May 3, 2025 • 24 mins
Navigating today's mortgage market doesn't have to be overwhelming. Steve Reed of Benchmark Home Loans joins us to cut through the confusion with straightforward talk about what's really happening with housing inventory, interest rates, and smart loan shopping in 2024.
The real estate landscape has noticeably shifted from the frenzy of 2021-2022. We're seeing about 20% more inventory compared to last year, with homes typically staying on market for 30-90 days instead of hours or days. While this feels dramatically different after the pandemic market, Steve explains it's actually a return to historical norms. Properties priced right and in good condition still move quickly, while overpriced homes or those needing significant repairs linger longer.
Interest rates present perhaps the biggest source of consumer confusion. Steve dismantles the myth of "the rate" by explaining how your personal mortgage rate depends on at least 27 different factors including credit score, down payment, property type, location, debt-to-income ratio, and intended use. While average rates currently hover between 6.5-6.75%, the good news is they're trending downward as inflation stabilizes.
One of our most valuable discussions centers on rate shopping and the potentially deceptive practice of advertising rock-bottom rates without disclosing required points. Steve breaks down how paying points works mathematically - showing that on a $300,000 loan, the difference of 1/8% in rate equals merely $24 monthly (or "two Starbucks lattes"). This perspective helps frame the true value proposition of working with knowledgeable local lenders versus chasing marginally lower advertised rates from big-box lenders.
First-time homebuyers receive special attention as Steve emphasizes their need for education, certainty, and guidance through the biggest purchase they've likely ever made. When every dollar counts, having clear expectations about down payments, closing costs, and monthly obligations becomes crucial. The value of working with experienced professionals who provide transparency and personalized service far outweighs potentially saving a few dollars monthly.
Ready to explore your mortgage options with professionals who prioritize education and transparency? Connect with our team today to discuss your specific situation and goals.
To help you to navigate the home buying and mortgage process, Jonathan & Steve are currently licensed in Tennessee, Florida, Georgia, South Carolina, and Virginia, contact us today at 423-491-5405 or visit www.jonathanandsteve.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
This is Benchmark Happenings, brought to you by
Jonathan and Steve fromBenchmark Home Loans.
Northeast Tennessee, johnsonCity, kingsport, bristol, the
Tri-Cities One of the mostbeautiful places in the country
to live.
Tons of great things to do andawesome local businesses.
(00:22):
And on this show you'll findout why people are dying to move
to Northeast Tennessee and onthe way we'll have discussions
about mortgages and we'llinterview people in the real
estate industry.
It's what we do.
This is Benchmark Happenings,brought to you by Benchmark Home
Loans and now your host,christine Reed.
Speaker 2 (00:46):
Welcome back everybody to Benchmark
Happenings.
And we thought this time wewould do a market update.
So I have Steve Reed with uswith Benchmark Home Loans, steve
, welcome.
Speaker 3 (00:58):
Thank you, happy to be here.
Speaker 2 (01:00):
I'm glad to have you here.
It's hard to pin you down, butyou know we do.
This is Benchmark Home Loans,this is Benchmark Happenings,
and we do talk about a lot ofgreat things in East Tennessee
and a lot of awesome businesses,but I thought it was about time
that we need to educate peoplewho listen, hear about the
(01:20):
current purchase market and aswell as how buyers can shop for
a loan.
How do you think about that?
Speaker 3 (01:27):
I think that's great and since you're on the topic of
awesome businesses, you know Ican't think of a more awesome
business than Benchmark HomeLoans.
I mean, we've been here for along time and we do things the
right way.
We love on our customers andcare about our customers, and so
thank you for that, Thank youfor having me and hopefully this
(01:48):
will.
15, 20 minutes worth ofinformation will help a home
buyer first time home buyer moveup home buyer, whatever the
case is, and so happy to takethe time to do this.
Speaker 2 (02:01):
Thank you.
Well, I think it's well worththe time, and I think that.
So, steve, let's just sort ofstart with how would you
describe the current market interms of inventory?
We've talked about that in thepast.
We know things are changing andthe amount of time that homes
are staying on the marketcompared to last year.
Speaker 3 (02:23):
Wow, that's a great question.
Yeah, the inventory is a bit ofa moving target.
It is a little different thanthis time last year.
I mean, we're starting to see,although the spring buying
season is up on us.
So we're starting to see somechanges there.
But I can say the first coupleof months of this year we
started seeing a few more homescome to market and a few more
(02:47):
homes stay on the market alittle longer.
So I think everyone got spoiledover.
You know the 21 and 22, theCOVID years, and you know, hey,
I'm going to sell my house, I'mgoing to put it on the market
today and I plan on movingtomorrow because I have a
contract before the end of theday today and so it's almost I
(03:10):
don't know it's unrealisticexpectations now, because we got
kind of conditioned to thatmarket and now we're almost just
back, if there's any such thingas normal these days.
But the market is maybe alittle bit more normal as far as
a house is going to stay on themarket, you know 30, 60, 90
days now, and which is notunusual historically but for
(03:34):
what we've seen the last coupleof years it is unusual.
So a little bit different feelto the market.
Homes are still flying off theshelves if they're priced right
when they go on the market.
It seems to me what's sitting onthe market longer, which will
always be the case, are justthose houses that might be
overpriced and we also get a lotof houses that go under
(03:55):
contract, that have some issueswhen you get to the home
inspection and that kind ofthing.
So I would say overpriced housesor houses that are in need of
some repair, you may end upholding on to those just a
little bit longer.
So to speak, to the inventoryissue, we've got about 20% more
inventory now than we did a yearago, and so it would make sense
(04:18):
that any home that or if youlook at the overall kind of the
global picture of this thing, ifhouses are staying on the
market longer, it gives time forinventory, to kind of the
global picture of this thing.
If houses are staying on themarket longer, it gives time for
inventory to kind of backlog alittle bit more.
So it would make sense thatwe've got about 20% more houses
on the market, more homes on themarket just from the fact that
they're staying on there longer.
(04:38):
And there's also, I think, alot of people are ready to move.
You know, either move up, movedown.
Maybe they had a growing family, they didn't want to let loose
of their 3% interest rate, butthey're just tired of waiting
for rates to go back down, andsome people are ready to make a
move, so I think you could seesome things break loose this
(04:58):
year.
Speaker 2 (05:00):
Right, right, well, and we always know, in an
election year things change,right, right, well, we always
know, in an election year thingschange and we've got much more
positive outlook with theeconomy and the home buying
market.
So we hear a lot about interestrates and a lot of people like
to post about interest rates.
(05:20):
So I'm just going to ask you,because I know that you watch
the market, you truly understandit, and so what is an average
interest rates and where arethey trending?
Speaker 3 (05:33):
Yeah, well, thank you for saying average.
We get a lot of calls.
Clients will say, hey, what'syour rate?
And it's almost laughablebecause there's not a rate.
Okay, there's a rate for youand there's a rate for the next
guy Because there's 27,.
I think different factors thatgo into determining one's
(05:54):
interest rate, such as downpayment.
Where's the property located?
What type of property is it?
What are you going to use theproperty for?
Is it going to be your primaryresidence or investment property
?
What's your debt income ratio?
What kind of reserves do youhave?
So, what's your credit score?
Well, that's the biggest one.
I was about to leave it out.
So, thank you.
(06:14):
So all those factors play intoa rate.
Now for average rate, and a goodthing to do.
You can Google average mortgagerate for state of Tennessee and
, believe it or not, that'spretty accurate.
We look at that and we help ourcustomers with that that want
to keep up with the rates, andthat's a really cool thing to do
(06:34):
.
Normally, when you look online,you're going to have these big
box lenders.
They're going to post their lowrock bottom rate, but they're
not going to tell you you'regoing to pay 3% or 4% or 3% or 4
points to buy that rate down.
But if you just Google averageinterest rate for Tennessee and
look at Google's answer, it'sactually accurate and we're
(06:57):
normally a little bit lower thanthat.
We're normally a little bitlower than average.
So, to answer your question, anaverage rate right now is about
six and a half to six, andthree quarters.
Speaker 2 (07:09):
So it has come down.
I mean, we were looking atseven, seven and a half, eight
percent.
Yes, it has A couple of yearsago, last year but so it is
coming down.
Speaker 3 (07:19):
It is coming down.
We're starting to see, I mean,in the previous administration I
mean we had, there's nobodythat can really deny that
inflation was kind of out ofcontrol, and so that's not
something you fix in a day whenyou look at I mean everything we
consume.
Um, oil prices play a part.
(07:41):
I mean everything's.
There's oil in the mixsomewhere.
If you're buying a shirt or ifyou're buying anything, it's
really you know it has to betransported and all that.
So you know oil prices were up.
I know we were paying more atthe pumps.
You know egg prices went crazy.
Of course they've since, youknow, started trending back down
(08:01):
and so you know our food andenergy prices were way up.
That drives interest rates.
Now that we're starting to seethe inflation kind of settle
down and head in the otherdirection, it is going to trend
rates downward and I'm asimpatient as anyone.
But it's not something that'sgoing to happen in a day or two
(08:23):
or a week or two.
We're going to see.
Some days rates are going to goup, some days they're going to
go down.
But I tell my clients, look atit like a stair step.
You know if you draw a line,which way are they trending?
Are they trending up or down?
And they're definitely trendingdown.
But that's not to say comeMonday when the market changes,
(08:44):
or you know, we may be up alittle bit Monday, but overall
we're looking pretty good.
You know we're in the mid sixes.
I think buyer demand will go upsignificantly once we get under
that 6% mark, which we can getunder there now by paying some
points.
But you really want to talk toa lender that knows what they're
(09:05):
doing, because it's not alwaysa good idea to pay points.
We love to take your money as alender, but it's not always
smart to pay a lender your money.
Speaker 2 (09:14):
So that goes back to.
I think, Steve, it would behelpful for today, when you talk
about buying down, so boxstores quote these rock bottom
rates for people and it's reallydeceptive.
It's a way to pull you in.
Then you talked about how youcan buy down with points.
(09:39):
What does that mean exactly?
Speaker 3 (09:41):
Yeah, okay.
Well, so let's just say I canprovide you a rate.
Say you got a high score.
I can provide you a rate of sixand a half today with just
standard closing costs, such asappraise on all your normal
stuff, but nothing extra tackedonto your closing costs in the
rate six and a half.
Let's say your loan amountis300,000.
(10:02):
If you'll pay me 1% more, whichis $3,000, ie points, then
instead of a six and a half rateI can give you a six and a
quarter rate.
That's just an example.
Now that six and a quarter ratemay lower your payment by $30,
$40 a month.
I don't have the math with me,but it'll be close.
(10:24):
So the easiest way to figurethat is take that $3,000 that
you've just paid, divide it in,let's call it $30.
And how many months do you haveto keep that loan to get your
money back?
And so you want to get yourmoney back within about 12 to 18
months, because within 12 to 18months rates may go down.
(10:47):
You may be refinancing again.
So you just don't want to paytoo many points out there and it
takes too long to get yourmoney back.
So in a declining market likewe're in, I don't recommend
paying a lot of points.
Now, sometimes to pay one, youcan maybe even do, maybe even do
better than a quarter and it'sa better deal, so sometimes
paying one.
But I get a little nervous whenmy clients want to start paying
(11:09):
two and three and four points.
Because you know, if you paysix, nine, $12,000 and you only
keep the loan 12 months or 18months and rates say go to 5%,
you're going to refinance.
Speaker 1 (11:27):
You've just lost that money pretty much just to have
a slightly lower payment.
Speaker 3 (11:31):
So you have to be extremely careful with what
you're paying as points.
So you really want a lenderthat will be very transparent in
that process, and I'll give my.
I used to, didn't do this.
I used to just say, no, youdon't want to pay a point, or
you don't want to pay two points, here's the rate.
And then, lo and behold,someone will go home tonight and
(11:54):
see a rocket mortgage ad thatadvertises 5.99, but don't say
anything about the points.
Right, so maybe in the fineprint, but who reads that?
And so then they're like I'llsee him next year.
Why didn't you get a loan fromme?
Well, you didn't offer me afive, nine, nine?
Well, yeah, I could have donethat.
It just wasn't in your bestinterest.
So it needs to be a transparentprocess to where people
(12:19):
understand what they're paying.
Speaker 2 (12:20):
Yeah, so I appreciate you sort of clearing that up.
So I'm going to ask you areally tough question how do you
feel about a buyer shopping foran interest rate?
Speaker 3 (12:32):
I hate it.
Don't do it, just come to us.
Yeah, that is very it'scommonplace now, and if they're
going to shop, I want to helpeducate them on how to shop
smart.
And just what I just told you,with the transparent process and
understanding how points workand make sure, based on their
(12:54):
situation, how long are theygoing to live in the house?
Do these lenders they shop witheven ask that question?
You know, are they even?
Do they even care about themenough to ask them any questions
?
Or are they just going to quotea rock bottom rate?
So that comes from trust, andyou know I was thinking about
this the other day.
It's like, you know, you couldcome to me and I might quote you
(13:16):
a rate that's an eighth or aquarter higher than you're going
to see on Rocket Mortgage.
Sorry to keep using them, butthey're just one of the big box
places.
So maybe my rate is slightly,slightly higher, maybe it's not
we're real competitive with themis slightly slightly higher,
maybe it's not, we're realcompetitive with them, but let's
just say my rate's a little bithigher and so you're not going
to get the use of my servicesbecause you're going to use them
(13:37):
to save that little bittyamount.
I kind of equate that to.
You know, going down to thehardware store, you know you can
order that same wrench onlineand maybe save 10 bucks on it,
right, okay, where are you goingto wait on that wrench If it's
the wrong size, don't work, notwhat you needed, you got to send
(13:58):
it back.
Or you can go to the hardwarestore and talk to the very nice
gentleman at the hardware storethat's going to probably educate
you on wrenches and you'regoing to get the exact one you
want, and you might pay 10 bucksmore for it, right?
Where are you going to be thehappiest at the end of the day
when you've got the knowledgethat you know not only that you
(14:18):
think you've paid 10 moredollars for it, but by the time
you ship the other one back,maybe you have to pay for
shipping your time's worthsomething.
So what have you really saved,right?
So I think, clients that don'tdo business with us, it's like
skipping the hardware store andbuyer beware they're going to
these big box places and theydon't really know what they're
(14:40):
getting and sometimes it worksout.
Many times it does not work outgreat for them and they really
don't.
It's just, I don't know.
It's like, you know, whenyou're dating someone and you
decide you don't like them, well, you don't know what you missed
out on.
Maybe they might turn out to bethe best person in the world
and make tons of money.
Right, they might be amultimillionaire, so but it's
(15:01):
like missing out on somethingwhen they don't come to us and
get that education and theydon't get asked those right
questions because they're justputting so much emphasis and
weight on what that rate is.
And an eighth and a quarter ofa percent is really nothing,
because in the end.
Speaker 2 (15:21):
Put that in a dollar amount, say an eight, I'm going
to.
So I've called you up, steve,because my family member.
You did the loan for them andthey loved you.
It was just a great process andI've called you.
We've spent time together,you've educated me, you've
walked me through the processand I feel really good about you
(15:44):
know making a great decision.
I put in for the loan, youstart the processing.
I call you up next week and sayhey, I just found a rate that's
a quarter of a percent, eighthof a percent less.
Can you match that?
Speaker 3 (16:02):
Yeah, okay.
So while you were talking, Iwent ahead and calculated that.
So on a $300,000 loan, aneighth of a percent is about $24
, right $24.
Speaker 2 (16:14):
That's like two Starbucks lattes.
Speaker 3 (16:16):
Exactly so it's not that much.
But what's really even moreimportant than that is, at the
end of the day, if I've helpedyou strategize on when to lock
your rate that eighth of apercent you think you're paying
more.
If we have the right strategiesand we watch the bond market
and we know what's going on youmight end up getting locked an
(16:38):
eighth of a percent lower thanwhat that other company promised
you, based on when you need toclose and how tolerant to a
little bit of a gamble you are.
If you're not locked but so wecould strategize so you might
just think it's an eighth higherif you're not locked but so we
could strategize so you mightjust think it's an eighth higher
, but you're going to end uplower with us.
Some of our other fees might belower.
You know when we see the marketchanging, we may wait an extra
(17:01):
hour or two to lock you, and youknow you benefit from all that.
But unless you're in our systemand unless you trust us and
unless you agree to move forwardwith us, you're never going to
know any of that and so.
But we're not going to be oneof those lenders.
It's just going to go in andgive you the low ball price just
to reel you in.
We're going to kind of give you,to our own detriment.
(17:22):
A lot of times we're going togive you worst case scenario and
we're going to under promiseand over deliver every single
time, absolutely.
But you don't know what youdon't know.
So if you move on to one ofthese dot-com companies online,
if you're going to shop, makesure it's somebody that's asking
(17:43):
you questions, make sure youtrust them, make sure they
understand what makes the bondmarket move.
They understand how inflationaffects rates.
They know what economic news iscoming out when it's coming out
.
I guarantee just those two orthree questions.
If you called up any lenderaround and asked them those
questions, they wouldn't knowthe answer.
(18:05):
So that'll be your answer foryou.
When you call them and theycan't answer those questions, I
said a column up and sayingwhat's your rate?
That's the easiest question toanswer in the world, because
they're just going to give youthe lowest rate with the high
score, with all the metrics thatare perfect, and then they're
going to start a little bit of aconversation because they've
(18:26):
already got you roped in.
So be very, very careful ofthat.
Speaker 2 (18:35):
Yeah, I think that's really good advice.
So, speaking of advice, let'stalk a little bit about closing
for the first-time homebuyercrowd.
What advice would you give tothat first-time homebuyer?
Speaker 3 (18:43):
Yeah.
So they need more direction andI truly believe move-up buyers
need just as much, because thisis just not a process you do
every day or every month.
You might do it four or fivetimes over your lifetime, or two
or three, but first-timehomebuyers especially need the
education.
I had a conversation with agentleman yesterday trying to
(19:04):
help his son who was going toour biggest local credit union
in the area and he was verydissatisfied with their service.
They wouldn't offer any kind ofeducation.
They're just like here it is,you know, kind of take it or
leave it, and uh, was not reallydirecting him or showing him
(19:27):
the correct path forward.
So, as a first-time homebuyer,run from that Get with companies
and there's other good localcompanies.
We're not the only one, but wefeel like we're one of the best.
We used to think the localcompanies was our competition.
It's really not.
We've got some.
The local companies was ourcompetition.
It's really not.
We got some decent localcompanies.
(19:47):
But the competition now arethese big box stores that are
going to lower the rates to justunbelievable levels and then
they're going to do a bait andswitch when you get in.
A lot of times you're not goingto get that rate, but you're
going to get no education.
So first-time homebuyers need toget with somebody that someone
that will hold their hand.
(20:08):
They need a really good realestate agent that will hold
their hand, which we canrecommend if they don't already
have one, we can recommend.
We work with a few good, reallygood agents and it's a team
process.
It takes a village for afirst-time homebuyer because
they're scared.
A village for a first-timehomebuyer because they're scared
(20:30):
.
Every penny counts.
It's not like you can just callthem up and say, oh yeah, we
forgot to tell you about that$300 you need, or $500.
Every penny counts.
They need to know, they needcertainty.
In a word, it's certainty.
They need to know what am Igoing to be expected to come up
with at closing for a downpayment, for my closing costs?
What are my payments going tobe?
They can't handle surprises andbecause most of them have lower
(20:53):
incomes, they're starting out,you know, and so we have to
handle them with kid gloves, butwe have to make sure that
they're prepared for the biggestpurchase they've ever made and
maybe ever will make until theybuy their next home.
So it's a real serious thing.
It's not like some clerksetting in Iowa can tell you
(21:15):
over the phone that's just gotout of college, that's not in
the advice business like we are,or the education business.
So it's a scary thought for methat a first-time homebuyer
would even look online to gettheir mortgage.
Now I'm not saying don't shop.
I mean I would prefer theydon't if they get with us.
But if you're going to shop, doit before.
(21:37):
But once we get with them andthey commit, that's time to stop
shopping and it's time to startpacking you know and getting
ready to buy the home.
So, first-time homebuyers, justdon't be wishy-washy, you know.
Decide on your lender, get alender you trust, get a real
estate agent that you trust andthen worry about other things
(22:02):
that are important, but don'tkeep out looking to try to find
an eighth of a percent betterrate that might save you $20 a
month that you might end uppaying way more for, just like
the hardware store.
So get good information, and wehave that here.
Speaker 2 (22:22):
Yes, I think too, when you're making decisions in
life and and like a purchasing ahome, it's the largest
financial decision most peoplewill make.
But it's also, like you know,if you don't have clarity, if
there's confusion as you'regoing through that process,
something's wrong yeah, and alot of times confused.
(22:44):
Clients don't purchase, don'tpurchase, run or or or or they
might be with someone thatdoesn't, or a box store,
whatever that they could.
They don't get the best productfor them that really suits
their needs.
So, steve, this was really good.
I really appreciate you takingthe time to be here today and
(23:08):
talk about the market.
Speaker 3 (23:09):
Does that mean, you'll have me back.
Of course yeah, I enjoyed beinghere.
Speaker 2 (23:13):
Thank you, Steve.
Speaker 1 (23:17):
This has been Benchmark Happenings, brought to
you by Jonathan Tipton andSteve Reed from Benchmark Home
Loans.
Jonathan and Steve areresidential mortgage lenders.
They do home loans in NortheastTennessee and they're not only
licensed in Tennessee butFlorida, georgia, south Carolina
and Virginia.
We hope you've enjoyed the show.
(23:38):
If you did make sure to like,rate and review.
Our passion is NortheastTennessee, so if you have
questions about mortgages, callus at 423-491-5405.
And the website iswwwjonathanandstevecom.
Thanks for being with us andwe'll see you next time on
(24:01):
Benchmark Happenings.
This is Benchmark Happenings, brought to you by
Jonathan and Steve fromBenchmark Home Loans.
Northeast Tennessee, johnsonCity, kingsport, bristol, the
Tri-Cities One of the mostbeautiful places in the country
to live.
Tons of great things to do andawesome local businesses.
(00:22):
And on this show you'll findout why people are dying to move
to Northeast Tennessee and onthe way we'll have discussions
about mortgages and we'llinterview people in the real
estate industry.
It's what we do.
This is Benchmark Happenings,brought to you by Benchmark Home
Loans and now your host,christine Reed.
Speaker 2 (00:46):
Welcome back everybody to Benchmark
Happenings.
And we thought this time wewould do a market update.
So I have Steve Reed with uswith Benchmark Home Loans, steve
, welcome.
Speaker 3 (00:58):
Thank you, happy to be here.
Speaker 2 (01:00):
I'm glad to have you here.
It's hard to pin you down, butyou know we do.
This is Benchmark Home Loans,this is Benchmark Happenings,
and we do talk about a lot ofgreat things in East Tennessee
and a lot of awesome businesses,but I thought it was about time
that we need to educate peoplewho listen, hear about the
(01:20):
current purchase market and aswell as how buyers can shop for
a loan.
How do you think about that?
Speaker 3 (01:27):
I think that's great and since you're on the topic of
awesome businesses, you know Ican't think of a more awesome
business than Benchmark HomeLoans.
I mean, we've been here for along time and we do things the
right way.
We love on our customers andcare about our customers, and so
thank you for that, Thank youfor having me and hopefully this
(01:48):
will.
15, 20 minutes worth ofinformation will help a home
buyer first time home buyer moveup home buyer, whatever the
case is, and so happy to takethe time to do this.
Speaker 2 (02:01):
Thank you.
Well, I think it's well worththe time, and I think that.
So, steve, let's just sort ofstart with how would you
describe the current market interms of inventory?
We've talked about that in thepast.
We know things are changing andthe amount of time that homes
are staying on the marketcompared to last year.
Speaker 3 (02:23):
Wow, that's a great question.
Yeah, the inventory is a bit ofa moving target.
It is a little different thanthis time last year.
I mean, we're starting to see,although the spring buying
season is up on us.
So we're starting to see somechanges there.
But I can say the first coupleof months of this year we
started seeing a few more homescome to market and a few more
(02:47):
homes stay on the market alittle longer.
So I think everyone got spoiledover.
You know the 21 and 22, theCOVID years, and you know, hey,
I'm going to sell my house, I'mgoing to put it on the market
today and I plan on movingtomorrow because I have a
contract before the end of theday today and so it's almost I
(03:10):
don't know it's unrealisticexpectations now, because we got
kind of conditioned to thatmarket and now we're almost just
back, if there's any such thingas normal these days.
But the market is maybe alittle bit more normal as far as
a house is going to stay on themarket, you know 30, 60, 90
days now, and which is notunusual historically but for
(03:34):
what we've seen the last coupleof years it is unusual.
So a little bit different feelto the market.
Homes are still flying off theshelves if they're priced right
when they go on the market.
It seems to me what's sitting onthe market longer, which will
always be the case, are justthose houses that might be
overpriced and we also get a lotof houses that go under
(03:55):
contract, that have some issueswhen you get to the home
inspection and that kind ofthing.
So I would say overpriced housesor houses that are in need of
some repair, you may end upholding on to those just a
little bit longer.
So to speak, to the inventoryissue, we've got about 20% more
inventory now than we did a yearago, and so it would make sense
(04:18):
that any home that or if youlook at the overall kind of the
global picture of this thing, ifhouses are staying on the
market longer, it gives time forinventory, to kind of the
global picture of this thing.
If houses are staying on themarket longer, it gives time for
inventory to kind of backlog alittle bit more.
So it would make sense thatwe've got about 20% more houses
on the market, more homes on themarket just from the fact that
they're staying on there longer.
(04:38):
And there's also, I think, alot of people are ready to move.
You know, either move up, movedown.
Maybe they had a growing family, they didn't want to let loose
of their 3% interest rate, butthey're just tired of waiting
for rates to go back down, andsome people are ready to make a
move, so I think you could seesome things break loose this
(04:58):
year.
Speaker 2 (05:00):
Right, right, well, and we always know, in an
election year things change,right, right, well, we always
know, in an election year thingschange and we've got much more
positive outlook with theeconomy and the home buying
market.
So we hear a lot about interestrates and a lot of people like
to post about interest rates.
(05:20):
So I'm just going to ask you,because I know that you watch
the market, you truly understandit, and so what is an average
interest rates and where arethey trending?
Speaker 3 (05:33):
Yeah, well, thank you for saying average.
We get a lot of calls.
Clients will say, hey, what'syour rate?
And it's almost laughablebecause there's not a rate.
Okay, there's a rate for youand there's a rate for the next
guy Because there's 27,.
I think different factors thatgo into determining one's
(05:54):
interest rate, such as downpayment.
Where's the property located?
What type of property is it?
What are you going to use theproperty for?
Is it going to be your primaryresidence or investment property
?
What's your debt income ratio?
What kind of reserves do youhave?
So, what's your credit score?
Well, that's the biggest one.
I was about to leave it out.
So, thank you.
(06:14):
So all those factors play intoa rate.
Now for average rate, and a goodthing to do.
You can Google average mortgagerate for state of Tennessee and
, believe it or not, that'spretty accurate.
We look at that and we help ourcustomers with that that want
to keep up with the rates, andthat's a really cool thing to do
(06:34):
.
Normally, when you look online,you're going to have these big
box lenders.
They're going to post their lowrock bottom rate, but they're
not going to tell you you'regoing to pay 3% or 4% or 3% or 4
points to buy that rate down.
But if you just Google averageinterest rate for Tennessee and
look at Google's answer, it'sactually accurate and we're
(06:57):
normally a little bit lower thanthat.
We're normally a little bitlower than average.
So, to answer your question, anaverage rate right now is about
six and a half to six, andthree quarters.
Speaker 2 (07:09):
So it has come down.
I mean, we were looking atseven, seven and a half, eight
percent.
Yes, it has A couple of yearsago, last year but so it is
coming down.
Speaker 3 (07:19):
It is coming down.
We're starting to see, I mean,in the previous administration I
mean we had, there's nobodythat can really deny that
inflation was kind of out ofcontrol, and so that's not
something you fix in a day whenyou look at I mean everything we
consume.
Um, oil prices play a part.
(07:41):
I mean everything's.
There's oil in the mixsomewhere.
If you're buying a shirt or ifyou're buying anything, it's
really you know it has to betransported and all that.
So you know oil prices were up.
I know we were paying more atthe pumps.
You know egg prices went crazy.
Of course they've since, youknow, started trending back down
(08:01):
and so you know our food andenergy prices were way up.
That drives interest rates.
Now that we're starting to seethe inflation kind of settle
down and head in the otherdirection, it is going to trend
rates downward and I'm asimpatient as anyone.
But it's not something that'sgoing to happen in a day or two
(08:23):
or a week or two.
We're going to see.
Some days rates are going to goup, some days they're going to
go down.
But I tell my clients, look atit like a stair step.
You know if you draw a line,which way are they trending?
Are they trending up or down?
And they're definitely trendingdown.
But that's not to say comeMonday when the market changes,
(08:44):
or you know, we may be up alittle bit Monday, but overall
we're looking pretty good.
You know we're in the mid sixes.
I think buyer demand will go upsignificantly once we get under
that 6% mark, which we can getunder there now by paying some
points.
But you really want to talk toa lender that knows what they're
(09:05):
doing, because it's not alwaysa good idea to pay points.
We love to take your money as alender, but it's not always
smart to pay a lender your money.
Speaker 2 (09:14):
So that goes back to.
I think, Steve, it would behelpful for today, when you talk
about buying down, so boxstores quote these rock bottom
rates for people and it's reallydeceptive.
It's a way to pull you in.
Then you talked about how youcan buy down with points.
(09:39):
What does that mean exactly?
Speaker 3 (09:41):
Yeah, okay.
Well, so let's just say I canprovide you a rate.
Say you got a high score.
I can provide you a rate of sixand a half today with just
standard closing costs, such asappraise on all your normal
stuff, but nothing extra tackedonto your closing costs in the
rate six and a half.
Let's say your loan amountis300,000.
(10:02):
If you'll pay me 1% more, whichis $3,000, ie points, then
instead of a six and a half rateI can give you a six and a
quarter rate.
That's just an example.
Now that six and a quarter ratemay lower your payment by $30,
$40 a month.
I don't have the math with me,but it'll be close.
(10:24):
So the easiest way to figurethat is take that $3,000 that
you've just paid, divide it in,let's call it $30.
And how many months do you haveto keep that loan to get your
money back?
And so you want to get yourmoney back within about 12 to 18
months, because within 12 to 18months rates may go down.
(10:47):
You may be refinancing again.
So you just don't want to paytoo many points out there and it
takes too long to get yourmoney back.
So in a declining market likewe're in, I don't recommend
paying a lot of points.
Now, sometimes to pay one, youcan maybe even do, maybe even do
better than a quarter and it'sa better deal, so sometimes
paying one.
But I get a little nervous whenmy clients want to start paying
(11:09):
two and three and four points.
Because you know, if you paysix, nine, $12,000 and you only
keep the loan 12 months or 18months and rates say go to 5%,
you're going to refinance.
Speaker 1 (11:27):
You've just lost that money pretty much just to have
a slightly lower payment.
Speaker 3 (11:31):
So you have to be extremely careful with what
you're paying as points.
So you really want a lenderthat will be very transparent in
that process, and I'll give my.
I used to, didn't do this.
I used to just say, no, youdon't want to pay a point, or
you don't want to pay two points, here's the rate.
And then, lo and behold,someone will go home tonight and
(11:54):
see a rocket mortgage ad thatadvertises 5.99, but don't say
anything about the points.
Right, so maybe in the fineprint, but who reads that?
And so then they're like I'llsee him next year.
Why didn't you get a loan fromme?
Well, you didn't offer me afive, nine, nine?
Well, yeah, I could have donethat.
It just wasn't in your bestinterest.
So it needs to be a transparentprocess to where people
(12:19):
understand what they're paying.
Speaker 2 (12:20):
Yeah, so I appreciate you sort of clearing that up.
So I'm going to ask you areally tough question how do you
feel about a buyer shopping foran interest rate?
Speaker 3 (12:32):
I hate it.
Don't do it, just come to us.
Yeah, that is very it'scommonplace now, and if they're
going to shop, I want to helpeducate them on how to shop
smart.
And just what I just told you,with the transparent process and
understanding how points workand make sure, based on their
(12:54):
situation, how long are theygoing to live in the house?
Do these lenders they shop witheven ask that question?
You know, are they even?
Do they even care about themenough to ask them any questions
?
Or are they just going to quotea rock bottom rate?
So that comes from trust, andyou know I was thinking about
this the other day.
It's like, you know, you couldcome to me and I might quote you
(13:16):
a rate that's an eighth or aquarter higher than you're going
to see on Rocket Mortgage.
Sorry to keep using them, butthey're just one of the big box
places.
So maybe my rate is slightly,slightly higher, maybe it's not
we're real competitive with themis slightly slightly higher,
maybe it's not, we're realcompetitive with them, but let's
just say my rate's a little bithigher and so you're not going
to get the use of my servicesbecause you're going to use them
(13:37):
to save that little bittyamount.
I kind of equate that to.
You know, going down to thehardware store, you know you can
order that same wrench onlineand maybe save 10 bucks on it,
right, okay, where are you goingto wait on that wrench If it's
the wrong size, don't work, notwhat you needed, you got to send
(13:58):
it back.
Or you can go to the hardwarestore and talk to the very nice
gentleman at the hardware storethat's going to probably educate
you on wrenches and you'regoing to get the exact one you
want, and you might pay 10 bucksmore for it, right?
Where are you going to be thehappiest at the end of the day
when you've got the knowledgethat you know not only that you
(14:18):
think you've paid 10 moredollars for it, but by the time
you ship the other one back,maybe you have to pay for
shipping your time's worthsomething.
So what have you really saved,right?
So I think, clients that don'tdo business with us, it's like
skipping the hardware store andbuyer beware they're going to
these big box places and theydon't really know what they're
(14:40):
getting and sometimes it worksout.
Many times it does not work outgreat for them and they really
don't.
It's just, I don't know.
It's like, you know, whenyou're dating someone and you
decide you don't like them, well, you don't know what you missed
out on.
Maybe they might turn out to bethe best person in the world
and make tons of money.
Right, they might be amultimillionaire, so but it's
(15:01):
like missing out on somethingwhen they don't come to us and
get that education and theydon't get asked those right
questions because they're justputting so much emphasis and
weight on what that rate is.
And an eighth and a quarter ofa percent is really nothing,
because in the end.
Speaker 2 (15:21):
Put that in a dollar amount, say an eight, I'm going
to.
So I've called you up, steve,because my family member.
You did the loan for them andthey loved you.
It was just a great process andI've called you.
We've spent time together,you've educated me, you've
walked me through the processand I feel really good about you
(15:44):
know making a great decision.
I put in for the loan, youstart the processing.
I call you up next week and sayhey, I just found a rate that's
a quarter of a percent, eighthof a percent less.
Can you match that?
Speaker 3 (16:02):
Yeah, okay.
So while you were talking, Iwent ahead and calculated that.
So on a $300,000 loan, aneighth of a percent is about $24
, right $24.
Speaker 2 (16:14):
That's like two Starbucks lattes.
Speaker 3 (16:16):
Exactly so it's not that much.
But what's really even moreimportant than that is, at the
end of the day, if I've helpedyou strategize on when to lock
your rate that eighth of apercent you think you're paying
more.
If we have the right strategiesand we watch the bond market
and we know what's going on youmight end up getting locked an
(16:38):
eighth of a percent lower thanwhat that other company promised
you, based on when you need toclose and how tolerant to a
little bit of a gamble you are.
If you're not locked but so wecould strategize so you might
just think it's an eighth higherif you're not locked but so we
could strategize so you mightjust think it's an eighth higher
, but you're going to end uplower with us.
Some of our other fees might belower.
You know when we see the marketchanging, we may wait an extra
(17:01):
hour or two to lock you, and youknow you benefit from all that.
But unless you're in our systemand unless you trust us and
unless you agree to move forwardwith us, you're never going to
know any of that and so.
But we're not going to be oneof those lenders.
It's just going to go in andgive you the low ball price just
to reel you in.
We're going to kind of give you,to our own detriment.
(17:22):
A lot of times we're going togive you worst case scenario and
we're going to under promiseand over deliver every single
time, absolutely.
But you don't know what youdon't know.
So if you move on to one ofthese dot-com companies online,
if you're going to shop, makesure it's somebody that's asking
(17:43):
you questions, make sure youtrust them, make sure they
understand what makes the bondmarket move.
They understand how inflationaffects rates.
They know what economic news iscoming out when it's coming out
.
I guarantee just those two orthree questions.
If you called up any lenderaround and asked them those
questions, they wouldn't knowthe answer.
(18:05):
So that'll be your answer foryou.
When you call them and theycan't answer those questions, I
said a column up and sayingwhat's your rate?
That's the easiest question toanswer in the world, because
they're just going to give youthe lowest rate with the high
score, with all the metrics thatare perfect, and then they're
going to start a little bit of aconversation because they've
(18:26):
already got you roped in.
So be very, very careful ofthat.
Speaker 2 (18:35):
Yeah, I think that's really good advice.
So, speaking of advice, let'stalk a little bit about closing
for the first-time homebuyercrowd.
What advice would you give tothat first-time homebuyer?
Speaker 3 (18:43):
Yeah.
So they need more direction andI truly believe move-up buyers
need just as much, because thisis just not a process you do
every day or every month.
You might do it four or fivetimes over your lifetime, or two
or three, but first-timehomebuyers especially need the
education.
I had a conversation with agentleman yesterday trying to
(19:04):
help his son who was going toour biggest local credit union
in the area and he was verydissatisfied with their service.
They wouldn't offer any kind ofeducation.
They're just like here it is,you know, kind of take it or
leave it, and uh, was not reallydirecting him or showing him
(19:27):
the correct path forward.
So, as a first-time homebuyer,run from that Get with companies
and there's other good localcompanies.
We're not the only one, but wefeel like we're one of the best.
We used to think the localcompanies was our competition.
It's really not.
We've got some.
The local companies was ourcompetition.
It's really not.
We got some decent localcompanies.
(19:47):
But the competition now arethese big box stores that are
going to lower the rates to justunbelievable levels and then
they're going to do a bait andswitch when you get in.
A lot of times you're not goingto get that rate, but you're
going to get no education.
So first-time homebuyers need toget with somebody that someone
that will hold their hand.
(20:08):
They need a really good realestate agent that will hold
their hand, which we canrecommend if they don't already
have one, we can recommend.
We work with a few good, reallygood agents and it's a team
process.
It takes a village for afirst-time homebuyer because
they're scared.
A village for a first-timehomebuyer because they're scared
(20:30):
.
Every penny counts.
It's not like you can just callthem up and say, oh yeah, we
forgot to tell you about that$300 you need, or $500.
Every penny counts.
They need to know, they needcertainty.
In a word, it's certainty.
They need to know what am Igoing to be expected to come up
with at closing for a downpayment, for my closing costs?
What are my payments going tobe?
They can't handle surprises andbecause most of them have lower
(20:53):
incomes, they're starting out,you know, and so we have to
handle them with kid gloves, butwe have to make sure that
they're prepared for the biggestpurchase they've ever made and
maybe ever will make until theybuy their next home.
So it's a real serious thing.
It's not like some clerksetting in Iowa can tell you
(21:15):
over the phone that's just gotout of college, that's not in
the advice business like we are,or the education business.
So it's a scary thought for methat a first-time homebuyer
would even look online to gettheir mortgage.
Now I'm not saying don't shop.
I mean I would prefer theydon't if they get with us.
But if you're going to shop, doit before.
(21:37):
But once we get with them andthey commit, that's time to stop
shopping and it's time to startpacking you know and getting
ready to buy the home.
So, first-time homebuyers, justdon't be wishy-washy, you know.
Decide on your lender, get alender you trust, get a real
estate agent that you trust andthen worry about other things
(22:02):
that are important, but don'tkeep out looking to try to find
an eighth of a percent betterrate that might save you $20 a
month that you might end uppaying way more for, just like
the hardware store.
So get good information, and wehave that here.
Speaker 2 (22:22):
Yes, I think too, when you're making decisions in
life and and like a purchasing ahome, it's the largest
financial decision most peoplewill make.
But it's also, like you know,if you don't have clarity, if
there's confusion as you'regoing through that process,
something's wrong yeah, and alot of times confused.
(22:44):
Clients don't purchase, don'tpurchase, run or or or or they
might be with someone thatdoesn't, or a box store,
whatever that they could.
They don't get the best productfor them that really suits
their needs.
So, steve, this was really good.
I really appreciate you takingthe time to be here today and
(23:08):
talk about the market.
Speaker 3 (23:09):
Does that mean, you'll have me back.
Of course yeah, I enjoyed beinghere.
Speaker 2 (23:13):
Thank you, Steve.
Speaker 1 (23:17):
This has been Benchmark Happenings, brought to
you by Jonathan Tipton andSteve Reed from Benchmark Home
Loans.
Jonathan and Steve areresidential mortgage lenders.
They do home loans in NortheastTennessee and they're not only
licensed in Tennessee butFlorida, georgia, south Carolina
and Virginia.
We hope you've enjoyed the show.
(23:38):
If you did make sure to like,rate and review.
Our passion is NortheastTennessee, so if you have
questions about mortgages, callus at 423-491-5405.
And the website iswwwjonathanandstevecom.
Thanks for being with us andwe'll see you next time on
(24:01):
Benchmark Happenings.
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