , and they said, oh , okay.

Speaker 1: 33:05

Yeah, I'm just thinking about it. Which would you, which would you take, given you , knowing that you have this headwind all the time of the worst pricing for the i

Speaker 3: 33:14

Is this loan amount below $200,000 or above?

Speaker 1: 33:17

Yeah , 180. 180.

Speaker 3: 33:19

I would take the lower rate because the , when you have a smaller loan amount, you need a bigger movement in rates to make a future refinance worthwhile. And if you really wanted to lower the interest expense, he could prepay on the condo. Yep .

Speaker 1: 33:39

Yep . He could. Uh , and for them, you know what it's all about, I think, and this is what I got outta the conversation, it's about the payment. Okay . Right . It's like, hey, we're used to this certain payment.

Speaker 3: 33:47

They're not trying to be Right. They're trying to be certain,

Speaker 1: 33:52

Well they're , they're trying to avoid the payment hike. Okay. And so it's like, well, okay, I can help you with that. And one

Speaker 3: 33:58

The reasons are they stretching back out to 30 years as well? Yes. Aha . Okay. Right, because it's about cash flow . Yeah .

Speaker 1: 34:03

We could customize the interest rate or the loan term to 23 years. But in my mind, this is like your play thing up there, your getaway

Speaker 3: 34:12

Were did they just during , um, 2021, they were like, Hmm , we'll just keep what we got.

Speaker 1: 34:17

Well, I guess so, because, you know, yeah , they had , I think it's either four or 3.875. I think they were just, yeah. Maybe fell asleep, didn't think about it. Not sure. Um, anyway, so that's that one other thing. The Fed does meet this week and there is a 96% chance that they're gonna keep rates the same. I think is really a hundred percent. Yeah . But it's also super likely that they're gonna lower rates at their September meeting. But don't worry folks,

Speaker 3: 34:43

Don't , don't say plural. Don't say rates rate . Okay. Rate the one rate

Speaker 1: 34:47

The one rate, the overnight rates, the one overnight rate that banks charge each other to borrow money. Yeah . Has nothing to do with mortgage. Mortgage rates are already down Yeah . From where they were because we got good inflation news, not because of what the Fed is gonna do in September, that's just now expected. Um, and they're also expected to cut that overnight rate , uh, again a couple more times this year according to the futures market. That's all the time we have for today's show. Folks. Thanks for tuning in. If you need help or a loved one , uh, either refinancing a previous hire rate or with a rock solid preapproval, all you or they gotta do is click on that blue button@anet.com. Even listening to the ANet Mortgage and Realty Show on AM six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the ANet Mortgage and Realty Show are solely that of the host or guests of ANet Mortgage and ANet Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.