June 30, 2025 • 36 mins
🏠Mortgages Made Simple: Demystifying Home Loans with John Lake of Shamrock Home Loans
In this episode of Jim Sells the Suncoast, Jim welcomes John Lake from Shamrock Home Loans to break down the mortgage process in a way that’s easy to understand—even for first-time buyers. From pre-approval vs. pre-qualification to loan types, down payments, and the myth of “just chasing the best rate,” John shares what really matters when financing a home.
Whether you’re buying on the Suncoast or beyond, this episode is packed with smart insights to help you shop with confidence—and avoid the pitfalls that cost people deals, dollars, and sleep.
🔑 Key Highlights
đź’ˇ Understanding the Mortgage Process
- From Contract to Keys: Shamrock’s step-by-step approach helps buyers stay informed and excited from day one.
- The Table Analogy: A mortgage should be solid and stable—just like a well-built table. That means starting with the right foundation: income, credit, and down payment.
đź“Š What Lenders Look For
- Credit Profile: More than just your score—lenders evaluate usage, types of credit, and payment history.
- Income Verification: Whether salaried, hourly, or self-employed, your income history matters. Lenders assess trends, consistency, and documentation over 2 years.
- Debt-to-Income Ratios: Ideal housing expenses = under 40% of income; total debt + mortgage = under 50% (though some exceptions apply).
đź’° Down Payments & PMI
- 20% = No PMI: But smaller down payments are still viable with programs offering 0–10% options.
- PMI (Private Mortgage Insurance): Protects the lender, but doesn't always break the bank—and sometimes is the smarter financial move, especially with FHA.
đź“„ Pre-Approval vs. Pre-Qualification
- Pre-Qual = A Conversation: Based on unverified info; risky in competitive markets.
- Pre-Approval = Verified & Vetted: Full credit, income, and asset review; gives buyers a stronger edge with sellers and agents.
🧩 Types of Loans
- Conventional: Best for borrowers with solid credit and larger down payments.
- FHA: More flexible guidelines, especially good for first-time buyers or those with credit dings.
- VA: No down payment or PMI for eligible veterans.
- USDA: Zero-down for homes in rural-eligible areas with income limits.
- Non-Traditional/Bank Statement Loans: Ideal for self-employed borrowers or those with non-standard income.
🛠️ Points, Rate Buydowns & Smart Strategies
- Points = Prepaid Interest: May lower monthly payments but not always cost-effective long-term.
- Shamrock's List & Lock Program: Sellers can contribute toward rate buydowns to make deals more attractive in slower markets—especially powerful for resale homes.
- True Affordability: Focus less on chasing the “lowest rate” and more on what monthly payment feels comfortable long-term.
đź‘€ Avoiding Common Mistakes
- Don't Wait to Talk to
A Personal Note from Jim:
Hey there, I’m Jim Ahearn, your go-to real estate guide and host of Jim Sells The Suncoast podcast! 🎙️✨ Dreaming of Florida life? I’ve got you covered! As your dedicated buyer's agent, I’ll handle everything from walk-throughs to closing, making your home-buying journey as smooth as a Florida breeze.
Whether you're local or tuning in from afar, I’ll bring the Suncoast to you with virtual tours and expert advice. Let’s chat about your dream home and I'll connect you with all the right people to make it happen.
Ready to move to paradise?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jim (00:01):
All right.
Hi, and welcome to Jim Sells theSuncoast.
Today I'm honored to have JohnLake from Shamrock Home Loans on
John is multifaceted.
He's working in a coupledifferent areas, but he's
familiar down here with theSuncoast.
And we're gonna talk a littlebit about different kinds of
mortgages.
How to apply for'em, what goesthrough the process of them, and
(00:22):
then don't get fixated on thatbig number.
Let's take a look at what you'reactually gonna live in.
John, welcome.
Thank you.
Thanks Jim.
And how are you today?
I am doing
John (00:32):
well, very well.
Terrific.
Terrific.
Terrific.
So when I started a conversationwith a prospective borrower and
client, most of the time what wetry to focus in on is
understanding the process,because we've heard horror
stories about applying for amortgage when somebody makes an
offer.
And that offer is accepted.
(00:53):
People will pop the clock.
The sellers, the buyers, therealtors,
Jim (00:57):
they pop the
John (00:57):
cork.
Nobody on this little green planof our has ever popped the clock
when they've applied for amortgage.
We wanna take that into stride.
Sadly, in today's world, becauseof technology, you can do this
in an automated fashion.
But, and if it's your firsthome, you are not getting the
right guidance.
(01:18):
You need to have that humanfactor because if you apply and
you'll say, pick a loan product.
The difference betweenU-S-D-A-F-H-A-A conventional 3 1
5 up Alejandra.
And at that point, what ends uphappening is interest.
(01:38):
If you picked a differentproduct, you might have a better
chance of getting approved.
So you need somebody to guideyou and explain the process.
I'm almost three decades into.
This business.
So I try to make buying veryeasy.
Our motto at Shamrock is keepingour clients excited from
contract to keys.
And we do that by taking themalong step by step and educating
(01:58):
them to make sure theyunderstand what the process is
all about.
So whenever I talk to a newclient, I always ask them, have
you ever bought furniture youhave to assemble?
And most of them say yes.
We bought a table that we had toassemble just a short time ago.
And I said, you get that boxhome.
You open the box, you geteverything out.
You get a bag of bolts and youget one tool, two things can
(02:23):
happen.
One, you have a very solid tableand it was a nice experience.
Or two, the table's wobbly.
Your hands are bloodied, andyou've learned a.
So we wanna eliminate thatsecond and put you through a
process that, so if we tabletogether, the first we look at
(02:47):
is your some personalinformation to obtain a credit
report.
And that credit report, thealmighty credit score is
important.
And you get your credit cardbill and it has a credit score
like, oh, I got good credit.
But every industry I.
Has its own algorithm and yourcredit score is based on a
(03:08):
mathematical formula that eachindustry can adjust towards
their risk tolerance.
Your risk tolerance are gettinga$500 credit card at the gap is
very different from the lender.
You wanna start there and thecredit report is basically.
Us a few things.
The first thing it does tell usyour score and that score is
(03:31):
made up of different things howmuch credit you have versus what
are your your, what kind ofcredit is it?
Is it revolving?
Is it a MasterCard?
Is student loans?
So there is so much that goesinto, tells you.
(03:56):
And that previous two years,because this person their
credit.
Now I've had simple things wheresomebody has a couple credit
limits and what.
$400 balances and they pay itevery month.
But the algorithm doesn'tunderstand that.
(04:16):
So it says this person has usedup most of their credit, so
they're not managing it well, sowe're gonna give them a hit.
So the profile of the creditreport is important as well as
the second thing we take is yourmonthly minimum debt service.
What is the monthly minimumpayments on your account?
And we take that data and wewalk over to our second leg.
(04:37):
Now the second leg is, and thatis your ability to be paid, but
we wanna know exactly how do youget paid?
Do you get paid as a W2?
Is there salary?
Is it hourly?
Is it overtime?
Is there bonuses?
Is there commission?
(04:57):
Are you self-employed?
File a sole proprietorship,schedule C, do you file joint
return or a a partnership.
Are you an SCORP corporation?
And you have, we wanna find outwhat you've made over the last
two years.
So that we can see some sort ofconsistency in your income,
Jim (05:16):
right?
John (05:16):
So if you're self-employed, we look at your
net adjusted number after you'vehad some of your deductions, and
we'll even add some of thedeductions.
We say, okay, this is what thisperson made last two years
trending up.
Is it trending across or is ittrend?
So we look at that and say, thisis what we're gonna use for
income, salary, employee, andyou don't get any bonuses 10 a
(05:44):
month.
And that's what we have.
So we take that income.
They want your housing expense,what your mortgage payment is.
Principle, your interest, yourtaxes, any HOA fees, any private
(06:06):
mortgage insurance.
And I'll explain that in asecond.
They want that number to beunder 40%.
Okay.
We can go higher in some casesbut that's the target.
And then we want to take thatdebt.
We took off your credit report.
Add it to the mortgage, and we'dlike to keep that under 50%, but
again, we can go a little higherin some cases.
(06:26):
So that's where we get some ofyour ranges on what you can
afford.
Okay.
The third leg of Right,
Jim (06:33):
and this is your starting point, right?
Your, you pull all thatinformation in, we say, Hey,
here's where we're gonna startbecause we know what you can
afford.
And then you can start lookingat how that's gonna apply to
different different options thatyou have.
John (06:45):
And this is collecting the data portion of it.
We wanna know what you have toput down because if you have
less than 20% to put into thedeal, and we have loans at a
hundred percent.
We have loans cases that havesome down payment assistance.
In some communities there's alot of great programs there.
But again, if you are managingyour mortgage with an app, then
(07:06):
chances are you're not gonna befully educated on what may be
available to you.
So we want to know whatpercentage, and we can do zero.
We may have some down paymentassistance, 3%, three and a
half, 5, 10, 15, 20.
And that 20 is the magic number.
Because if you have 20% down,you are not obligated to pay
private mortgage insurance now.
(07:29):
What is PMI?
It's an acronym.
A lot of loan officers love totalk in acronyms.
I don't understand a lot ofacronyms.
If your LTV is more than 80 anda PMI is gonna be 0.5% over the
first 10, and then we're gonnahave to find out where your DTI
is.
They're tied in to make surewe're getting the right PMI.
Yeah it's just people, they lookat you like, this is why we
don't wanna do this, but if it'sexplained properly.
(07:53):
Many years ago when my parentswanted to buy a house and houses
were like seven,$8,000.
You had to have 30% down.
And you also had to get a 10year mortgage.
That's it.
That's how it was done.
No special financing, then thenew deal came across and they
said, we want people to ownhomes.
(08:13):
It's the American dream.
Why are you banks making this sohard?
It's because lenders are usuallyrisk adverse.
That means we don't wanna lose.
We're in it for profit.
We're a for-profit in.
So in the long run, we realizethat if we had a partner with a
down payment, the chances of ushaving to foreclose are very
(08:34):
little, because you're not gonnawalk away from equity.
You'll sell the house before wecan.
Jim (08:40):
If everybody's got skin in the game, right?
Everybody wants to win,
John (08:43):
right?
So the government said noteverybody has 30%.
And as prices go up and up, andincome doesn't move as much, it
makes money almost impossiblefor the average American.
So what PMI is an insurancepolicy and it does protect the
loan.
And it's based on your downpayment and that 20% mark.
(09:04):
So if you're buying a house andyou're putting down 10%, we now
only have to insure 10% becauseif you fail, then we foreclose,
we sell the house, and if itdoesn't sell at 90%, we have an
insurance policy that will payit up.
If you're putting down 5%, thenwe're gonna insure 15% of the
amount.
So the bigger the loan amountand the higher the.
(09:28):
The loan to value, we're gonnaneed proper coverage.
So it now gives people anopportunity to buy a home with
little down payment and have amanageable private mortgage
insurance.
Private mortgage insurance isnot a dirty word or dirty words
because they're becoming moreinexpensive.
Technology and stuff.
It's become very inexpensive.
(09:49):
So there's ways
Jim (09:50):
that.
Borrower a chance to choosetheir own risk and choose their
own level that they feelcomfortable with.
That hey, you know what, 10%, Idon't mind paying this or 20%
'cause I don't wanna pay it atall.
Whatever works for that, you canreally tailor it to that
individual borrower.
John (10:04):
Just in your your email the other day meeting the
average sales price was what?
Six and change 20%?
That's$50,000.
Yeah.
That's a lot of money forsomeone starting out.
And come up with to, to buy.
So it makes it more difficultfor the buyer to buy.
And this makes it a littleeasier for everybody.
(10:25):
So the down payment, we want tosee where the down payment is.
And then the last which in.
Florida is a little lessdifficult because there are our
properties in all price rangesavailable for sale.
So you're not I qualify for four50 and there's really no house.
Four 50.
It starts at seven, so I can'tbuy a house because I'm limited
(10:47):
by my ability to repay the loan.
So that's.
A fantastic problem to have inFlorida because you have
options.
Options, means that there'savailability and there's
opportunity.
So I'm very excited about theFlorida market, even though
there's, it's not a seller'smarket.
And those sellers are like andthey're staying in the house a
(11:09):
little longer.
And they're asking for morebecause a friend of a friend who
has a cousin who knew somebody'sbrother, who one time sold the
house.
And got this price for it, sotherefore my house must be
Jim (11:18):
worth that.
John (11:19):
So you know what that's like.
So once we build this littlemodel by obtaining a credit
report.
I become Noah.
I collect two of everything.
We ask for two pay stubs, two Wtwos.
If you're self-employed, wemight ask for two years of tax.
We're two months of bankstatement showing the money that
(11:43):
is.
Can get gift, you
Error (11:45):
can take,
John (11:47):
come.
We wanna make sure you haveaccess to liquidity.
Then we give you a realtor, thatletter of credit, which means
that, we've done our diligence,we've underwritten this loan
with credit reports, income andasset documents, and here are
the programs you're available.
And.
Now it's time to go out and playhouse hundreds.
(12:09):
'cause we all know you just seethree houses in one day and you
pick a house over cocktails.
Jim (12:13):
Absolutely.
Super simple process.
John (12:18):
It's
Jim (12:18):
so once they've gone through all these steps, now
you're talking about what is theright loan for them?
Or is that's in that process.
Process.
Where they're talking, that's inprocess.
Conventional, FHA, va, us da,yep.
The number of choices continuesto grow.
John (12:33):
It does because we're getting back into some creative
lending.
But creative lending still allrequires the ability to repay.
I have people tell me that, Hey,my credit score is high.
I am like, that's terrific.
Good for you.
You've done a good job so far,but let's talk about your
income.
And that's where everythingstarts to fall apart.
Some people, while I'mself-employed, I can't buy a
(12:55):
loan.
That's not true.
We have many loan types that canhelp people who may have the
ability.
To take legal deductions andtheir taxes and show less of an
income, but doesn't mean thattheir house, we just have to go
through a little alternative,right?
They're out there and available.
Now, when you get outta thatlittle box, realize that,
(13:16):
gentleman I am to work withsays, the more you give me, the
less I ask for.
So you gimme more money down,the less documents I'm gonna
require.
And that's usually true that wecan find ways to make things
happen, whether it's so some ofthese new fancy loans, which
just look at bank statements forself-employed people and stuff
like that, we can usually comeup with a way to do it.
Jim (13:38):
So you mentioned a little bit earlier too, that magic
paper that you give to yourrealtor the pre-approval, the
difference between apre-approval.
And pre-qualify.
There's a difference.
John (13:48):
There is a big difference.
To be pre-qualified.
You and I just got pre-qualifiedwithout me asking you right.
Some questions.
Do you have good credit?
Your credit card says 800.
Okay.
And what are your bills?
There are about$300 a month.
Okay.
And what do you make?
You make.
A hundred thousand dollars ayear.
Okay.
And what do you have in thebank?
I have$150,000 in the bank.
(14:09):
Okay based on this.
And you wanna buy that house forX amount of dollars.
This number works and you'repre-qualified.
But when I start pulling creditand I see that their score isn't
exactly what they said, becauseour algorithm is a little
different and well.
You don't make that money, butyou have the ability to make up
(14:30):
to that money.
But right now you haven't madethat money in the last two
years.
So this is what you're trending,which is substantially less and
you said you had this in thebank.
Oh, you would eventually wouldhave that in the bank.
So now all of a sudden you'resitting across from a seller
with your buyer and you've givena pre-qual letter and they sign
the agreement and now you comeand apply and we find out that
(14:51):
we do not have a loan.
Because we had a conversation.
Pre-approval is now we've donediligence, we've pulled credit
we've acquired your income andasset documents, and now we've
reviewed everything.
We've done an underwritingthrough, with an underwriter and
through some of the automatedunderwriting processes that we
have.
So we're gonna tell you thatyeah, we've done our diligence.
(15:12):
All you have to do is find ahouse and we'll do diligence on
that home.
Jim (15:15):
So letter, you basically vetted and verified that
information and now you feelpretty good about this is gonna
work so we can give a stamp ofapproval.
John (15:25):
Oh, yeah.
And that's what you, everybodyshould be looking for.
I know a lot of a listingagents, they'll see a pre-qual
letter and they'll just pass andthat just gets pulled over.
We're not even entertain,especially if you're in a
situation where there aremultiple offers.
A pre goes way to the bottom andyou have to have something
special about your offer thatwill make that go to the top
(15:46):
because there are gonna be, cashoffers, there's going to be
people putting large amounts ofdown payment, some things that
make your offer stronger thansomebody who's just
prequalified.
Jim (15:54):
Because the seller, at the end of the day, they want to
reach that deal.
Yeah.
And if there's things in therethat may cause the deal to fall
through, hey, you don't makequite what you said, or you
don't have the actual, roundingcan be a terrible thing.
Yeah.
So the pre-qualify isn't astrong an offer.
Even if it looks good on paper,it hasn't been embedded.
John (16:13):
We wanna have a solid table from ikea.
Jim (16:15):
Yes.
John (16:16):
We don't want a wobbly one.
We want a solid one.
And most people understand thatonce it's explained to'em that a
prequalification really isn'tgonna get you anywhere with
offers.
It'll get your heart broken, butit's not gonna get you a house.
So I always say that if you areready to.
Get into this and buy a house,let's get you set up so that we
(16:36):
can maybe in multiple offers,make it a little quicker.
Because if I've already got youthrough underwriting and
approved, then I just have tohave appraisal and title work to
add into that package.
So that cuts down on a lot oftime, and maybe instead of 30
day close, we can do a 21 dayclose.
We've done some pretty quickclosings dependent upon where
(16:59):
the borrower is in this stage ofpaperwork and getting us what we
need as quickly as we need, andif I already have it, then I'm
just now filling in an addresson the application and we're
ramping it up.
And if we have to order stuff asa rush it can be done.
Jim (17:16):
Versus
John (17:16):
finding out.
Can you speak a little
Jim (17:17):
bit?
Yeah.
Can you speak a little bit aboutthe different types of loans and
maybe the main ones?
Really conventional.
FHA very specific for va USDA.
How do those apply?
Is there one that's stands outor any that may be particularly
niche?
John (17:34):
They're all pretty much have their own pros and cons.
Freddie Mac and Fannie Mae,which are the conventional
lenders they typically have someof the better terms.
However, they also havesometimes more difficult
criteria to meet.
If somebody's putting down 20%,they're gonna be the go-to
lender, down 10%, they'reprobably gonna be the go-to
(17:57):
lender.
The next would be the FHA, theFederal Housing Agency.
And they are a good first timehome buyer loan.
They are more flexible.
And they have certain thingsthat make it a little better.
For example, when I say privatemortgage insurance, because
(18:18):
Freddie Mac and Fannie Mae don'toffer it.
So we as lenders have to go outexternally and find that for
you, and it's all credit andrisk based.
Jim (18:28):
So
John (18:29):
you have maybe a couple dings and a lower score.
Your PMI could end up beingvery,
Error (18:36):
how much?
John (18:36):
FHA, whether you've got a five 80 score or an 800 score.
The PMI is the same becausethey're Oh, okay.
So it's the same number foreverybody.
So that's going to make somebodywith a ding or two, maybe a
little better the.
Part about the, that theyrequire PMI on all of their
(19:00):
loans.
So if you're putting down 20%and we don't need PMI, and maybe
you're dinged up, you're stillgonna get a better deal with
Freddie down and you're dingedup FHA is gonna be a better fit.
Sometimes they have better termsfor us, and they will be a
little bit more flexible withthings like.
(19:20):
Debt to income ratios, they'llgo 40, 39 and 49.
They might go as high as 53.
Again, dependent upon thecircumstances in the right
criteria.
So the FHA is not a bad loan?
They're too particular on theirhome.
(19:40):
They do because they're at 3%and they wanna make sure that a
borrower is not gonna go into.
A purchase with a house that'sgonna have holes in the wall,
it's gonna need a new roof.
It's got a cracked in thefoundation.
It's got this and that.
So the appraiser.
Does the look, they're not thehome inspector and they're just
(20:01):
gonna say based on my guidelineexperience with the FHA, we have
issues with the holes in thewall.
The ceilings get holes, there'sbroken windows, and the roof is,
should have somebody look at itand a professional give their
opinion so it.
So we wanna make sure that we'rewe're doing the right service.
(20:24):
That's why you look at justrates.
Somebody who's putting down 20%might see a better rate.
We
Error (20:34):
met with him on getting some
John (20:38):
coaching on that is important.
Now a VA is for veterans.
Entitled to a benefit and theyhave some great deals.
No money down, no monthlyprivate mortgage insurance.
They're very flexible with theirguidelines.
So it's a great benefit forpeople who've done the right
thing and served our country,right?
So they're entitled to it andthey deserve it.
(20:59):
Then we have USDA, which isanother great loan.
They will also go to a hundredpercent financing, but they are
looking at rural areas.
So if you're in Bradenton or inSarasota you're probably not
gonna qualify because of the.
The population and they go offcensus is right the city.
But if you get out on the otherside of 75, you know you've got
(21:21):
farmlands.
And that's great.
Area for USDA loans.
Now they do have incomeguidelines, meaning that they're
there as the lender of lastresort.
And if you have.
Three people in the house allworking, they're gonna want all
three, even not on the mortgage.
They're gonna want to see thoseincome to make sure that your
(21:41):
household income meets theirguidelines.
'cause they do have incomeguidelines in cap.
So it's a great loan.
And then we have the, a littlebit more, I guess you would call
'em boutique type loans.
And that's the right person.
Somebody who maybe is aninvestor, somebody who is
self-employed, somebody whodoesn't show a lot of money on
(22:02):
their tax returns, but theirbank statements have money
coming in huge amounts.
They have a good accountant whois taking full advantage of
their deductions.
We want you to report properly.
You are entitled to deductions,and if you take them, then
that's within the law.
We don't want anybody who'sgonna deceive the government and
end up in trouble.
Those are new products to cominginto the market and it's really
(22:23):
for a particular group, andthat's why somebody applying
maybe online is gonna get deniedand not know why I.
Right where we, this is
Jim (22:32):
I think to your point where that human element comes in is
to walking through the differentones.
Because, if I don't know thedifference and I just have a
selection screen, I'm randomlypressing buttons and then hoping
that's what's gonna work for me.
Yeah, it might, but notnecessarily
John (22:47):
you, you're taking, you're risking something that, you can
end up.
Now you have to close becauseyou are in process and you
realize that you made a bigmistake and you got an FHA loan
with PMI and you don't need it,and now you've got it.
And the only way to get rid ofit is to refinance, which is
gonna cost you a little bit ofmoney to do that.
So you, the guidance on apurchase is invaluable when
(23:09):
you're dealing with a humanbeing.
If you want to refinance, that'sa whole different story.
You've gone through the process.
A lot of lenders out there willoffer special deals, but I will
caution everybody and realizethis.
We all get the money from thesame place.
We all have the same mortgagebacked securities that are
(23:29):
selling at a certain particularprice, and we all are gonna have
pretty much the same rates.
So if you are getting a, anunbelievable rate that nobody
else can meet, there's somethingthere.
You need to look at your loanestimate because there's
charging you, I had one wherethe gentleman was telling me,
you're up and down, that he'snot paying any points.
(23:50):
He's not paying any points.
And I'm like, okay, I believeyou.
I said, ask for a loan estimateand let me take a look at it.
If it's better than I can do,then I'm gonna wish you the best
and send you on your absolutely.
And then it came across and Isaid, do you realize you're
paying a$7,500 bank fee?
And he is what's that?
I said we would've called thempoints, but you're just paying a
(24:12):
fee to do business with thiscompany or get this better rate
because they're giving you adeal, but they're making it back
with what they're gettingupfront in costs so that a PR is
important in this particularcase, because even though my
rate was higher, my a PR waslower because we didn't charge
anybody$7,500.
Jim (24:34):
And we're seeing a lot of that now with the current
environment and where the ratesare.
People are looking for ways tohave a a less expensive mortgage
payment.
So that brings up what you werejust talking about points.
So let's talk a little bit whatour points, how can they be
utilized to make a, live in themortgage and still make it
affordable to buy the house?
(24:54):
Points
John (24:54):
are interest paid in advance.
Okay, so if today's rate is 7%And normally a point would
reduce that rate by a quarter.
So if you have a$500,000 loanand you paid a point, it would
(25:14):
cost you$5,000, but you wouldsave a quarter of a point on the
payment.
And that might not make enoughof a difference to offset that.
That$5,000, because it mightonly save you, let's say.
$75 a month and no, okay, howlong do I have to keep this loan
in order to recoup my$75?
(25:37):
Now we are in a market thatshould be a declining rate
market, and all of a sudden nowyou've paid 5,000 and you've got
this rate of 6, 3, 7, 5, or 6,7, 5, and now you want to
refinance.
And I was like you just wastedthat$5,000 now.
The power of a reduced interestrate is huge.
(26:01):
And we see builders do thiswhere they say, okay, we're home
sellers.
We're home builders and homesellers.
We just do the mortgage thing onthe side to help facilitate the
sale of a house.
So what they do is they justmove part of their profit.
And they plunk a chunk of itdown on the, on, on the
mortgage.
So if you've got three or fourpoints or a percentage of the
(26:24):
mortgage that you can offset therate, now all of a sudden you're
down into the fives.
Now that's huge.
That could save you two or$300 amonth and make it more
affordable.
Most fellows don't realize thatthey have the ability to do
that.
And we at Shamrock have aprogram called Liston Lock,
(26:46):
where if you have a house that'snot selling let's say you're
going, you've got a$600,000house and you're gonna take
20,000, the price of that house.
Now you have five 80.
You've got somebody who'slooking to buy and finance it.
(27:07):
You've saved$20,000.
And again, I really, 10% of thatis$2,000 less in your down
payment.
And now you have
Jim (27:17):
what here?
We're
John (27:19):
less than your, is that enough to move the needle to, to
attract somebody to buy?
Jim (27:26):
Right
John (27:26):
now you give Shamrock and the seller, the buyer, that
$20,000 in buy down of theirinterest rate.
'cause that's all going towardsinterest.
Jim (27:36):
And
John (27:37):
what it's gonna do is it's gonna inev take your rate down
from maybe seven to, six and ahalf.
And at Shamrock with ourprogram, the seller signs up for
it.
We have a lot of marketingmaterial for the seller to, to
use social media.
We build a video we give yousigns.
We have all kinds of greattools.
We throw in a point, so that 3%that you might be discounting is
(27:59):
now 4%, and we're now looking ata rate, maybe close to six or
mid sixes that's gonna save youthree or$400 a month.
That moves the needletremendously.
So it's not only to thebuilder's advantages current
houses that are existing cantake advantage of the same
(28:22):
thing, and we have a tool thatwill enhance it and make it a
little bit more attractivebecause we're willing to be a
part of this.
And it's been, yeah, it's
Jim (28:30):
more than, yeah, it's more than just the price of what a
house is.
When you look at what's gonnamake it affordable, who doesn't
wanna get something cheaper, butis that really gonna be the best
deal?
You really gotta look at it andleverage it.
Is this gonna save me a coupledollars up front, but this one's
gonna save me money ongoing overthe course of, 30 years or until
(28:51):
down the road you refinance orsomething.
It can make the livingday-to-day much better.
John (28:56):
And we just did that with a client who really liked the
house.
They were putting down somemoney and it just wasn't working
for them because it was morethan they could afford.
And even with the a reducedoffer.
It still wasn't coming intowhere they wanted to be.
So we have this program in ourback pocket and the seller was
(29:17):
willing to throw in rather than,take the discount and you're not
gonna buy the house, but let megive that discount to, to buy
down your rate.
And John's gonna come with apoint.
And all of a sudden now, eventhough they were paying$25,000
more for the house, they weresaving a hundred dollars on
their payment compared togetting a discount at current
rates.
(29:37):
So it, it's a power ofcompounded interest in
amortization.
And if you stop buying thingsdown in, in numbers, then all of
a sudden now you are, you'restarting to save some real
money.
And the other advantage is that,is you may not need to
refinance.
A couple years ago we had that,marry the house and date the
(29:59):
rate.
And who advantage of.
We maybe haven't refinanced yet,but you know what?
They ha fallen in love withtheir rate.
'cause those were like in thelow sixes.
And we haven't seen that in, ina long time.
It is a long term commitment.
It is a home love where youlive.
Don't buy a house for the say ofbuying a house.
(30:20):
Love where you live.
Jim (30:23):
What are some of the common mistakes that Suncoast residents
make with mortgage and how canthey avoid'em?
John (30:29):
The rate is usually the last thing on the list of things
you need to be aware of.
Because I can't effectivelychange the rate.
You can't change the rate.
Buyers can't change the rate.
Affordability is my main drivingwhen I sit and have my
consultation with.
My, my prospective borrowers andclients, we talk about what they
(30:51):
qualify for, but then I say,let's take that and put that
aside.
What do you, can you afford?
If you have to stop making amortgage payment July 1st, and
that bill comes and you've gottapay it every month, tell me
where that, what's gonna keepyou up at night?
What number will keep you up atnight that you're not gonna be
happy in your home?
And then let's work off of thatand find a way to get you the
(31:12):
most that we can.
So focusing in on the wrongthing is usually what I see, I
can get it right here.
I'm like, oh.
What does that mean?
Is it is, it's the house stop,look at the house, we're all
gonna be the same or close tothe same.
We're a mortgage bank, we're amortgage, independent mortgage
lender.
So we underwrite, fund theloans.
(31:34):
We're not brokers.
We're not gonna farm'em out tosomebody.
And all of a sudden, a week goesby and you haven't gotten any
disclosures yet because theyhaven't figured out who they're
gonna sell it to and they'reoutta compliance.
We're gonna pick a product basedon the fact that we do offer all
of them, and the one that fitsyour needs.
And having that, Thatconversation and taking the time
(31:54):
to look at that before you goout and buy is important.
And then the second thing ishaving somebody on your team who
before you make the offer.
You call your lender and youhave a consultation.
It's John, this is the house.
We love.
Jim found us the house and wewant it.
And what, here's the askingprice.
(32:16):
This is what we've talked to Jimabout making the offer at.
We wanna know what these numbersmean.
So many people go intonegotiations, are not realizing
the difference between theiroffer, what asking prices.
Any deviation in any of thatalong the way.
Counter offers, they go into itcompletely blind of
(32:37):
understanding the process.
And I'll share a quick storywith you'cause I know we're time
sensitive is I had a gentlemanwho.
Came in and I got himpre-approved and we sat, we got
everybody happy.
His wife, his two kids, we allhad a great time.
And they were out looking forhouses and they kept getting
office rejected.
And they came close to one.
And I said come back in.
We need to have another meetingbecause we gotta make sure
(32:58):
you're doing the right stepsbecause you're not calling me.
And he sat down and close to meand his wife had taken the kids
to the restrooms.
And he said, John, this was thehouse.
We were so close, we made anoffer.
They counter offered us they're$10,000 to give them.
I'm like, dude, you're notgiving him 10,000.
(33:18):
You're giving him a thousanddollars.
And it's a difference of$58 inyour payment.
And this is the part of thestory that I'll never, ever
forget the fear in that man'seyes when I told him that and he
looked at me and he said, mywife.
Because he didn't take the timeand ask the right questions and
(33:39):
he would've gotten the rightanswers and they would've been
in that house'cause the kids hadalready picked up their
bedrooms.
He had the fear of his wife inhim.
Jim (33:49):
Yeah.
You know what?
A hundred percent right there.
When you have that team thatyou're assembling,'cause when
you're buying a house or you'reselling a house, you have a
team.
You've got you've got your realestate agent, you've got your
lender, you've got yourinsurance person.
You know you're gonna go throughall the steps.
They're there to make sureyou're happy with what.
What you're picking, and thenyou don't step into anything
that you don't wanna step into,so utilize the team, right?
(34:12):
If you set up the team but don'tuse them, then you might end up
failing.
Yes.
Yeah.
So John, I could sit here andtalk for you for hours.
I always learn something.
And love it.
So thank you so much for joiningme.
I really appreciate it.
My pleasure having, and I'll dothis again soon.
John (34:28):
I hope so and hopefully it'll be warmer here one day,
but I, yes.
Can't wait to get back to mysunny, warm Florida home.
I do miss it so much.
It's a great, it's a great placeto live.
So Jim, thank you.
All right.
Hi, and welcome to Jim Sells theSuncoast.
Today I'm honored to have JohnLake from Shamrock Home Loans on
John is multifaceted.
He's working in a coupledifferent areas, but he's
familiar down here with theSuncoast.
And we're gonna talk a littlebit about different kinds of
mortgages.
How to apply for'em, what goesthrough the process of them, and
(00:22):
then don't get fixated on thatbig number.
Let's take a look at what you'reactually gonna live in.
John, welcome.
Thank you.
Thanks Jim.
And how are you today?
I am doing
John (00:32):
well, very well.
Terrific.
Terrific.
Terrific.
So when I started a conversationwith a prospective borrower and
client, most of the time what wetry to focus in on is
understanding the process,because we've heard horror
stories about applying for amortgage when somebody makes an
offer.
And that offer is accepted.
(00:53):
People will pop the clock.
The sellers, the buyers, therealtors,
Jim (00:57):
they pop the
John (00:57):
cork.
Nobody on this little green planof our has ever popped the clock
when they've applied for amortgage.
We wanna take that into stride.
Sadly, in today's world, becauseof technology, you can do this
in an automated fashion.
But, and if it's your firsthome, you are not getting the
right guidance.
(01:18):
You need to have that humanfactor because if you apply and
you'll say, pick a loan product.
The difference betweenU-S-D-A-F-H-A-A conventional 3 1
5 up Alejandra.
And at that point, what ends uphappening is interest.
(01:38):
If you picked a differentproduct, you might have a better
chance of getting approved.
So you need somebody to guideyou and explain the process.
I'm almost three decades into.
This business.
So I try to make buying veryeasy.
Our motto at Shamrock is keepingour clients excited from
contract to keys.
And we do that by taking themalong step by step and educating
(01:58):
them to make sure theyunderstand what the process is
all about.
So whenever I talk to a newclient, I always ask them, have
you ever bought furniture youhave to assemble?
And most of them say yes.
We bought a table that we had toassemble just a short time ago.
And I said, you get that boxhome.
You open the box, you geteverything out.
You get a bag of bolts and youget one tool, two things can
(02:23):
happen.
One, you have a very solid tableand it was a nice experience.
Or two, the table's wobbly.
Your hands are bloodied, andyou've learned a.
So we wanna eliminate thatsecond and put you through a
process that, so if we tabletogether, the first we look at
(02:47):
is your some personalinformation to obtain a credit
report.
And that credit report, thealmighty credit score is
important.
And you get your credit cardbill and it has a credit score
like, oh, I got good credit.
But every industry I.
Has its own algorithm and yourcredit score is based on a
(03:08):
mathematical formula that eachindustry can adjust towards
their risk tolerance.
Your risk tolerance are gettinga$500 credit card at the gap is
very different from the lender.
You wanna start there and thecredit report is basically.
Us a few things.
The first thing it does tell usyour score and that score is
(03:31):
made up of different things howmuch credit you have versus what
are your your, what kind ofcredit is it?
Is it revolving?
Is it a MasterCard?
Is student loans?
So there is so much that goesinto, tells you.
(03:56):
And that previous two years,because this person their
credit.
Now I've had simple things wheresomebody has a couple credit
limits and what.
$400 balances and they pay itevery month.
But the algorithm doesn'tunderstand that.
(04:16):
So it says this person has usedup most of their credit, so
they're not managing it well, sowe're gonna give them a hit.
So the profile of the creditreport is important as well as
the second thing we take is yourmonthly minimum debt service.
What is the monthly minimumpayments on your account?
And we take that data and wewalk over to our second leg.
(04:37):
Now the second leg is, and thatis your ability to be paid, but
we wanna know exactly how do youget paid?
Do you get paid as a W2?
Is there salary?
Is it hourly?
Is it overtime?
Is there bonuses?
Is there commission?
(04:57):
Are you self-employed?
File a sole proprietorship,schedule C, do you file joint
return or a a partnership.
Are you an SCORP corporation?
And you have, we wanna find outwhat you've made over the last
two years.
So that we can see some sort ofconsistency in your income,
Jim (05:16):
right?
John (05:16):
So if you're self-employed, we look at your
net adjusted number after you'vehad some of your deductions, and
we'll even add some of thedeductions.
We say, okay, this is what thisperson made last two years
trending up.
Is it trending across or is ittrend?
So we look at that and say, thisis what we're gonna use for
income, salary, employee, andyou don't get any bonuses 10 a
(05:44):
month.
And that's what we have.
So we take that income.
They want your housing expense,what your mortgage payment is.
Principle, your interest, yourtaxes, any HOA fees, any private
(06:06):
mortgage insurance.
And I'll explain that in asecond.
They want that number to beunder 40%.
Okay.
We can go higher in some casesbut that's the target.
And then we want to take thatdebt.
We took off your credit report.
Add it to the mortgage, and we'dlike to keep that under 50%, but
again, we can go a little higherin some cases.
(06:26):
So that's where we get some ofyour ranges on what you can
afford.
Okay.
The third leg of Right,
Jim (06:33):
and this is your starting point, right?
Your, you pull all thatinformation in, we say, Hey,
here's where we're gonna startbecause we know what you can
afford.
And then you can start lookingat how that's gonna apply to
different different options thatyou have.
John (06:45):
And this is collecting the data portion of it.
We wanna know what you have toput down because if you have
less than 20% to put into thedeal, and we have loans at a
hundred percent.
We have loans cases that havesome down payment assistance.
In some communities there's alot of great programs there.
But again, if you are managingyour mortgage with an app, then
(07:06):
chances are you're not gonna befully educated on what may be
available to you.
So we want to know whatpercentage, and we can do zero.
We may have some down paymentassistance, 3%, three and a
half, 5, 10, 15, 20.
And that 20 is the magic number.
Because if you have 20% down,you are not obligated to pay
private mortgage insurance now.
(07:29):
What is PMI?
It's an acronym.
A lot of loan officers love totalk in acronyms.
I don't understand a lot ofacronyms.
If your LTV is more than 80 anda PMI is gonna be 0.5% over the
first 10, and then we're gonnahave to find out where your DTI
is.
They're tied in to make surewe're getting the right PMI.
Yeah it's just people, they lookat you like, this is why we
don't wanna do this, but if it'sexplained properly.
(07:53):
Many years ago when my parentswanted to buy a house and houses
were like seven,$8,000.
You had to have 30% down.
And you also had to get a 10year mortgage.
That's it.
That's how it was done.
No special financing, then thenew deal came across and they
said, we want people to ownhomes.
(08:13):
It's the American dream.
Why are you banks making this sohard?
It's because lenders are usuallyrisk adverse.
That means we don't wanna lose.
We're in it for profit.
We're a for-profit in.
So in the long run, we realizethat if we had a partner with a
down payment, the chances of ushaving to foreclose are very
(08:34):
little, because you're not gonnawalk away from equity.
You'll sell the house before wecan.
Jim (08:40):
If everybody's got skin in the game, right?
Everybody wants to win,
John (08:43):
right?
So the government said noteverybody has 30%.
And as prices go up and up, andincome doesn't move as much, it
makes money almost impossiblefor the average American.
So what PMI is an insurancepolicy and it does protect the
loan.
And it's based on your downpayment and that 20% mark.
(09:04):
So if you're buying a house andyou're putting down 10%, we now
only have to insure 10% becauseif you fail, then we foreclose,
we sell the house, and if itdoesn't sell at 90%, we have an
insurance policy that will payit up.
If you're putting down 5%, thenwe're gonna insure 15% of the
amount.
So the bigger the loan amountand the higher the.
(09:28):
The loan to value, we're gonnaneed proper coverage.
So it now gives people anopportunity to buy a home with
little down payment and have amanageable private mortgage
insurance.
Private mortgage insurance isnot a dirty word or dirty words
because they're becoming moreinexpensive.
Technology and stuff.
It's become very inexpensive.
(09:49):
So there's ways
Jim (09:50):
that.
Borrower a chance to choosetheir own risk and choose their
own level that they feelcomfortable with.
That hey, you know what, 10%, Idon't mind paying this or 20%
'cause I don't wanna pay it atall.
Whatever works for that, you canreally tailor it to that
individual borrower.
John (10:04):
Just in your your email the other day meeting the
average sales price was what?
Six and change 20%?
That's$50,000.
Yeah.
That's a lot of money forsomeone starting out.
And come up with to, to buy.
So it makes it more difficultfor the buyer to buy.
And this makes it a littleeasier for everybody.
(10:25):
So the down payment, we want tosee where the down payment is.
And then the last which in.
Florida is a little lessdifficult because there are our
properties in all price rangesavailable for sale.
So you're not I qualify for four50 and there's really no house.
Four 50.
It starts at seven, so I can'tbuy a house because I'm limited
(10:47):
by my ability to repay the loan.
So that's.
A fantastic problem to have inFlorida because you have
options.
Options, means that there'savailability and there's
opportunity.
So I'm very excited about theFlorida market, even though
there's, it's not a seller'smarket.
And those sellers are like andthey're staying in the house a
(11:09):
little longer.
And they're asking for morebecause a friend of a friend who
has a cousin who knew somebody'sbrother, who one time sold the
house.
And got this price for it, sotherefore my house must be
Jim (11:18):
worth that.
John (11:19):
So you know what that's like.
So once we build this littlemodel by obtaining a credit
report.
I become Noah.
I collect two of everything.
We ask for two pay stubs, two Wtwos.
If you're self-employed, wemight ask for two years of tax.
We're two months of bankstatement showing the money that
(11:43):
is.
Can get gift, you
Error (11:45):
can take,
John (11:47):
come.
We wanna make sure you haveaccess to liquidity.
Then we give you a realtor, thatletter of credit, which means
that, we've done our diligence,we've underwritten this loan
with credit reports, income andasset documents, and here are
the programs you're available.
And.
Now it's time to go out and playhouse hundreds.
(12:09):
'cause we all know you just seethree houses in one day and you
pick a house over cocktails.
Jim (12:13):
Absolutely.
Super simple process.
John (12:18):
It's
Jim (12:18):
so once they've gone through all these steps, now
you're talking about what is theright loan for them?
Or is that's in that process.
Process.
Where they're talking, that's inprocess.
Conventional, FHA, va, us da,yep.
The number of choices continuesto grow.
John (12:33):
It does because we're getting back into some creative
lending.
But creative lending still allrequires the ability to repay.
I have people tell me that, Hey,my credit score is high.
I am like, that's terrific.
Good for you.
You've done a good job so far,but let's talk about your
income.
And that's where everythingstarts to fall apart.
Some people, while I'mself-employed, I can't buy a
(12:55):
loan.
That's not true.
We have many loan types that canhelp people who may have the
ability.
To take legal deductions andtheir taxes and show less of an
income, but doesn't mean thattheir house, we just have to go
through a little alternative,right?
They're out there and available.
Now, when you get outta thatlittle box, realize that,
(13:16):
gentleman I am to work withsays, the more you give me, the
less I ask for.
So you gimme more money down,the less documents I'm gonna
require.
And that's usually true that wecan find ways to make things
happen, whether it's so some ofthese new fancy loans, which
just look at bank statements forself-employed people and stuff
like that, we can usually comeup with a way to do it.
Jim (13:38):
So you mentioned a little bit earlier too, that magic
paper that you give to yourrealtor the pre-approval, the
difference between apre-approval.
And pre-qualify.
There's a difference.
John (13:48):
There is a big difference.
To be pre-qualified.
You and I just got pre-qualifiedwithout me asking you right.
Some questions.
Do you have good credit?
Your credit card says 800.
Okay.
And what are your bills?
There are about$300 a month.
Okay.
And what do you make?
You make.
A hundred thousand dollars ayear.
Okay.
And what do you have in thebank?
I have$150,000 in the bank.
(14:09):
Okay based on this.
And you wanna buy that house forX amount of dollars.
This number works and you'repre-qualified.
But when I start pulling creditand I see that their score isn't
exactly what they said, becauseour algorithm is a little
different and well.
You don't make that money, butyou have the ability to make up
(14:30):
to that money.
But right now you haven't madethat money in the last two
years.
So this is what you're trending,which is substantially less and
you said you had this in thebank.
Oh, you would eventually wouldhave that in the bank.
So now all of a sudden you'resitting across from a seller
with your buyer and you've givena pre-qual letter and they sign
the agreement and now you comeand apply and we find out that
(14:51):
we do not have a loan.
Because we had a conversation.
Pre-approval is now we've donediligence, we've pulled credit
we've acquired your income andasset documents, and now we've
reviewed everything.
We've done an underwritingthrough, with an underwriter and
through some of the automatedunderwriting processes that we
have.
So we're gonna tell you thatyeah, we've done our diligence.
(15:12):
All you have to do is find ahouse and we'll do diligence on
that home.
Jim (15:15):
So letter, you basically vetted and verified that
information and now you feelpretty good about this is gonna
work so we can give a stamp ofapproval.
John (15:25):
Oh, yeah.
And that's what you, everybodyshould be looking for.
I know a lot of a listingagents, they'll see a pre-qual
letter and they'll just pass andthat just gets pulled over.
We're not even entertain,especially if you're in a
situation where there aremultiple offers.
A pre goes way to the bottom andyou have to have something
special about your offer thatwill make that go to the top
(15:46):
because there are gonna be, cashoffers, there's going to be
people putting large amounts ofdown payment, some things that
make your offer stronger thansomebody who's just
prequalified.
Jim (15:54):
Because the seller, at the end of the day, they want to
reach that deal.
Yeah.
And if there's things in therethat may cause the deal to fall
through, hey, you don't makequite what you said, or you
don't have the actual, roundingcan be a terrible thing.
Yeah.
So the pre-qualify isn't astrong an offer.
Even if it looks good on paper,it hasn't been embedded.
John (16:13):
We wanna have a solid table from ikea.
Jim (16:15):
Yes.
John (16:16):
We don't want a wobbly one.
We want a solid one.
And most people understand thatonce it's explained to'em that a
prequalification really isn'tgonna get you anywhere with
offers.
It'll get your heart broken, butit's not gonna get you a house.
So I always say that if you areready to.
Get into this and buy a house,let's get you set up so that we
(16:36):
can maybe in multiple offers,make it a little quicker.
Because if I've already got youthrough underwriting and
approved, then I just have tohave appraisal and title work to
add into that package.
So that cuts down on a lot oftime, and maybe instead of 30
day close, we can do a 21 dayclose.
We've done some pretty quickclosings dependent upon where
(16:59):
the borrower is in this stage ofpaperwork and getting us what we
need as quickly as we need, andif I already have it, then I'm
just now filling in an addresson the application and we're
ramping it up.
And if we have to order stuff asa rush it can be done.
Jim (17:16):
Versus
John (17:16):
finding out.
Can you speak a little
Jim (17:17):
bit?
Yeah.
Can you speak a little bit aboutthe different types of loans and
maybe the main ones?
Really conventional.
FHA very specific for va USDA.
How do those apply?
Is there one that's stands outor any that may be particularly
niche?
John (17:34):
They're all pretty much have their own pros and cons.
Freddie Mac and Fannie Mae,which are the conventional
lenders they typically have someof the better terms.
However, they also havesometimes more difficult
criteria to meet.
If somebody's putting down 20%,they're gonna be the go-to
lender, down 10%, they'reprobably gonna be the go-to
(17:57):
lender.
The next would be the FHA, theFederal Housing Agency.
And they are a good first timehome buyer loan.
They are more flexible.
And they have certain thingsthat make it a little better.
For example, when I say privatemortgage insurance, because
(18:18):
Freddie Mac and Fannie Mae don'toffer it.
So we as lenders have to go outexternally and find that for
you, and it's all credit andrisk based.
Jim (18:28):
So
John (18:29):
you have maybe a couple dings and a lower score.
Your PMI could end up beingvery,
Error (18:36):
how much?
John (18:36):
FHA, whether you've got a five 80 score or an 800 score.
The PMI is the same becausethey're Oh, okay.
So it's the same number foreverybody.
So that's going to make somebodywith a ding or two, maybe a
little better the.
Part about the, that theyrequire PMI on all of their
(19:00):
loans.
So if you're putting down 20%and we don't need PMI, and maybe
you're dinged up, you're stillgonna get a better deal with
Freddie down and you're dingedup FHA is gonna be a better fit.
Sometimes they have better termsfor us, and they will be a
little bit more flexible withthings like.
(19:20):
Debt to income ratios, they'llgo 40, 39 and 49.
They might go as high as 53.
Again, dependent upon thecircumstances in the right
criteria.
So the FHA is not a bad loan?
They're too particular on theirhome.
(19:40):
They do because they're at 3%and they wanna make sure that a
borrower is not gonna go into.
A purchase with a house that'sgonna have holes in the wall,
it's gonna need a new roof.
It's got a cracked in thefoundation.
It's got this and that.
So the appraiser.
Does the look, they're not thehome inspector and they're just
(20:01):
gonna say based on my guidelineexperience with the FHA, we have
issues with the holes in thewall.
The ceilings get holes, there'sbroken windows, and the roof is,
should have somebody look at itand a professional give their
opinion so it.
So we wanna make sure that we'rewe're doing the right service.
(20:24):
That's why you look at justrates.
Somebody who's putting down 20%might see a better rate.
We
Error (20:34):
met with him on getting some
John (20:38):
coaching on that is important.
Now a VA is for veterans.
Entitled to a benefit and theyhave some great deals.
No money down, no monthlyprivate mortgage insurance.
They're very flexible with theirguidelines.
So it's a great benefit forpeople who've done the right
thing and served our country,right?
So they're entitled to it andthey deserve it.
(20:59):
Then we have USDA, which isanother great loan.
They will also go to a hundredpercent financing, but they are
looking at rural areas.
So if you're in Bradenton or inSarasota you're probably not
gonna qualify because of the.
The population and they go offcensus is right the city.
But if you get out on the otherside of 75, you know you've got
(21:21):
farmlands.
And that's great.
Area for USDA loans.
Now they do have incomeguidelines, meaning that they're
there as the lender of lastresort.
And if you have.
Three people in the house allworking, they're gonna want all
three, even not on the mortgage.
They're gonna want to see thoseincome to make sure that your
(21:41):
household income meets theirguidelines.
'cause they do have incomeguidelines in cap.
So it's a great loan.
And then we have the, a littlebit more, I guess you would call
'em boutique type loans.
And that's the right person.
Somebody who maybe is aninvestor, somebody who is
self-employed, somebody whodoesn't show a lot of money on
(22:02):
their tax returns, but theirbank statements have money
coming in huge amounts.
They have a good accountant whois taking full advantage of
their deductions.
We want you to report properly.
You are entitled to deductions,and if you take them, then
that's within the law.
We don't want anybody who'sgonna deceive the government and
end up in trouble.
Those are new products to cominginto the market and it's really
(22:23):
for a particular group, andthat's why somebody applying
maybe online is gonna get deniedand not know why I.
Right where we, this is
Jim (22:32):
I think to your point where that human element comes in is
to walking through the differentones.
Because, if I don't know thedifference and I just have a
selection screen, I'm randomlypressing buttons and then hoping
that's what's gonna work for me.
Yeah, it might, but notnecessarily
John (22:47):
you, you're taking, you're risking something that, you can
end up.
Now you have to close becauseyou are in process and you
realize that you made a bigmistake and you got an FHA loan
with PMI and you don't need it,and now you've got it.
And the only way to get rid ofit is to refinance, which is
gonna cost you a little bit ofmoney to do that.
So you, the guidance on apurchase is invaluable when
(23:09):
you're dealing with a humanbeing.
If you want to refinance, that'sa whole different story.
You've gone through the process.
A lot of lenders out there willoffer special deals, but I will
caution everybody and realizethis.
We all get the money from thesame place.
We all have the same mortgagebacked securities that are
(23:29):
selling at a certain particularprice, and we all are gonna have
pretty much the same rates.
So if you are getting a, anunbelievable rate that nobody
else can meet, there's somethingthere.
You need to look at your loanestimate because there's
charging you, I had one wherethe gentleman was telling me,
you're up and down, that he'snot paying any points.
(23:50):
He's not paying any points.
And I'm like, okay, I believeyou.
I said, ask for a loan estimateand let me take a look at it.
If it's better than I can do,then I'm gonna wish you the best
and send you on your absolutely.
And then it came across and Isaid, do you realize you're
paying a$7,500 bank fee?
And he is what's that?
I said we would've called thempoints, but you're just paying a
(24:12):
fee to do business with thiscompany or get this better rate
because they're giving you adeal, but they're making it back
with what they're gettingupfront in costs so that a PR is
important in this particularcase, because even though my
rate was higher, my a PR waslower because we didn't charge
anybody$7,500.
Jim (24:34):
And we're seeing a lot of that now with the current
environment and where the ratesare.
People are looking for ways tohave a a less expensive mortgage
payment.
So that brings up what you werejust talking about points.
So let's talk a little bit whatour points, how can they be
utilized to make a, live in themortgage and still make it
affordable to buy the house?
(24:54):
Points
John (24:54):
are interest paid in advance.
Okay, so if today's rate is 7%And normally a point would
reduce that rate by a quarter.
So if you have a$500,000 loanand you paid a point, it would
(25:14):
cost you$5,000, but you wouldsave a quarter of a point on the
payment.
And that might not make enoughof a difference to offset that.
That$5,000, because it mightonly save you, let's say.
$75 a month and no, okay, howlong do I have to keep this loan
in order to recoup my$75?
(25:37):
Now we are in a market thatshould be a declining rate
market, and all of a sudden nowyou've paid 5,000 and you've got
this rate of 6, 3, 7, 5, or 6,7, 5, and now you want to
refinance.
And I was like you just wastedthat$5,000 now.
The power of a reduced interestrate is huge.
(26:01):
And we see builders do thiswhere they say, okay, we're home
sellers.
We're home builders and homesellers.
We just do the mortgage thing onthe side to help facilitate the
sale of a house.
So what they do is they justmove part of their profit.
And they plunk a chunk of itdown on the, on, on the
mortgage.
So if you've got three or fourpoints or a percentage of the
(26:24):
mortgage that you can offset therate, now all of a sudden you're
down into the fives.
Now that's huge.
That could save you two or$300 amonth and make it more
affordable.
Most fellows don't realize thatthey have the ability to do
that.
And we at Shamrock have aprogram called Liston Lock,
(26:46):
where if you have a house that'snot selling let's say you're
going, you've got a$600,000house and you're gonna take
20,000, the price of that house.
Now you have five 80.
You've got somebody who'slooking to buy and finance it.
(27:07):
You've saved$20,000.
And again, I really, 10% of thatis$2,000 less in your down
payment.
And now you have
Jim (27:17):
what here?
We're
John (27:19):
less than your, is that enough to move the needle to, to
attract somebody to buy?
Jim (27:26):
Right
John (27:26):
now you give Shamrock and the seller, the buyer, that
$20,000 in buy down of theirinterest rate.
'cause that's all going towardsinterest.
Jim (27:36):
And
John (27:37):
what it's gonna do is it's gonna inev take your rate down
from maybe seven to, six and ahalf.
And at Shamrock with ourprogram, the seller signs up for
it.
We have a lot of marketingmaterial for the seller to, to
use social media.
We build a video we give yousigns.
We have all kinds of greattools.
We throw in a point, so that 3%that you might be discounting is
(27:59):
now 4%, and we're now looking ata rate, maybe close to six or
mid sixes that's gonna save youthree or$400 a month.
That moves the needletremendously.
So it's not only to thebuilder's advantages current
houses that are existing cantake advantage of the same
(28:22):
thing, and we have a tool thatwill enhance it and make it a
little bit more attractivebecause we're willing to be a
part of this.
And it's been, yeah, it's
Jim (28:30):
more than, yeah, it's more than just the price of what a
house is.
When you look at what's gonnamake it affordable, who doesn't
wanna get something cheaper, butis that really gonna be the best
deal?
You really gotta look at it andleverage it.
Is this gonna save me a coupledollars up front, but this one's
gonna save me money ongoing overthe course of, 30 years or until
(28:51):
down the road you refinance orsomething.
It can make the livingday-to-day much better.
John (28:56):
And we just did that with a client who really liked the
house.
They were putting down somemoney and it just wasn't working
for them because it was morethan they could afford.
And even with the a reducedoffer.
It still wasn't coming intowhere they wanted to be.
So we have this program in ourback pocket and the seller was
(29:17):
willing to throw in rather than,take the discount and you're not
gonna buy the house, but let megive that discount to, to buy
down your rate.
And John's gonna come with apoint.
And all of a sudden now, eventhough they were paying$25,000
more for the house, they weresaving a hundred dollars on
their payment compared togetting a discount at current
rates.
(29:37):
So it, it's a power ofcompounded interest in
amortization.
And if you stop buying thingsdown in, in numbers, then all of
a sudden now you are, you'restarting to save some real
money.
And the other advantage is that,is you may not need to
refinance.
A couple years ago we had that,marry the house and date the
(29:59):
rate.
And who advantage of.
We maybe haven't refinanced yet,but you know what?
They ha fallen in love withtheir rate.
'cause those were like in thelow sixes.
And we haven't seen that in, ina long time.
It is a long term commitment.
It is a home love where youlive.
Don't buy a house for the say ofbuying a house.
(30:20):
Love where you live.
Jim (30:23):
What are some of the common mistakes that Suncoast residents
make with mortgage and how canthey avoid'em?
John (30:29):
The rate is usually the last thing on the list of things
you need to be aware of.
Because I can't effectivelychange the rate.
You can't change the rate.
Buyers can't change the rate.
Affordability is my main drivingwhen I sit and have my
consultation with.
My, my prospective borrowers andclients, we talk about what they
(30:51):
qualify for, but then I say,let's take that and put that
aside.
What do you, can you afford?
If you have to stop making amortgage payment July 1st, and
that bill comes and you've gottapay it every month, tell me
where that, what's gonna keepyou up at night?
What number will keep you up atnight that you're not gonna be
happy in your home?
And then let's work off of thatand find a way to get you the
(31:12):
most that we can.
So focusing in on the wrongthing is usually what I see, I
can get it right here.
I'm like, oh.
What does that mean?
Is it is, it's the house stop,look at the house, we're all
gonna be the same or close tothe same.
We're a mortgage bank, we're amortgage, independent mortgage
lender.
So we underwrite, fund theloans.
(31:34):
We're not brokers.
We're not gonna farm'em out tosomebody.
And all of a sudden, a week goesby and you haven't gotten any
disclosures yet because theyhaven't figured out who they're
gonna sell it to and they'reoutta compliance.
We're gonna pick a product basedon the fact that we do offer all
of them, and the one that fitsyour needs.
And having that, Thatconversation and taking the time
(31:54):
to look at that before you goout and buy is important.
And then the second thing ishaving somebody on your team who
before you make the offer.
You call your lender and youhave a consultation.
It's John, this is the house.
We love.
Jim found us the house and wewant it.
And what, here's the askingprice.
(32:16):
This is what we've talked to Jimabout making the offer at.
We wanna know what these numbersmean.
So many people go intonegotiations, are not realizing
the difference between theiroffer, what asking prices.
Any deviation in any of thatalong the way.
Counter offers, they go into itcompletely blind of
(32:37):
understanding the process.
And I'll share a quick storywith you'cause I know we're time
sensitive is I had a gentlemanwho.
Came in and I got himpre-approved and we sat, we got
everybody happy.
His wife, his two kids, we allhad a great time.
And they were out looking forhouses and they kept getting
office rejected.
And they came close to one.
And I said come back in.
We need to have another meetingbecause we gotta make sure
(32:58):
you're doing the right stepsbecause you're not calling me.
And he sat down and close to meand his wife had taken the kids
to the restrooms.
And he said, John, this was thehouse.
We were so close, we made anoffer.
They counter offered us they're$10,000 to give them.
I'm like, dude, you're notgiving him 10,000.
(33:18):
You're giving him a thousanddollars.
And it's a difference of$58 inyour payment.
And this is the part of thestory that I'll never, ever
forget the fear in that man'seyes when I told him that and he
looked at me and he said, mywife.
Because he didn't take the timeand ask the right questions and
(33:39):
he would've gotten the rightanswers and they would've been
in that house'cause the kids hadalready picked up their
bedrooms.
He had the fear of his wife inhim.
Jim (33:49):
Yeah.
You know what?
A hundred percent right there.
When you have that team thatyou're assembling,'cause when
you're buying a house or you'reselling a house, you have a
team.
You've got you've got your realestate agent, you've got your
lender, you've got yourinsurance person.
You know you're gonna go throughall the steps.
They're there to make sureyou're happy with what.
What you're picking, and thenyou don't step into anything
that you don't wanna step into,so utilize the team, right?
(34:12):
If you set up the team but don'tuse them, then you might end up
failing.
Yes.
Yeah.
So John, I could sit here andtalk for you for hours.
I always learn something.
And love it.
So thank you so much for joiningme.
I really appreciate it.
My pleasure having, and I'll dothis again soon.
John (34:28):
I hope so and hopefully it'll be warmer here one day,
but I, yes.
Can't wait to get back to mysunny, warm Florida home.
I do miss it so much.
It's a great, it's a great placeto live.
So Jim, thank you.
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