Unlocking Mortgage Secrets: Tips & Advice from Expert Sean Zalmanoff

Sean Zalmanoff, founder and chief loan officer of Better Rate Mortgage, covers an array of mortgage-related topics. The discussion delves into the various types of loans available, the importance of starting early in the mortgage application process, and practical tips for improving credit scores. Sean offers insights into mortgage refinancing, the benefits of different loan terms, and shares useful financial advice for both first-time homebuyers and seasoned borrowers. The episode emphasizes the importance of working with knowledgeable mortgage professionals for a smoother and more informed home-buying experience.

[00:00] Introduction and Welcome

[01:18] Encouraging Local Businesses

[01:53] Challenges of the Restaurant Industry

[03:00] Guest Introduction: Sean Zalmanoff

[03:24] Sean's Journey into the Mortgage Industry

[04:24] The Impact of 9/11 on the Mortgage Industry

[05:09] Starting a Mortgage Business

[08:44] The Great Recession and Its Aftermath

[12:07] Modern Mortgage Industry Insights

[15:19] Understanding Different Loan Types

[17:46] The Importance of Financial Literacy

[22:31] Break and Sponsor Messages

[24:46] Return and Mortgage History

[25:48] Get Ready: Essential Mortgage Preparation Tips

[29:14] Credit Scores Demystified: What You Need to Know

[30:36] Down Payments and Financial Planning

[33:39] Smart Strategies for Managing Debt

[44:11] The Importance of Pre-Approval

[48:58] Choosing the Right Realtor and Loan Officer

[53:20] Conclusion and Final Thoughts

Takeaways:

• Supporting local businesses in their first 60 days is crucial for their survival and growth.
• A simple word of encouragement can energize a new business owner and motivate them to keep going.
• When entering the mortgage market, starting the application process early can save time and stress later on.
• Understanding the different types of loans available can empower first-time buyers to make informed decisions.
• Refinancing can help save money, but it's essential to weigh the costs versus benefits before making a move.
• Choosing the right loan officer can make a significant difference in your mortgage experience and financial future.

• Home - Better Rate Mortgage

This is Season 8! For more episodes, go to stlintune.com

Links referenced in this episode:

• betterratemortgage.com
• dredscottlives.org

Companies mentioned in this episode:

• Fannie Mae
• Freddie Mac
• USDA
• Better Rate Mortgage
• Monster Mortgage

#mortgageadvice #mortgagesolutions #mortgages #betterratemortgage #mortgagetips #fanniemaeloans #freddiemacloans #fhaloans #conventionalloans

Episode Transcript

(00:00):
Fannie and Freddie Mac. Youcould get Jumbo VA balloon. Have
you met USDA FTHB too? All areavailable here in the Loo. St. Louis
in Tune.
It's a great ride. You shoulddo our advertising for us.

(00:24):
Welcome to St. Louis in Tuneand thank you for joining us for
fresh perspectives on issuesand events with experts, community
leaders and every people whomake a difference in shaping our
society and world. I'm ArnoldStricker along with co host Marcus
Langstonis. Mark Langston.
That's right. Backwards. NotScannel crown.
I know you love that. Do youever sign it backwards?

(00:47):
Oh, no, I can't, I can't.
My mom used to be able towrite backwards. I was like, how
do you do that?
She's smart.
She must have been bored inschool and just. I'm going to start
writing my name back.
Smart. That's smart.
Yeah, she was. She was very intelligent.
All those wires in her headwere together. They were.
They were. Okay, folks, we'reglad that you joined us today. You

(01:07):
can listen to previous [e-mail]. please help us continue
to grow by leaving a review onthe website. Apple Podcast or your
preferred podcast platform.Our return to Civility today deals
with something that isimportant, especially for those new
business owners out there.Patronize a new local business and

(01:28):
if you like it, tell theowner. The first 60 days of a new
business are so important.Simple words of encouragement from
a local patron can fill anentrepreneurial owner with enough
energy to make it throughanother risky day.
Yes. Amen. Can I say amen?
Absolutely.
Put your hands in the air. Amen.
That's right.
That is true.

(01:48):
Yeah. Do jazz hands if you want.
I know you got to. That's great.
Except if you're driving.Don't do that.
I know, I know. Could youever. Can I could. Would you ever
do like a restaurant? I feelso. I feel. I don't feel bad. I don't
feel bad, but I feel for theowners of restaurants because they
are there. The ones that Iknow, they're there all the time,
every day, almost 24 hours aday. It's like they wake up, they

(02:11):
go into the restaurant andthey go home and they go to bed.
It's your life. And if peoplesay, oh, I've always wanted to own
a restaurant. No. If you'venever had any business in that industry,
you have no business being inthe industry.
Yeah. So take care of thosemom and pop businesses that are out
there.
Yeah. And if a new place opensup and it may not Be that they might
be struggling with service ortaste a little bit, Give them a little

(02:36):
leeway, give them a couplemore weeks, come back, be nice, swing
back through, be kind. Yeah,it's about time then. If it still
is not up to snuff, I'll justleave it right there.
It's really hard to staff forrestaurants and the labor in restaurants,
it's just been pillaged sinceCOVID with factories and warehouses
and stuff paying so much more.I have a couple friends in the.

(02:57):
Industry, and it's tough.
They struggle with staffing.
That third voice there wasSean Zalmanoff. He's our guest this
morning. So he speaks from a.He's a business owner, but not in
the restaurant industry. Sopatronize a new local business and
if you like it, tell theowner. So this owner sitting across

(03:18):
from me, he's been in themortgage business for what, 24 years?
23.
Yes, 23. Wow. How did you getstarted in the mortgage industry?
So it goes back to my time atMizzou in good old Columbia, Missouri.
And I, I graduated in thewinter of 00. And so I had the pleasure

(03:40):
of working. I worked in a barand restaurant, fantastic place called
Willie's. And as all myfriends were coming back during football
season and I was interviewingfor jobs, they would all ask me how
much money I made and tell mehow terrible it was in the real world.
And they said, you make moremoney and your life's better. Don't

(04:01):
go get a real job. Still get it.
Stay in an unreal job.
So stay bartending andmanaging a restaurant. I became a
professional job interviewer.I think I got, I had a goal of 100.
I got into the 60s of jobinterviews. And there was a gentleman
who came into the bar all thetime, and he, he was trying to, he

(04:21):
tried to recruit me for yearsto come in the mortgage business.
Rates were starting to comedown at this time. But then Fast
forward to 9, 11, so 2001 nextyear. And most people are familiar
with the concept of trickledown economics. I like to call this
faucet on economics and faucetoff economics. So those late 90s,

(04:43):
early 2000s, the stock marketwas booming, right? Lots of kids
that were in school, theirparents had money or on paper they
did, and they were allowed tospend a lot of cash. And all of a
sudden it all evaporatedovernight. And I was like, I guess
I should actually think aboutdoing someone else. And. And this

(05:03):
guy comes into the restaurantagain and he's sitting down, he's
Seanie Are you ready? Take meup in this offer. It's fun, it's
great. Mortgages are awesome.And so I was like, I'm ready, but
I can't do it in Columbia,Missouri. I need a new start. Lived
in St. Louis all my life untilthen. He had an office in O'Fallon,

(05:24):
Missouri, that a friend of hisran. And I went and I worked there,
and I was there for about ninemonths. And if you could imagine
every single thing wrong withthe mortgage industry, this company
ran it. So we had kids in theback. So this is before the do not
call. This was, like, justcoming into play. We had kids in

(05:45):
the back. Literally. They rippages out of phone books. And then
they would just start callingthem. Because after the tragedy of
9 11, stock markets collapsed.And usually when the air comes out
of the stock market, interestrates go down. Inflation's the arch
enemy of mortgage bonds. Therewas not much inflation going on.
Inflation is the arch enemy ofall fixed rate instruments. And so

(06:07):
when the inflation was goingdown, rates just plummeted. So tons
of refi. So they couldliterally just call people out of
the phone book. And it was aninteresting place. I learned a lot.
But if kids got out of highschool, they came in the back, they
ripped these pages out ofphone books, they filled out these
lead sheets. Then we calledthese lead sheets back. I remember
the transformation one daywhen somebody was like, hey, what

(06:28):
if instead of just filling outthe lead sheet and handing it to
us, what if they transferredthe call to us? Concept, new live
transfers. But it was just,the rates were high, the fees were
high. Everything was terribleabout this place. And once I realized
that, I talked to a couplebuddies, and I almost started a company
where I was just going tocharge a flat fee at this time. Now

(06:49):
we call them loan estimatesthat are given to review your numbers.
At this time, they were calledgood faith estimates. And I wanted
to start a company that justreviewed good faith estimates for
people. Because I was like, Icould charge people 1000 bucks to
review their good faithestimate. And with the amount of
junk fees we. We charged atthis place, I was like, I could have
saved people $5,000. I waslike, it would have been a great

(07:11):
deal to do this.
Wow.
And then I started to realizethat every other company wasn't like
this boiler room operationthat I was working at.
It wasn't a broad brushstatement about the industry.
Yes. Still, the mortgage andreal estate industry is an interesting
place. You got to do yourhomework on who you choose. Because
unlike the restaurantindustry, you Make a fair sum of

(07:34):
money for every transactionyou close. And so who you work with
definitely matters. And it'salways going to attract an element
of unscrupulous people.
So Sean is the founder andchief loan officer of Better Rate
Mortgage. And Sean, so whathappened after that? You go to work
for somebody else?

(07:55):
I went to work for somebodyelse for a short time and then somebody
came and offered me amanagement opportunity to open my
own office. I just, I had goodsuccess out of the gate. Some of
it was talent, some of it wastiming. You need a little bit of
both. And that gentleman also,he was interesting to work for and

(08:18):
a few, maybe I worked with himfor about a year. So there's a lot
of people that I worked within the past who aren't allowed to
originate loans anymore. Andit's this guy. Anyway, he taught
me a lot. Good or bad, hetaught me a lot. And at that point
I realized it was time to domy own thing. So I opened a little
mortgage brokerage companycalled Monster Mortgage. And we created

(08:40):
all these like mortgagemonsters. And then we had a theme
of things that they did. Andthen the Great Recession happened.
And it was at that time whatmany thought was the end of days
of the independent mortgagecompany were upon us. And so I had
another opportunity. I washaving a lot of success and I had

(09:00):
an opportunity, opportunity toroll my company into another organization.
And, and that was that placetaught me a lot. It was a really
good company. It was veryentrepreneurial. I started there
with one other person. Overthe course of 13 years and a month,
I grew it to over 70 people inmy region. I was running offices
in five states and towards theend I hated it. Loan officers have

(09:25):
a unique ability to be sadwhen they're sad, and sad when they're
happy. And by the time 2022came around. So just some interesting
mortgage facts. Before 2020,the most loans that had ever been
done in a single yearoriginated volume wise was 2.8 trillion.
And in 2020 and 2021 it wasover 4 trillion.

(09:48):
Wow.
And so as I'm managing theseloan officers and at this time I
owned a coaching business tohelp loan officers as well too. And
they were all asking me, likeSean, can I continue to close 15
loans? Are a lot of people whoare closing three or four loans a
month. And it's you can, butyou need five times the amount of
referral partners because thisgift that we've been given with very

(10:09):
low interest rates is going todry up. There's no way we continue
to close this amount ofbusiness. And so many of them, most
of them didn't listen. Andthey were sad when their turn times
were long because theindustry, because there was just
too much volume going into it.And then they were sad when they
didn't listen and they weren'tmaking as much money. And so it was
the summer of 22, and I was onvacation in the Pacific Northwest,

(10:36):
and I had offices in Maine atthe time, and I needed. I was supposed
to travel across country. Iwas supposed to be there for a week
and then leave the familythere and then go to Maine. And if
you've ever tried to travelfrom the Pacific Northwest to the
Northeast, it's a day offlights at a minimum. And I think
I needed three flights to getthere. And I sat down on the dock

(10:57):
and I just did the oldscientific method. Everything I liked
about the industry, everythingI didn't like about the industry.
And the number one thing was Ireally enjoyed helping people buy
houses and figuring out theirproblems or solutions to things.
And number two was breakingbread with Realtors because there's
a lot of cool agents outthere. There's a lot of uncool agents,

(11:18):
too, but you get to pick whoyou work with.
Right? Right.
And I didn't do any of thatanymore. And I'm an economics nerd.
I'm not. I'm an economicsnerd. And so I was supposed to go
to Maine and give apresentation for 50 realtors they
wanted me to give apresentation for. And because of
my experience in the coachingworld and filling a room, I gave

(11:38):
them a really specific formulaof how to get a lot of people in
the room. They had one personsigned up for their event.
Wow.
So I was like, canceled thetrip. I went home, I wrote a business
plan, and a few months later,I resigned from my position. And
I opened up a mortgage companythat could deliver closed loans at

(12:03):
a cost that most people can'topen their doors for.
Wow.
And one of. One of the thingsthat I really focus on a lot is there's
a interview I saw with Bezos,I don't know, maybe a decade ago.
And they were asking him, theywere like, jeff, what are you guys
doing at Amazon to prepare forchanges in the future that are going

(12:26):
to happen in 10 years from now?
Great question.
And that was exactly hisanswer. But like a true politician,
he was like, that's a greatquestion, but that's not the question
we ask ourselves the most. Hesaid, what do we do the best right
now? And how can we continueto be the best in that in five years
from now. And one of thereally cool things with the mortgage

(12:47):
industry is technology hasadvanced so much. Ten years ago,
15 years ago, if you wantedthe best technology, you had to build
it yourself. Or it was onlygiven in these enterprise contracts
for two or three hundredpeople. Now anybody can buy any technology
that they want at maybesomebody pays 20% less if you buy

(13:09):
200 seats, but not enoughwhere it moves the needle for the
cost of a consumer. And so itreally leveled the playing field
with the advancement oftechnology. And then in just the
past couple years since I'veopened the business, what AI has
done for our ability to makethings easier has been awesome, both
on our end, a consumer end,and a cost endpoint. And have you

(13:33):
ever seen those things online?It's like cheap, fast and easy. You
can't have all three, right?In the mortgage industry, if you
don't understand you need tobe cheap, fast and easy, you're dead.
Because, like, my business isa commodity and I am amazing at what
I do. I don't think there'sanybody better doing loans than what

(13:54):
I do.
But he's the mortgage man, folks.
But if I'm a quarter pointhigher than everybody else, you're
going to suffer through somepain, right? To go somebody somewhere
else. Every eighth of a pointon an interest rate is about $7 a
month. You know, if you've gota $400,000 loan and you're a quarter
point higher, do the $6higher, you're a lot more expensive

(14:16):
than somebody else. 50 bucks amonth is. That's a lot of money that
adds up over time. And a lotof companies, they're a half point
higher, three quarters of apoint higher. And so you have to
be able to design a businessthat is going to be cost effective
today and profitable. And whatI did is I just. And I was. One of
the problems at the oldcompany, people like me were there's

(14:37):
companies that they have loanofficers and branch managers and
regional managers and regionalexecutives and corporate executives
and then. And thenshareholders. And all of this really
means that consumers pay more.
Too top heavy.
Very much too top heavy.
So, you know, I've got mygazillion list of questions here.
I got a few too.

(14:58):
Yeah, go ahead, Mark.
No, my head is spinning a lot.No, no, Best. I don't know. Let's
just go. I want to know bestterms, length of terms. I've looked
at 10, 20, 30 years. Even inCalifornia, they're doing 50 year
terms. I can't imagine a 50year term for buying a house.
That's crazy.
But houses are much moreexpensive. And whatever happened

(15:19):
to fha? When I was a young kidtrying to get started buying apartment
buildings, I managed to get myvery first loan was an FHA loan,
$3,000 down and I was in. Butyou can't do that anymore.
No, that's not true.
Oh, good, good talk about the different.
Kinds of loans because I betSouped mentioned them at the beginning

(15:40):
of the show.
That was rhyme too. I justwant to give you credit.
Thank you.
So FHA loans still exist andone to four family. So if you can
buy a four unit apartmentbuilding with three and a half percent
down and as of November of 23to do a Fannie Mae Freddie Mac loan
that the conventional loansthat people hear about used to need

(16:03):
20% down to buy a multifamilyconventional loan and you only need
5% down now.
Oh, is that right?
Yeah. So it's become a loteasier to actually buy those home.
Prices are up and interestrates are up. So easier is a relative
term. But from a qualificationstandpoint, from a down payment standpoint,

(16:24):
it's easier actually to getinto those loans that you can do
with 3.5% and 5% down.
I think it makes a differenceon getting people started.
Oh, absolutely. Yeah.
Maybe not the guy or galthat's been in it for years, but
someone just stepping into themarket, first house, first apartment
building, they're going tolive in one of the units, whatever
it might be.
And the cash flow matters. Ifyou're 45 and buying a multifamily

(16:48):
to live in, or if you're 25and buying a multifamily to live
in, the rents matter a lotmore as far as what they are at 45,
because at 25 you have so muchmore time for rent appreciation to
go up.
Yep, works in your favor.
I'm amazed that people don'tknow about first time home buyer

(17:09):
loans. I never knew about theUSDA thing. I'd never heard of that
before. But a lot of peoplewalking around who want to buy a
new home, they've never owneda home. They don't know about this
particular kind of loan.
Yeah, the USDA loan. And yes,we're talking about the same thing
that they stamp beef withusda. It's a beef loan, but it's
not a beef loan, it's a homeloan. And so in, in rural areas you

(17:30):
can, you can buy a house withno money down. So it's similar to
the VA loan, which. The VAloan, we can talk about that in a
little bit. That's hands downthe best loan on the planet. But
in rural communities, and youcan actually go to USDA's website,
you can put in an address andit'll tell you if it falls into it.
But can we go back and talkabout that 3.5% and 5% down a little

(17:51):
bit more? Because one of thethings that I despise about my industry
is so many of the people thatdo what I do, they're order takers.
And so somebody comes in andthey're like, I want to put 15% down,
I want to put 20% down. And,okay, here's your loan. And with
interest rates being higherthan people are used to, or I guess

(18:13):
at this point, people are usedto these sixes and sevens. But when
you're spoiled with twos andthrees for a while, which being in
the mortgage industry, y'all,I pray every day that we never see
2 point something percent on amortgage again. And people always
ask me why? Because thecalamity of events, we're going to
need another global pandemicand we're going to need some government

(18:34):
missteps of buying way toomany bonds that drive rates down,
that are going to createbidding wars on houses that are going
to make prices go up 20 or 30%a year again. And we saw exactly
what happens when rates arethat low. And now with even less
inventory in the market, wedon't want that to happen. You don't
want that to happen, even ifyou're out there shopping right now

(18:55):
and you're like, I wish I hada 2% rate. You don't, because then
everybody else does. And theamount of buyers for the amount of
homes, it doesn't work. And sowhat? Going back to this down payment
side of things, often peoplecome to me, they're like, I have
this amount of money to putdown. They're 25 years old. They're
not thinking about the timevalue of money. And the cool thing
is, if you get a mortgagetoday, then 10 years from now, you're

(19:20):
still paying with today's dollars.
Correct.
On that mortgage. So moneydevalues at roughly 3% a year. And
so 10 years from now, you'reusing dollars that are 70% of today's
value, but you get to pay withthem on today's dollars. So generally,
the dollars that we spend, andthis is just Econ101, as long as

(19:41):
we don't have deflation thedollars that we spend today, they're
the most expensive dollarsthat we're ever going to spend as
money devalues in the future.If I can show somebody, oh, you have
this credit card debt. Weshould pay this off, or, hey, let
me pull up a compound interestrate calculator. And let's look at
what $30,000 does invested inthe stock market over the course

(20:06):
of 20 years. Over 30 years.And there's something that everybody
needs to know. It's the ruleof 72. And so the rule of 72 says,
whatever your interest rateis, if you divide that in to 72,
that's how long it takes foryour money to double. And so the
current iteration of the s andP500 has been around since 1957.

(20:29):
And since 1957, it's returnedover 10%, about 10.5% a year. It's
probably even higher afterlast year's stock market gains. But
even if you look. If you be alittle more conservative and say
8%, if it's going to return 8%a year, and you look at $30,000 invested
at 8%, which, again, yourmoney would double in about nine

(20:52):
years over the course of time,the earlier people invest, it's the
last double that matters. Yougot 30, then you've got 60, then
you've got 120, then you got240. It's like. And then, oh, wait,
and then it's $500,000 on thatnext double. And if it happens to
be 10%, if it happens toreturn at what it currently is. I

(21:13):
have people that I talked toin the early 2000s coming out of
the Great Recession,especially that when they've literally
come to me and like, Sean, Ishould name one of my kids after
you, because after the GreatRecession, everyone's. I don't want
to put money in the market.And I'm like, the market just got
cut in half. This is the timeyou want. I know it's scary, but,
like, overall, if the marketsdon't return, we have a lot more

(21:36):
to worry about than the valueof our houses.
That's right.
Yeah. We're talking to SeanZalmanoff. He's founder and chief
loan officer of Better RateMortgage. This is Arnold Stricker
with Mark Langston of St.Louis in Tune. Mark, this is a wealth
of information.
Oh, yeah.
And I remember Sean was sayingbefore the show, what am I going
to talk about for mortgagesfor an hour? We're halfway through

(21:58):
now, Sean, and we haven't evengotten. I've only done two of my
questions. I have like about12, so.
All right, let's grow.
No, it's fine. It's goodbecause this is important information.
I think that the averageperson out there, not even the average
person, even the above averageperson, and of the below average
person, everybody needs toknow. They are just not aware of

(22:18):
all of the intricacies of theimportance of getting a really good
mortgage and getting itthrough a loan officer that's going
to treat them respectfully andlook out for their interests and
not try to gouge them. We'regoing to take a quick break and we'll
be right back. This is ArnoldStricker with Mark Langston of St.
Louis and Tune. Don't go away.This is Arnold Stricker of St. Louis

(22:52):
in Tune on behalf of the DredScott Heritage Foundation. In 1857,
the Dred Scott decision was amajor legal event and catalyst that
contributed to the Civil War.The decision declared that Dred Scott
could not be free because hewas not a citizen. The 14th Amendment,
also called the Dred ScottAmendment, granted citizenship to
all born or naturalized herein our country and was intended to

(23:13):
overturn the US Supreme Courtdecision on July 9, 1868. The Dred
Scott Heritage foundation isrequesting a commemorative stamp
to be issued from the USPostal Service to recognize and remember
the heritage of this amendmentby issuing a stamp with the likeness
of the man Dred Scott. But weneed your support and the support
of thousands of people whowould like to see this happening.

(23:33):
To achieve this goal, we askyou to download, sign and share the
one page petition with others.To find the petition, please go to
dredscottlives.org and clickon the Dred Scott petition drive
on the right side of the page.On behalf of the Dred Scott Heritage
foundation, this has beenArnold Stricker of St. Louis Intune.
The United States has a strongtradition of welcoming newcomers

(23:55):
and refugees. The welcomeCorps is a new service opportunity
for Americans inspired towelcome those seeking freedom and
safety and in turn, helpstrengthen their own communities.
Welcome Corps is a publicprivate partnership that is inspired
by what Americans represent toso many around the world. A beacon
of hope and refuge. All ittakes is a helping hand. Are you
ready? To learn more, contactthe International Institute of St.

(24:19):
[e-mail] or call314-773-9090. That's infoistl.org
or call 314 203-9090. Want towelcome you back to St. Louis in

(24:47):
tune. This is Arnold Strickerwith Mark Langston, we're talking
to Sean Zalmanoff founder andchief loan officer of Better Rate
Mortgage. And folks, by theway, the mer the word Mercury mortgage
is a morphed word of two wordsthat were French for dead and pledge.
So mortgage means a deadpledge. And I've done my history
on mortgages. I have a wholething here. But I figured that would

(25:10):
bore everybody. Sean's moreimportant about listening to than
me.
Now, before we get into thesecond half of the show, if you're
listening to this, get a penand paper. Yes, I'm not kidding.
I have been making notes aswe've gone through the first half
and it's hard to keep up, butsuch valuable information.
So, and this is one reason Ilove what we do here on the show,
Mark, is because we haveexperts like this within our community

(25:35):
to help people understand alot of these things that look like
they're huge mountains. Andwith the right guide, you can, that
mountain's maybe not as tallor hey, here's the pass. We're going
to go through the pass here.You don't need to worry about those
things. So big question here,Sean. What are the most important
things that people need to doto prepare for a mortgage?

(25:55):
Start early. You got to startearly. I get people who, they'll
be like, hey, I'm going to buya house in July. And I'm like, okay,
we need to do your applicationright now in case your credit's not
perfect, in case there's someincome tweaking, in case you should
actually delay a promotionbecause making underneath a certain
amount of money is going to,to let me make an offer to you based

(26:17):
upon area median income limitsthat is going to make your situation
better. People are afraid toget their credit pulled sometimes.
Well, you're going to have toget your credit pulled at some point.
Whenever we start withsomebody, we always do a soft inquiry.
It's not anything thatnegatively affects your credit score.
It's a fallacy that it affectsyour credit score negatively anyway.
One credit pull doesn't reallydo anything. But you can't even when

(26:39):
we, when somebody does a softinquiry on your credit, you don't
even know that they pulledyour credit unless they're showing
you that they pulled yourcredit. And so the earlier you start,
the better prepared you are.And somebody might tell you, hey,
you got perfect credit, yougot a low debt to income ratio, you're
in the driver's seat, don'tworry about it. But if that's not
the case for you or there'ssomething that we can do to help

(27:02):
make your situation better.The earlier you start, the better
your position is. And itdoesn't cost anything to start the
process.
So do you talk to peopleabout, hey, you've got like 50 credit
cards, probably not a goodidea, or how to improve your credit
score, pay this loan down, orconsolidate your loans, or do you

(27:22):
get into that kind of stuff?
Yeah, I mean, we get intothat. We get into easy tricks to
build credit. If parents havelong standing or your significant
other, your boyfriend orgirlfriend or husband, wife, partner,
has, has credit cards thatyou, that they've paid on time. Like
my niece, for instance, herhusband was, had no credit whatsoever

(27:45):
when we started talking. Andhe just, because he's a very responsible
individual, not a collection,not a bad credit. He just never opened
credit. Early 20s. And sounfortunately, being incredibly fiscally
responsible and not openingcredit, you can't get a loan. You're

(28:07):
not rewarded for not havingcredit. Now that doesn't mean you
need to go charge a bunch ofthings. I tell people, hey, get a
credit card and put yourNetflix subscription on it, Put your
Disney plus subscription onit, and just set it in advance so
that automatically comes outof your account every month. And
you put that 12 bucks on,there it goes. And it builds credit
really quickly. But some ofthe things, like with, with my niece's

(28:30):
situation, she was able to addher husband as, as a user on her
account. And so what happensin that situation? She had an account
for five years, low balance,high limit. He instantly inherits
five years worth of history.So we were allowed to plan for that.
And it was funny because hedid the same thing with one of his

(28:52):
parents that they put him onthere. And she had perfect credit
and he ended up having perfectcredit, but he ended up having a
score that was a few pointshigher than her in less than 30 days.
Because of how we were able todo that, right? And so that allowed
us to use both their, in boththeir incomes. It allowed them to
qualify for the exact housethat they wanted to buy. And it just
made a great situation for them.

(29:14):
Sean, what is a perfect score?What would you say a perfect score.
Is in the scoring models? Now?One of, one of the things with mortgage
reports, between Transient andEquifax and Experian, those are the
three, I don't know, maybelords of our industry, because it
almost seems like you're backin, in times of wars and castles.

(29:36):
But they. Between them,there's 50 different plus algorithms
for credit scores. I can't sayany of them are really great, but
one of the barriers to entryto opening a business is you make
it as complicated as possibleand then you can't all of a sudden
have Mark and Arnold's creditbureau open up tomorrow. And the.
In the mortgage world, aperfect score is 850. I've seen 820s.

(30:00):
Maybe I've seen like an 830even. It's impossible to get a quote
unquote perfect score to getthe best rates in the market. On
a conventional loan, you'relooking above 780. But there's not
really much difference above740 to 780, depending whether you're
looking at a VA loan or an FHAloan. The credit score requirements

(30:21):
do go down on those loans. Butif you're shooting for what score
do I need to have that I canwalk in anywhere and get the best
rate? 780 is the number, themagical number you're looking for.
Okay, good to know.
So what do most people miss in.
There'S one that they thinkthat more down payment helps them.
And so again, like, one of thethings, like your mortgage person

(30:46):
is like a financial plannerand really like a great mortgage
person is a debt manager. Likeif a hundred dollars doesn't mean
anything to this person inwhat they're paying a month. And
so right now, based oninterest rates, every $20,000 you
put down is going to move theneedle in your mortgage payment about

(31:08):
$130 a month. So if somebody'scoming to me and they're like, I
want to put $60,000 down. AndI'm like, you could do the same thing
with 20 and $260 a month.Doesn't do anything as far as what
your qualifications are oryour monthly, monthly cash flow.
And again, I should take them.And I'm like, hey, look what $40,000.

(31:29):
Never put another penny in.Look what $40,000 equals for you
in 30 or 40 years. Like, youcan have a million dollars sitting
here, assuming the marketsreturn what they've returned and
not change anything with yourlifestyle. Or they have this expensive
car payment or they have thesecredit cards. And I'm like, hey,
look, we can. You can pay allthese off with this, right? You're

(31:52):
going to cash flow X number ofdollars better. You can either take
that if you want to pay offthe loan quicker and pay off the
loan quicker, which in almostevery instance I advise against.
It's a terrible idea to makeextra payments on your loan.
Oh, I want to hear that.
Again, because today's dollarsare the most expensive. That money,

(32:12):
once you put it into yourhouse, it's gone unless you go do
a cash out refinance or a homeequity line of credit and pay money
to access the money that's inyour house. If you have credit card
balances, the money needs togo to pay those off. If you're not
saving everything you want tofor retirement, if you haven't put
money in your IRA, if you'renot maxing out at least your 401k

(32:33):
portion, if your employermatches, that's free money. Even
if that money returns 3 or 4%less than, than what you're getting
somewhere else. But if you, ifsomebody's matching 3% and they're
giving you 3% free money, it'sfree money. You can't beat free cash.
If you don't have your 529plans that, that you're putting in

(32:54):
for your kids. All of thosethings need to be, you need to be
debt free and you need to bemaxing out your savings and meeting
with a financial advisor tosomebody to make sure that all those
things are being accomplished.And then once all of that's done,
then look at doing puttingextra money towards your mortgage.
But it's the last thing thatyou should pay money to because it

(33:17):
has no return. Your house isgoing to appreciate anyway. Regardless
of how much money you putdown, the house is going to appreciate
at the same amount. Obviouslyif you pay down the mortgage more,
there's more equity, but ithas zero impact on the percent appreciation
that you're going to get whenyou sell. So using your money wisely

(33:39):
to do this, I've done a couplecash out loans for people recently
who bought houses in 2018,2019, refinanced in 2020 or 2021
had a 2.5% rate. Andunfortunately, due to one circumstance
or another, they have 70,$80,000 in other debt that they've
incurred. And I've takensomebody with a 2 1/2% rate, I've

(34:02):
given them a 7% rate on theirmortgage and I've showed them how
they can pay off their house10 years quicker because we're taking
that money out of the house.Because the other beautiful thing
that's happened in a lot ofinstances are people who bought houses,
their value of their house. Ifyou bought before 2020, your house
could be up 50, 60%. I mean in20 and 20. In 2020 and 2021, that

(34:24):
average over those two yearswas 40ish percent. That houses increased
combined in those two years.Some houses increased even more than
that. And we can take thatsomebody. So wait, you just told
me, took somebody's rate from2 1/2% to 7% and they can pay off
their house 10 years quicker.Because what we did is we took the
debt that they had, we paidoff all of their debt, said, hey,

(34:45):
if you keep making the samepayments, add up the car loan, the
credit card, this credit card,that other bill, and you take all
of that and you roll it backin. Now all of a sudden we took your
payments that were $5000 amonth. We just made them $3000 a
month. You take that extra$2000 and apply it to your mortgage

(35:06):
and you crush the number ofyears that are left on it.
You really do some. Youeducate people with financial responsibility
and it's up to them to beresponsible then because they can't
go back into, well, I want toget that new car, I want to run my
credit card back up. They haveto be responsible and see the pros
and the cons of that.
So I don't like home equitylines of credit. Am I right about

(35:28):
that? I would rather refinanceand take the money out. Can I do
that for my house?
You can, yeah.
Because a home equity lineusually is like you pay the interest,
but you.
Can pay extra money towardsprinting as well too. It just depends.
Like right now, if, let's sayyou need a $20,000, a home equity

(35:49):
line of credit, they'reusually free to a couple hundred
bucks to set up. When you do anew first mortgage, especially if
you're doing cash out, youhave to have an appraisal, you have
to have new title work, you'reout a couple thousand dollars.
Okay.
With where interest rates areright now on a home equity line of
credit and where fixed ratemortgages are with cash out loans,

(36:09):
you're actually often a lotbetter off doing a home equity line
of credit. And so just soeverybody understands where I'm coming
from, I refer almost all myhome equity lines of credit to local
credit unions. They just dothem better than everybody else.
I make money when I closefirst close ended mortgages. So I
would make money closing thiscash out refinance. I would make

(36:31):
no money doing this homeequity line of credit. And so what
I'm telling you, it's in yourbest interest. I just, I like to
put those caveats in there. IfI would refer it to somebody else
and not get paid to do it,it's in your best interest. If I
could do a loan that wouldactually make money. So it depends
on those things. Now ifsomebody's looking at a huge line
of credit because they need topay off this debt or do something,

(36:51):
then maybe that cash out,refinance. But it really depends
on the amount. The lower theloan amount that we're talking about,
whether it's a home equityline of credit or fixed rate mortgage
or anything else, the less theinterest rate matters, also the shorter
the amortization term. Peopleget, get so caught up, it's like

(37:12):
on a car that they're payingfor five years and it's this is 3%
and this is 5%. I'm like, didyou look at the amount of interest
you're actually paying?Because the shorter the amortization,
the more principal you pay upfront right away, right? And the
less the interest rate matterson those things and the less it actually
moves the needle on your payment.
I think that's the main thingpeople look for is what's the interest

(37:32):
rate, what's the interestrate? And they ignore many of the
other factors that you'retalking about. You really get into
that with people and say, hey,but have you considered this?
There's a lot of lenders outthere who, they have the interest
rate on the surface is better.And then they're like, ah, but it's
three points to get thatinterest rate rate. And I'm like,
if you paid three points tome, I'd be a half point better. There's

(37:55):
a lot of instances right nowwhere we'll actually, the higher
the interest rate, I can oftencredit money back to people. And
so what we'll do sometimes belike, hey, listen, we're at the top
of where interest rates are inthe market right now and you're doing
X, Y and Z with the, with thisloan. If somebody was doing a construction
loan, I can raise your rateand credit you thousands of of dollars

(38:17):
back. And then you're going torefinance this when it's done anyway.
Good.
And then so I can save youfour or five or I can credit you
four or $5,000 at closing andthen eight months later, a year later
when you're done, then we canactually refinance and save that
money to lessen cost. And soit's not just about rate. You've
got to pay attention to whatthe costs are. And if you're looking

(38:40):
at a loan estimate, it's thesection AA fees, it's the 800, the
section 800 charges, it's theorigination Fees that are coming
from the lender and whatpoints and fees they are or are not
charging you there. Somepeople get caught up in like the
title work in those things.And one lender might estimate 1500
for title, one lender mightestimate 2000 for title. As a borrower,

(39:03):
you pick the title company oryour realtor picks the title company.
Whatever we estimate for titleis irrelevant. It's you're going
to pay whatever the titlecompany charges. We're just going
to try to get you a goodguesstimate to what that cost actually
is.
So when should peoplerefinance? Are there certain factors
that are more beneficial torefinance than or better times.

(39:25):
Or the most of the refinance?So we had a good period at the end
of Q3, beginning of Q4 of 20,20, 24, rates had, rates were bottoming
out where you could get highfives, low sixes on 30 year conventional
mortgages. @ that point therewas a lot of people that we could

(39:45):
save a point on their interestrate. But what we did with a lot
of those people because someof them wanted to pay the cost and
get the cheapest ratepossible. A lot of those scenarios
though, if the rate was 5,875,somebody's like, I was like, you
can take a six and a quartertoo and we can literally add zero
dollars to your loan amount.And sometimes with these situations,
if the rate drops enough whereI can pay for the cost on a large

(40:09):
loan, that might be a half ofa point. If it drops a half point
and you don't have to pay anymoney, but you save 150 bucks a month,
that makes sense. You mightalso be saving $150 a month. But
somebody might be trying tocharge you eight grand to save $150
a month. That probably doesn'tmake any sense for you to do, right?
So it really depends on therecoupment period of that and then

(40:35):
again the opportunity cost. Ifyou have that $8,000 again, what
if you invested $8,000 in an Sand P index fund? And I just, I keep
talking about this S and Pindex fund because it's like spy.
If anybody wants. I am not afinancial planner. I don't do financial
securities for anybody else.
That's his disclaimer, folks.
I'm not licensed to do this. Idon't have any products to sell.

(40:59):
But Warren Buffet talks aboutthe S and P index all the time as
well too. It's something, it's500 stocks, broad based, it rebalances
you can go buy the Spy andyour Ameritrade or Schwab or E Trade
or whatever account you wantto. You can go to your financial
planner. They'reelectronically traded funds. They
rebalance. And so, so it's areally. It's about as safe as an

(41:19):
investment as you can make.That should return money over time.
And again. If the stock marketdoesn't return money and inherently,
as long as we have inflation,things cost more. The stock market
returns money. I could godeeper into that, but it will. But
if it doesn't, there arepitchforks and people in the like,

(41:42):
we have bigger problems. Wehave way bigger problems. So you
might as well be in the game.Like one of the beautiful things
that I tell people about theUnited States of America is like,
it's not actually that hard toget rich slowly if you have a conservative
approach. If you don'toverspend. If you work with somebody

(42:05):
who understands markets andyou invest over time, it's not hard
to retire and have enoughmoney to take care of yourself.
And the earlier you start, the better.
Oh yeah.
Oh yeah.
Yep. Heard that all the time.
Yeah.
If I have a loan that I'vebeen paying for 25 years, 30 year
loan, and I've got some extramoney in my savings account and now

(42:30):
I'm looking at my loan going,I'm just paying interest now on this,
this loan, I'm not paying, I'mnot interested. But principal. So
I've pretty much spent all theinterest off. Would you suggest I
keep paying that loan or justgo ahead and pay it off and then
I'll take that extra cash thatI'm using for that loan. I can keep
that.
It really like you said, whenyou're at the end, you get. You got

(42:53):
five or six years left on a 30year loan. The great majority of
your payments go intoprincipal. If you're just like at
the. If the money is justsitting in your savings account doing
nothing for you and you justdon't want to have a mortgage payment
anymore, then pay it off. Butyeah, like you said, it's the six,
one half dozen the other. It'snot something that really matters.
Okay. Or take that money andput it in the S and P. There you

(43:15):
go. Instead of that. Okay,good advice. I think some people
end up in that situation too.
Yeah.
Now one of the things that yougot to be like, the longer. So The
S&P's return this average at10% since 1957. One thing that the
closer you are to reallyneeding that money in Your retirement.
Maybe it's a bond that you putit in, maybe it's something else

(43:36):
at that point. Becausealthough over time it's returned
10%, there's been 30 and 40%increases, there's been 20% decreases
in that. It's not that if youjust put it in, you're going to get
this rate of return forever.So you need to think about how quickly
you're going to need to accessthose funds. It's not nothing with
the stock market, nothing withany investments ever. A guarantee.

(44:00):
So the time horizon that youneed it, but the longer that it is
from you needing the moneygenerally the more aggressive you
can be with said funds.
Is it beneficial? Let me backup. How beneficial is it to get a.
Pre approval on a loan again,you got to start early. Like the

(44:21):
earlier you start, the betterthat you're going to be in position.
But if you don't have a preapproval and a realtor says it's
cool you don't have a preapproval, I'm going to show you 50
houses. You should fire thatrealtor right away because they're
desperate and they probablydon't close any business. Nobody
worth their weight wants towork with you unless you have a pre

(44:45):
approval. And nobody's goingto accept your offer without a pre
approval. Otherwise you'rejust out looking at houses for nothing.
How long does that normallytake on average, roughly? I know
it's going to be different fordifferent people.
If you're ready to go. Thewhole online application process,
which you can do online, youcan do from your phone. Like we all
have this push button mortgagetechnology right now it takes somewhere

(45:08):
between 10 and 15 minutes tofill out an application. And then
there's the technology wehave. It's a lot like Dropbox. So
once you do it, you just dragand drop your pay stubs here, your
W2s here. Somebody can be donein 20 minutes with the whole thing.
And then if it's a, if it's asimple situation, you make X amount
of money. There's not variableincome. We could have your pre approval

(45:28):
done in a couple hours. Ifit's complex and you're self employed,
there's some tax returnsinvolved and there's some calculation
a day or two. I'm working withsomebody right now who has eight
businesses. It might be a weekto go through all of her stuff. It's
a quick process.
Yeah. Wow.
I like that. Some of thoseless fortunate, financially less

(45:51):
fortunate folks, they have a680. Is that hard for them to Get
a loan?
No, not at all.
I always hear you got to pay ahigher interest rate because you
have a lower, a lower score.And I think that, to me, that doesn't
help those people.
Well, it depends. So youreally want to be north of 620 as

(46:12):
a baseline start. FHA loansare going to have pretty similar
rates at a 620 or a 740 creditscore. Conventional loans are going
to have a higher interest rateevery. So 780 is basically your cream
or your crop. And every 20points below that, the interest rate

(46:34):
adjusts. But Fannie Mae andFreddie Mac, they have a mandate
to make homes affordable. Andso if you make less than 82,560 now
this number is going to berevised in May or June when the new
area median incomes come out.But it's 802005 60. If you make less
than that, all of these loanlevel price adjustments on the Fannie

(46:58):
Mae loans are waived. You'regonna get. Now if you're not putting
down the mortgage, insuranceis going to be more expensive. If
you're not putting down 20%,but you'd get the same rate at a
640 credit score as you do ata 780 credit score if you're underneath
that area, mean median income.And one of the neat things that Fannie

(47:19):
Mae lets us do and Freddie Maclets us do on these loans, let's
say somebody, they'refortunate and they make $80,000 a
year and they have a $10,000bonus. If we don't need the $10,000
bonus to qualify, I can justgo off the 80. If they work overtime
and that puts them over. If Idon't need the overtime, I can get
rid of the overtime. Now, ifyou make $90,000 a year, I can't

(47:41):
just say, oh, I only need touse 80 and you still qualify.
Right.
But if I can carve outportions of the income or a lot of
times we'll have two peopleapplying on a loan together, fiscally
responsible. One of theirincomes is underneath that mark.
They can qualify on theirloan, but both together, they're
over that mark. And I'm like,I can give you a half point better
rate if we just do this andlet me take you off the loan. You

(48:03):
still get to your partner,still gets to be on title, but you
are able to get a much betterinterest rate in the market. Because
again, like, this is what,this is the difference in having
a debt manager and somebodywho consults you versus an order
taker.
Right?
Right. I Love it.
We've been talking to SeanZalmanoff. He's founder and chief
loan officer of Better RateMortgage and you can find out more

(48:25):
at better rate mortgage.combetterrate mortgage.com Mark this
has been really valuableinformation for even people who have
been through the processseveral times or for those folks
who are like, yeah, I'd reallylike to stop paying rent and I'd
like to buy my first house ormy first duplex or whatever it would
be. It's tremendousinformation. We just scratched the

(48:49):
surface. I'm sure we couldreally delve into some more detailed
specifics about this, but Ithink listeners get the flow of what
we're doing here.
Shawn. I would. It sounds likewe should really shop I realtor a
lot. Sounds like that personis going to be a real pivotal individual
in the success of finding ahome and getting a loan.

(49:09):
Yeah.
Because you're working withthem, right?
Yes. So many people start withthe realtor and they really need
to start with the mortgage company.
Okay.
You need to get pre approvedfirst. And you know the when you're
buying a loan or buying ahouse, let's say in Missouri, if
I'm doing your loan in St.Louis City or Kansas City, the loan's

(49:33):
the loan. And as long as Iunderstand how your income breaks
down, it's very easy for me tosee let's area median income that
I keep talking about on FannieMae's website. I can advise you on
the best loan product easilywithout knowing the streets of Jackson
County In Kansas City you havea lot of realtors though that.

(49:55):
They want their commission, Isthat what.
Yeah, they're just trying tobe couth here.
Yeah, they just want to getpaid and they, they might not know
you got an agent who lives inJefferson County. Only folks in Jefferson
county like you don't wantthem showing you houses in St. Louis
City and vice versa, like youprobably don't want the other agent.

(50:16):
Now there's a lot of agentsthat we work with and some great
agents that they have teams.And so there's one person running
it, running the team who's gotthe advice, who's got the knowledge
and the realtor standpoint tonegotiate and do everything. And
then they have somebody whospecializes in Jefferson county and
somebody who specializes inO'Fallon, Illinois and somebody who

(50:36):
specializes in St. Charles,Missouri. And then all of a sudden
then you can have this really,really cohesive team. But it's really,
you got to get the preapproval first. You've got to, you
can Go on to the nmls. That'sthe national mortgaging licensing
that was put in place afterthe Great Recession. You can see
how long your loan officer hasbeen licensed for. You can see how

(50:58):
many companies they've been atin the last decade and how many times
they've job hopped. You canlook at your, ask your Realtor, ask
how many transactions theythen ask them to show what, what
they're doing. Now sometimesthere's a benefit in working with
somebody who is newer in acertain segment but you want somebody

(51:20):
who knows what they're doingand it's not just necessarily through
experience, but they need tobe plugged into somebody who at least
is a mentor who's reallyguiding them through the process.
How do I find you? Because Ithink it's great. If I was looking
through the MLS, I go, okay,I'm approved for $250,000. Okay,

(51:41):
how do I find you or otherfolks that are like you to help me
just get to that point?
You know, one of the nicethings is, you know, Google's been
very kind to us. We have a lotof reviews on Google. So if somebody
searches Mortgage St. Louis inthat local search, I'm usually one
of the top guys that comes up.But the, you just gotta, you gotta

(52:02):
do your homework and you'vegotta talk to people about, ask them
questions. The great thing foryou as a consumer is you should Google
a little bit about mortgagesbefore you're talking to somebody.
And there's often times whereas pathetic as this is 20 minutes

(52:24):
of you googling aboutmortgages and, and then going asking
a loan officer some questions,you're going to know more about them
than know about, know moreabout mortgages than they do. And
you're going to understandmore about some processes and you're
going to know if they gettripped up over how we're paid and
how things work and how doesthis work and how does this affect

(52:45):
their interest rate. The oldadage that you'll hear almost every
loan officer say is we all getour money from the same place. True
statement, Fannie Mae, FreddieMac, fha, hud. That's how we get
our money. But the margin thatpeople tack on to said money is very

(53:06):
different from company A tocompany B and even inside of company
sometimes from loan officer Ato loan officer B.
Valuable information. Sean,thanks for coming in and talking
to us about this. Mark. Ithink we probably need to do a part
two down the road sometime.
Yeah. So much for do we haveenough to talk about.
Oh my goodness. And folks,we've talked so long about this,

(53:30):
we don't have any time to goto our word of the day or Mark's
day of the days or.
Even thank goodness for yourjokes. You can't do your jokes. That's
a good thing.
That's correct.
I know. So some things are good.
Some things are good. ButSean, again, thanks for coming in.
Thanks for having me.
This has been really valuableand I know people will want to listen
to this and listen to thisagain. And check out [e-mail]

(53:54):
that's betterratemortgage.comSean Zalmanoff, founder and Chief
Loan Officer Folks, that's allfor this hour and we thank you for
listening. If you've enjoyedthis episode, you can listen to additional
shows at stlintune.comconsider leaving a review on the
website Apple podcast,podcast, podchaser, or your preferred
podcast platform. Yourfeedback helps us reach more listeners

(54:14):
and continue to grow. I wantto thank Bob Berthicel for our theme
music, our guest SeanZalmanoff and co host Mark Langston.
And we thank you for being apart of our community of curious
minds. St. Louis in tune is aproduction of Motif Media Group and
the US Radio Network. Rememberto keep seeking, keep learning, walk
worthy, and let your lightshine. For St. Louis In Tune, I'm
Arnold Stricker.