December 14, 2022 • 30 mins
Jeff and Gina discuss market trends during the holiday season including inventory, the next Fed Meeting and home loan rates today. In this episode we also discuss the importance of planning for Self Employed borrowers who want to prequalify to buy a home. Mortgage companies typically need a two-year history of self-employed income, showing enough income to qualify. We also briefly discuss alternative options for financing your primary or investment property.
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
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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.
And Gina, I am Gina Millway,your local mortgage advisor.
And this is, Hey, good morning.
I'm Jeff Cunningham.
I am your local real estateagent here in Piedmont Triad of
North Carolina.
We're covering Greensboro.
We are in Greensboro today.
And How you doing today, Gina?
I am fantastic.
Another rainy day.
(00:20):
Is it gonna be another rainy daytoday?
please tell me there's some sunbecause, well, there's a little
bit of sun over here, but don'tget too excited.
Yeah, we're supposed to get alittle more rain this afternoon,
so it's, it's like Seattlecrying out loud, I tell you.
Oh my gosh.
I am, I'm over.
I'm over the rain in the cold.
I'm over it.
I'm ready for spring.
I'm done.
I'm over it.
This is it.
Just scream.
(00:42):
The, I just wanna go home andput on the fuzziest pajamas that
I have.
Yep.
And sit on the couch withanother fuzzy blanket and some
hot coffee and just watch, watchtv.
That's, that's the motivationfor this week.
Yeah, absolutely.
Absolutely.
Well, I, I did take a littlemidweek vacation yesterday and
did just exactly that in themorning.
It was, you know, crappyweather.
As you know, and my goodness, Ijust, I just took advantage of
(01:05):
the, of the fuzzy blanket andthe fuzzy pajamas.
So absolutely.
But but yeah, we're supposed tohave some great weather coming
up, I think coming in for earlynext week.
So yeah, if you got any Yardwork you want to do other than
your holiday shopping.
Yeah.
Next week would be the time toget out for the next weather.
Yeah.
So we are recording this, whatis today?
December the eighth.
(01:25):
And so it's Christmas season isin full of fetch Christmas music
on all the stations.
Oh, yeah.
Christmas shopping, Christmascrowds, all the fun stuff for
Christmas.
But the bells out there areringing Well, let's talk about
how the, the market's doing inthe, in the Christmas shopping.
Season.
Mm-hmm.
how's, how are we doing oninventory side?
(01:46):
Are.
Yeah, we still seeing a littlebit of increase or we are seeing
a little bit of an increase butwe're not seeing a ton.
Right now.
If I could be so bold I thinkwe're moving back into, at least
here apparently we're movingback into more of a.
Seasonal market.
You know, and I think, again,we've got 10 different things
out there that are, that areimpacting our market, whether it
be you know, the elections thatjust happened, we've got
(02:06):
interest rates that are bouncingup and down.
of course, Christmas, we've gotwe just coming outta this
pandemic, you know, everybodyand their brother seems to have
a cold nowadays, so you've gotthe tri deic or whatever they're
calling it nowadays that's goingon.
So in any case, all of thosefactors are not adding to our
inventory.
And, and again, we're not seeinga huge drop.
(02:27):
We're not seeing a hugeincrease.
But again all indications ofpointing to we're just in a
seasonal market at this moment.
You know, if I, I've, I've gota, a listing appointment this
afternoon, so we've got folksthat are still selling.
Of course these folks are gonnabe buying as well.
And, and I've got a couple otherbuyers that are out there as
well.
So yeah, it's a mixed bag.
Well, we typically see, at leastin this area, a little dropoff
(02:50):
in buyers.
Mm-hmm.
in the winter, and theneverybody kind of picks back up
around the end of January,February for the spring market.
Yeah.
But honestly, December hasalways been my favorite.
Market for a buyer.
Mm-hmm.
because there's less competitionin buyers.
Yes, indeed.
A little bit less right now, Iwould say in general we're
probably a little, little slowerthan what we would normally see.
(03:11):
Mm-hmm.
you know, pre covid and, andeverything that's going on.
But, you know, a lot of peopledon't want to.
Moved during the holidaysbecause of Christmas decorating
and family and those types ofthings.
I actually purchased my house inDecember.
We actually, we closed on, Ibelieve it was like December
15th, in the middle of December,and it was fantastic because.
I used it as an excuse not todecorate my house, you know?
(03:38):
And I know no one can see theScrooge outfit that you're
wearing, but right?
So, no, it was great.
No, because.
Ah, yeah, I've just kind ofslacked off the decorating over
the years and the kids are like,we'll help you.
And Oh yeah, for the first 10minutes, they're great.
(03:59):
they're great.
Yeah.
Ah, yes, I understand.
Absolutely.
And, and, and, and, and, andtruth, truth be told, we're a
little, a couple of differentsituations here.
You still have kids at home, ofcourse.
Yes.
And mine have already moved out,so I, similar to you, when I had
purchased my first house thatwas just before Thanksgiving.
Years and years ago.
But yes, same thing.
You know, we got everybody inthe house.
(04:20):
I think we were sitting on boxesfor Thanksgiving dinner.
Which you know, when you're,when you got your first house
and you're sitting on boxes inyour own house, it doesn't
matter.
It's not, it's beautiful chairand you're sitting at a
beautiful table because it'sthat.
And, and yes.
My daughter again, both my kidsare outta the house now.
But my daughter asked last weekat Thanksgiving, the week before
(04:43):
you know, Hey, what what are yougonna get a treat, dad?
When are you gonna go ahead andstart getting a house decorated
for Christmas?
And and I have one of myfavorite decorations is one of
those little three feet or threefoot Charlie Brown Christmas
trees.
And I love it, I just move itfrom wherever it, it is gonna be
set up in the house, out to thegarage, and then back and forth,
(05:05):
and it's, it's really good.
You just pick it up and just,you just relocate it.
It's a one-handed job.
Absolutely.
It's easy.
That's the best.
Yes.
So, but, But going with that, mydaughter, you know, the look on
her face when, you know, shesaid, Hey, when are you gonna
get a Christmas tree?
And I said, I have one.
You know, boy, I tell you what,if I could ever look at a, a 31
year old, 12 year old that thatwould've been it you know,
(05:27):
disappointment, face justdropped.
Like, oh my goodness, dad, whatare you thinking?
So, So yeah, I'll be getting aChristmas tree here in the next
week or so.
highly disappointed, which yeah,people, yes, highly
disappointed.
which will lead us a little bitinto maybe a little bit of our
market update.
Again, I'm hearing that theprices, so inflation of course,
(05:51):
is is Is something that we'reall being impacted by here here
in the season.
Mm-hmm.
but most especially, so this,this may sit well with you and,
and give you a reason to tellthe kids that you're not buying
your Christmas tree this year.
is, they are just about doubledfrom what I'm understanding.
Oh, wow.
Yes.
So, you know, if you were upbuying a a$50 Christmas tree
(06:12):
last year, Expect to spend about90 or a hundred dollars this
year.
Wow.
Yeah.
It's it, it, it's everywhere.
You know, just the cost oftransportation you know,
everything else that any of thefarmers and and providers are
doing for us you know, it'simpacting everybody.
But but with that, you know,again, we we do only have a
couple of more meetingsscheduled this year for the
(06:34):
Feds, which generally thatshould be The only time they can
raise the interest rates goingforward or drop them for that
matter.
And, and, and, and with that ifyou don't mind, Gina, what have
you heard here about the marketlately?
What's what's going on withagain, with the feds and their
rates?
What's the expectation and, andhow's that impacting our our
interest rates here are mortgagerates going into the next coming
(06:55):
weeks or months?
Yeah, absolutely.
So the.
interest rates have, are, arebetter.
They're, they're, they'reimproving.
They're not back, you know, towhere we'd all like to see'em,
but they're improving.
And you know, right now we'reseeing rates depending on the
scenario because everybody'sscenario is different and rates
are based on not just the rate,what is the rate, but it's based
(07:19):
on the loan scenario, purchaseprice.
Mm-hmm.
credit score, all that, etcetera.
You know, so we're seeing ratesanywhere from right now between,
you know, I would say six and ahalf to seven and a half,
depending.
You know what the scenario is,so they are better.
They started improving theinflation.
The last inflation report thatcame out was where the feds
wanted to see it.
Yes.
(07:39):
It's not, well, I'm not wherethey wanted to see it, but it
was moving in the rightdirection.
It was improving as far asthey're concerned.
As far as they're concerned,Right.
We're still filling it.
It's not better.
But their, their main goal isgetting inflation under control.
Mm-hmm.
and.
That is their, their mainleverage to do it is interest
(07:59):
rates.
Mm-hmm.
And so there are a lot of thingsthat go into this there.
And we talked about, you know,jobless claims affecting it.
Jobless claims in itself doesn'taffect it, but everything
together does.
So the feds right now want, theywant there to be pain.
Mm-hmm.
and pain means job loss to them,and job loss means that people
(08:22):
spend less money.
Therefore, that puts a curb oninflation.
Mm-hmm.
So them raising rates, createsthe pain, creates the job loss
and return reduces inflation.
Mm-hmm.
kind of the chain reaction thatthey're looking for.
Sure.
So inflation did start to showsome signs of improvement and
improving, which made the fedshappi.
(08:45):
and so they are, there is ameeting coming up.
I believe this, the thir 13th iswhat I said and for sure I don't
have, nobody has a crystal ball.
We were kind of expecting a halfa point last time than we ended
up with 75, but there are moresigns pointing towards what'll
only have about a half a pointincrease this.
(09:06):
Okay.
And similar to the last few rateincreases that we have seen, and
I know it's been a littlesporadic are we, are, are we
still seeing or are youexpecting that there's any
residual or built in protectionfor us?
You know, meaning you know, ifthese things jump up, you know,
three quarters of a point,sometimes half a point, we don't
see the mortgage rates increaseimmediately.
Cuz again, sometimes there is alittle bit of a buffer built in.
(09:28):
Mm-hmm.
do we have any buffer left?
Do you.
Yeah.
I mean, there's others, there'salways buffers built into it.
Mm-hmm.
because companies, mortgagecompanies are not gonna put
theirselves on the line to losemoney.
Okay.
So there are buffers built intoit.
Absolutely.
And right now everybody'sexpecting the half a percent.
So it just really depends onrates.
(09:53):
I, if what happens after the fedmeetings really depends on.
What they say.
Mm-hmm.
not necessarily the data, butwhat they say or do they, do
they feel like they can ease upon it or are they still hard
pressed on keeping the painmm-hmm.
so that that's what's going toaffect rates is mm-hmm.
(10:14):
what they project that they'regoing to do.
Right.
If they project that they'regoing to continue decreasing as
we expect them to do mm-hmm.
then the, the rates will beokay.
We'll, they'll still hopefullycontinue to improve with that
expectation.
Right.
But if they come out and say,you know, the numbers aren't
really where we expect it gonnabe you know, and then we, we
(10:37):
could see some increases.
Sure, sure.
Well you know, I I, I, I didhear, I mean, there are a few
articles out there that are, youknow just, just being thrown
around.
You know, interest rates areexpected to recover.
One of the last optimisticmessages or, or, or articles I
had read probably they said, youknow, sometime in 23, towards
the end of 23, And, and thenumbers I had heard out, there
(10:59):
are somewhere, you know, againyou know, the pre pandemic
numbers right around five, fiveand a quarter, maybe even five
and a half if not even droppingdown lower than that.
And, you know, those are greatrates.
You know, again, that again, my,my, my first home I was almost
9%, I think were 8.75.
Right?
Yeah.
And, and again, historicallythat's though, that at that time
(11:20):
was a fantastic rate.
Mm-hmm.
I was applauded by all my familymembers and and, and, and it
was, you know, again, it wasgreat.
you know, of course beforepandemic, I think we were right
around five and a quarter,five-ish you know, bouncing up
and around right there on fiverefi rates.
Of course, were much lower andmuch better.
But you know, I I, I've beentold, and, and I'm certainly
(11:41):
telling my clients and buyers aswell as the sellers you know,
our 3%, 4% rates.
I mean, they're just not comingback.
If they do, we don't know whythey would.
But you know, we have just gonethrough a heck of an, an anomaly
mm-hmm.
that you know, again, those thathave been able to take advantage
of it.
Fantastic.
What has gone well for us, ofcourse, is our property values
(12:03):
have all increased.
Yep.
You know, those, those that ownproperties of course.
And and we don't expect any ofthose to be dropping anytime
soon.
If, if, if ever you know, eachtime we've ever, each time, I
think it was in the last 60years.
That we've come out of arecession.
You know, our property valueshave always increased.
They we're not gonna see thatimmediately every time.
Mm-hmm.
You know, but at the same timewe, we, we have historic history
(12:26):
on our side where, you know, ourproperty values are gonna
increase.
Yeah.
So, and they always come back.
Even if they drop, they alwayscome back.
So Absolut.
Absolutely.
And it's more of short termversus long term.
Mm-hmm.
you know, if you're buying ahouse for a short, short term
mm-hmm.
gain a, a fix and flip or an, oryou know, short term investment,
maybe you're gonna be in thehouse a year.
It makes a, it, it will make ita little harder.
(12:48):
But overall on the long runYeah.
Property values, I mean, theyalways increase.
They continue to, Absolutely.
And with that we have differentVal we have different options
and different products out therethat are available.
So just since you mentioned youknow, again maybe an employee
that's transferring into, let'sjust say Greensboro you know,
for the next two or three yearsit might not be the best idea
(13:11):
for that individual to actuallylock into a 30 year fixed
product.
You know, and, and, and, and,and, and again, the rates being
what they are and rates beingwhat they might be again.
You know, it might be a betteridea if, if the individual
actually gets into a some sortof an adjustable rate and or can
take advantage of maybe the twoone buy downs in a row, right?
(13:33):
right.
You know?
Yeah.
Not to call the two one buy downon adjustable rate by any means,
but but you know, takingadvantage of some of the
products that are there,reducing your monthly you know
income.
Oh, I'm sorry.
Right.
Your debt, right.
Your monthly debt.
Yeah.
and and then, then being able toturn that around in a couple
years, you know, again,hopefully maximizing your
profit.
Right.
Absolutely.
Yeah.
And there's some good productsout there to, to help those
(13:53):
buyers who.
Wanna keep their mortgagepayment under a certain percent
and still be able to get into ahome that they want.
Absolutely.
Okay.
And you know, and talking aboutthe market and the time of year
that we're in, we're inDecember, the end of the year
we're kind of wrapping up theyear for most people and most
businesses.
Yes.
So this is the time of yearwhere if you're going to be
(14:16):
buying a house, you need tothink about your tax.
Mm-hmm.
And what, what, what in your taxreturns there, do we need to
work?
Would you be looking at there,Gina?
Well, this is primarily going tobe for the self-employed
borrower, ah, the W2 borrowers.
We don't usually get tax returnsvery often.
Usually the only reason we lookat.
(14:38):
Tax returns for theconventional, you know, W2
salary bar is, you know, maybethere's some tax debt or
something like that, but it'snot.
Mm-hmm.
typical to get a tax return forsomebody who's w2 hourly salary
income.
So if you are self-employed, youreally need to be thinking about
the income that you're gonna bereporting on your tax returns
(15:00):
and, you know, you may wannatalk to.
a loan officer before you filethose.
If you're gonna be buying ahouse in the next mm-hmm.
couple years and this is theirprimary residence, not, not
another investment property.
Well, and it depends, I guess itwould be the type of loan that
we wanna do.
So it, it could be for primaryor investment.
(15:20):
There are the, the benefit toinvestment is there are
alternative options.
Mm-hmm.
to self for self-employedborrowers where we don't have to
use their.
now for your primary residents.
We don't have as manyalternative loan options as we
do your investment.
There are a lot more regulationsaround a primary residence, so
(15:42):
if you're thinking about buyinga primary resident, it's really,
really important that you payattention to your tax returns.
Mm-hmm.
basically, the rule of thumb isif you don't tell Uncle Sam that
you make it, we can't use it.
Oh, and that's, it's not yourgross income.
(16:04):
It's not that number one linegross receipts on your
self-employed income, on yourSchedule C.
It is after all your deductions,the adjusted gross income, the
adjusted gross income, that isthe line that we are looking at.
Now, there are some things thatcan be added back in
depreciation is usually a reallybig one because it's not.
(16:26):
It's not an actual expense.
It, it's a, it's a lineadjustment.
It's not an expense that you'repaying out money for.
It's a line adjustment.
So typically the investorsthemselves are gonna be using
the depreciation, right?
So depreciation can be addedback in mm-hmm.
So there are a few things thatcan be added back in, but.
For the most part, we are gonnabe looking at that, that gross
(16:50):
adjusted income from yourSchedule C if you're
self-employed or you'redepending on, you know, what
type of corporation, K one s orwhatever you may have.
Mm-hmm.
This carrying over to youractual income.
That's what we're looking at.
And I, if that's what you'rereporting, that's the income we
have to use.
Mm-hmm.
and we all know self employeepeople typically.
way more money than, you knowwhat they tell Uncle Sam because
(17:12):
everybody's trying to avoid the,the tax hit.
Mm-hmm.
Well, there's a home hit Ah, ifyou don't show income, right?
It, it's one or the other.
You can't have it both ways.
Right.
You know, if you don't reportincome, you're not gonna have
enough income to buy a home.
You wanna make sure if you'replanning on buying a home or
(17:33):
maybe financing of any, anyother type too, because they're
places that look at income.
You wanna make sure that youhave enough income on your tax
returns, sure.
To go through this process.
So talk to your loan officermaybe before you file those
taxes and just kind of get anidea of the income that you
need.
Right?
And yes, you may have to paytaxes on that.
(17:54):
it beats the alternative.
It's gonna get you what youneed.
It's gonna get you the desiredoutcome, which is again, the
income being reported, which isgonna be reflected again on your
applications and so forth.
Right, which will get you intowhat it is that you need to do
so that you can qualify for aloan.
Right.
Exactly.
And now there are, there arealternatives for primary homes
(18:17):
if people are self-employed.
There are bank statement loanswhere we basically take 12 or 24
months of bank statements and weanalyze the income that flows
through the account.
We get an average monthlybalance and we use that as
income.
Mm-hmm.
the problem with that is that isa non-traditional loan.
Mm-hmm.
(18:38):
and what the rates where theyare anyway, as high as they are,
the non QM stuff, it's a riskierloan.
it's considered riskier.
It's it's, they're not privateinvestors, but it's not your
typical Fannie Freddie FHA loan.
It's not a government backedloan.
So there are more riskadjustments.
The rate's gonna be higher.
and you're gonna need more down.
(18:59):
Mm-hmm.
Down payments will rangeanywhere from 10 to, you know,
20, 25%, just depending on thescenario.
Sure.
So if you don't report to UncleSam mm-hmm.
right.
And you don't show income andyou have to go non-traditional.
It will be higher and rate.
It'll be higher in fees, andyou'll need more money down than
(19:21):
you would typically yourtraditional loan.
Right?
There are options out there, butif you can prevent that by
preparing your tax returns,it'll save you some money.
And self-employed borrowers, youknow, there are different
guidelines for those, butideally you wanna have income
for about two years.
Some instances we can use oneyear's tax returns if the.
(19:43):
you know if it's a conventionalloan and the business has been
in business for over five yearsmm-hmm.
we may be able to get away withone year.
But you wanna be thinking abouta two year span just to, just to
c y a.
Yes.
Yes.
Absolutely.
Well, that's fantastic.
Thank you for all thatinformation, cuz that is, that
is a mouthful.
It is a lot.
Yes.
Yeah.
Yeah.
So I mean, the, the thing is, isif you're thinking if you're
(20:05):
self-employed mm-hmm.
again, self-employed borrowers,if you're self-employed, talk to
a loan officer.
Yes.
Before you file those taxes.
Now you, and, and that's, Ithink, is a big thing.
That's a big misnomer.
I think that's out there aswell.
Is establishing contact or arelationship with a loan officer
does not mean that you're buyinga house next week.
(20:26):
Right.
You know, again, in someinstances, like we're discussing
there is a necessity forpreparation, you know, and at
least identifying what whatneeds to be worked on.
Right.
So, so yes, this does work bothways and, and it can work
negatively both ways.
Number one is yes, if you thinkthat you're able to afford a
home and you have not spoken toa loan officer, then number one,
(20:47):
you're probably gonna be a lotdisappointed or very
disappointed when you go in andsay, okay, I wanna buy this
house.
And mm-hmm your tax returnsdon't allow you to get that.
So again that's, that's justdisapp.
Right?
And it happens all the time.
All yes, it does.
The time, all the time.
So it's not uncommon at all.
Right.
And you know, there, and I'mgoing back to the primary versus
(21:12):
investment.
You know, those of you who areinvestment buyers, there are
more alternatives for investmentproperties.
Mm-hmm.
than the primary home.
We have cash flow or no doc forinvestment properties where
basically we use the cash flowof the property.
I mean, there are instanceswhere they do stated income on
investment properties.
(21:32):
Of course, those, you know, theriskier you get or the less
documentation, the moreexpensive they get.
But I will say right now, thepricing adjustments that were
made on the traditional side ofan investment property, like if
you're just going with a regularloan versus using a
non-traditional is not muchdifferent.
Right now.
(21:53):
The rate probably a littlehigher.
Maybe looking at a point, pointand a half for the same loan
scenario versus convent.
Okay.
But conventional investmentproperties have a ton of fees on
them right now.
Mm-hmm.
there are a lot of pricingadjustments on those loans.
Mm-hmm.
So it might be worth your whileto do the no doc.
It's, you know, it's, it's lesswork.
(22:14):
You don't have to go through thetax returns, you don't have to
provide all those and worryabout it.
You just got, you know, you justgotta make sure the house cash
flows so, So there's somebenefits to that for the
investor side, but the, the bigthing is on the primary side,
when you're buying a primaryhome, you have you, there's not
as many options, right?
(22:34):
And there's a big differencebetween traditionally
qualifying, showing income onyour taxes and alternative loan
products for primary.
For primary homes, right?
Mm-hmm.
Well, if speaking of primariesand I know it's a little
difficult to, to gauge ratesagain based on where folks are
based on down payments and soforth, but where we are with the
(22:56):
last adjustment, and again, withthe the vibrations we've been
seeing here in the last coupleof days anyways, where are the
rates at today?
So if I was gonna qualify for$300,000.
You know and I was going at 5%.
Where do you think I could lockin today or arrange about.
So it, again, it depends all onthe loan scenario, but we're
(23:17):
looking anywhere between, youknow, I would say six and a half
to seven and a half, justdepending on mm-hmm.
what type of loan it is, howmuch down credit score, that
type of thing.
Gotcha, gotcha.
And, and, and again, this is notto call it a, a shift or a
larger shift but would we expectto see save more.
Government, back loans, some F ha, Fannie Mac, all that good
(23:39):
stuff.
We expect to see more of thosemoving forward than than say we
saw, you know, the last twoyears we saw a huge push for
conventional.
Yeah.
And again, being a seller'smarket, you know sellers weren't
giving many concessions.
Right.
And, and buyers need to be,needed to be as strong as they
could be.
So cash and conventional loanswere of course, You know the
(24:02):
major methods we were using lastyear.
Absolutely.
Yeah.
Those were the primary concontracts during the last couple
years.
I had very few government loans.
During that, those two years ofcovid, now it, it has moved more
in the buyer's favor.
I am seeing more FHA contractsthan I did previously, so.
(24:22):
Yep.
Yeah, so there are quite a fewof those out there.
Isn't, they're generally better,or I should say less expensive
for the for the consumer.
It j it just depends.
It depends on their scenario.
The benefit of a government loanis going to be the government
loans typically are betterpricing for the same scenario
than your conventional loan.
(24:42):
Okay.
But.
As far as rate goes for the, forthe interest rate.
Yeah.
But you know, if the bar issomebody who, who is a higher
score and had planned onputting, you know, that 20%
down, then the conventional'sgonna, even if the rate is
slightly higher, the, that'sprobably gonna be a better deal
because like your f h A loan.
That's gonna have mortgageinsurance no matter how much you
(25:05):
put down.
So you're spending that extramoney every month and it kind of
negates the better interestrate.
Gotcha, gotcha, gotcha.
So it, it's absolutely, thereare pros and cons to each and it
just depends on, you know, thescenario of the borrower, if
it's a lower score borrower andLower down payment.
Mm-hmm.
Yeah.
A, an FHA loan or governmentloan might be the, the way to go
(25:25):
versus a conventional loan.
Sure, sure.
And we did talk you know, in ourlast episode we did, we did talk
a lot about veterans as well.
So again, they're.
Their opportunities, you know,again, should should also be
favorable.
Mm-hmm.
Again, the rates dropping is, isis gonna be favorable for all of
us.
It's favorable for all of us.
Yeah.
If and when that happens.
But again, we are expecting thatto drop and.
(25:47):
You know, and I mentionedearlier I don't think we're
gonna be dropping down to a fouror even a 3% or anything like
that here for no, probably not along period of time.
And you know, and, and knockingon wood, we don't need another
pandemic or anything like thatto push us there.
No, no, no, no.
I don't want to get locked upagain, and I don't know anybody
who does No, absolutely not.
(26:08):
So All right, so just to kindof.
recap on what we've talkedabout.
Things are moving as far as themarket.
Things are moving in the rightdirection, maybe slower than
most of us like, but with, thereare some positive things going
on.
It's moving, absolutely.
Moving in the right direction.
And then self employee borrowerstalk to your loan officer ahead
of time.
(26:28):
Yes.
You want to be thinking abouthome buying two years in.
Oh, very good.
Very good.
And, and absolutely establishthose relationships.
Establish a relationship withagain, a realtor someone that
you're looking for, you know,that, that has an idea and has a
great bit of knowledge for whatarea that you're looking at.
School systems.
You know, and again, like youmentioned, Gina being two years
(26:50):
out, you might have a, a childthat's preschool at this moment.
But again, what do you want todo, you know, 2, 3, 4 years?
Where do you want that child togo to school?
That type of thing.
Right.
Absolutely.
You know which, which are, areall standard.
You know, criteria to, you know,getting in a realtor's car and,
and, and, and starting thatstarting the pursuit of home,
(27:11):
home ownership.
Yes, absolutely.
But yes the tax prep, which isfantastic.
You know, again Talk with yourloan officer.
If you, if that individual saysyou may or may not need X amount
you know, the, the loan officeralong with your accountant and
or whoever you do your taxeswith, again, yes, if you can get
those two together, nottogether, but if you can get the
(27:32):
same information going back andforth, of course you're gonna be
in a better position moving.
Yep.
Everybody on the same page.
Absolutely.
Absolutely.
And, and we just wanna make surethat everybody understands you
know, where we are today in, in,in our economy.
It'll, it'll pass.
They have in the past, they willagain we have a few different
scenarios.
Pandemic being the main scenarioyou know which is going to have
(27:54):
an impact on our recovery.
you know, again, we're we, we,we in our, you know, again,
government, whether or not weagree with it or not they're
making efforts to go ahead andadjust it back to where again,
our economy is gonna be strong.
Folks gonna have equity in theirhomes and those that want to buy
will be able to buy.
And again, that's why we set ourteams.
(28:14):
You know, with a, with a lender,with a realtor, and of course a
buyer or seller.
And and again, we're all workingtowards the same end result,
which is making you the best,best money that you can get, as
well as getting you the besthome you can get.
Home ownership.
Yes.
Home ownership and buildingpersonal wealth.
So it's a great goal for the newyear.
(28:35):
Indeed, indeed.
And again, looking forward totwo, two to 2023.
Oh my goodness.
Oh my goodness.
2023 I said that But yes.
Looking forward to 2023.
What do you have here before,well, before we wrap up, what do
you, what do you have going into2023 there?
What's, what are you lookingforward to, Gina?
Lower rates, That is, that is myhope for 2023.
(28:59):
No you know, I'm really lookingforward to maybe moving back
into.
a more normal, well adjustedmarket.
Mm-hmm.
versus, you know, the crazinessthat we've been in.
The panic buying the, that low,extremely low rates, the high
rates, let's get back to somenormalcy in and get people into
homes.
That's what I'm looking forwardto.
Yeah, totally agree with you.
(29:20):
Yeah.
Looking, looking forward to someconsistency would be, you know
again, Is what I'd be, what,what I'd be expecting.
You know, I, I don't think inthe first quarter of 2023 we're
gonna have that.
But, you know, again, I, I, I dobelieve, as you mentioned
earlier, we are working in theright direction as far as
making, you know, stridestowards getting inflation under
(29:41):
control, bringing our supplychains back to where they need
to be getting our economy.
You know, I don't wanna say asflat as it used to be, but, but
I kind of miss flat Yeah.
Flat, good All right, well,here's to a flat 2023 Well,
indeed, indeed.
Well, we'll be back in the nextin the next week.
And and, and I hope everybodyhas a great couple of days.
(30:03):
Enjoy your Christmas shopping,enjoy your holiday season, and
yeah, we'll be talking next weekor so.
All right, sounds good.
Thanks guys for joining in andlook forward to hearing from
you.
Thank you.
See ya.
Hello and welcome to thepodcast.
Let's get moving with Jeff.
And Gina, I am Gina Millway,your local mortgage advisor.
And this is, Hey, good morning.
I'm Jeff Cunningham.
I am your local real estateagent here in Piedmont Triad of
North Carolina.
We're covering Greensboro.
We are in Greensboro today.
And How you doing today, Gina?
I am fantastic.
Another rainy day.
(00:20):
Is it gonna be another rainy daytoday?
please tell me there's some sunbecause, well, there's a little
bit of sun over here, but don'tget too excited.
Yeah, we're supposed to get alittle more rain this afternoon,
so it's, it's like Seattlecrying out loud, I tell you.
Oh my gosh.
I am, I'm over.
I'm over the rain in the cold.
I'm over it.
I'm ready for spring.
I'm done.
I'm over it.
This is it.
Just scream.
(00:42):
The, I just wanna go home andput on the fuzziest pajamas that
I have.
Yep.
And sit on the couch withanother fuzzy blanket and some
hot coffee and just watch, watchtv.
That's, that's the motivationfor this week.
Yeah, absolutely.
Absolutely.
Well, I, I did take a littlemidweek vacation yesterday and
did just exactly that in themorning.
It was, you know, crappyweather.
As you know, and my goodness, Ijust, I just took advantage of
(01:05):
the, of the fuzzy blanket andthe fuzzy pajamas.
So absolutely.
But but yeah, we're supposed tohave some great weather coming
up, I think coming in for earlynext week.
So yeah, if you got any Yardwork you want to do other than
your holiday shopping.
Yeah.
Next week would be the time toget out for the next weather.
Yeah.
So we are recording this, whatis today?
December the eighth.
(01:25):
And so it's Christmas season isin full of fetch Christmas music
on all the stations.
Oh, yeah.
Christmas shopping, Christmascrowds, all the fun stuff for
Christmas.
But the bells out there areringing Well, let's talk about
how the, the market's doing inthe, in the Christmas shopping.
Season.
Mm-hmm.
how's, how are we doing oninventory side?
(01:46):
Are.
Yeah, we still seeing a littlebit of increase or we are seeing
a little bit of an increase butwe're not seeing a ton.
Right now.
If I could be so bold I thinkwe're moving back into, at least
here apparently we're movingback into more of a.
Seasonal market.
You know, and I think, again,we've got 10 different things
out there that are, that areimpacting our market, whether it
be you know, the elections thatjust happened, we've got
(02:06):
interest rates that are bouncingup and down.
of course, Christmas, we've gotwe just coming outta this
pandemic, you know, everybodyand their brother seems to have
a cold nowadays, so you've gotthe tri deic or whatever they're
calling it nowadays that's goingon.
So in any case, all of thosefactors are not adding to our
inventory.
And, and again, we're not seeinga huge drop.
(02:27):
We're not seeing a hugeincrease.
But again all indications ofpointing to we're just in a
seasonal market at this moment.
You know, if I, I've, I've gota, a listing appointment this
afternoon, so we've got folksthat are still selling.
Of course these folks are gonnabe buying as well.
And, and I've got a couple otherbuyers that are out there as
well.
So yeah, it's a mixed bag.
Well, we typically see, at leastin this area, a little dropoff
(02:50):
in buyers.
Mm-hmm.
in the winter, and theneverybody kind of picks back up
around the end of January,February for the spring market.
Yeah.
But honestly, December hasalways been my favorite.
Market for a buyer.
Mm-hmm.
because there's less competitionin buyers.
Yes, indeed.
A little bit less right now, Iwould say in general we're
probably a little, little slowerthan what we would normally see.
(03:11):
Mm-hmm.
you know, pre covid and, andeverything that's going on.
But, you know, a lot of peopledon't want to.
Moved during the holidaysbecause of Christmas decorating
and family and those types ofthings.
I actually purchased my house inDecember.
We actually, we closed on, Ibelieve it was like December
15th, in the middle of December,and it was fantastic because.
I used it as an excuse not todecorate my house, you know?
(03:38):
And I know no one can see theScrooge outfit that you're
wearing, but right?
So, no, it was great.
No, because.
Ah, yeah, I've just kind ofslacked off the decorating over
the years and the kids are like,we'll help you.
And Oh yeah, for the first 10minutes, they're great.
(03:59):
they're great.
Yeah.
Ah, yes, I understand.
Absolutely.
And, and, and, and, and, andtruth, truth be told, we're a
little, a couple of differentsituations here.
You still have kids at home, ofcourse.
Yes.
And mine have already moved out,so I, similar to you, when I had
purchased my first house thatwas just before Thanksgiving.
Years and years ago.
But yes, same thing.
You know, we got everybody inthe house.
(04:20):
I think we were sitting on boxesfor Thanksgiving dinner.
Which you know, when you're,when you got your first house
and you're sitting on boxes inyour own house, it doesn't
matter.
It's not, it's beautiful chairand you're sitting at a
beautiful table because it'sthat.
And, and yes.
My daughter again, both my kidsare outta the house now.
But my daughter asked last weekat Thanksgiving, the week before
(04:43):
you know, Hey, what what are yougonna get a treat, dad?
When are you gonna go ahead andstart getting a house decorated
for Christmas?
And and I have one of myfavorite decorations is one of
those little three feet or threefoot Charlie Brown Christmas
trees.
And I love it, I just move itfrom wherever it, it is gonna be
set up in the house, out to thegarage, and then back and forth,
(05:05):
and it's, it's really good.
You just pick it up and just,you just relocate it.
It's a one-handed job.
Absolutely.
It's easy.
That's the best.
Yes.
So, but, But going with that, mydaughter, you know, the look on
her face when, you know, shesaid, Hey, when are you gonna
get a Christmas tree?
And I said, I have one.
You know, boy, I tell you what,if I could ever look at a, a 31
year old, 12 year old that thatwould've been it you know,
(05:27):
disappointment, face justdropped.
Like, oh my goodness, dad, whatare you thinking?
So, So yeah, I'll be getting aChristmas tree here in the next
week or so.
highly disappointed, which yeah,people, yes, highly
disappointed.
which will lead us a little bitinto maybe a little bit of our
market update.
Again, I'm hearing that theprices, so inflation of course,
(05:51):
is is Is something that we'reall being impacted by here here
in the season.
Mm-hmm.
but most especially, so this,this may sit well with you and,
and give you a reason to tellthe kids that you're not buying
your Christmas tree this year.
is, they are just about doubledfrom what I'm understanding.
Oh, wow.
Yes.
So, you know, if you were upbuying a a$50 Christmas tree
(06:12):
last year, Expect to spend about90 or a hundred dollars this
year.
Wow.
Yeah.
It's it, it, it's everywhere.
You know, just the cost oftransportation you know,
everything else that any of thefarmers and and providers are
doing for us you know, it'simpacting everybody.
But but with that, you know,again, we we do only have a
couple of more meetingsscheduled this year for the
(06:34):
Feds, which generally thatshould be The only time they can
raise the interest rates goingforward or drop them for that
matter.
And, and, and, and with that ifyou don't mind, Gina, what have
you heard here about the marketlately?
What's what's going on withagain, with the feds and their
rates?
What's the expectation and, andhow's that impacting our our
interest rates here are mortgagerates going into the next coming
(06:55):
weeks or months?
Yeah, absolutely.
So the.
interest rates have, are, arebetter.
They're, they're, they'reimproving.
They're not back, you know, towhere we'd all like to see'em,
but they're improving.
And you know, right now we'reseeing rates depending on the
scenario because everybody'sscenario is different and rates
are based on not just the rate,what is the rate, but it's based
(07:19):
on the loan scenario, purchaseprice.
Mm-hmm.
credit score, all that, etcetera.
You know, so we're seeing ratesanywhere from right now between,
you know, I would say six and ahalf to seven and a half,
depending.
You know what the scenario is,so they are better.
They started improving theinflation.
The last inflation report thatcame out was where the feds
wanted to see it.
Yes.
(07:39):
It's not, well, I'm not wherethey wanted to see it, but it
was moving in the rightdirection.
It was improving as far asthey're concerned.
As far as they're concerned,Right.
We're still filling it.
It's not better.
But their, their main goal isgetting inflation under control.
Mm-hmm.
and.
That is their, their mainleverage to do it is interest
(07:59):
rates.
Mm-hmm.
And so there are a lot of thingsthat go into this there.
And we talked about, you know,jobless claims affecting it.
Jobless claims in itself doesn'taffect it, but everything
together does.
So the feds right now want, theywant there to be pain.
Mm-hmm.
and pain means job loss to them,and job loss means that people
(08:22):
spend less money.
Therefore, that puts a curb oninflation.
Mm-hmm.
So them raising rates, createsthe pain, creates the job loss
and return reduces inflation.
Mm-hmm.
kind of the chain reaction thatthey're looking for.
Sure.
So inflation did start to showsome signs of improvement and
improving, which made the fedshappi.
(08:45):
and so they are, there is ameeting coming up.
I believe this, the thir 13th iswhat I said and for sure I don't
have, nobody has a crystal ball.
We were kind of expecting a halfa point last time than we ended
up with 75, but there are moresigns pointing towards what'll
only have about a half a pointincrease this.
(09:06):
Okay.
And similar to the last few rateincreases that we have seen, and
I know it's been a littlesporadic are we, are, are we
still seeing or are youexpecting that there's any
residual or built in protectionfor us?
You know, meaning you know, ifthese things jump up, you know,
three quarters of a point,sometimes half a point, we don't
see the mortgage rates increaseimmediately.
Cuz again, sometimes there is alittle bit of a buffer built in.
(09:28):
Mm-hmm.
do we have any buffer left?
Do you.
Yeah.
I mean, there's others, there'salways buffers built into it.
Mm-hmm.
because companies, mortgagecompanies are not gonna put
theirselves on the line to losemoney.
Okay.
So there are buffers built intoit.
Absolutely.
And right now everybody'sexpecting the half a percent.
So it just really depends onrates.
(09:53):
I, if what happens after the fedmeetings really depends on.
What they say.
Mm-hmm.
not necessarily the data, butwhat they say or do they, do
they feel like they can ease upon it or are they still hard
pressed on keeping the painmm-hmm.
so that that's what's going toaffect rates is mm-hmm.
(10:14):
what they project that they'regoing to do.
Right.
If they project that they'regoing to continue decreasing as
we expect them to do mm-hmm.
then the, the rates will beokay.
We'll, they'll still hopefullycontinue to improve with that
expectation.
Right.
But if they come out and say,you know, the numbers aren't
really where we expect it gonnabe you know, and then we, we
(10:37):
could see some increases.
Sure, sure.
Well you know, I I, I, I didhear, I mean, there are a few
articles out there that are, youknow just, just being thrown
around.
You know, interest rates areexpected to recover.
One of the last optimisticmessages or, or, or articles I
had read probably they said, youknow, sometime in 23, towards
the end of 23, And, and thenumbers I had heard out, there
(10:59):
are somewhere, you know, againyou know, the pre pandemic
numbers right around five, fiveand a quarter, maybe even five
and a half if not even droppingdown lower than that.
And, you know, those are greatrates.
You know, again, that again, my,my, my first home I was almost
9%, I think were 8.75.
Right?
Yeah.
And, and again, historicallythat's though, that at that time
(11:20):
was a fantastic rate.
Mm-hmm.
I was applauded by all my familymembers and and, and, and it
was, you know, again, it wasgreat.
you know, of course beforepandemic, I think we were right
around five and a quarter,five-ish you know, bouncing up
and around right there on fiverefi rates.
Of course, were much lower andmuch better.
But you know, I I, I've beentold, and, and I'm certainly
(11:41):
telling my clients and buyers aswell as the sellers you know,
our 3%, 4% rates.
I mean, they're just not comingback.
If they do, we don't know whythey would.
But you know, we have just gonethrough a heck of an, an anomaly
mm-hmm.
that you know, again, those thathave been able to take advantage
of it.
Fantastic.
What has gone well for us, ofcourse, is our property values
(12:03):
have all increased.
Yep.
You know, those, those that ownproperties of course.
And and we don't expect any ofthose to be dropping anytime
soon.
If, if, if ever you know, eachtime we've ever, each time, I
think it was in the last 60years.
That we've come out of arecession.
You know, our property valueshave always increased.
They we're not gonna see thatimmediately every time.
Mm-hmm.
You know, but at the same timewe, we, we have historic history
(12:26):
on our side where, you know, ourproperty values are gonna
increase.
Yeah.
So, and they always come back.
Even if they drop, they alwayscome back.
So Absolut.
Absolutely.
And it's more of short termversus long term.
Mm-hmm.
you know, if you're buying ahouse for a short, short term
mm-hmm.
gain a, a fix and flip or an, oryou know, short term investment,
maybe you're gonna be in thehouse a year.
It makes a, it, it will make ita little harder.
(12:48):
But overall on the long runYeah.
Property values, I mean, theyalways increase.
They continue to, Absolutely.
And with that we have differentVal we have different options
and different products out therethat are available.
So just since you mentioned youknow, again maybe an employee
that's transferring into, let'sjust say Greensboro you know,
for the next two or three yearsit might not be the best idea
(13:11):
for that individual to actuallylock into a 30 year fixed
product.
You know, and, and, and, and,and, and again, the rates being
what they are and rates beingwhat they might be again.
You know, it might be a betteridea if, if the individual
actually gets into a some sortof an adjustable rate and or can
take advantage of maybe the twoone buy downs in a row, right?
(13:33):
right.
You know?
Yeah.
Not to call the two one buy downon adjustable rate by any means,
but but you know, takingadvantage of some of the
products that are there,reducing your monthly you know
income.
Oh, I'm sorry.
Right.
Your debt, right.
Your monthly debt.
Yeah.
and and then, then being able toturn that around in a couple
years, you know, again,hopefully maximizing your
profit.
Right.
Absolutely.
Yeah.
And there's some good productsout there to, to help those
(13:53):
buyers who.
Wanna keep their mortgagepayment under a certain percent
and still be able to get into ahome that they want.
Absolutely.
Okay.
And you know, and talking aboutthe market and the time of year
that we're in, we're inDecember, the end of the year
we're kind of wrapping up theyear for most people and most
businesses.
Yes.
So this is the time of yearwhere if you're going to be
(14:16):
buying a house, you need tothink about your tax.
Mm-hmm.
And what, what, what in your taxreturns there, do we need to
work?
Would you be looking at there,Gina?
Well, this is primarily going tobe for the self-employed
borrower, ah, the W2 borrowers.
We don't usually get tax returnsvery often.
Usually the only reason we lookat.
(14:38):
Tax returns for theconventional, you know, W2
salary bar is, you know, maybethere's some tax debt or
something like that, but it'snot.
Mm-hmm.
typical to get a tax return forsomebody who's w2 hourly salary
income.
So if you are self-employed, youreally need to be thinking about
the income that you're gonna bereporting on your tax returns
(15:00):
and, you know, you may wannatalk to.
a loan officer before you filethose.
If you're gonna be buying ahouse in the next mm-hmm.
couple years and this is theirprimary residence, not, not
another investment property.
Well, and it depends, I guess itwould be the type of loan that
we wanna do.
So it, it could be for primaryor investment.
(15:20):
There are the, the benefit toinvestment is there are
alternative options.
Mm-hmm.
to self for self-employedborrowers where we don't have to
use their.
now for your primary residents.
We don't have as manyalternative loan options as we
do your investment.
There are a lot more regulationsaround a primary residence, so
(15:42):
if you're thinking about buyinga primary resident, it's really,
really important that you payattention to your tax returns.
Mm-hmm.
basically, the rule of thumb isif you don't tell Uncle Sam that
you make it, we can't use it.
Oh, and that's, it's not yourgross income.
(16:04):
It's not that number one linegross receipts on your
self-employed income, on yourSchedule C.
It is after all your deductions,the adjusted gross income, the
adjusted gross income, that isthe line that we are looking at.
Now, there are some things thatcan be added back in
depreciation is usually a reallybig one because it's not.
(16:26):
It's not an actual expense.
It, it's a, it's a lineadjustment.
It's not an expense that you'repaying out money for.
It's a line adjustment.
So typically the investorsthemselves are gonna be using
the depreciation, right?
So depreciation can be addedback in mm-hmm.
So there are a few things thatcan be added back in, but.
For the most part, we are gonnabe looking at that, that gross
(16:50):
adjusted income from yourSchedule C if you're
self-employed or you'redepending on, you know, what
type of corporation, K one s orwhatever you may have.
Mm-hmm.
This carrying over to youractual income.
That's what we're looking at.
And I, if that's what you'rereporting, that's the income we
have to use.
Mm-hmm.
and we all know self employeepeople typically.
way more money than, you knowwhat they tell Uncle Sam because
(17:12):
everybody's trying to avoid the,the tax hit.
Mm-hmm.
Well, there's a home hit Ah, ifyou don't show income, right?
It, it's one or the other.
You can't have it both ways.
Right.
You know, if you don't reportincome, you're not gonna have
enough income to buy a home.
You wanna make sure if you'replanning on buying a home or
(17:33):
maybe financing of any, anyother type too, because they're
places that look at income.
You wanna make sure that youhave enough income on your tax
returns, sure.
To go through this process.
So talk to your loan officermaybe before you file those
taxes and just kind of get anidea of the income that you
need.
Right?
And yes, you may have to paytaxes on that.
(17:54):
it beats the alternative.
It's gonna get you what youneed.
It's gonna get you the desiredoutcome, which is again, the
income being reported, which isgonna be reflected again on your
applications and so forth.
Right, which will get you intowhat it is that you need to do
so that you can qualify for aloan.
Right.
Exactly.
And now there are, there arealternatives for primary homes
(18:17):
if people are self-employed.
There are bank statement loanswhere we basically take 12 or 24
months of bank statements and weanalyze the income that flows
through the account.
We get an average monthlybalance and we use that as
income.
Mm-hmm.
the problem with that is that isa non-traditional loan.
Mm-hmm.
(18:38):
and what the rates where theyare anyway, as high as they are,
the non QM stuff, it's a riskierloan.
it's considered riskier.
It's it's, they're not privateinvestors, but it's not your
typical Fannie Freddie FHA loan.
It's not a government backedloan.
So there are more riskadjustments.
The rate's gonna be higher.
and you're gonna need more down.
(18:59):
Mm-hmm.
Down payments will rangeanywhere from 10 to, you know,
20, 25%, just depending on thescenario.
Sure.
So if you don't report to UncleSam mm-hmm.
right.
And you don't show income andyou have to go non-traditional.
It will be higher and rate.
It'll be higher in fees, andyou'll need more money down than
(19:21):
you would typically yourtraditional loan.
Right?
There are options out there, butif you can prevent that by
preparing your tax returns,it'll save you some money.
And self-employed borrowers, youknow, there are different
guidelines for those, butideally you wanna have income
for about two years.
Some instances we can use oneyear's tax returns if the.
(19:43):
you know if it's a conventionalloan and the business has been
in business for over five yearsmm-hmm.
we may be able to get away withone year.
But you wanna be thinking abouta two year span just to, just to
c y a.
Yes.
Yes.
Absolutely.
Well, that's fantastic.
Thank you for all thatinformation, cuz that is, that
is a mouthful.
It is a lot.
Yes.
Yeah.
Yeah.
So I mean, the, the thing is, isif you're thinking if you're
(20:05):
self-employed mm-hmm.
again, self-employed borrowers,if you're self-employed, talk to
a loan officer.
Yes.
Before you file those taxes.
Now you, and, and that's, Ithink, is a big thing.
That's a big misnomer.
I think that's out there aswell.
Is establishing contact or arelationship with a loan officer
does not mean that you're buyinga house next week.
(20:26):
Right.
You know, again, in someinstances, like we're discussing
there is a necessity forpreparation, you know, and at
least identifying what whatneeds to be worked on.
Right.
So, so yes, this does work bothways and, and it can work
negatively both ways.
Number one is yes, if you thinkthat you're able to afford a
home and you have not spoken toa loan officer, then number one,
(20:47):
you're probably gonna be a lotdisappointed or very
disappointed when you go in andsay, okay, I wanna buy this
house.
And mm-hmm your tax returnsdon't allow you to get that.
So again that's, that's justdisapp.
Right?
And it happens all the time.
All yes, it does.
The time, all the time.
So it's not uncommon at all.
Right.
And you know, there, and I'mgoing back to the primary versus
(21:12):
investment.
You know, those of you who areinvestment buyers, there are
more alternatives for investmentproperties.
Mm-hmm.
than the primary home.
We have cash flow or no doc forinvestment properties where
basically we use the cash flowof the property.
I mean, there are instanceswhere they do stated income on
investment properties.
(21:32):
Of course, those, you know, theriskier you get or the less
documentation, the moreexpensive they get.
But I will say right now, thepricing adjustments that were
made on the traditional side ofan investment property, like if
you're just going with a regularloan versus using a
non-traditional is not muchdifferent.
Right now.
(21:53):
The rate probably a littlehigher.
Maybe looking at a point, pointand a half for the same loan
scenario versus convent.
Okay.
But conventional investmentproperties have a ton of fees on
them right now.
Mm-hmm.
there are a lot of pricingadjustments on those loans.
Mm-hmm.
So it might be worth your whileto do the no doc.
It's, you know, it's, it's lesswork.
(22:14):
You don't have to go through thetax returns, you don't have to
provide all those and worryabout it.
You just got, you know, you justgotta make sure the house cash
flows so, So there's somebenefits to that for the
investor side, but the, the bigthing is on the primary side,
when you're buying a primaryhome, you have you, there's not
as many options, right?
(22:34):
And there's a big differencebetween traditionally
qualifying, showing income onyour taxes and alternative loan
products for primary.
For primary homes, right?
Mm-hmm.
Well, if speaking of primariesand I know it's a little
difficult to, to gauge ratesagain based on where folks are
based on down payments and soforth, but where we are with the
(22:56):
last adjustment, and again, withthe the vibrations we've been
seeing here in the last coupleof days anyways, where are the
rates at today?
So if I was gonna qualify for$300,000.
You know and I was going at 5%.
Where do you think I could lockin today or arrange about.
So it, again, it depends all onthe loan scenario, but we're
(23:17):
looking anywhere between, youknow, I would say six and a half
to seven and a half, justdepending on mm-hmm.
what type of loan it is, howmuch down credit score, that
type of thing.
Gotcha, gotcha.
And, and, and again, this is notto call it a, a shift or a
larger shift but would we expectto see save more.
Government, back loans, some F ha, Fannie Mac, all that good
(23:39):
stuff.
We expect to see more of thosemoving forward than than say we
saw, you know, the last twoyears we saw a huge push for
conventional.
Yeah.
And again, being a seller'smarket, you know sellers weren't
giving many concessions.
Right.
And, and buyers need to be,needed to be as strong as they
could be.
So cash and conventional loanswere of course, You know the
(24:02):
major methods we were using lastyear.
Absolutely.
Yeah.
Those were the primary concontracts during the last couple
years.
I had very few government loans.
During that, those two years ofcovid, now it, it has moved more
in the buyer's favor.
I am seeing more FHA contractsthan I did previously, so.
(24:22):
Yep.
Yeah, so there are quite a fewof those out there.
Isn't, they're generally better,or I should say less expensive
for the for the consumer.
It j it just depends.
It depends on their scenario.
The benefit of a government loanis going to be the government
loans typically are betterpricing for the same scenario
than your conventional loan.
(24:42):
Okay.
But.
As far as rate goes for the, forthe interest rate.
Yeah.
But you know, if the bar issomebody who, who is a higher
score and had planned onputting, you know, that 20%
down, then the conventional'sgonna, even if the rate is
slightly higher, the, that'sprobably gonna be a better deal
because like your f h A loan.
That's gonna have mortgageinsurance no matter how much you
(25:05):
put down.
So you're spending that extramoney every month and it kind of
negates the better interestrate.
Gotcha, gotcha, gotcha.
So it, it's absolutely, thereare pros and cons to each and it
just depends on, you know, thescenario of the borrower, if
it's a lower score borrower andLower down payment.
Mm-hmm.
Yeah.
A, an FHA loan or governmentloan might be the, the way to go
(25:25):
versus a conventional loan.
Sure, sure.
And we did talk you know, in ourlast episode we did, we did talk
a lot about veterans as well.
So again, they're.
Their opportunities, you know,again, should should also be
favorable.
Mm-hmm.
Again, the rates dropping is, isis gonna be favorable for all of
us.
It's favorable for all of us.
Yeah.
If and when that happens.
But again, we are expecting thatto drop and.
(25:47):
You know, and I mentionedearlier I don't think we're
gonna be dropping down to a fouror even a 3% or anything like
that here for no, probably not along period of time.
And you know, and, and knockingon wood, we don't need another
pandemic or anything like thatto push us there.
No, no, no, no.
I don't want to get locked upagain, and I don't know anybody
who does No, absolutely not.
(26:08):
So All right, so just to kindof.
recap on what we've talkedabout.
Things are moving as far as themarket.
Things are moving in the rightdirection, maybe slower than
most of us like, but with, thereare some positive things going
on.
It's moving, absolutely.
Moving in the right direction.
And then self employee borrowerstalk to your loan officer ahead
of time.
(26:28):
Yes.
You want to be thinking abouthome buying two years in.
Oh, very good.
Very good.
And, and absolutely establishthose relationships.
Establish a relationship withagain, a realtor someone that
you're looking for, you know,that, that has an idea and has a
great bit of knowledge for whatarea that you're looking at.
School systems.
You know, and again, like youmentioned, Gina being two years
(26:50):
out, you might have a, a childthat's preschool at this moment.
But again, what do you want todo, you know, 2, 3, 4 years?
Where do you want that child togo to school?
That type of thing.
Right.
Absolutely.
You know which, which are, areall standard.
You know, criteria to, you know,getting in a realtor's car and,
and, and, and starting thatstarting the pursuit of home,
(27:11):
home ownership.
Yes, absolutely.
But yes the tax prep, which isfantastic.
You know, again Talk with yourloan officer.
If you, if that individual saysyou may or may not need X amount
you know, the, the loan officeralong with your accountant and
or whoever you do your taxeswith, again, yes, if you can get
those two together, nottogether, but if you can get the
(27:32):
same information going back andforth, of course you're gonna be
in a better position moving.
Yep.
Everybody on the same page.
Absolutely.
Absolutely.
And, and we just wanna make surethat everybody understands you
know, where we are today in, in,in our economy.
It'll, it'll pass.
They have in the past, they willagain we have a few different
scenarios.
Pandemic being the main scenarioyou know which is going to have
(27:54):
an impact on our recovery.
you know, again, we're we, we,we in our, you know, again,
government, whether or not weagree with it or not they're
making efforts to go ahead andadjust it back to where again,
our economy is gonna be strong.
Folks gonna have equity in theirhomes and those that want to buy
will be able to buy.
And again, that's why we set ourteams.
(28:14):
You know, with a, with a lender,with a realtor, and of course a
buyer or seller.
And and again, we're all workingtowards the same end result,
which is making you the best,best money that you can get, as
well as getting you the besthome you can get.
Home ownership.
Yes.
Home ownership and buildingpersonal wealth.
So it's a great goal for the newyear.
(28:35):
Indeed, indeed.
And again, looking forward totwo, two to 2023.
Oh my goodness.
Oh my goodness.
2023 I said that But yes.
Looking forward to 2023.
What do you have here before,well, before we wrap up, what do
you, what do you have going into2023 there?
What's, what are you lookingforward to, Gina?
Lower rates, That is, that is myhope for 2023.
(28:59):
No you know, I'm really lookingforward to maybe moving back
into.
a more normal, well adjustedmarket.
Mm-hmm.
versus, you know, the crazinessthat we've been in.
The panic buying the, that low,extremely low rates, the high
rates, let's get back to somenormalcy in and get people into
homes.
That's what I'm looking forwardto.
Yeah, totally agree with you.
(29:20):
Yeah.
Looking, looking forward to someconsistency would be, you know
again, Is what I'd be, what,what I'd be expecting.
You know, I, I don't think inthe first quarter of 2023 we're
gonna have that.
But, you know, again, I, I, I dobelieve, as you mentioned
earlier, we are working in theright direction as far as
making, you know, stridestowards getting inflation under
(29:41):
control, bringing our supplychains back to where they need
to be getting our economy.
You know, I don't wanna say asflat as it used to be, but, but
I kind of miss flat Yeah.
Flat, good All right, well,here's to a flat 2023 Well,
indeed, indeed.
Well, we'll be back in the nextin the next week.
And and, and I hope everybodyhas a great couple of days.
(30:03):
Enjoy your Christmas shopping,enjoy your holiday season, and
yeah, we'll be talking next weekor so.
All right, sounds good.
Thanks guys for joining in andlook forward to hearing from
you.
Thank you.
See ya.
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