November 2, 2022 • 44 mins
On today's episode we discuss todays market and interest rates. We discuss why it's a great time for buyers to purchase even in a high rate market. We discuss strategies to help buyers overcome higher mortgage payments dues to higher rates.
Jeff Cunningham is a Realtor (license # 301547) with United Realty Group (Broker license C34827) serving the Triad NC area.
Jeff can be reached at
Email - jeff.cunninghamrealtor@gmail.com,
website, jeffcunningham.mysalecore.com,
Facebook,- https://www.facebook.com/jeffcunninghambroker/
Gina Milloway is the Mortgage Loan originator NMLS #1676070 & CEO of Triad Mortgage LLC, NMLS # 2385260,
Gina can be reached at,
Email: gmilloway@traidmortgagellc.com
Web: https: https://www.ginamillowayloans.com/
Facebook - https://www.facebook.com/mortgageswithgina/
Office -336-290-1891
NMLS Consumer Access: https://nmlsconsumeraccess.org/
Privacy Policy: https://www.ginamillowayloans.com/privacy-policy
Triad Mortgage is an equal housing lender
All loans are subject to credit approval. This is not a commitment to lend. Guidelines subject to change without prior notice.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello and welcome to thepodcast.
Let's get moving with Jeff andGina.
This is Gina Millway, your localmortgage advisor.
And this is, I am JeffCunningham.
I am your local real estateagent here, uh, in the triad of
North Carolina.
And we are covering Greensboro,uh, Winston Salem.
We reach over as far asBurlington and we go down as far
(00:21):
as even Silo City in Asbo.
Um, but anyways, welcome,welcome, welcome.
Welcome to the show.
All right.
Today we have, um, we're gonnakind of do a, like a little
market update today and talkabout is it a seller's market?
Is it a buyer's market?
What's going on with theseinterest rates and what can
(00:41):
buyers do about that?
So water cooler talk, watercooler, quad.
Right?
Right.
What do we talk about behind thescenes?
What does that look like?
You know, to kind of helpeverybody ease, ease their fears
around, uh, you know, the marketand what's going on.
There's a lot of negative talk.
And, you know, if you'relistening to this, today is
(01:04):
November 2nd, so that we'regoing on current information
and.
With it being it's Wednesday, soit's fed's, Fed's meeting
Wednesday today, so the minuteswill come out today, about two
30, which we all know what thatmeans.
Oh, we're all waiting for somegreat news.
We're all waiting for it.
(01:24):
Yes, we're all waiting for it.
And what are we expecting?
Well, um, you know, it's, it'sinteresting, it's, you know, if
I had a crystal ball, I couldmake a lot of money in this, in
this market, but I don't, Sowhat is being expected is, A lot
of it is gonna depend on theinflation report and then how
(01:50):
aggressive the Fed is going tobe with continuing to attack
inflation.
With rising interest rates.
With rising interest rates.
Yes.
So, you know, every.
You know, every quarter whenthey come out for their, with
their meetings, their, or theirminutes, they're, they're
telling us what they're gonna doto help find inflation, to get
(02:11):
that back under control, whichis, is needed.
You know, thats, it's, you know,a, a valued, um, effort that
needs to be done.
However, how they're going aboutit, I feel like is maybe a
little aggressive, and that isreally what's driving the
mortgage interest rates, right.
So you know, the talk is thatthey've really being over
(02:33):
aggressive with it.
Um, they should raise the ratesand let's, let's let things
happen and play out before youinstantly run into raising the
rates again.
And they're not doing that.
They're being very, veryaggressive with raising the
rates.
And again, let, let's go backand clarify.
The Fed doesn't raise mortgageinterest rates.
(02:53):
They raise.
The dollar amount that funds canbe purchased, which raises
mortgage rates because it costsmore to get that money.
Kind of a two step process.
Right.
Exactly.
Now a lot of things have alreadybeen priced into the market.
You know, we, we price ahead oftime because it takes a little
(03:14):
while to get that loan sold andoff to where it's gonna be
packaged and, and sold on thesecondary market and off to its
investors.
So things are priced ahead oftime.
So for today's.
what we're expecting is we'reexpecting a 50 basis point hike
today, so we're expecting themto come off of that 75 basis
points that they've beenhitting, hitting us with the
(03:35):
last few meetings and, and comeback to the 50 mm-hmm.
which is a good, it's a goodindication that they're going to
ease off of, of the hikes, andthat's the thought that they're
gonna ease off of it and stopthe hikes.
Um, over the next year.
Hopefully it, it's sooner than.
But a lot of it just reallydepends on the inflation data.
(03:55):
Um, inflation is, I think is alittle bit better.
It's not a lot better, but is alittle better.
Mm-hmm.
uh, they're also looking at, youknow, jobless claims and the
unemployment rate.
They want the unemployment rateto move up to go up.
Mm-hmm.
it's too low.
I think we're sitting this weekat about 3.6 and they want it to
be over four.
(04:17):
So the Feds, the Fed wantsthings to be unfortunately a
little painful.
Mm.
But there are other things, butthat makes sense.
But yes, it doesn't make sense.
But that's how they, that's thetool that they have to fight
inflation.
Mm-hmm.
So what's gonna happen withrates, you know, today moving
forward over the next few monthsreally depends on how
aggressive, It's not that 50basis point hike that's gonna
(04:40):
move them.
I mean, that moves them.
that may already be built in tothe rate.
Mm-hmm.
it's going to be how aggressivetheir comments are towards
fighting inflation and whatthey're gonna do.
Mm-hmm.
So if they tell us they're stillmoving, headstrong rates will,
you know, continue to rise.
Mm-hmm.
most likely, if they tell usthat they're seeing some
(05:03):
indication or they're likingwhat's happening, then rates
hopefully will stable,stabilize.
They're probably not gonna movelower.
Very quickly, but stabilize, ifthey can just stabilize, that
would be great.
Well, yes.
That, that would, that would befantastic because yeah, we're,
you know, we, we are hearingsome positive impacts here on
(05:24):
the economy front.
Um, which again, it's stillcounterintuitive to, to.
Um, what we were talking aboutbefore we, before we hit the
record button, you know, uh, it,it, a lot of the stuff just here
doesn't seem to be making sensebased on the fact that we're
dealing with, you know,historical events.
The pandemic mm-hmm.
you know, things that, uh, thathave just occurred in the last
(05:46):
year, maybe even six months, or,you know, six months to the last
two years.
Um, you know, things havechanged where, where the
economy's just not the same asit was and.
1998, you know, 1981.
Mm-hmm.
And these are the referencesthat we keep hearing.
We're going back to, you know,these periods in time.
And again, those, those areapples in orange discussions.
(06:08):
Mm-hmm.
in my opinion.
You know, again, just reasonbeing, we have a lot more people
than we did in 1981, so it'shard to compare.
You know, the need for theinflation, um, repair, uh,
guidelines or, or, or methodsthat we're putting in place
right now from the Fed, um, to,to counteract things that, uh,
(06:30):
again, in 2022, you know, are alittle bit different.
Um, You know, than they werelike, you know, like I said, 30,
40 years ago.
Right.
But it's still, you know, again,difficult to, uh, let's say
ingest or, or deal with on, onthe consumer or their standard,
uh, you know, being a, a, a, howdo you wanna say, uh, a resident
(06:53):
here in mm-hmm.
in grand old usa.
Um, because yeah, our prices ofeverything just seem to be, you
know, going up.
Um, And like I said, even thoughwe're having our GDP numbers
that are improving a little bit,um, as we mentioned,
unemployment is kind of hangingright where it should be.
(07:13):
Um, yet we're, we're looking forindicators that are, you know,
gonna tell us, uh, a little bitof a different story, um, for us
to act in a different manner.
Is, is that accurate?
Mm-hmm.
Yeah, Ab a absolutely.
And, and there are so manythings that are going on right
now.
Are opposing each other, I meanmm-hmm.
(07:34):
the, the war on, on Ukraine.
And I haven't watched, I'mtrying not to watch the news.
I'm not sure what's going on.
There's true.
Yeah.
That, you know, it, it's stillgoing on.
There's a, it, it's gone.
The difference for me, or whereI see it right now is the
difference between.
We're not just dealing with theUS economy.
Mm-hmm.
it's, it's a global economyright now.
(07:55):
Mm-hmm.
we're having a global effect.
Um, everything that's happenedwith the pandemic, the energy
crisis, the, the war on Ukraine,um, With everything with Russia,
that's all trickling down andaffecting everybody right now.
Mm-hmm.
Mm-hmm.
unfortunately.
Right.
So, not only is it we're dealingwith our economy but we're
having to deal with the, theglobal economy and how it's
(08:17):
affecting us, and, you know,and, and the dollar is still
strong, um, from what my, myunderstanding and what I'm
hearing and that's affecting.
Other countries.
Mm-hmm.
because they need our dollar tonot be as strong for them to
recover.
So.
Correct.
It's really a balancing act, andI think when we get into all
this, I think the takeawaymessage for me would be, come
(08:39):
back local, come back to yourlocal market.
Perfect.
Mm-hmm.
and, and, and, and pay it.
Focus on that.
You know, a lot of times when wewatch the news, we're seeing
headlines from.
Uh, these big metropolitancities that kind of have their
own their own economy and dotheir own things.
Yes.
You know, you know, LA may havea housing bubble and it might,
(09:00):
and it might have a housingcrash and a burst, but that
doesn't mean we're going to haveone in, in Greensboro, we have a
really strong housing markethere.
A lot of people moving here, alot of people wanna buy here.
A lot of people wanna purchasehere.
Mm-hmm.
We don't see the appreciationand the rise in housing that
those places do.
(09:21):
Yes.
So I think paying attention towhat's going on in your local
market and kind of not shieldyourself, but be aware that
that's not your.
Market your micro economy.
Absolutely.
Absolutely.
And, and, and, and, and thatgets us back to the old adage,
(09:41):
you know, uh, stuff that, uh,you know, my parents would tell
me and, and, and I tell my kids,you know, we gotta control what
we can control.
Um, right.
There are definitely factorsthat are outside of our control
that, uh, that are impactingwhat we do every single day.
Um, but you know, it's best ifwe try and focus on what it is
(10:02):
that we can.
Um, we spoke last episode, youknow, uh, for folks that, um,
are preparing to buy, you know,stay vigilant, you know, stay in
control of what it is.
Mm-hmm.
you have control over yourfinances, your credit, um, you
know, all of those, all of thosepertinent, um, Things, um, that
(10:23):
we need to again, just focus on,on a day to day basis, and most
especially on what we're talkingabout.
You know, again, um, staying in,um, ready mm-hmm.
and be ready to purchase.
Yeah.
Um, when, when time comes about.
Um, Which is what we really,really, really need to focus on.
And again, that's gonna lead usinto our next topic, which is,
(10:45):
you know, interest rates.
Mm-hmm.
Um, so again, as a consumer, Idon't necessarily have the
control over an interest rate,but that will, uh, direct me on
what I can afford and what I canafford will again, potentially
move me again in my.
If I'm looking at buying a$300,000 house at a 5% interest
(11:07):
rate, well that might work downto a$285,000 home.
Mm-hmm.
and a 7% interest rate and viceversa.
Um, so again, great, uh, greatopportunity and great time too.
Visit your local realtor, yourlocal broker, um, you know, and
again, discuss what is going onin your local.
(11:28):
Yeah, absolutely.
And you know, the thing that'sgoing on in the local markets
is, is the rents, you know?
Yeah.
Insane.
And it just continues, it seemslike to, to rise.
And we don't have enough rental,you know, units in the area for
people who need to rent.
And, you know, that's when wecome back to, you know, buying,
(11:50):
Is it, is it really a goodoption?
And I think right now, yes,interest rates are.
and that may keep some peoplefrom being able to buy.
Mm-hmm.
Let's, let's be honest, it may,if you are pushing that budget,
you know, to, to get into ahome, this may not be your
market.
Mm-hmm.
you may have to wait, but ifyou're not, you know, if you're
(12:12):
not one of those people who are,are pushing the budget to get
into a home, it's still a greattime to.
if you're renting, you're payingsomebody else's mortgage.
I know you guys have heard thatyou're paying a hundred percent
interest rate if you're renting.
So, Yeah.
Um, you know, the pain comesinto, I think for buyers is, is
where that puts your mortgage.
You know, we are coming off amarket where interest rates were
(12:35):
in the twos and the threes.
That's a big difference fromwhere we are right now.
Where rates being in, you know,the, the seven, so to speak.
Mm-hmm.
Mm.
Um, you know, give or take.
So it's a huge difference.
It's a huge difference in yourmonthly payment.
Mm-hmm.
But there are a lot ofadvantages to being a buyer
right now in this market.
Mm-hmm.
(12:55):
a lot of advantages now.
Absolutely.
Housing prices have, I would saythat it's slowed in
appreciation.
Would you agree?
We're not seeing them rise quiteas sharp.
Correct, Correct.
We are, we are seeing somecorrections and, and I don't
wanna, uh, stand or jump on thatstandard correction in the
market, you know, crashing,blah, blah, blah, blah, blah.
(13:16):
No, we're not seeing that.
Uh, what I am seeing is thehomes that are priced
appropriately, and the homesthat are priced correctly,
again, key word, correctcorrection.
Yeah.
If they are being, or if they'rebeing put on the market priced
appropriately mm-hmm.
then we are not seeing any realslow down in the market ranges
(13:37):
that we standard, that we lookat standard wise.
Um, meaning, you know, a lot ofthe homes in in Greensboro for a
three or four bedroom home arenow priced anywhere from the,
say, one 50 up to three.
Um, and these are, these are thestandard neighborhood homes.
Mm-hmm.
um, you know, this isn'tdowntown Greensboro per se.
(13:57):
This isn't downtownWinston-Salem per se.
Uh, but this is your, you know,again, standard three bedroom,
two bath, quarter acre home.
Um, you know, and we're seeingfolks out there right now.
Um, that are dealing, um, with,with, again, ideal markets,
they're dealing with lesscompetition.
Um, meaning yes, there are lessbuyers out there.
(14:19):
Um, and, and, and the reasonbeing, you know, a couple of
reasons.
Number one is yeah, the interestrates may have gone up where
that pushed them out of thatprice range for a moment, but,
We do have other options thatare available out there to keep
us in play.
Um, and we'll talk a little bitmore about that as far as what
(14:40):
we see for new products that areout there today.
Um, but you know, again, whatwe're seeing as far as the
seller's market versus buyer'smarket, again, buyers are.
getting a little more controlhere.
Mm-hmm.
because sellers are trying tohold onto that purchase price
that they want.
Okay.
And, and in doing so, sellersare gonna have to deal with a
little more concessions.
(15:01):
Mm-hmm.
and preparation.
Now again, we've been talking alot of preparation on the
buyer's side in the last coupleof weeks.
Well, sellers also now need toprepare a little bit.
Because just putting a sign infront of your house isn't gonna
do the job as it did six monthsago.
Right, exactly.
Look, if you sold your house inthe last two years during Covid,
(15:23):
if you were one of those luckysellers who, who got that, good
congratulations, Celebrate, takeyour prize and move on.
We are not there anymore.
We are not in that market.
So, you know, buyers are goingto have a little.
advantage here.
You're not, you're not having tocompete with 20, 25 contracts
(15:44):
Yep.
On a price.
Yep.
I, I haven't seen any offers.
I'm not, and maybe you'redifferent, you're more on that
side of it, but I'm not seeingcontracts that are over, you
know, 15, 25,$30,000.
Right.
Correct.
You know, asking price.
I'm seeing our deposits comingdown to a more reasonable, which
is a big deal for me.
The deposit coming down is, It'ssomething that I feel like we
(16:06):
really, really, really needright now.
Because, you know, if you havesomebody putting down a$10,000
deposit on a home mm-hmm.
and there's something wrong withthat home.
Yeah.
And they can't, they reallycan't buy the home for, for
whatever reason.
It may be.
They don't, they can't afford todo the repairs on it.
Correct.
They've lost that money and thatmay be all the money they have.
Mm-hmm.
that may be all the money thatthey've.
(16:26):
To buy that home.
So I feel like that honestly,that was really needed.
Our, our due diligence depositscoming down in North Carolina is
a huge deal for me.
Yes.
I feel like a huge advantage forour buyers.
So sellers, you know, we're,we're not in covid market
anymore.
Um, you're gonna have tonegotiate a little bit, um, give
some seller concessions.
(16:46):
And, and I think that's, we'regonna talk about how those
seller concessions can actuallyhelp.
Buyers have a lower,theoretically, a lower interest
rate.
Mm-hmm.
um, or mortgage based on a lowerinterest rate, so they're not
having to deal with that higherinterest rate for a short period
of time.
Absolutely.
Absolutely.
(17:07):
Yeah.
Well, um, so, so again, we wealways stay positive here on our
show and, and we try to do that.
Um, and, and, and we also wantto be, you know, again, the
voice of reason and trust.
Um, so if there are things outthere, uh, you know, again,
we're, we're here to again, makesure that folks are aware, um
(17:29):
mm-hmm.
this in the Gloom and Doomradio.
Radio show.
This isn't a Globe podcast Um,you know, but we wanna make sure
that folks, again, are preparedand ready to act when they can,
and that they do have the.
Uh, products, uh, material,whether it be, uh, again,
something to read, something toeducate themselves on, uh,
(17:49):
whether it be in their localmarket, whether it be something
that's national, we might needto be prepared for, or something
like that.
Mm-hmm.
Um, but regardless, um, youknow, we wanna make sure that
you guys are talking to yourlocal agents, uh, both your
lenders and your real estateagents, get an idea of what's
going on, what's coming down theroad.
You know, again, in.
(18:10):
Local environment right there inyour, your Greensboro, your
triad area mm-hmm.
wherever that might be for you.
And again, having someone tobounce that information off on
or even just ask a simplequestion, you know?
Mm-hmm.
Hey, what do you think theinterest rates are gonna do next
week?
Well, again, that's a little bitof a difficult question.
We can give you reasons why wethink what, you know, what may
(18:32):
happen.
Um, But again, you know, uh, alot of that information is
outside of our control.
But we do have a couple of newprograms that have been coming
on hot and heavy for the lastweek, maybe even two weeks,
that, um, that we're gonna bringto your attention as well.
This should help out both the,uh, buyers, um mm-hmm.
Cause again, it gives them alittle bit of different avenue.
(18:54):
They negotiate as well as on theopposite side of things, the
sellers with this new productwill be able to keep their home
prices, uh, their sell price upa little bit.
But again, you are also gonnahave to deal with some of the,
uh, concessions that we hadmentioned a few times earlier.
Um, Right.
And, and with that, Gina, let's,let's just get right into what
(19:15):
the, you know, two one and 3 21,um, programs are that are out
there that, that are reallyexciting.
Again, keeps people in themarket, keeps people on both
sides, sellers and buyers.
Um, you know, again, talkingright at the.
Yeah, absolutely.
So I'm gonna focus specificallyon the, the two one.
(19:38):
And there are, I've seen both,both of them out there.
There's a 3, 2, 1, and thenthere's a one as well.
So there's a 3, 2, 1, A two, oneand a one.
There may be others out there,but this, this is what I'm
familiar with.
Now, the 3, 2, 1, I'm not gonnachat about that one.
I feel like, um, you reach acertain point where you have to
make a decision is that, youknow, is that worth it?
(20:00):
It may be more expensive.
To not be worth it.
So we're kind of looking at, uh,the two one today and what is a
two one?
A two one.
Um, Is this a mortgage rate?
Yeah.
So a two, one is a, it, it'sreferred to as a temporary buy
down.
Mm-hmm.
So basically what it's doing istemporarily buying down the rate
(20:24):
for a set amount of time.
And on a two one it's a two yearperiod.
Gotcha.
So it's a temporary buy down ofthe rate.
And you know, people have asked,Well, why don't we just pay
points and fees and buy the ratedown?
Well, the difference here isthat this is a temporary buy
(20:44):
down.
Mm-hmm.
And so it's, it's a buy downcovering a two year period.
Yeah.
It's a not a buy down covering a30 year period of your mortgage.
Mm-hmm.
So on this scenario, the, thedifference is, and I'm gonna go
into the cost, um, what it wouldcost you to do this in a minute,
(21:04):
but as a comparison, we're gonnatalk about getting your rate
down to a 5% in this scenario.
Mm-hmm.
in today's market, if you wereto get your rate down to a 5%,
Um, on the scenario that I'vedone, it's based on a$200,000
purchase price.
It would cost you about 19grand.
Wow.
To buy your debt rate down for30 years.
For 30 years.
And you're saying I'm buyingdown.
(21:25):
So if I wanted to buy down onthat percentage rate, So you're
saying going from like a, aseven to a five Right.
Cost me.
So that's two percentage points.
It cost me about$19,000.
Upfront.
Upfront, paid.
Okay.
Yeah.
Yeah.
So let's talk about how.
So basically what this two, onebuy down is doing is it's giving
(21:45):
buyers an opportunity or anoption for two years to have a
lower mortgage payment as iftheir loan were based on a lower
interest rate.
Mm-hmm.
So the scenario that we're gonnalook at all this is based on,
um, a$200,000 purchase.
10% down with$180,000 loanamount.
(22:08):
And I, um, this can be used.
Let me just back up.
This can be used on severalproducts.
It can be used on conventional,can be used on FHA and VA cannot
be used on U S D A.
Oh, so this is a conventionalproduct.
It's not a non QM product.
It's just a, it's a regular Ohloan.
Um, it is not an arm.
This is not an ARM product.
This is a temporary buy down.
(22:28):
It is a fixed.
Product.
Mm-hmm.
for those of you that are new tothe market adjustable rate,
mortgage arm, Yes.
Adjustable rate.
This, this mortgage It is, It'snot adjusting at all.
Mm-hmm.
There's no adjusting.
It's just how the calculation isdone.
And this is gonna be on a settimeframe.
(22:49):
This is gonna be on a settimeframe.
So we're talking about the twoone.
So essentially what this loan isdoing is for the.
Let me back up and say this is aseller.
So how we get here is it's aseller concession.
Mm-hmm.
And this is where, where you'resaying before that sellers are
using this as a tool.
Yeah.
Some sellers are offering this,I think I've even seen it on
(23:11):
some listings in the mls, wherethere sellers are offering this,
the two one buy down.
And so it has to be paid byseller concessions.
The borrower can't pay for it.
And so what that means is, likewe've all heard about sellers,
you know, paying closing costs,um, seller concession, seller
pay, closing costs.
This is kind of the same thing.
(23:32):
So it's a seller pay closingcost.
Your contract is written thesame, You're just gonna ask for
seller paid concessions.
Mm-hmm.
So what happens is it's a twoone.
So in the first year, yourmortgage payment is going to be
based.
2% lower than your base rate.
(23:53):
So that's where that two comesin.
So let's say your base interestrate is 7%.
Just to use round numbers on thetwo.
One.
In your first year of yourmortgage, your payment is going
to feel like it's a 5% interestrate.
Mm.
Now do I need, excuse me, Do Ineed to qualify for that as 5%
(24:14):
or 7%?
7%.
You do have to qualify at thehigher rate.
Yes.
Mm-hmm.
you do have to qualify.
Okay.
Regardless of what's offered.
So, even though, and again, uh,speaking from a realtor side of
things, so if I offer.
You know, this two, one buy downfor any buyer that's out there,
other than U S D A, uh, at leastfor these specific programs.
(24:36):
Then I need to put that in my,you know, remarks, or at least
I'm advertising my property tobe sold that way.
But I don't necessarily have tobuy that way.
Um, you know, again, it justbecause it's being offered as a
two, one, you know, again, cashbuyers are certainly welcome to
come in and again, buyer nowmight have a little bit more of
(25:00):
an opportunity to negotiate.
Now that they're using their ownfund cash versus, uh, this, uh,
this new program, the two onebuy downs.
Um, and you know, again, we, we,we, we are still in a
negotiating table and just givesus a different option, okay?
Right.
So yeah, so there's lots ofdifferent options, you know, as
(25:21):
far as the sellers if they comein with a different program.
But, so essentially how this haswork, so that first year you
have your, your 2% below your,your set rate, which is 7%.
Mm-hmm.
So your mortgage payment is thatyou are paying, is based on
five.
Now your loan is still a 7%interest rate, right?
(25:43):
But the payment that the, thebuyer is paying is based on 5%.
Mm-hmm.
So how that works is, let's saythat your, I'm gonna use, I got
some numbers in front of me, butthey're odd numbers.
I'm gonna use round numbers, soit makes sense.
So let's say that, That yourmortgage payment is a thousand
(26:05):
dollars a month.
Mm-hmm.
and that 5% interest rate makesyour mortgage payment$800 a
month.
Mm-hmm.
there's a$200 difference betweenthe 800 and a thousand.
Mm-hmm.
we've got$200 difference.
Your payment on this program isstill actually that thousand
dollars.
Mm-hmm.
But because you have thoseseller concessions to.
(26:28):
to pay your payment to buy downthat rate.
Mm-hmm.
you're actually making yourpayment at 800 and you're
pulling 200 out of your escrowto make the payment.
Mm-hmm.
so the seller concessions go toescrow and every month the
difference between your 7%mortgage payment and your 5%
mortgage payment is coming outof escrow.
So you don't have to make it.
(26:49):
It's being paid every month foryou.
Fantastic.
So again, the seller is notnecessarily making a$200 payment
for the buyers.
Uh, again, on a monthly basiswhen we get into the closing,
uh, that amount of money that'sagreed upon mm-hmm.
whether it be a two, one or a 321 or just a one, um, again,
(27:11):
that money.
is, is taken outta the closingor off the closing table.
Mm-hmm.
put into an escrow account.
So yes, it is now under, again,it, that money is placed in
escrow and, and again, it's notthe responsibility of the seller
anymore to do anything withthat.
Right.
That is basically a concessionand it's, and it's done with at
(27:33):
the closing.
Right.
Yeah.
No, the seller is no longerinvolved once we close, So
they're not actually likewriting you a check every month.
Um, it goes into escrow, goesinto a savings account, so to
speak, and it's paid everymonth, just like your taxes and
insurance are paid every month.
Mm-hmm.
So every month the differencebetween your 5% interest rate
and your, your regular or your5% mortgage and your 7% mortgage
(27:54):
is paid out of your escrow.
Nice for you, essentially.
And that's done.
throughout the process.
And the same thing happens inyear two.
So we have the two one buy down,right?
So in year two it, it changes tothe 1% difference.
So if your interest rate, mm-hmmwas 7%, now you're making a
mortgage payment based on 6%.
(28:16):
Got it.
And let's say that new mortgagepayment is$900 a month, then a
thousand dollars comes out tomake up the a thousand dollars
mortgage payment based on seven.
So it, it's a lot of math and itsounds confusing and it's a lot
to go through just talking aboutit without having like charts
and graphs and everything.
But essentially what's happeningis you're having a temporary
(28:37):
reduction in your monthlymortgage payment.
Mm-hmm.
that is being paid outta escrowfrom those sellers concessions.
Yes.
Well, hey, what, uh, so whathappens after year two, Gina?
So the goal of this loan isreally, To kind of get people
through a couple years and tolet interest rates settle and
(29:00):
come back down.
Now, keep in mind we don't havea crystal ball.
We don't know for a fact thatthey're coming back down, but
that is the hope.
So one, you need to be okay withthe full payment.
Mm-hmm.
just in case some, you know, youcan't refinance or something
changes.
You need to be okay with that.
You still have to qualify on thefull payment, on the full 7%
interest rate or whatever yourinterest rate.
(29:22):
So you need to be comfortablewith that payment.
But people going into this typeof loan are, for whatever
reason, wanting a lower paymentfor the first couple years and
hopes that they can refinanceand maybe maintain that payment
Sure.
For the remainder of that refi.
Sure.
So that's, that's really whatthe product is used for.
And you know, it could be usedfor other things too, not just
(29:44):
the interest rate.
It could be that, you know,maybe some ideas just out of
school.
And they're going to be movinginto a career that's going to
pay them more and they'll beable to afford mm-hmm.
You know, the, the highermortgage payment once they go
into that job.
So there's lots of reasons touse it, but that's kind of the
gist of it.
(30:04):
Sure, Sure.
That's, that's perfect.
And, and, and again, that's,that, that just sets up another
opportunity again for buyers,Right.
Um, you know, again, qualifying,like you said, on the higher
rate is, is required.
Um, but for the, for, for the,for the duration of that period,
whether it be two or three yearsor one year, you know, again,
buyers are able to, uh, enjoythe savings, if you want to call
(30:26):
it that.
Um, and, and, and, you know,again, maybe bank a little
extra.
So if you're saving two or$300 amonth in year one and then one
to$200 a month in year two, youknow, again, it's not a bad idea
to go ahead and put that money,uh, again, into a savings
account or even buy down, Idon't wanna say buy down again,
(30:48):
even make an additional, uh,principal payment.
Yes.
Um, again, reducing, reducingyour loan amount.
Yeah, absolutely.
And that would be a smart thingto do is, you know, make up the
difference and, and pay thatmoney towards your principal so
that way you are reducing,you're, you are reducing your
interest rate, that you'repaying even more.
You're paying off that mortgageand that principal even faster.
(31:08):
Mm-hmm.
And, you know, if you do refi,the good thing about this loan
is that it's an escrow account,so you're not gonna lose that
money if you refi, you don't getit back.
But it is applied as like aprincipal reduction.
Okay.
Um, so principal reduction, ifI'm gonna refinance, let's just
say in a year from now.
Mm-hmm.
Um, my interest rate drops from,or I should say the national
(31:30):
interest rates, drops, dropsfrom say 7.25 down.
6.25.
Mm-hmm.
I can refinance.
Mm-hmm.
with that money again, that'sstill in escrow.
Mm-hmm.
reducing my principle, which isgonna again, in essence reduce
my loan amount.
Yes.
Um, and, and, and then I can goahead and refinance, I don't
(31:52):
wanna say fee free, butcertainly with some sort of an
advantage where I've got somemoney left over in my escrow
account and that can be appliedto.
Yeah, so it, it, you don't losethe money.
So if you refinancing that, thatyear, the money is, you know,
the loan balance or theprincipal is reduced.
So your new loan is gonna be ata lower amount based on what was
(32:13):
left in the escrow and whatyou've paid off to it so far.
So, yeah, that's pretty cool.
So, I mean, yeah, so there'ssome ways to use it.
It's not part, is it perfect foreverybody to know?
Um, and the downside is going tobe, this is a seller concession.
Mm-hmm.
And it comes out, Now it's gonnabe different based on the loan
amount, but it's about 2% of thepurchase price.
(32:36):
Mm-hmm.
So 2% of the purchase price.
Let's say somebody needed sellerconcessions to help with closing
costs already.
Mm-hmm.
Before they thought about doingthis program mm-hmm.
Well, we're limited by ourprograms on how much seller
(33:00):
concession we can actually get.
Mm-hmm.
So on a conventional loan and aconventional loan depends on how
much you have to put down or howmuch seller concessions you can
get.
But, uh, it starts around 3%.
So, Let's say that you neededthose seller concessions to help
you pay your closing cost.
Mm-hmm.
Well, if you do the 2 0 1 buydown and you get 2% in seller
(33:23):
concessions, that only leavesyou 1% to go towards closing
costs, which is about two grand,which might not be enough.
Mm-hmm.
so.
There, there are some things totake in consideration.
If you were planning on gettingthose seller concessions or
those seller paid closing costsalready.
Mm-hmm.
then this might not be the bestoption for you unless you want
to come out of pocket for yourclosing cost.
(33:43):
Um, Gotcha.
As it is because it, it, it istaking that money essentially.
Okay.
Gotcha.
So, so, uh, and again, I knowthis is relatively new, uh, to
both of us.
Um, I have not processed, uh,one of these loans.
But in doing so, um, again, themath required, is this something
(34:07):
that, um, uh, that you as abroker now would be mm-hmm.
more, uh, say, involved with asfar as part of the negotiations?
Yeah.
Yeah, absolutely.
So, I mean, it's not a lotdifferent for the realtor side
of it.
Mm-hmm.
when you're, when you're makingan offer on a contract, You're
(34:28):
just gonna ask for those sellerconcessions.
Mm-hmm.
And you know, you know, if youcall me up and say, Hey, we're
looking at this house, we'relooking at a purchase price of
200,000.
What, what do we need to askfor?
We can give you that number.
Mm-hmm.
now it's not gonna be a hundredpercent exact because we gotta
lock in that loan for it to beexact, so.
(34:49):
Mm-hmm.
the interest.
It's based off of the interest.
Where you lock it out, whereyour interest rate is going to
be.
But we can get really, reallyclose, you know, and if we go
over, so we could maybe ask fortwo and a half or that full 3%
in seller our concessions, andthen we can use, you know, the
2% for the buy down and then 1%for other closing costs.
(35:09):
So it's not gonna go to waste.
Um, Sure.
But as far as you're concernedin making an offer, you really
just have to ask for thoseseller concessions on the
contact.
Right, And as we've mentionedearlier, we are seeing those
being mentioned.
Mm-hmm.
in the mls, or at least in theadvertising, which is something
that's being offered from thebuyer side.
I'm sorry, Right.
(35:30):
From the Stellar's side, whichagain is giving you the direct
indication that Okay, 2%, youknow, of again, of the, uh, the
purchase price.
Could be or will be, you know,again, based on math, you know,
go back into those, uh, sellersconcessions, uh, once we go
ahead and put the, uh, contracttogether.
Yeah, absolutely.
(35:50):
Cool.
And you know, and it goes backto, you know, just being aware
of your options.
And like I said earlier, buyingdown the rate on this scenario
would cost somebody, you know,close to 19 grand.
Yeah.
And that's money that's notgoing anywhere.
You're, that's a fee.
You're paying the, the lender toget that rate, it's a fee.
You're not getting any benefitfrom that other than just
(36:12):
lowering your interest rate.
That's a closing cost.
Yes.
Whereas this, you can do this asa seller paid, and it's about
4,200 on this scenario that I,that I plugged in and seller
patient sessions, which is notunreasonable.
No, no.
And that's, so that's 4,200based on 200,000.
(36:33):
So let's just jump that up.
So, Basically double that rateif we're going to 400,000,
correct?
Yeah, I mean, I can flip that inreal quick.
So yeah, I'll do a 400.
So, so I mean, if, if we'redoing just, you know, again,
simple math, I mean, you know,instead of going with a$19,000,
you know, closing cost, buydown, you know, you're looking
(36:53):
at something less than half.
Again, if you're going up tothat$400,000 mark, guessing 84,
80$500 a mo.
Uh, you know, again, as far asthe total concession.
Yeah.
So that would end, that wouldput you at, um, about, yeah,
about 83 90 in seller paysabout, and it's still about at
(37:16):
that two, 2.098%.
So, you know, you could ask fortwo, two and a half percent, or
you could go ahead and ask for,you know, 3%, four, you could
ask for whatever.
Yeah.
Um, but we just need to know, Ineed to know going into the loan
setup.
I, I need to know be whilebefore, once you go under
(37:36):
contract.
I need to know from the buyer ifthat they wanna use this program
cuz they can use the sellerconcessions for other things.
Sure.
They don't have to use it forthis.
Sure.
But when I structure the loan, Ineed to know how to structure it
because it needs to go out onthe loan estimate and it needs
to be structured around thatYes.
And, and, and, and I wouldimagine that this is also gonna
involve realtor discussions, uh,both on the buyers and the
(37:59):
seller side.
Um, for the reason being, um,if, if, if a seller is
advertising that they're, youknow, again, uh, willing to, you
know, use the two, one.
Program for their sell price,then, you know, again, that
gives us generally a number tostart with as far as what we can
negotiate with.
Mm-hmm.
Um, and, you know, and again,if, if, if, depending on what
(38:21):
the buyer's needs are, um, youknow, whether or not they need
additional closing costassistance.
Right.
Um, and on the other side ofthings, um, you know, for the
sellers, how motivated are they?
Right.
Um, and, and whether or notthey're talking about again,
moving, um, or selling theirproperty.
On a need to basis versus again,selling their property on, uh,
(38:44):
on a want to basis to go aheadand, uh, you know, again, get as
much equity outta the home asthey can.
Again, that's the name of thegame for buying property and
selling property.
Um, but again, folks do havesome needs.
Uh, it might just be that thereis a transfer in place for
someone's employment and youknow, again, someone.
Capitalizing on all of the moneyleft on the table, of course,
(39:07):
would be the best scenario.
But again, at least we haveoptions and, and, and power to
negotiate on both sides.
Yeah, so I mean, there areoptions out there and I think
the whole point, you know, of,of us doing this and going
through it in the podcast is, isto keep buyers, you know, keep
you in a positive mindset.
Mm-hmm.
(39:27):
There are options out there tohelp ease the pain or the higher
interest rates.
Um, sure.
It's a great time to negotiate.
Yep.
I mean, you know, if you could,if you can buy a house and get,
you know, 10, 15 grand off ofthe list price mm-hmm.
well, you can change yourinterest rate as the market
(39:48):
fluctuate, you can change yourinterest rate.
You can't change what you paidfor the.
Correct.
You can't absolutely correct.
Paid for it.
Mm-hmm.
and people who bought duringcovid and paid 25,$30,000 over,
they can't change that.
That's the purchase price.
That's they're in it, they're init for that amount.
Yep.
Yep.
You know, unless they sell thehouse and you can't change what
you bought it for, but you canchange your interest rate.
(40:10):
You, you most certainly canabsolutely go back into that,
uh, that statement we madeearlier.
You know, we can control what wecan control and those that we
can't control, again, we gottalead by the.
Yeah, absolutely.
You know, in buying a house, itprotects you from the, the, in.
It, it, it protects you from theinflation of the rental market.
Mm-hmm.
it protects you from dealingwith a crazy landlord.
(40:32):
Yeah.
you know, you know, you're notpaying a hundred percent
interest rate in rent and Right.
And there are, there's somenegotiating power right now and
buying so, it is not a bad timeto purchase a home.
It's just No, no, no, no, no.
And again, you know, again, justto reiterate here, what, what we
are seeing here in our, in ourmarket, um, you know, again,
(40:53):
property values are still onthe, on the rise.
We're not seeing the, you know,the, the, the, the weekly bumps
that we were.
But, you know, again, we'restill seeing that, uh, you know,
we're, we're increasing now.
Uh, again, sales, uh, purchaseprice, um, on a regular basis
here.
Um, and they're holding strong.
And in our market, you know, wedo have industry that's still
(41:15):
moving in.
We've got plenty of buildingthat's still going on.
Um, and, and we are still insomewhat of a housing shortage
based on our inventory levels,right.
Again, I think we spoke earlierat the beginning of the show.
Uh, we're at 1.8.
We're a little less, I'm sorry,a little more than, uh, one and
a half months of inventory,which standard inventory, uh,
(41:39):
nationally, um, as well asregionally should be somewhere
between three and six months.
Right's, A balance.
What, what they consider abalance.
Absolutely.
At least Vermont.
Yeah.
Yeah.
So, so we are still short andthen until that inventory
actually catches up, which, youknow, uh, uh, the buyers, I'm
sorry, the builders, um, are,you know, they have their own
(42:01):
concerns out there with, youknow, still standard supply
chain issues that are going on.
Um, We mentioned earlier thethings that are outside of our
control, um, uh, the worldeconomy, um, and, and how things
are progressing with with thewar and, and the uk.
And, and again, things thatreally just don't, uh, don't
impact our day to day lives.
(42:23):
Um, you know, eventually do worktheir way into, uh, you know,
um, Our wallets, which, which isYeah, it's our wallets.
A little bit of, a little bit ofa, you know, troubling fact.
But, but, uh, again, welcome tothe global economy, right, Yeah,
exactly.
So keep it, keep it focused.
Keep it lo local.
You guys, keep it positive.
If you have questions about whatyou can do in this market or
(42:45):
what you can't do, should youbuy, should you sell, um, should
you look at a mortgage?
Should, should you refinance?
I do have refinances that arestill happening for one reason
or another.
You know, it, it's not the, it'snot the end of the world.
There's still a lot of positivethings going on, and let's focus
on our area and mm-hmm.
um, the good things that aregoing on here, and if you have
(43:06):
any questions about any ofthose, you know, always feel
free to reach out and, you know,ask somebody who can guide you
in the right direction.
Absolutely.
Absolutely.
Of course, we're always here.
Uh, and you can get our contactinformation down below.
And, um, and, and I thinkeverything's updated there as
well, Gina.
Yes.
And, um, and yeah, uh, again,folks, um, It is always a good
(43:30):
time to investigate and into andbuy property.
Um, again, like Gina was saying,you know, um, we, we, we can't
cry over spilled milk or like Isaid, the opportunities that we
had actually missed out on.
Um, everybody would love a 3%interest rate.
Um, But those days aren't comingback anytime soon.
Um, so what we need to do is,uh, is make the best of what we
(43:53):
have.
And, um, and again, dealing withyour local, uh, mortgage
professionals and dealing withyour local agents, uh, again, is
gonna be the best guide to getyou the best deal, um, in the
near future right now.
Yeah, absolutely.
All right, guys, well, I thinkthat about sums it up.
Are we good?
I think so, I, I, I don't thinkI've got anything else to add
(44:14):
here.
You know, it, other than thefact there's gonna be, what, 68,
69 degrees here, um, beingNovember, um, here in the triad,
which, uh, you know, I lovegiving everybody the, the, the
standard weather update.
But, uh, man, I love fall herein North Carolina.
Really, really do It is a greatday to get outside.
You guys, go and get outside.
Enjoy the weather in NorthCarolina and we'll see you on
(44:37):
the next.
Talk soon.
All right, thanks.
Hello and welcome to thepodcast.
Let's get moving with Jeff andGina.
This is Gina Millway, your localmortgage advisor.
And this is, I am JeffCunningham.
I am your local real estateagent here, uh, in the triad of
North Carolina.
And we are covering Greensboro,uh, Winston Salem.
We reach over as far asBurlington and we go down as far
(00:21):
as even Silo City in Asbo.
Um, but anyways, welcome,welcome, welcome.
Welcome to the show.
All right.
Today we have, um, we're gonnakind of do a, like a little
market update today and talkabout is it a seller's market?
Is it a buyer's market?
What's going on with theseinterest rates and what can
(00:41):
buyers do about that?
So water cooler talk, watercooler, quad.
Right?
Right.
What do we talk about behind thescenes?
What does that look like?
You know, to kind of helpeverybody ease, ease their fears
around, uh, you know, the marketand what's going on.
There's a lot of negative talk.
And, you know, if you'relistening to this, today is
(01:04):
November 2nd, so that we'regoing on current information
and.
With it being it's Wednesday, soit's fed's, Fed's meeting
Wednesday today, so the minuteswill come out today, about two
30, which we all know what thatmeans.
Oh, we're all waiting for somegreat news.
We're all waiting for it.
(01:24):
Yes, we're all waiting for it.
And what are we expecting?
Well, um, you know, it's, it'sinteresting, it's, you know, if
I had a crystal ball, I couldmake a lot of money in this, in
this market, but I don't, Sowhat is being expected is, A lot
of it is gonna depend on theinflation report and then how
(01:50):
aggressive the Fed is going tobe with continuing to attack
inflation.
With rising interest rates.
With rising interest rates.
Yes.
So, you know, every.
You know, every quarter whenthey come out for their, with
their meetings, their, or theirminutes, they're, they're
telling us what they're gonna doto help find inflation, to get
(02:11):
that back under control, whichis, is needed.
You know, thats, it's, you know,a, a valued, um, effort that
needs to be done.
However, how they're going aboutit, I feel like is maybe a
little aggressive, and that isreally what's driving the
mortgage interest rates, right.
So you know, the talk is thatthey've really being over
(02:33):
aggressive with it.
Um, they should raise the ratesand let's, let's let things
happen and play out before youinstantly run into raising the
rates again.
And they're not doing that.
They're being very, veryaggressive with raising the
rates.
And again, let, let's go backand clarify.
The Fed doesn't raise mortgageinterest rates.
(02:53):
They raise.
The dollar amount that funds canbe purchased, which raises
mortgage rates because it costsmore to get that money.
Kind of a two step process.
Right.
Exactly.
Now a lot of things have alreadybeen priced into the market.
You know, we, we price ahead oftime because it takes a little
(03:14):
while to get that loan sold andoff to where it's gonna be
packaged and, and sold on thesecondary market and off to its
investors.
So things are priced ahead oftime.
So for today's.
what we're expecting is we'reexpecting a 50 basis point hike
today, so we're expecting themto come off of that 75 basis
points that they've beenhitting, hitting us with the
(03:35):
last few meetings and, and comeback to the 50 mm-hmm.
which is a good, it's a goodindication that they're going to
ease off of, of the hikes, andthat's the thought that they're
gonna ease off of it and stopthe hikes.
Um, over the next year.
Hopefully it, it's sooner than.
But a lot of it just reallydepends on the inflation data.
(03:55):
Um, inflation is, I think is alittle bit better.
It's not a lot better, but is alittle better.
Mm-hmm.
uh, they're also looking at, youknow, jobless claims and the
unemployment rate.
They want the unemployment rateto move up to go up.
Mm-hmm.
it's too low.
I think we're sitting this weekat about 3.6 and they want it to
be over four.
(04:17):
So the Feds, the Fed wantsthings to be unfortunately a
little painful.
Mm.
But there are other things, butthat makes sense.
But yes, it doesn't make sense.
But that's how they, that's thetool that they have to fight
inflation.
Mm-hmm.
So what's gonna happen withrates, you know, today moving
forward over the next few monthsreally depends on how
aggressive, It's not that 50basis point hike that's gonna
(04:40):
move them.
I mean, that moves them.
that may already be built in tothe rate.
Mm-hmm.
it's going to be how aggressivetheir comments are towards
fighting inflation and whatthey're gonna do.
Mm-hmm.
So if they tell us they're stillmoving, headstrong rates will,
you know, continue to rise.
Mm-hmm.
most likely, if they tell usthat they're seeing some
(05:03):
indication or they're likingwhat's happening, then rates
hopefully will stable,stabilize.
They're probably not gonna movelower.
Very quickly, but stabilize, ifthey can just stabilize, that
would be great.
Well, yes.
That, that would, that would befantastic because yeah, we're,
you know, we, we are hearingsome positive impacts here on
(05:24):
the economy front.
Um, which again, it's stillcounterintuitive to, to.
Um, what we were talking aboutbefore we, before we hit the
record button, you know, uh, it,it, a lot of the stuff just here
doesn't seem to be making sensebased on the fact that we're
dealing with, you know,historical events.
The pandemic mm-hmm.
you know, things that, uh, thathave just occurred in the last
(05:46):
year, maybe even six months, or,you know, six months to the last
two years.
Um, you know, things havechanged where, where the
economy's just not the same asit was and.
1998, you know, 1981.
Mm-hmm.
And these are the referencesthat we keep hearing.
We're going back to, you know,these periods in time.
And again, those, those areapples in orange discussions.
(06:08):
Mm-hmm.
in my opinion.
You know, again, just reasonbeing, we have a lot more people
than we did in 1981, so it'shard to compare.
You know, the need for theinflation, um, repair, uh,
guidelines or, or, or methodsthat we're putting in place
right now from the Fed, um, to,to counteract things that, uh,
(06:30):
again, in 2022, you know, are alittle bit different.
Um, You know, than they werelike, you know, like I said, 30,
40 years ago.
Right.
But it's still, you know, again,difficult to, uh, let's say
ingest or, or deal with on, onthe consumer or their standard,
uh, you know, being a, a, a, howdo you wanna say, uh, a resident
(06:53):
here in mm-hmm.
in grand old usa.
Um, because yeah, our prices ofeverything just seem to be, you
know, going up.
Um, And like I said, even thoughwe're having our GDP numbers
that are improving a little bit,um, as we mentioned,
unemployment is kind of hangingright where it should be.
(07:13):
Um, yet we're, we're looking forindicators that are, you know,
gonna tell us, uh, a little bitof a different story, um, for us
to act in a different manner.
Is, is that accurate?
Mm-hmm.
Yeah, Ab a absolutely.
And, and there are so manythings that are going on right
now.
Are opposing each other, I meanmm-hmm.
(07:34):
the, the war on, on Ukraine.
And I haven't watched, I'mtrying not to watch the news.
I'm not sure what's going on.
There's true.
Yeah.
That, you know, it, it's stillgoing on.
There's a, it, it's gone.
The difference for me, or whereI see it right now is the
difference between.
We're not just dealing with theUS economy.
Mm-hmm.
it's, it's a global economyright now.
(07:55):
Mm-hmm.
we're having a global effect.
Um, everything that's happenedwith the pandemic, the energy
crisis, the, the war on Ukraine,um, With everything with Russia,
that's all trickling down andaffecting everybody right now.
Mm-hmm.
Mm-hmm.
unfortunately.
Right.
So, not only is it we're dealingwith our economy but we're
having to deal with the, theglobal economy and how it's
(08:17):
affecting us, and, you know,and, and the dollar is still
strong, um, from what my, myunderstanding and what I'm
hearing and that's affecting.
Other countries.
Mm-hmm.
because they need our dollar tonot be as strong for them to
recover.
So.
Correct.
It's really a balancing act, andI think when we get into all
this, I think the takeawaymessage for me would be, come
(08:39):
back local, come back to yourlocal market.
Perfect.
Mm-hmm.
and, and, and, and pay it.
Focus on that.
You know, a lot of times when wewatch the news, we're seeing
headlines from.
Uh, these big metropolitancities that kind of have their
own their own economy and dotheir own things.
Yes.
You know, you know, LA may havea housing bubble and it might,
(09:00):
and it might have a housingcrash and a burst, but that
doesn't mean we're going to haveone in, in Greensboro, we have a
really strong housing markethere.
A lot of people moving here, alot of people wanna buy here.
A lot of people wanna purchasehere.
Mm-hmm.
We don't see the appreciationand the rise in housing that
those places do.
(09:21):
Yes.
So I think paying attention towhat's going on in your local
market and kind of not shieldyourself, but be aware that
that's not your.
Market your micro economy.
Absolutely.
Absolutely.
And, and, and, and, and thatgets us back to the old adage,
(09:41):
you know, uh, stuff that, uh,you know, my parents would tell
me and, and, and I tell my kids,you know, we gotta control what
we can control.
Um, right.
There are definitely factorsthat are outside of our control
that, uh, that are impactingwhat we do every single day.
Um, but you know, it's best ifwe try and focus on what it is
(10:02):
that we can.
Um, we spoke last episode, youknow, uh, for folks that, um,
are preparing to buy, you know,stay vigilant, you know, stay in
control of what it is.
Mm-hmm.
you have control over yourfinances, your credit, um, you
know, all of those, all of thosepertinent, um, Things, um, that
(10:23):
we need to again, just focus on,on a day to day basis, and most
especially on what we're talkingabout.
You know, again, um, staying in,um, ready mm-hmm.
and be ready to purchase.
Yeah.
Um, when, when time comes about.
Um, Which is what we really,really, really need to focus on.
And again, that's gonna lead usinto our next topic, which is,
(10:45):
you know, interest rates.
Mm-hmm.
Um, so again, as a consumer, Idon't necessarily have the
control over an interest rate,but that will, uh, direct me on
what I can afford and what I canafford will again, potentially
move me again in my.
If I'm looking at buying a$300,000 house at a 5% interest
(11:07):
rate, well that might work downto a$285,000 home.
Mm-hmm.
and a 7% interest rate and viceversa.
Um, so again, great, uh, greatopportunity and great time too.
Visit your local realtor, yourlocal broker, um, you know, and
again, discuss what is going onin your local.
(11:28):
Yeah, absolutely.
And you know, the thing that'sgoing on in the local markets
is, is the rents, you know?
Yeah.
Insane.
And it just continues, it seemslike to, to rise.
And we don't have enough rental,you know, units in the area for
people who need to rent.
And, you know, that's when wecome back to, you know, buying,
(11:50):
Is it, is it really a goodoption?
And I think right now, yes,interest rates are.
and that may keep some peoplefrom being able to buy.
Mm-hmm.
Let's, let's be honest, it may,if you are pushing that budget,
you know, to, to get into ahome, this may not be your
market.
Mm-hmm.
you may have to wait, but ifyou're not, you know, if you're
(12:12):
not one of those people who are,are pushing the budget to get
into a home, it's still a greattime to.
if you're renting, you're payingsomebody else's mortgage.
I know you guys have heard thatyou're paying a hundred percent
interest rate if you're renting.
So, Yeah.
Um, you know, the pain comesinto, I think for buyers is, is
where that puts your mortgage.
You know, we are coming off amarket where interest rates were
(12:35):
in the twos and the threes.
That's a big difference fromwhere we are right now.
Where rates being in, you know,the, the seven, so to speak.
Mm-hmm.
Mm.
Um, you know, give or take.
So it's a huge difference.
It's a huge difference in yourmonthly payment.
Mm-hmm.
But there are a lot ofadvantages to being a buyer
right now in this market.
Mm-hmm.
(12:55):
a lot of advantages now.
Absolutely.
Housing prices have, I would saythat it's slowed in
appreciation.
Would you agree?
We're not seeing them rise quiteas sharp.
Correct, Correct.
We are, we are seeing somecorrections and, and I don't
wanna, uh, stand or jump on thatstandard correction in the
market, you know, crashing,blah, blah, blah, blah, blah.
(13:16):
No, we're not seeing that.
Uh, what I am seeing is thehomes that are priced
appropriately, and the homesthat are priced correctly,
again, key word, correctcorrection.
Yeah.
If they are being, or if they'rebeing put on the market priced
appropriately mm-hmm.
then we are not seeing any realslow down in the market ranges
(13:37):
that we standard, that we lookat standard wise.
Um, meaning, you know, a lot ofthe homes in in Greensboro for a
three or four bedroom home arenow priced anywhere from the,
say, one 50 up to three.
Um, and these are, these are thestandard neighborhood homes.
Mm-hmm.
um, you know, this isn'tdowntown Greensboro per se.
(13:57):
This isn't downtownWinston-Salem per se.
Uh, but this is your, you know,again, standard three bedroom,
two bath, quarter acre home.
Um, you know, and we're seeingfolks out there right now.
Um, that are dealing, um, with,with, again, ideal markets,
they're dealing with lesscompetition.
Um, meaning yes, there are lessbuyers out there.
(14:19):
Um, and, and, and the reasonbeing, you know, a couple of
reasons.
Number one is yeah, the interestrates may have gone up where
that pushed them out of thatprice range for a moment, but,
We do have other options thatare available out there to keep
us in play.
Um, and we'll talk a little bitmore about that as far as what
(14:40):
we see for new products that areout there today.
Um, but you know, again, whatwe're seeing as far as the
seller's market versus buyer'smarket, again, buyers are.
getting a little more controlhere.
Mm-hmm.
because sellers are trying tohold onto that purchase price
that they want.
Okay.
And, and in doing so, sellersare gonna have to deal with a
little more concessions.
(15:01):
Mm-hmm.
and preparation.
Now again, we've been talking alot of preparation on the
buyer's side in the last coupleof weeks.
Well, sellers also now need toprepare a little bit.
Because just putting a sign infront of your house isn't gonna
do the job as it did six monthsago.
Right, exactly.
Look, if you sold your house inthe last two years during Covid,
(15:23):
if you were one of those luckysellers who, who got that, good
congratulations, Celebrate, takeyour prize and move on.
We are not there anymore.
We are not in that market.
So, you know, buyers are goingto have a little.
advantage here.
You're not, you're not having tocompete with 20, 25 contracts
(15:44):
Yep.
On a price.
Yep.
I, I haven't seen any offers.
I'm not, and maybe you'redifferent, you're more on that
side of it, but I'm not seeingcontracts that are over, you
know, 15, 25,$30,000.
Right.
Correct.
You know, asking price.
I'm seeing our deposits comingdown to a more reasonable, which
is a big deal for me.
The deposit coming down is, It'ssomething that I feel like we
(16:06):
really, really, really needright now.
Because, you know, if you havesomebody putting down a$10,000
deposit on a home mm-hmm.
and there's something wrong withthat home.
Yeah.
And they can't, they reallycan't buy the home for, for
whatever reason.
It may be.
They don't, they can't afford todo the repairs on it.
Correct.
They've lost that money and thatmay be all the money they have.
Mm-hmm.
that may be all the money thatthey've.
(16:26):
To buy that home.
So I feel like that honestly,that was really needed.
Our, our due diligence depositscoming down in North Carolina is
a huge deal for me.
Yes.
I feel like a huge advantage forour buyers.
So sellers, you know, we're,we're not in covid market
anymore.
Um, you're gonna have tonegotiate a little bit, um, give
some seller concessions.
(16:46):
And, and I think that's, we'regonna talk about how those
seller concessions can actuallyhelp.
Buyers have a lower,theoretically, a lower interest
rate.
Mm-hmm.
um, or mortgage based on a lowerinterest rate, so they're not
having to deal with that higherinterest rate for a short period
of time.
Absolutely.
Absolutely.
(17:07):
Yeah.
Well, um, so, so again, we wealways stay positive here on our
show and, and we try to do that.
Um, and, and, and we also wantto be, you know, again, the
voice of reason and trust.
Um, so if there are things outthere, uh, you know, again,
we're, we're here to again, makesure that folks are aware, um
(17:29):
mm-hmm.
this in the Gloom and Doomradio.
Radio show.
This isn't a Globe podcast Um,you know, but we wanna make sure
that folks, again, are preparedand ready to act when they can,
and that they do have the.
Uh, products, uh, material,whether it be, uh, again,
something to read, something toeducate themselves on, uh,
(17:49):
whether it be in their localmarket, whether it be something
that's national, we might needto be prepared for, or something
like that.
Mm-hmm.
Um, but regardless, um, youknow, we wanna make sure that
you guys are talking to yourlocal agents, uh, both your
lenders and your real estateagents, get an idea of what's
going on, what's coming down theroad.
You know, again, in.
(18:10):
Local environment right there inyour, your Greensboro, your
triad area mm-hmm.
wherever that might be for you.
And again, having someone tobounce that information off on
or even just ask a simplequestion, you know?
Mm-hmm.
Hey, what do you think theinterest rates are gonna do next
week?
Well, again, that's a little bitof a difficult question.
We can give you reasons why wethink what, you know, what may
(18:32):
happen.
Um, But again, you know, uh, alot of that information is
outside of our control.
But we do have a couple of newprograms that have been coming
on hot and heavy for the lastweek, maybe even two weeks,
that, um, that we're gonna bringto your attention as well.
This should help out both the,uh, buyers, um mm-hmm.
Cause again, it gives them alittle bit of different avenue.
(18:54):
They negotiate as well as on theopposite side of things, the
sellers with this new productwill be able to keep their home
prices, uh, their sell price upa little bit.
But again, you are also gonnahave to deal with some of the,
uh, concessions that we hadmentioned a few times earlier.
Um, Right.
And, and with that, Gina, let's,let's just get right into what
(19:15):
the, you know, two one and 3 21,um, programs are that are out
there that, that are reallyexciting.
Again, keeps people in themarket, keeps people on both
sides, sellers and buyers.
Um, you know, again, talkingright at the.
Yeah, absolutely.
So I'm gonna focus specificallyon the, the two one.
(19:38):
And there are, I've seen both,both of them out there.
There's a 3, 2, 1, and thenthere's a one as well.
So there's a 3, 2, 1, A two, oneand a one.
There may be others out there,but this, this is what I'm
familiar with.
Now, the 3, 2, 1, I'm not gonnachat about that one.
I feel like, um, you reach acertain point where you have to
make a decision is that, youknow, is that worth it?
(20:00):
It may be more expensive.
To not be worth it.
So we're kind of looking at, uh,the two one today and what is a
two one?
A two one.
Um, Is this a mortgage rate?
Yeah.
So a two, one is a, it, it'sreferred to as a temporary buy
down.
Mm-hmm.
So basically what it's doing istemporarily buying down the rate
(20:24):
for a set amount of time.
And on a two one it's a two yearperiod.
Gotcha.
So it's a temporary buy down ofthe rate.
And you know, people have asked,Well, why don't we just pay
points and fees and buy the ratedown?
Well, the difference here isthat this is a temporary buy
(20:44):
down.
Mm-hmm.
And so it's, it's a buy downcovering a two year period.
Yeah.
It's a not a buy down covering a30 year period of your mortgage.
Mm-hmm.
So on this scenario, the, thedifference is, and I'm gonna go
into the cost, um, what it wouldcost you to do this in a minute,
(21:04):
but as a comparison, we're gonnatalk about getting your rate
down to a 5% in this scenario.
Mm-hmm.
in today's market, if you wereto get your rate down to a 5%,
Um, on the scenario that I'vedone, it's based on a$200,000
purchase price.
It would cost you about 19grand.
Wow.
To buy your debt rate down for30 years.
For 30 years.
And you're saying I'm buyingdown.
(21:25):
So if I wanted to buy down onthat percentage rate, So you're
saying going from like a, aseven to a five Right.
Cost me.
So that's two percentage points.
It cost me about$19,000.
Upfront.
Upfront, paid.
Okay.
Yeah.
Yeah.
So let's talk about how.
So basically what this two, onebuy down is doing is it's giving
(21:45):
buyers an opportunity or anoption for two years to have a
lower mortgage payment as iftheir loan were based on a lower
interest rate.
Mm-hmm.
So the scenario that we're gonnalook at all this is based on,
um, a$200,000 purchase.
10% down with$180,000 loanamount.
(22:08):
And I, um, this can be used.
Let me just back up.
This can be used on severalproducts.
It can be used on conventional,can be used on FHA and VA cannot
be used on U S D A.
Oh, so this is a conventionalproduct.
It's not a non QM product.
It's just a, it's a regular Ohloan.
Um, it is not an arm.
This is not an ARM product.
This is a temporary buy down.
(22:28):
It is a fixed.
Product.
Mm-hmm.
for those of you that are new tothe market adjustable rate,
mortgage arm, Yes.
Adjustable rate.
This, this mortgage It is, It'snot adjusting at all.
Mm-hmm.
There's no adjusting.
It's just how the calculation isdone.
And this is gonna be on a settimeframe.
(22:49):
This is gonna be on a settimeframe.
So we're talking about the twoone.
So essentially what this loan isdoing is for the.
Let me back up and say this is aseller.
So how we get here is it's aseller concession.
Mm-hmm.
And this is where, where you'resaying before that sellers are
using this as a tool.
Yeah.
Some sellers are offering this,I think I've even seen it on
(23:11):
some listings in the mls, wherethere sellers are offering this,
the two one buy down.
And so it has to be paid byseller concessions.
The borrower can't pay for it.
And so what that means is, likewe've all heard about sellers,
you know, paying closing costs,um, seller concession, seller
pay, closing costs.
This is kind of the same thing.
(23:32):
So it's a seller pay closingcost.
Your contract is written thesame, You're just gonna ask for
seller paid concessions.
Mm-hmm.
So what happens is it's a twoone.
So in the first year, yourmortgage payment is going to be
based.
2% lower than your base rate.
(23:53):
So that's where that two comesin.
So let's say your base interestrate is 7%.
Just to use round numbers on thetwo.
One.
In your first year of yourmortgage, your payment is going
to feel like it's a 5% interestrate.
Mm.
Now do I need, excuse me, Do Ineed to qualify for that as 5%
(24:14):
or 7%?
7%.
You do have to qualify at thehigher rate.
Yes.
Mm-hmm.
you do have to qualify.
Okay.
Regardless of what's offered.
So, even though, and again, uh,speaking from a realtor side of
things, so if I offer.
You know, this two, one buy downfor any buyer that's out there,
other than U S D A, uh, at leastfor these specific programs.
(24:36):
Then I need to put that in my,you know, remarks, or at least
I'm advertising my property tobe sold that way.
But I don't necessarily have tobuy that way.
Um, you know, again, it justbecause it's being offered as a
two, one, you know, again, cashbuyers are certainly welcome to
come in and again, buyer nowmight have a little bit more of
(25:00):
an opportunity to negotiate.
Now that they're using their ownfund cash versus, uh, this, uh,
this new program, the two onebuy downs.
Um, and you know, again, we, we,we, we are still in a
negotiating table and just givesus a different option, okay?
Right.
So yeah, so there's lots ofdifferent options, you know, as
(25:21):
far as the sellers if they comein with a different program.
But, so essentially how this haswork, so that first year you
have your, your 2% below your,your set rate, which is 7%.
Mm-hmm.
So your mortgage payment is thatyou are paying, is based on
five.
Now your loan is still a 7%interest rate, right?
(25:43):
But the payment that the, thebuyer is paying is based on 5%.
Mm-hmm.
So how that works is, let's saythat your, I'm gonna use, I got
some numbers in front of me, butthey're odd numbers.
I'm gonna use round numbers, soit makes sense.
So let's say that, That yourmortgage payment is a thousand
(26:05):
dollars a month.
Mm-hmm.
and that 5% interest rate makesyour mortgage payment$800 a
month.
Mm-hmm.
there's a$200 difference betweenthe 800 and a thousand.
Mm-hmm.
we've got$200 difference.
Your payment on this program isstill actually that thousand
dollars.
Mm-hmm.
But because you have thoseseller concessions to.
(26:28):
to pay your payment to buy downthat rate.
Mm-hmm.
you're actually making yourpayment at 800 and you're
pulling 200 out of your escrowto make the payment.
Mm-hmm.
so the seller concessions go toescrow and every month the
difference between your 7%mortgage payment and your 5%
mortgage payment is coming outof escrow.
So you don't have to make it.
(26:49):
It's being paid every month foryou.
Fantastic.
So again, the seller is notnecessarily making a$200 payment
for the buyers.
Uh, again, on a monthly basiswhen we get into the closing,
uh, that amount of money that'sagreed upon mm-hmm.
whether it be a two, one or a 321 or just a one, um, again,
(27:11):
that money.
is, is taken outta the closingor off the closing table.
Mm-hmm.
put into an escrow account.
So yes, it is now under, again,it, that money is placed in
escrow and, and again, it's notthe responsibility of the seller
anymore to do anything withthat.
Right.
That is basically a concessionand it's, and it's done with at
(27:33):
the closing.
Right.
Yeah.
No, the seller is no longerinvolved once we close, So
they're not actually likewriting you a check every month.
Um, it goes into escrow, goesinto a savings account, so to
speak, and it's paid everymonth, just like your taxes and
insurance are paid every month.
Mm-hmm.
So every month the differencebetween your 5% interest rate
and your, your regular or your5% mortgage and your 7% mortgage
(27:54):
is paid out of your escrow.
Nice for you, essentially.
And that's done.
throughout the process.
And the same thing happens inyear two.
So we have the two one buy down,right?
So in year two it, it changes tothe 1% difference.
So if your interest rate, mm-hmmwas 7%, now you're making a
mortgage payment based on 6%.
(28:16):
Got it.
And let's say that new mortgagepayment is$900 a month, then a
thousand dollars comes out tomake up the a thousand dollars
mortgage payment based on seven.
So it, it's a lot of math and itsounds confusing and it's a lot
to go through just talking aboutit without having like charts
and graphs and everything.
But essentially what's happeningis you're having a temporary
(28:37):
reduction in your monthlymortgage payment.
Mm-hmm.
that is being paid outta escrowfrom those sellers concessions.
Yes.
Well, hey, what, uh, so whathappens after year two, Gina?
So the goal of this loan isreally, To kind of get people
through a couple years and tolet interest rates settle and
(29:00):
come back down.
Now, keep in mind we don't havea crystal ball.
We don't know for a fact thatthey're coming back down, but
that is the hope.
So one, you need to be okay withthe full payment.
Mm-hmm.
just in case some, you know, youcan't refinance or something
changes.
You need to be okay with that.
You still have to qualify on thefull payment, on the full 7%
interest rate or whatever yourinterest rate.
(29:22):
So you need to be comfortablewith that payment.
But people going into this typeof loan are, for whatever
reason, wanting a lower paymentfor the first couple years and
hopes that they can refinanceand maybe maintain that payment
Sure.
For the remainder of that refi.
Sure.
So that's, that's really whatthe product is used for.
And you know, it could be usedfor other things too, not just
(29:44):
the interest rate.
It could be that, you know,maybe some ideas just out of
school.
And they're going to be movinginto a career that's going to
pay them more and they'll beable to afford mm-hmm.
You know, the, the highermortgage payment once they go
into that job.
So there's lots of reasons touse it, but that's kind of the
gist of it.
(30:04):
Sure, Sure.
That's, that's perfect.
And, and, and again, that's,that, that just sets up another
opportunity again for buyers,Right.
Um, you know, again, qualifying,like you said, on the higher
rate is, is required.
Um, but for the, for, for the,for the duration of that period,
whether it be two or three yearsor one year, you know, again,
buyers are able to, uh, enjoythe savings, if you want to call
(30:26):
it that.
Um, and, and, and, you know,again, maybe bank a little
extra.
So if you're saving two or$300 amonth in year one and then one
to$200 a month in year two, youknow, again, it's not a bad idea
to go ahead and put that money,uh, again, into a savings
account or even buy down, Idon't wanna say buy down again,
(30:48):
even make an additional, uh,principal payment.
Yes.
Um, again, reducing, reducingyour loan amount.
Yeah, absolutely.
And that would be a smart thingto do is, you know, make up the
difference and, and pay thatmoney towards your principal so
that way you are reducing,you're, you are reducing your
interest rate, that you'repaying even more.
You're paying off that mortgageand that principal even faster.
(31:08):
Mm-hmm.
And, you know, if you do refi,the good thing about this loan
is that it's an escrow account,so you're not gonna lose that
money if you refi, you don't getit back.
But it is applied as like aprincipal reduction.
Okay.
Um, so principal reduction, ifI'm gonna refinance, let's just
say in a year from now.
Mm-hmm.
Um, my interest rate drops from,or I should say the national
(31:30):
interest rates, drops, dropsfrom say 7.25 down.
6.25.
Mm-hmm.
I can refinance.
Mm-hmm.
with that money again, that'sstill in escrow.
Mm-hmm.
reducing my principle, which isgonna again, in essence reduce
my loan amount.
Yes.
Um, and, and, and then I can goahead and refinance, I don't
(31:52):
wanna say fee free, butcertainly with some sort of an
advantage where I've got somemoney left over in my escrow
account and that can be appliedto.
Yeah, so it, it, you don't losethe money.
So if you refinancing that, thatyear, the money is, you know,
the loan balance or theprincipal is reduced.
So your new loan is gonna be ata lower amount based on what was
(32:13):
left in the escrow and whatyou've paid off to it so far.
So, yeah, that's pretty cool.
So, I mean, yeah, so there'ssome ways to use it.
It's not part, is it perfect foreverybody to know?
Um, and the downside is going tobe, this is a seller concession.
Mm-hmm.
And it comes out, Now it's gonnabe different based on the loan
amount, but it's about 2% of thepurchase price.
(32:36):
Mm-hmm.
So 2% of the purchase price.
Let's say somebody needed sellerconcessions to help with closing
costs already.
Mm-hmm.
Before they thought about doingthis program mm-hmm.
Well, we're limited by ourprograms on how much seller
(33:00):
concession we can actually get.
Mm-hmm.
So on a conventional loan and aconventional loan depends on how
much you have to put down or howmuch seller concessions you can
get.
But, uh, it starts around 3%.
So, Let's say that you neededthose seller concessions to help
you pay your closing cost.
Mm-hmm.
Well, if you do the 2 0 1 buydown and you get 2% in seller
(33:23):
concessions, that only leavesyou 1% to go towards closing
costs, which is about two grand,which might not be enough.
Mm-hmm.
so.
There, there are some things totake in consideration.
If you were planning on gettingthose seller concessions or
those seller paid closing costsalready.
Mm-hmm.
then this might not be the bestoption for you unless you want
to come out of pocket for yourclosing cost.
(33:43):
Um, Gotcha.
As it is because it, it, it istaking that money essentially.
Okay.
Gotcha.
So, so, uh, and again, I knowthis is relatively new, uh, to
both of us.
Um, I have not processed, uh,one of these loans.
But in doing so, um, again, themath required, is this something
(34:07):
that, um, uh, that you as abroker now would be mm-hmm.
more, uh, say, involved with asfar as part of the negotiations?
Yeah.
Yeah, absolutely.
So, I mean, it's not a lotdifferent for the realtor side
of it.
Mm-hmm.
when you're, when you're makingan offer on a contract, You're
(34:28):
just gonna ask for those sellerconcessions.
Mm-hmm.
And you know, you know, if youcall me up and say, Hey, we're
looking at this house, we'relooking at a purchase price of
200,000.
What, what do we need to askfor?
We can give you that number.
Mm-hmm.
now it's not gonna be a hundredpercent exact because we gotta
lock in that loan for it to beexact, so.
(34:49):
Mm-hmm.
the interest.
It's based off of the interest.
Where you lock it out, whereyour interest rate is going to
be.
But we can get really, reallyclose, you know, and if we go
over, so we could maybe ask fortwo and a half or that full 3%
in seller our concessions, andthen we can use, you know, the
2% for the buy down and then 1%for other closing costs.
(35:09):
So it's not gonna go to waste.
Um, Sure.
But as far as you're concernedin making an offer, you really
just have to ask for thoseseller concessions on the
contact.
Right, And as we've mentionedearlier, we are seeing those
being mentioned.
Mm-hmm.
in the mls, or at least in theadvertising, which is something
that's being offered from thebuyer side.
I'm sorry, Right.
(35:30):
From the Stellar's side, whichagain is giving you the direct
indication that Okay, 2%, youknow, of again, of the, uh, the
purchase price.
Could be or will be, you know,again, based on math, you know,
go back into those, uh, sellersconcessions, uh, once we go
ahead and put the, uh, contracttogether.
Yeah, absolutely.
(35:50):
Cool.
And you know, and it goes backto, you know, just being aware
of your options.
And like I said earlier, buyingdown the rate on this scenario
would cost somebody, you know,close to 19 grand.
Yeah.
And that's money that's notgoing anywhere.
You're, that's a fee.
You're paying the, the lender toget that rate, it's a fee.
You're not getting any benefitfrom that other than just
(36:12):
lowering your interest rate.
That's a closing cost.
Yes.
Whereas this, you can do this asa seller paid, and it's about
4,200 on this scenario that I,that I plugged in and seller
patient sessions, which is notunreasonable.
No, no.
And that's, so that's 4,200based on 200,000.
(36:33):
So let's just jump that up.
So, Basically double that rateif we're going to 400,000,
correct?
Yeah, I mean, I can flip that inreal quick.
So yeah, I'll do a 400.
So, so I mean, if, if we'redoing just, you know, again,
simple math, I mean, you know,instead of going with a$19,000,
you know, closing cost, buydown, you know, you're looking
(36:53):
at something less than half.
Again, if you're going up tothat$400,000 mark, guessing 84,
80$500 a mo.
Uh, you know, again, as far asthe total concession.
Yeah.
So that would end, that wouldput you at, um, about, yeah,
about 83 90 in seller paysabout, and it's still about at
(37:16):
that two, 2.098%.
So, you know, you could ask fortwo, two and a half percent, or
you could go ahead and ask for,you know, 3%, four, you could
ask for whatever.
Yeah.
Um, but we just need to know, Ineed to know going into the loan
setup.
I, I need to know be whilebefore, once you go under
(37:36):
contract.
I need to know from the buyer ifthat they wanna use this program
cuz they can use the sellerconcessions for other things.
Sure.
They don't have to use it forthis.
Sure.
But when I structure the loan, Ineed to know how to structure it
because it needs to go out onthe loan estimate and it needs
to be structured around thatYes.
And, and, and, and I wouldimagine that this is also gonna
involve realtor discussions, uh,both on the buyers and the
(37:59):
seller side.
Um, for the reason being, um,if, if, if a seller is
advertising that they're, youknow, again, uh, willing to, you
know, use the two, one.
Program for their sell price,then, you know, again, that
gives us generally a number tostart with as far as what we can
negotiate with.
Mm-hmm.
Um, and, you know, and again,if, if, if, depending on what
(38:21):
the buyer's needs are, um, youknow, whether or not they need
additional closing costassistance.
Right.
Um, and on the other side ofthings, um, you know, for the
sellers, how motivated are they?
Right.
Um, and, and whether or notthey're talking about again,
moving, um, or selling theirproperty.
On a need to basis versus again,selling their property on, uh,
(38:44):
on a want to basis to go aheadand, uh, you know, again, get as
much equity outta the home asthey can.
Again, that's the name of thegame for buying property and
selling property.
Um, but again, folks do havesome needs.
Uh, it might just be that thereis a transfer in place for
someone's employment and youknow, again, someone.
Capitalizing on all of the moneyleft on the table, of course,
(39:07):
would be the best scenario.
But again, at least we haveoptions and, and, and power to
negotiate on both sides.
Yeah, so I mean, there areoptions out there and I think
the whole point, you know, of,of us doing this and going
through it in the podcast is, isto keep buyers, you know, keep
you in a positive mindset.
Mm-hmm.
(39:27):
There are options out there tohelp ease the pain or the higher
interest rates.
Um, sure.
It's a great time to negotiate.
Yep.
I mean, you know, if you could,if you can buy a house and get,
you know, 10, 15 grand off ofthe list price mm-hmm.
well, you can change yourinterest rate as the market
(39:48):
fluctuate, you can change yourinterest rate.
You can't change what you paidfor the.
Correct.
You can't absolutely correct.
Paid for it.
Mm-hmm.
and people who bought duringcovid and paid 25,$30,000 over,
they can't change that.
That's the purchase price.
That's they're in it, they're init for that amount.
Yep.
Yep.
You know, unless they sell thehouse and you can't change what
you bought it for, but you canchange your interest rate.
(40:10):
You, you most certainly canabsolutely go back into that,
uh, that statement we madeearlier.
You know, we can control what wecan control and those that we
can't control, again, we gottalead by the.
Yeah, absolutely.
You know, in buying a house, itprotects you from the, the, in.
It, it, it protects you from theinflation of the rental market.
Mm-hmm.
it protects you from dealingwith a crazy landlord.
(40:32):
Yeah.
you know, you know, you're notpaying a hundred percent
interest rate in rent and Right.
And there are, there's somenegotiating power right now and
buying so, it is not a bad timeto purchase a home.
It's just No, no, no, no, no.
And again, you know, again, justto reiterate here, what, what we
are seeing here in our, in ourmarket, um, you know, again,
(40:53):
property values are still onthe, on the rise.
We're not seeing the, you know,the, the, the, the weekly bumps
that we were.
But, you know, again, we'restill seeing that, uh, you know,
we're, we're increasing now.
Uh, again, sales, uh, purchaseprice, um, on a regular basis
here.
Um, and they're holding strong.
And in our market, you know, wedo have industry that's still
(41:15):
moving in.
We've got plenty of buildingthat's still going on.
Um, and, and we are still insomewhat of a housing shortage
based on our inventory levels,right.
Again, I think we spoke earlierat the beginning of the show.
Uh, we're at 1.8.
We're a little less, I'm sorry,a little more than, uh, one and
a half months of inventory,which standard inventory, uh,
(41:39):
nationally, um, as well asregionally should be somewhere
between three and six months.
Right's, A balance.
What, what they consider abalance.
Absolutely.
At least Vermont.
Yeah.
Yeah.
So, so we are still short andthen until that inventory
actually catches up, which, youknow, uh, uh, the buyers, I'm
sorry, the builders, um, are,you know, they have their own
(42:01):
concerns out there with, youknow, still standard supply
chain issues that are going on.
Um, We mentioned earlier thethings that are outside of our
control, um, uh, the worldeconomy, um, and, and how things
are progressing with with thewar and, and the uk.
And, and again, things thatreally just don't, uh, don't
impact our day to day lives.
(42:23):
Um, you know, eventually do worktheir way into, uh, you know,
um, Our wallets, which, which isYeah, it's our wallets.
A little bit of, a little bit ofa, you know, troubling fact.
But, but, uh, again, welcome tothe global economy, right, Yeah,
exactly.
So keep it, keep it focused.
Keep it lo local.
You guys, keep it positive.
If you have questions about whatyou can do in this market or
(42:45):
what you can't do, should youbuy, should you sell, um, should
you look at a mortgage?
Should, should you refinance?
I do have refinances that arestill happening for one reason
or another.
You know, it, it's not the, it'snot the end of the world.
There's still a lot of positivethings going on, and let's focus
on our area and mm-hmm.
um, the good things that aregoing on here, and if you have
(43:06):
any questions about any ofthose, you know, always feel
free to reach out and, you know,ask somebody who can guide you
in the right direction.
Absolutely.
Absolutely.
Of course, we're always here.
Uh, and you can get our contactinformation down below.
And, um, and, and I thinkeverything's updated there as
well, Gina.
Yes.
And, um, and yeah, uh, again,folks, um, It is always a good
(43:30):
time to investigate and into andbuy property.
Um, again, like Gina was saying,you know, um, we, we, we can't
cry over spilled milk or like Isaid, the opportunities that we
had actually missed out on.
Um, everybody would love a 3%interest rate.
Um, But those days aren't comingback anytime soon.
Um, so what we need to do is,uh, is make the best of what we
(43:53):
have.
And, um, and again, dealing withyour local, uh, mortgage
professionals and dealing withyour local agents, uh, again, is
gonna be the best guide to getyou the best deal, um, in the
near future right now.
Yeah, absolutely.
All right, guys, well, I thinkthat about sums it up.
Are we good?
I think so, I, I, I don't thinkI've got anything else to add
(44:14):
here.
You know, it, other than thefact there's gonna be, what, 68,
69 degrees here, um, beingNovember, um, here in the triad,
which, uh, you know, I lovegiving everybody the, the, the
standard weather update.
But, uh, man, I love fall herein North Carolina.
Really, really do It is a greatday to get outside.
You guys, go and get outside.
Enjoy the weather in NorthCarolina and we'll see you on
(44:37):
the next.
Talk soon.
All right, thanks.
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