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 Accu Mortgage and Realty Show. I'm Brian Wicker, licensed real estate broker with ACU Nett Realty Advisors, and also the majority owner of ACU Nett 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, who is one of ANets Senior Loan consultants, also our Chief Client Experience officer. And his NMS ID number is 3 2 8 8 4 7. If you've got a question or a comment, you can always call or text us on the WTMJ talk and text line , which is 8 5 5 6 1 6 1 6 20 . And remember, you can grab a podcast of today's show wherever you normally get your podcast. So, David, in the few weeks we've had off during , uh, the Green Bay football team's run of noon games. Yeah . We have had a host of economic reports in October, along with some election nervousness that have all conspired together to , um, how shall we say, push mortgage rates in the wrong direction. Yeah. Yeah. And the , the latest in that installment , uh, was kind of a nothing burger. Um, we got the October jobs report came out on Friday. And remember, folks, normally bad news is good for mortgage rates. And so the market was expecting a hundred thousand new jobs to be created in September, which by the way, was way lower than the 254,000 that got created in , uh, the previous month of , um, of September. And it turned out there's only 12,000 jobs that got created. What, why was that, David?

Speaker 3: 2:05

Well, I was watching CNBC live when Rick Santelli announced the jobs report and just across the board, they were all just like, wow, that is way below even that consensus expectation of a hundred thousand jobs. It would appear that that number was injured by the back to back hurricanes in the southeast Right . As well as the Boeing strike.

Speaker 1: 2:34

Exactly. So the , the a hundred thousand number that everybody was expecting already had those big interruptions in the economy baked in. Right. And then it came in even lower. So, boy, I don't know about you David , but I was thinking like, oh , this is gonna be a great day for mortgage rates <laugh> , and eh , yes . It turned out to be a huge nothing burger.

Speaker 3: 2:54

Um , well, I think, which this happens a lot with new data, you know, at 8:00 AM markets were staring at this report and then by the afternoon, and , and so the , the first review of the data was like, man, we really are, the Federal Reserve really is achieving what they want, bringing inflation to reality, moderating the jobs , uh, status job growth. Yeah, job growth. But then come the afternoon on Friday, markets kept looking at the same data and decided that what they thought they were translating the data as in the morning, they kind of convinced the bond market convinced itself otherwise by the afternoon and didn't take Friday's jobs report as the harbinger of good news that they thought was in the morning.

Speaker 1: 3:52

Yeah. So, so really, you know , what I was reading is that the markets don't know what to make of this report. It's like, Hey, will the real job situation, please stand up , uh, because you had this really hot number from , uh, September, right ? That by the way, it got revised down by 31,000 jobs. Oh , this didn't get talked about too much, but the August number got cut in half for new job creation, like from 159,000 jobs down to like 78. So it's like, oh , is the job market cooling? Is it hot? Is it lumpy? Is it not? And so it's just , just general , um, confusion, I think, or, you know, no, no conclusion. Couple of other things. Um, we did get a inflation measurement on Thursday. Yeah . That the market didn't care about the fed's favorite , uh, measure of inflation. Personal consumption expenditures came in at 2.1 for the head headline, which is exactly where they want it to be, 2.7 year over year for the core inflation. But here's the other interesting thing. About 10 days ago, the interest rate markets are believed as starting to bake in a greater chance of a Trump election victory. And they're interpreting that as being possibly inflationary because of the tariffs that he's proposing, which will end up raising prices for imported goods, IE inflationary , uh, and then also talking about extending the 2017 tax cuts. And that would create , uh, uh, more deficits. And so both of those things have also been said to conspire to make , uh, rates go up. All that said the last I checked , uh, the chance of the Fed Federal Reserve cutting another quarter percent on the day after election day on November, well , I guess it's two days after November 7th is only 99.9%. So the , so the markets say, Hey man, we are, we are gonna see another fed rate cut. And then , uh, they also meet again December 18th. There's an 83% chance for a third rate cut, which means there's a 17% chance that they'll stay the same. All those future beliefs are already baked into today's mortgage rates. And so when we come back, let's give a quick , uh, uh, reading on where did we end the week , uh, for your typical 30 year fixed rate mortgage. You are listening to the Accident Mortgage and Realty Show on a M six 20 WTMJ

Speaker 2: 6:18

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

Speaker 1: 6:27

Welcome back to the Anette Mortgage and Realty Show. I'm Brian the Elder. That's David, the young girl over there. And so , uh, David, we're just talking about how interest rates have conspired , uh, over the last several weeks to go up. We ended , um, Friday , uh, with the following available. This is if you're buying the median sales price home of $335,000 in the five county Milwaukee metro area with 25% down. So that means you'd be looking at a $250,000 30 year fixed rate. We're assuming all the other rates stuff , uh, you could snag, could have snagged a 6.375% rate if you were willing to pay about two points or 2% of the loan balance upfront . Five grand of interest, rate of interest paid in advance, which makes the a PR 6.59 door number two, 6.625%. That would come with $3,100 of points an a PR of 6.76. And by the way, folks, the A PR reflects those points being paid upfront and , uh, thinning them out over the whole 30 year , uh, term. By the way, the payment difference for that quarter percent higher rate is only $41 more per month at $250,000. So not that big a deal.

Speaker 3: 7:35

You're , you're preempting, you're preempting my reply already on the payment difference between these rates, but keep going.

Speaker 1: 7:41

And then , uh, 6.99% , uh, would be the no point rate again for this $250,000 mortgage , uh, with 25% equity. And that would've an a PR of 7.00 and that payment would be $61 more than the 6.625 rate. One other interesting fact, it takes about four to four and a half years of lower monthly payments to recoup the higher costs associated with snagging those lower rates. So David, what are you seeing on the front lines of, of mortgage lendings? Ha has this uptick in rates curbed the enthusiasm of any or many home shoppers?

Speaker 3: 8:19

Uh , the quick answer is no, but let me tell you, you know, this time last year , mortgage rates were at eight less we forget .

Speaker 1: 8:29

Yeah. So let's let that that's a good comparison. Yeah. Let's be thankful for 6, 9 9.

Speaker 3: 8:33

Yeah, you bet. But, and, and it's been nice to be able to circle back with some clients that we helped last year and we went through the pro the same exercise. We, you know, the , the , uh, fall of 2023 C client . Is it your expectation that you think interest rates are probably gonna come down in the next year or two, if that is your thesis? Don't overinvest now to get a rate that you think you're gonna trade in relatively soon. And thankfully refinancing in Wisconsin can be cheap. Yeah. And, and so I've, you know, for, for in recent history, I can tell new home buyers the exercise that we are circling back to with clients we helped last year. It's like, hey, we're taking a victory lap with some clients who we helped last fall who are sitting at high sevens and we're able to turn around and get them something maybe even a full percent lower because we are following a thesis that we believed rates will continue to moderate. And, and laying that out for clients. And now here fall of 2024, thinking about what do we think the world might look like fall of 2025?

Speaker 1: 9:55

And I was talking to a real estate broker on Friday who shared the same sentiment that from his perspective, buyers are not shying away. Now some are saying, well, I'm gonna wait till after the election. You know, okay, <laugh> , others are saying, no, I gotta do something, you know, right away. 'cause I'm afraid of the election. So what do you have a comment on that?

Speaker 3: 10:14

I I was just gonna say, I, I will be humored to hear what new reason a home buyer might come up with to further delay their home shopping if, if 'cause on Wednesday and the election has concluded, the next best thing that's gonna pop up is Christmas. Oh, we're gonna wait till after Christmas. Sure. And then what are they gonna wait? Oh, play off football. Can't go looking at us

Speaker 1: 10:39

After

Speaker 3: 10:39

Play off football can off up for house . Right. And , and ultimately like falling in love, your timeline will change when the right house pops up.

Speaker 1: 10:50

Well, in , in that same conversation , um, you know, I was asking about, well, okay, you know, what are the attitudes of home buyers and sellers? And certainly , uh, so this broker, and I agree with them statistically, if you can find a home you wanna buy now in November, December, January, statistically you're gonna pay less yes. Than if you buy in, you know , March or April or May. There's just less demand. Um, and , and , and so if you can find something that you wanna call home and you're in a position to do a man, now is the right time to do it. Um, a couple of other facts which are really dependent on your submarket, but I looked at the , uh, October MLS listings too late too , too early, rather to do a deep dive on the sales side. But on the listing side, listings were actually up 5.7% in October. This is for the five county Milwaukee metro area, single family detached homes and condos combined. So there's 105 more listings that came on the market. September was also 3% higher than in 2023. Year to date listings are up 4.2% or 760 units compared to 2023. Um , but it all depends on where you're looking. So interestingly, this particular broker said, ah , that doesn't feel like it for the sub markets in which my buyers are looking. Sure . Alright, why don't we come back, David, I've got some interesting information , uh, from Freddie Mac , uh, on first time home buyers . We're gonna turn that into some first time home buyer stories of our own. We'll do that right after this. You're listening to the Aced Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ, getting

Speaker 3: 12:25

You

Speaker 2: 12:25

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

Speaker 1: 12:32

Wtmj. Thanks again for hanging out with us. And , uh, we're talking about first time home buyers . David, I came across a Freddie Mac report. They did a deep dive on , uh, first time home buyers . And by the way, Fannie Mae, Freddie Mac buy roughly 70% of all the mortgages in any given year. And so, according to their study, which I turned into a little quiz for your benefit , uh, and those are our listeners, you can play along at home. What percentage of purchase money mortgages that Freddie Mac bought in 2024 so far were made to first time home buyers ? I'll make this multiple choice. 35%, 44%, or 53%? David?

Speaker 3: 13:10

Uh, 53. Because let me give you my answer why? I think that's the answer. Repeat home buyers are a little locked into the house that they got at their low rate. And so really it's only first time home buyers who have the most amount of appetite for a new house, new mortgage.

Speaker 1: 13:30

Exactly. Correct. Okay. You have , you've played this game before. Okay. Then , um, the low point, here's another interesting fact for first time home buyer percentage was back in 2004 , 2004. Do you think that the low point for first time home buyer percentage was 20%, 25%, or 30%

Speaker 3: 13:50

25 historically before that? Oh four, or let's say in the intervening 20 some years, that number has generally floated around like a, a third of correct has been new for first time home buyers .

Speaker 1: 14:04

Well, it's kind of interesting. So the answer is 20%. Was that I believe the , uh, geo, geo geo , no geometric geometry term. The Nader , the low point Yeah . Was , uh, 20%. And so during the financial crisis between 2010 and 2012, the percentage went

Speaker 3: 14:22

First . That's because the other 80% was getting loans that they shouldn't have. But that's a separate

Speaker 1: 14:25

Conversation <laugh>. Right? So it went from 40% first time how home buyers down to 33%. Then it kind of climbed back up and was at about 45% from 2018 through the first half of 2022, which is when rates shot up and you got the lock-in effect , starting about then. Um , anyway ,

Speaker 3: 14:43

The definition by the way, of first time home buyer is nobody on the borrowed money has owned real estate in the last three years.

Speaker 1: 14:52

I just closed a loan for a friend and repeat client on the 31st. On, on Halloween, who was a born again ? First time home buyer. Okay. Right . He had owned a home before. Yeah . But he had been renting for more than three years. And so, but unfortunately he made too much money. He didn't qualify for anything special. Okay. This is on the , uh, question of affordability. Um , Freddie Mac says, Hey, you know what? Entry level homes are those that sell for 75% or less. So the median sales price, median sales price in the five county metro areas, 3 35 so far this year. So that means anything selling for 2 51 or less would be defined by as entry level housing. When they looked at that nationwide, they noticed that from 20 , uh, from the year 2000 through 2024, so almost a quarter century home price appreciation grew much faster. Mm-hmm . <affirmative> 63% faster in that affordable entry level range compared to what they define as the high end range, which is homes priced at 125% or more of the median sales price. So that kind of stands to reason, right? 'cause you're gonna have more demand for homes in the lower price range. Yeah .

Speaker 3: 16:02

I

Speaker 1: 16:03

Took a quick look at October , uh, home listings in the five county metro area again, and there were 1,942, conveniently, a third of 'em were in that entry level category, $251,000 or less. Another third was right in the middle between 75 and 125%. And the final third was in the higher end of the market. So it strikes me that, you know, if if 53% of your first time home buyers, you know, are first time home buyers, there's just more pressure on that low end , higher demand, more competition that's gonna keep home prices going up and probably, you know, you're gonna have multiple offers in many cases. Yes . Any comment on that before I go to the third nugget?

Speaker 3: 16:49

I I can tell you this, there is a home available at a price that a home buyer can afford. No. No matter what. I think home buyers are trying to then lay that over, where is that house and what do I get for the price that I'm paying?

Speaker 1: 17:07

Good point. I like the way you said that. Um, the last factoid from their study, they looked at , uh, renting households between the ages of 25 and 44. Oh, by the way, ACU units , uh, average age of a first time home buyer a year to date , 35 years old. Interesting . Which sounds about right. And , um, anyway, looking at that demographic of 25 to 44, earning at least $75,000 in 2020 $4, and they went back historically and looked at that same cohort in past years. Well, right now there are 3.3 million renter households that fit that bill of being 75,000 or more in income. And in that, in that age range, that's double what it was in 2012. So there's apparently a bigger group of qualified renters or renters who are likely to wanna become home buyers than there was 12 years ago. So all that spells higher , um, demand, and yet there's not a lot of supply. And so when we come back, let's talk about some real first time home buyer stories . David, I know you've got one, I've got one too . We'll do that when we come back. But right now it's time to turn it over to the WTMJ Breaking News Center .

Speaker 2: 18:23

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

Speaker 1: 18:31

Welcome back and thanks again for tuning in. Uh, I'm Brian Wicker , uh, the, the Elder of the wicker , uh, men. And that's David Wicker over there. David, you've uh, got a first time home buyer story to share. Let's, let's hear it. Yeah .

Speaker 3: 18:44

Well, and this piggybacks off of your, you know, description of the data around first time home buyers . These folks have, I I I would almost call it classic, they both have strong jobs. They can service the upcoming monthly payment for their mortgage, for the borrowed money. They don't have a lot of down payment money though, for the downstroke to get there.

Speaker 1: 19:10

Okay.

Speaker 3: 19:11

They ultimately, I could approve them for a payment up to $3,000, including taxes , principal and interest property taxes, homeowners insurance, monthly. PMI.

Speaker 1: 19:27

And by the way, can I ask, what would their housing debt to income ratio be at that level? Do you happen to recall or

Speaker 3: 19:35

The,

Speaker 1: 19:35

Is it pushing it ?

Speaker 3: 19:36

The mortgage, the mortgage payment portion would be about 30% of pre-tax income if they dial it all the way up to $3,000 in payment .

Speaker 1: 19:45

Huh . Which, by the way, I don't know if you probably know this, that is the government's definition of an affordable home payment Yeah . Is when you spend 30% or less of your gross monthly income on your house. So they're not breaking the bank. But what do , what do they wanna spend? Well,

Speaker 3: 20:01

And , and I, I think any good mortgage practitioner should lay out, let me tell you what the ceiling is. Sometimes that can be quite interesting for clients who have a lot of leverage in their income. It's like, do you wanna buy a million dollar house? I I can approve you for a jaundus house and a jaundus payment. But you know, you probably don't want that 'cause you wanna buy groceries and you know, be

Speaker 1: 20:29

Able Yeah . Other things.

Speaker 3: 20:29

Yeah. Other things. So their maximum is 3000. They would prefer to be somewhere closer to $2,200.

Speaker 1: 20:38

Ooh , that's a , that's a lot of difference.

Speaker 3: 20:40

That's a lot of difference. But ultimately, because we lay out what their options are, I am, my job is to empower them to decide for themselves. Because it all depends on the house. Right. And , and in two, in two ways. One, my my favorite, you know, poke, hey client, do you think you're gonna be making more money two years from now or less money?

Speaker 1: 21:09

Hmm . I'm gonna go with more

Speaker 3: 21:10

Just about every client says more. Uh, because, you know, we all have expectations of succeeding in, in our work. And so with that in mind, getting a fixed rate mortgage today, arrests that cost. Yeah . While your income might continue to rise. So reaching, I remember you telling me this when I bought my first house. Reaching for a little bit more allows you to grow into a house and a payment. Looking into the future, you are buying a house not just for who you are today, but also who you will become. And if you don't , if you, if you take on a payment that you are comfortable with right now, you may move into a house that is small about one week after you

Speaker 1: 22:06

Yeah . Move in. You might quickly. Yeah , you might quickly. And what about their combination, David, of, you know , down payment? I mean, and maybe you don't have this off the top of your head, but if they wanted to buy a house that came with a $2,200 payment, there's two ways to do that. You know, lower the purchase price or increase the down payment. And you said they didn't have a lot of money for down payment. So that's not probably even a practical option. It's also, you know, always disappointing. 'cause it's about $66 of payment reduction for every additional $10,000 you put down. Yeah . So, you know, that's, that's a tough , uh, mathematical , uh, rule of thumb.

Speaker 3: 22:45

Well, and so the other element in, you know, the , because they can service the monthly payment with their income, any improvements to a property would require cash out of , out of pocket. And so reaching to be able for the right house that maybe has improvements, that's would be a payment, 300 more dollars per month. The way that I framed that analysis for them was, yes, it's more per month, but you're essentially financing improvements that you then don't have to pay out of pocket .

Speaker 1: 23:23

Right. With the money that

Speaker 3: 23:25

You don't have to make the house nicer. That, that kind of opened their eyes a little bit. Like, wow, we didn't think about, you know, yes, it's more payment, but you're reducing upgrades in the future and that cash expense as well.

Speaker 1: 23:37

Right? So let's have some money left over . Always a good idea. Especially the older house that you're gonna buy. Um, David, let's come back with, with my first time home buyer story of somebody who , um, called me, well actually it was their, their neighbor who called me about two and a half weeks ago , uh, while the, the client was already 10 days into the home buying process and wasn't feeling really good about the lender that they had initially picked. We'll cover that when we come back. You are listening to the Academic Mortgage and Realty Show on six 20 WTMJ.

Speaker 2: 24:10

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

Speaker 1: 24:20

Back. And , uh, we're talking first time home buyers here, which we are realizing , uh, comprises, oh , 53 to 54% of all the home purchases that are occurring right now in the market. And , uh, so I had gotten a text, actually it was two and a half weeks ago , uh, from a friend and a client whose neighbor had gotten an accepted offer back on October 5th. And their closing date on this , uh, model home that they're buying in Waukesha County , uh, was November 6th. So a 31 day close. And here they were 10 days into their transaction, David. And they were starting to get a bad feeling about the mortgage lender they had chosen, which was a small bank out of Illinois. Uh, even though they're buying in , uh, Wisconsin, they had previously lived in Illinois and knew somebody at this bank. Well, for one thing, the appraisal had not yet been ordered. It's like, man, you are a third into your time allotment for getting this. Yeah , you are behind. And then secondly, they were having to ask like , well, can we lock in a rate? And this was, you know, right after the jobs report that made rates go up. So they were feeling nervous about rates. So the first thing I did on October 16th or 15th whenever I was talking to them is, let's spin up what, what rates are available now. Gave them three different options, you know, low rate, medium rate, high rate. Ultimately they chose the 6.625 rate, which back then I could afford. I I could afford to pay $1,200 of their loan costs. Uh, so they're only paying 266 bucks to get the 6.625 loan. That deal is no longer available. 'cause rates have continued to go up, I'm sorry to say. Yeah . But then, you know, we also did the math , um, just like your clients, right? Of, well, even though they're buying new construction, there's still some things they wanted to do. They didn't wanna deplete all their savings. And so they answer came down to, Hey, you're gonna only put 18% down 'cause we're going to hit a target. And they were already,

Speaker 3: 26:18

That is specific 18%. Okay ,

Speaker 1: 26:21

Well, 'cause there was a number we were shooting for. Okay. And , and so they are gonna pay $40 a month in PMI. Um , but again, that's gonna keep enough money in their pocket that it's worthwhile to them. Now there are other lender,

Speaker 3: 26:35

When you say 18%, I'm just thinking to myself, you did you prod them like, well, why not 17.5%? No , why not 17%? No ,

Speaker 1: 26:45

No. I , you know, they, they were, they , they're high earners and so they can even accumulate savings. Um, okay . A after they buy the house. So no, I wasn't gonna go down that road. Okay . Um , plus time was of the essence. Um, but this other lender had told, oh, you know what, you can drop the p your PMI is gonna drop right away automatically. And I'm like, that is false. Um, the automatic dropping of PMI occurs when you pay down your loan balance not to 80% of the original purchase. It's 78%. And so that's not gonna happen until August of 2028. So I'm just saying, hey, the automatic dropping, it's gonna take a while , but once you do actually pay it down to 80%, you can ask for the PMI to be dropped. Yeah . So just a little sidebar there. Um, and then it also turned out, David, that they had moved money from their non-retirement investment account to their bank account , uh, in order to fund the earnest money, which was substantial. Okay . And it turned out that all that movement of money happened after the statements , um, had come out. 'cause this was all now happening in middle of October. Remember, we're gonna close on November 6th. So now all of a sudden I've got this gnarly movement of money , uh, that I have to document. But in talking with them , which is a pain. So folks, if you are, if we're only documenting barely enough money for you to make this transaction happen, we have to account for the movement of money and all the bits of money, including their earnest money. However, if a lender like Akina can document that you have 20% more than what you need, then we don't have to trace the money. We just have to show it. So, turns out the husband had a rollover IRA with six figures in it from a different job. So it's like, great, we are gonna document your IRA even though they're not really gonna use that money.

Speaker 3: 28:46

Okay . Well, yeah. I , I I'm gonna rephrase it. Let's point to a pile of money to prove, look, there is money and then we don't have to document how then does money arrive to the closing table? And some of the artistry of mortgage lending is don't answer questions that don't get asked. Yeah. When we meet the threshold to show you've got enough funds, thumbs up, see you at the closing table. Yeah.

Speaker 1: 29:10

Other , otherwise it was gonna be torturous , right? Going from one account. Oh ,

Speaker 3: 29:14

Just , just picture , you know , the transaction history from your online login . Oh . But you know, it's gotta be formatted this way. So underwriting will take it. It's not fun.

Speaker 1: 29:22

Yeah , yeah . Does it have your name or the account number on it? Does it have all the dates in between? It's a pain. So I was really delighted about that. Um, and then lastly, there were a couple of inspection items. Even though it was new construction, you know, this was a model home. So it's been standing for a year or something. I don't know exactly how many months, but they found a few things and they wrote up an amendment to have those things fixed. But it required somebody to go back out there and check to make sure it was fixed. The original inspector would ref did , would unwilling to do that. So we had to find them another inspector to go out and do it. Bottom line is, it's all getting done and we're getting ready to close. Wow . On November 6th, a happy ending. Hey, when we come back, I've got one more story , uh, about somebody who we helped , uh, buy their next home in Florida. We'll get to that when we return. You are listening to the Academic Mortgage and Realty Show on Wisconsin's radio station AM six 20 WTMJ.

Speaker 2: 30:20

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

Speaker 1: 30:28

Welcome back and thanks again for spending some minutes with us , uh, hearing about real estate, how to do it. And this particular , uh, situation. This just closed on Friday, November 1st , uh, down in , uh, Southwest Florida. And these are some folks who we've helped multiple times. They're Wisconsinites , uh, they're, they're now Floridians. They've had, we've helped 'em with properties in both states. And so , uh, they had a super low trophy rate on their existing home. And then once, you know, in the same community that they live in another home, like literally a block away came up on the market and they said, Hmm , that house has a lot of updates that ours doesn't. And you know what, if we did those updates, it would cost us like 300,000 and we think we can buy that house for about a hundred grand more than what we can fetch for our house. And so , uh, they put in

Speaker 3: 31:21

An offer, Nope , sorry honey, you have to stay in the ugly house 'cause I'm not willing to give up our 2.99% rate. Right. Said no husband ever.

Speaker 1: 31:32

Exactly. Exactly. And so , um, they were able to write a cash offer , uh, which you can do if you actually have the cash , uh, and can prove that to the seller. But then, you know, all the way along they were looking to , uh, get a mortgage on this property and the whole object of the game, of course, was to do this without the contingency of selling their home. So this is where it gets kind of clever. Um, as is the case. And we've talked about this many times. We were gonna point to , uh, his IRA as a source of income and he needed to begin taking , uh, money outta the IRA so it could say, look it , there's enough money for him to qualify for the loan. Interestingly, he had just moved all of his I rra money and the money for the down payment from one institution to another. So it was, and it took it , that happened over the course of two months. So luckily this guy's great with documentation. He understands he's a retired accountant, so he had to get us all kinds of good documentation to show Yeah , the money moving right from IRA custodian A to B, which again happened over two months. And then also the money that we were gonna point to for the down payment. So IRA income , uh, IRA funds for income pointing to their non-retirement money for the down payment. But then here's the really clever part. He decided, you know what, I'm actually gonna take the money out of the IRA and use that for the down payment and then I'm gonna hope that I sell my home within the 60 day period <laugh> that I have to return the money, I mean to my ira. Yeah. And so , um,

Speaker 3: 33:16

That I , I don't know if I would do that playing chicken with the 60 day, you know, clock.

Speaker 1: 33:23

I, I, I too would have pause in that. But the alternative was to suffer the capital gains from his non-retirement account. Right. And have to pay that income tax tax . Well

Speaker 3: 33:34

I just al also for anybody thinking about that , uh, for a non-retirement account, a margin loan may also afford you to not incur the taxes on liquidating that non-retirement security.

Speaker 1: 33:48

Good point. But margin loans are kind of expensive right now, I think. Well ,

Speaker 3: 33:51

But it's an annual

Speaker 1: 33:52

And we have to count that interest. We have to count that payment. Yes . You know, which would make, anyway , so bottom line is the co

Speaker 3: 33:59

Believe I just , if I'm picking between margin loan at 11% and playing chicken with the 60 day clock with the IRS, I'll, I'll suffer the interest expense.

Speaker 1: 34:11

Well, the backup plan was that he could always, you know, liquidate his , um, non-retirement or , or get the margin loan or whatever Yeah . And use that money to pay back the IRA. Well, as it turns out, they end up getting a cash offer on their existing home, no contingencies.

Speaker 3: 34:31

And , but I hope that the buyer shows up on let's not make it day 59. How's about that ? No , it's not . Let's make it day 49.

Speaker 1: 34:39

That , that's gonna close the first week of December. So they got a little wiggle room there. But isn't that the most amazing , uh, of stories that wow. Financial engineering, that guy's an accountant so he knows what's going on. Alright, so let's see. We covered on today's show. Hey, interest rates are higher than anybody would like. And by the way, what do you think it's gonna take for interest rates to come back down? David, do you have any , uh, comments on that?

Speaker 3: 35:05

You know , uh, the, the data, we've lost weight on inflation, but it seems to have stalled. And so I think we're gonna continue to have to prove to ourselves report by report that we continue to take a stick to inflation. And if inflation starts to tilt the other way, that's not gonna be welcome news to bond markets in general. So we gotta keep eating eggs and lentils to lose weight on inflation. That's what it's gonna take. And it's not gonna be overnight. It's gonna be consistent data that rescues rates.

Speaker 1: 35:39

And then also I think some more tamed jobs reports are gonna help us. Yeah. Um , so that's one thing we're ready to help. Uh , first time home buyers and move up home buyers . All you gotta do, if you want to help with a refi order to get a rock solid guaranteed preapproval to buy is click on that blue button@accu.com. That's all the time we have for today's show. We'll see you back here next week. You've been 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 Accu Net Mortgage and Realty Show are solely that of the host or guests of Anette Mortgage and ANet Realty Advisors, and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.