The Accunet Mortgage & Realty Show 11-3-24

Episode Transcript

Speaker 1 (00:00):
The following program, the ENT , mortgage and
Realty Show is paid for in fullby ENT mortgage, LLC and equal
housing lender consumeraccess.org number 2 5 5 3 6 8.
The advice and opinionsexpressed during the Academic
Mortgage and Realty Show aresolely that at the hosts and
guests of ENT mortgage, LLC,and not WTMJ or Good Karma
Brands.

Speaker 2 (00:20):
Welcome to the Accu Net Mortgage and Realty Show,
getting you inside informationon buying, selling, and
financing your home with expertadvice from Accu Net Mortgage
and Realty. And now, here'sBrian and David Wickers.

Speaker 1 (00:34):
Welcome to the Accu Mortgage and Realty Show. I'm
Brian Wicker, licensed realestate broker with ACU Nett
Realty Advisors, and also themajority owner of ACU Nett
Mortgage, where my individualNMLS ID number is 2 5 9 6 1 0.
And I'm here again today alongwith my son David, who is one
of ANets Senior Loanconsultants, also our Chief
Client Experience officer. Andhis NMS ID number is 3 2 8 8 4

(00:56):
7. If you've got a question ora comment, you can always call
or text us on the WTMJ talk andtext line , which is 8 5 5 6 1
6 1 6 20 . And remember, youcan grab a podcast of today's
show wherever you normally getyour podcast. So, David, in the
few weeks we've had off during, uh, the Green Bay football
team's run of noon games. Yeah. We have had a host of

(01:18):
economic reports in October,along with some election
nervousness that have allconspired together to , um, how
shall we say, push mortgagerates in the wrong direction.
Yeah. Yeah. And the , thelatest in that installment ,
uh, was kind of a nothingburger. Um, we got the October
jobs report came out on Friday.

(01:40):
And remember, folks, normallybad news is good for mortgage
rates. And so the market wasexpecting a hundred thousand
new jobs to be created inSeptember, which by the way,
was way lower than the 254,000that got created in , uh, the
previous month of , um, ofSeptember. And it turned out
there's only 12,000 jobs thatgot created. What, why was

(02:03):
that, David?

Speaker 3 (02:05):
Well, I was watching CNBC live when Rick Santelli
announced the jobs report andjust across the board, they
were all just like, wow, thatis way below even that
consensus expectation of ahundred thousand jobs. It would
appear that that number wasinjured by the back to back

(02:27):
hurricanes in the southeastRight . As well as the Boeing
strike.

Speaker 1 (02:34):
Exactly. So the , the a hundred thousand number
that everybody was expectingalready had those big
interruptions in the economybaked in. Right. And then it
came in even lower. So, boy, Idon't know about you David ,
but I was thinking like, oh ,this is gonna be a great day
for mortgage rates ,and eh , yes . It turned out to
be a huge nothing burger.

Speaker 3 (02:54):
Um , well, I think, which this happens a lot with
new data, you know, at 8:00 AMmarkets were staring at this
report and then by theafternoon, and , and so the ,
the first review of the datawas like, man, we really are,
the Federal Reserve really isachieving what they want,

(03:18):
bringing inflation to reality,moderating the jobs , uh,
status job growth. Yeah, jobgrowth. But then come the
afternoon on Friday, marketskept looking at the same data
and decided that what theythought they were translating
the data as in the morning,they kind of convinced the bond

(03:40):
market convinced itselfotherwise by the afternoon and
didn't take Friday's jobsreport as the harbinger of good
news that they thought was inthe morning.

Speaker 1 (03:52):
Yeah. So, so really, you know , what I was reading
is that the markets don't knowwhat to make of this report.
It's like, Hey, will the realjob situation, please stand up
, uh, because you had thisreally hot number from , uh,
September, right ? That by theway, it got revised down by
31,000 jobs. Oh , this didn'tget talked about too much, but

(04:13):
the August number got cut inhalf for new job creation, like
from 159,000 jobs down to like78. So it's like, oh , is the
job market cooling? Is it hot?
Is it lumpy? Is it not? And soit's just , just general , um,
confusion, I think, or, youknow, no, no conclusion. Couple
of other things. Um, we did geta inflation measurement on

(04:37):
Thursday. Yeah . That themarket didn't care about the
fed's favorite , uh, measure ofinflation. Personal consumption
expenditures came in at 2.1 forthe head headline, which is
exactly where they want it tobe, 2.7 year over year for the
core inflation. But here's theother interesting thing. About
10 days ago, the interest ratemarkets are believed as
starting to bake in a greaterchance of a Trump election

(04:59):
victory. And they'reinterpreting that as being
possibly inflationary becauseof the tariffs that he's
proposing, which will end upraising prices for imported
goods, IE inflationary , uh,and then also talking about
extending the 2017 tax cuts.
And that would create , uh, uh,more deficits. And so both of

(05:22):
those things have also beensaid to conspire to make , uh,
rates go up. All that said thelast I checked , uh, the chance
of the Fed Federal Reservecutting another quarter percent
on the day after election dayon November, well , I guess
it's two days after November7th is only 99.9%. So the , so
the markets say, Hey man, weare, we are gonna see another

(05:45):
fed rate cut. And then , uh,they also meet again December
18th. There's an 83% chance fora third rate cut, which means
there's a 17% chance thatthey'll stay the same. All
those future beliefs arealready baked into today's
mortgage rates. And so when wecome back, let's give a quick ,

(06:06):
uh, uh, reading on where did weend the week , uh, for your
typical 30 year fixed ratemortgage. You are listening to
the Accident Mortgage andRealty Show on a M six 20 WTMJ

Speaker 2 (06:18):
Home buying advice from the guys who know it best.
This is the ACU Mortgage andRealty Show with Brian Wicker
on WTMJ.

Speaker 1 (06:27):
Welcome back to the Anette Mortgage and Realty
Show. I'm Brian the Elder.
That's David, the young girlover there. And so , uh, David,
we're just talking about howinterest rates have conspired ,
uh, over the last several weeksto go up. We ended , um, Friday
, uh, with the followingavailable. This is if you're
buying the median sales pricehome of $335,000 in the five

(06:47):
county Milwaukee metro areawith 25% down. So that means
you'd be looking at a $250,00030 year fixed rate. We're
assuming all the other ratesstuff , uh, you could snag,
could have snagged a 6.375%rate if you were willing to pay
about two points or 2% of theloan balance upfront . Five
grand of interest, rate ofinterest paid in advance, which

(07:08):
makes the a PR 6.59 door numbertwo, 6.625%. That would come
with $3,100 of points an a PRof 6.76. And by the way, folks,
the A PR reflects those pointsbeing paid upfront and , uh,
thinning them out over thewhole 30 year , uh, term. By
the way, the payment differencefor that quarter percent higher

(07:29):
rate is only $41 more per monthat $250,000. So not that big a
deal.

Speaker 3 (07:35):
You're , you're preempting, you're preempting
my reply already on the paymentdifference between these rates,
but keep going.

Speaker 1 (07:41):
And then , uh, 6.99% , uh, would be the no point
rate again for this $250,000mortgage , uh, with 25% equity.
And that would've an a PR of7.00 and that payment would be
$61 more than the 6.625 rate.
One other interesting fact, ittakes about four to four and a
half years of lower monthlypayments to recoup the higher

(08:04):
costs associated with snaggingthose lower rates. So David,
what are you seeing on thefront lines of, of mortgage
lendings? Ha has this uptick inrates curbed the enthusiasm of
any or many home shoppers?

Speaker 3 (08:19):
Uh , the quick answer is no, but let me tell
you, you know, this time lastyear , mortgage rates were at
eight less we forget .

Speaker 1 (08:29):
Yeah. So let's let that that's a good comparison.
Yeah. Let's be thankful for 6,9 9.

Speaker 3 (08:33):
Yeah, you bet. But, and, and it's been nice to be
able to circle back with someclients that we helped last
year and we went through thepro the same exercise. We, you
know, the , the , uh, fall of2023 C client . Is it your
expectation that you thinkinterest rates are probably

(08:55):
gonna come down in the nextyear or two, if that is your
thesis? Don't overinvest now toget a rate that you think
you're gonna trade inrelatively soon. And thankfully
refinancing in Wisconsin can becheap. Yeah. And, and so I've,
you know, for, for in recenthistory, I can tell new home

(09:18):
buyers the exercise that we arecircling back to with clients
we helped last year. It's like,hey, we're taking a victory lap
with some clients who we helpedlast fall who are sitting at
high sevens and we're able toturn around and get them
something maybe even a fullpercent lower because we are

(09:40):
following a thesis that webelieved rates will continue to
moderate. And, and laying thatout for clients. And now here
fall of 2024, thinking aboutwhat do we think the world
might look like fall of 2025?

Speaker 1 (09:55):
And I was talking to a real estate broker on Friday
who shared the same sentimentthat from his perspective,
buyers are not shying away. Nowsome are saying, well, I'm
gonna wait till after theelection. You know, okay,
, others are saying,no, I gotta do something, you
know, right away. 'cause I'mafraid of the election. So what
do you have a comment on that?

Speaker 3 (10:14):
I I was just gonna say, I, I will be humored to
hear what new reason a homebuyer might come up with to
further delay their homeshopping if, if 'cause on
Wednesday and the election hasconcluded, the next best thing
that's gonna pop up isChristmas. Oh, we're gonna wait
till after Christmas. Sure. Andthen what are they gonna wait?

(10:36):
Oh, play off football. Can't golooking at us

Speaker 1 (10:39):
After

Speaker 3 (10:39):
Play off football can off up for house . Right.
And , and ultimately likefalling in love, your timeline
will change when the righthouse pops up.

Speaker 1 (10:50):
Well, in , in that same conversation , um, you
know, I was asking about, well,okay, you know, what are the
attitudes of home buyers andsellers? And certainly , uh, so
this broker, and I agree withthem statistically, if you can
find a home you wanna buy nowin November, December, January,
statistically you're gonna payless yes. Than if you buy in,

(11:12):
you know , March or April orMay. There's just less demand.
Um, and , and , and so if youcan find something that you
wanna call home and you're in aposition to do a man, now is
the right time to do it. Um, acouple of other facts which are
really dependent on yoursubmarket, but I looked at the
, uh, October MLS listings toolate too , too early, rather to

(11:34):
do a deep dive on the salesside. But on the listing side,
listings were actually up 5.7%in October. This is for the
five county Milwaukee metroarea, single family detached
homes and condos combined. Sothere's 105 more listings that
came on the market. Septemberwas also 3% higher than in
2023. Year to date listings areup 4.2% or 760 units compared

(11:56):
to 2023. Um , but it alldepends on where you're
looking. So interestingly, thisparticular broker said, ah ,
that doesn't feel like it forthe sub markets in which my
buyers are looking. Sure .
Alright, why don't we comeback, David, I've got some
interesting information , uh,from Freddie Mac , uh, on first
time home buyers . We're gonnaturn that into some first time
home buyer stories of our own.

(12:17):
We'll do that right after this.
You're listening to the AcedMortgage and Realty Show on
Wisconsin's radio station. AMsix 20 WTMJ, getting

Speaker 3 (12:25):
You

Speaker 2 (12:25):
Into the home of your dreams. Here's more of the
Accu Net Mortgage and RealtyShow with Brian Weer on

Speaker 1 (12:32):
Wtmj. Thanks again for hanging out with us. And ,
uh, we're talking about firsttime home buyers . David, I
came across a Freddie Macreport. They did a deep dive on
, uh, first time home buyers .
And by the way, Fannie Mae,Freddie Mac buy roughly 70% of
all the mortgages in any givenyear. And so, according to
their study, which I turnedinto a little quiz for your

(12:54):
benefit , uh, and those are ourlisteners, you can play along
at home. What percentage ofpurchase money mortgages that
Freddie Mac bought in 2024 sofar were made to first time
home buyers ? I'll make thismultiple choice. 35%, 44%, or
53%? David?

Speaker 3 (13:10):
Uh, 53. Because let me give you my answer why? I
think that's the answer. Repeathome buyers are a little locked
into the house that they got attheir low rate. And so really
it's only first time homebuyers who have the most amount
of appetite for a new house,new mortgage.

Speaker 1 (13:30):
Exactly. Correct.
Okay. You have , you've playedthis game before. Okay. Then ,
um, the low point, here'sanother interesting fact for
first time home buyerpercentage was back in 2004 ,
2004. Do you think that the lowpoint for first time home buyer
percentage was 20%, 25%, or 30%

Speaker 3 (13:50):
25 historically before that? Oh four, or let's
say in the intervening 20 someyears, that number has
generally floated around likea, a third of correct has been
new for first time home buyers.

Speaker 1 (14:04):
Well, it's kind of interesting. So the answer is
20%. Was that I believe the ,uh, geo, geo geo , no geometric
geometry term. The Nader , thelow point Yeah . Was , uh, 20%.
And so during the financialcrisis between 2010 and 2012,
the percentage went

Speaker 3 (14:22):
First . That's because the other 80% was
getting loans that theyshouldn't have. But that's a
separate

Speaker 1 (14:25):
Conversation . Right? So it went from
40% first time how home buyersdown to 33%. Then it kind of
climbed back up and was atabout 45% from 2018 through the
first half of 2022, which iswhen rates shot up and you got
the lock-in effect , startingabout then. Um , anyway ,

Speaker 3 (14:43):
The definition by the way, of first time home
buyer is nobody on the borrowedmoney has owned real estate in
the last three years.

Speaker 1 (14:52):
I just closed a loan for a friend and repeat client
on the 31st. On, on Halloween,who was a born again ? First
time home buyer. Okay. Right .
He had owned a home before.
Yeah . But he had been rentingfor more than three years. And
so, but unfortunately he madetoo much money. He didn't
qualify for anything special.
Okay. This is on the , uh,question of affordability. Um ,

(15:14):
Freddie Mac says, Hey, you knowwhat? Entry level homes are
those that sell for 75% orless. So the median sales
price, median sales price inthe five county metro areas, 3
35 so far this year. So thatmeans anything selling for 2 51
or less would be defined by asentry level housing. When they
looked at that nationwide, theynoticed that from 20 , uh, from

(15:36):
the year 2000 through 2024, soalmost a quarter century home
price appreciation grew muchfaster. Mm-hmm .
63% faster in that affordableentry level range compared to
what they define as the highend range, which is homes
priced at 125% or more of themedian sales price. So that

(15:57):
kind of stands to reason,right? 'cause you're gonna have
more demand for homes in thelower price range. Yeah .

Speaker 3 (16:02):
I

Speaker 1 (16:03):
Took a quick look at October , uh, home listings in
the five county metro areaagain, and there were 1,942,
conveniently, a third of 'emwere in that entry level
category, $251,000 or less.
Another third was right in themiddle between 75 and 125%. And

(16:23):
the final third was in thehigher end of the market. So it
strikes me that, you know, ifif 53% of your first time home
buyers, you know, are firsttime home buyers, there's just
more pressure on that low end ,higher demand, more competition
that's gonna keep home pricesgoing up and probably, you
know, you're gonna havemultiple offers in many cases.

(16:46):
Yes . Any comment on thatbefore I go to the third
nugget?

Speaker 3 (16:49):
I I can tell you this, there is a home available
at a price that a home buyercan afford. No. No matter what.
I think home buyers are tryingto then lay that over, where is
that house and what do I getfor the price that I'm paying?

Speaker 1 (17:07):
Good point. I like the way you said that. Um, the
last factoid from their study,they looked at , uh, renting
households between the ages of25 and 44. Oh, by the way, ACU
units , uh, average age of afirst time home buyer a year to
date , 35 years old.
Interesting . Which soundsabout right. And , um, anyway,
looking at that demographic of25 to 44, earning at least

(17:31):
$75,000 in 2020 $4, and theywent back historically and
looked at that same cohort inpast years. Well, right now
there are 3.3 million renterhouseholds that fit that bill
of being 75,000 or more inincome. And in that, in that
age range, that's double whatit was in 2012. So there's

(17:54):
apparently a bigger group ofqualified renters or renters
who are likely to wanna becomehome buyers than there was 12
years ago. So all that spellshigher , um, demand, and yet
there's not a lot of supply.
And so when we come back, let'stalk about some real first time
home buyer stories . David, Iknow you've got one, I've got

(18:15):
one too . We'll do that when wecome back. But right now it's
time to turn it over to theWTMJ Breaking News Center .

Speaker 2 (18:23):
Don't break the bag to get into a house. Back to
the ACU Net Mortgage and RealtyShow with Brian Wicker on WTMJ.

Speaker 1 (18:31):
Welcome back and thanks again for tuning in. Uh,
I'm Brian Wicker , uh, the, theElder of the wicker , uh, men.
And that's David Wicker overthere. David, you've uh, got a
first time home buyer story toshare. Let's, let's hear it.
Yeah .

Speaker 3 (18:44):
Well, and this piggybacks off of your, you
know, description of the dataaround first time home buyers .
These folks have, I I I wouldalmost call it classic, they
both have strong jobs. They canservice the upcoming monthly
payment for their mortgage, forthe borrowed money. They don't

(19:05):
have a lot of down paymentmoney though, for the
downstroke to get there.

Speaker 1 (19:10):
Okay.

Speaker 3 (19:11):
They ultimately, I could approve them for a
payment up to $3,000, includingtaxes , principal and interest
property taxes, homeownersinsurance, monthly. PMI.

Speaker 1 (19:27):
And by the way, can I ask, what would their housing
debt to income ratio be at thatlevel? Do you happen to recall
or

Speaker 3 (19:35):
The,

Speaker 1 (19:35):
Is it pushing it ?

Speaker 3 (19:36):
The mortgage, the mortgage payment portion would
be about 30% of pre-tax incomeif they dial it all the way up
to $3,000 in payment .

Speaker 1 (19:45):
Huh . Which, by the way, I don't know if you
probably know this, that is thegovernment's definition of an
affordable home payment Yeah .
Is when you spend 30% or lessof your gross monthly income on
your house. So they're notbreaking the bank. But what do
, what do they wanna spend?
Well,

Speaker 3 (20:01):
And , and I, I think any good mortgage practitioner
should lay out, let me tell youwhat the ceiling is. Sometimes
that can be quite interestingfor clients who have a lot of
leverage in their income. It'slike, do you wanna buy a
million dollar house? I I canapprove you for a jaundus house

(20:22):
and a jaundus payment. But youknow, you probably don't want
that 'cause you wanna buygroceries and you know, be

Speaker 1 (20:29):
Able Yeah . Other things.

Speaker 3 (20:29):
Yeah. Other things.
So their maximum is 3000. Theywould prefer to be somewhere
closer to $2,200.

Speaker 1 (20:38):
Ooh , that's a , that's a lot of difference.

Speaker 3 (20:40):
That's a lot of difference. But ultimately,
because we lay out what theiroptions are, I am, my job is to
empower them to decide forthemselves. Because it all
depends on the house. Right.
And , and in two, in two ways.
One, my my favorite, you know,poke, hey client, do you think

(21:04):
you're gonna be making moremoney two years from now or
less money?

Speaker 1 (21:09):
Hmm . I'm gonna go with more

Speaker 3 (21:10):
Just about every client says more. Uh, because,
you know, we all haveexpectations of succeeding in,
in our work. And so with thatin mind, getting a fixed rate
mortgage today, arrests thatcost. Yeah . While your income

(21:32):
might continue to rise. Soreaching, I remember you
telling me this when I boughtmy first house. Reaching for a
little bit more allows you togrow into a house and a
payment. Looking into thefuture, you are buying a house
not just for who you are today,but also who you will become.
And if you don't , if you, ifyou take on a payment that you

(21:58):
are comfortable with right now,you may move into a house that
is small about one week afteryou

Speaker 1 (22:06):
Yeah . Move in. You might quickly. Yeah , you might
quickly. And what about theircombination, David, of, you
know , down payment? I mean,and maybe you don't have this
off the top of your head, butif they wanted to buy a house
that came with a $2,200payment, there's two ways to do
that. You know, lower thepurchase price or increase the
down payment. And you said theydidn't have a lot of money for

(22:27):
down payment. So that's notprobably even a practical
option. It's also, you know,always disappointing. 'cause
it's about $66 of paymentreduction for every additional
$10,000 you put down. Yeah .
So, you know, that's, that's atough , uh, mathematical , uh,
rule of thumb.

Speaker 3 (22:45):
Well, and so the other element in, you know, the
, because they can service themonthly payment with their
income, any improvements to aproperty would require cash out
of , out of pocket. And soreaching to be able for the
right house that maybe hasimprovements, that's would be a

(23:07):
payment, 300 more dollars permonth. The way that I framed
that analysis for them was,yes, it's more per month, but
you're essentially financingimprovements that you then
don't have to pay out of pocket.

Speaker 1 (23:23):
Right. With the money that

Speaker 3 (23:25):
You don't have to make the house nicer. That,
that kind of opened their eyesa little bit. Like, wow, we
didn't think about, you know,yes, it's more payment, but
you're reducing upgrades in thefuture and that cash expense as
well.

Speaker 1 (23:37):
Right? So let's have some money left over . Always a
good idea. Especially the olderhouse that you're gonna buy.
Um, David, let's come backwith, with my first time home
buyer story of somebody who ,um, called me, well actually it
was their, their neighbor whocalled me about two and a half
weeks ago , uh, while the, theclient was already 10 days into

(23:58):
the home buying process andwasn't feeling really good
about the lender that they hadinitially picked. We'll cover
that when we come back. You arelistening to the Academic
Mortgage and Realty Show on six20 WTMJ.

Speaker 2 (24:10):
Important home buying questions and answers
you can count on. This is theAcuate Mortgage and Realty Show
with Brian Wicker on WTMJ.
Welcome

Speaker 1 (24:20):
Back. And , uh, we're talking first time home
buyers here, which we arerealizing , uh, comprises, oh ,
53 to 54% of all the homepurchases that are occurring
right now in the market. And ,uh, so I had gotten a text,
actually it was two and a halfweeks ago , uh, from a friend
and a client whose neighbor hadgotten an accepted offer back
on October 5th. And theirclosing date on this , uh,

(24:43):
model home that they're buyingin Waukesha County , uh, was
November 6th. So a 31 dayclose. And here they were 10
days into their transaction,David. And they were starting
to get a bad feeling about themortgage lender they had
chosen, which was a small bankout of Illinois. Uh, even
though they're buying in , uh,Wisconsin, they had previously

(25:04):
lived in Illinois and knewsomebody at this bank. Well,
for one thing, the appraisalhad not yet been ordered. It's
like, man, you are a third intoyour time allotment for getting
this. Yeah , you are behind.
And then secondly, they werehaving to ask like , well, can
we lock in a rate? And thiswas, you know, right after the
jobs report that made rates goup. So they were feeling

(25:26):
nervous about rates. So thefirst thing I did on October
16th or 15th whenever I wastalking to them is, let's spin
up what, what rates areavailable now. Gave them three
different options, you know,low rate, medium rate, high
rate. Ultimately they chose the6.625 rate, which back then I
could afford. I I could affordto pay $1,200 of their loan

(25:48):
costs. Uh, so they're onlypaying 266 bucks to get the
6.625 loan. That deal is nolonger available. 'cause rates
have continued to go up, I'msorry to say. Yeah . But then,
you know, we also did the math, um, just like your clients,
right? Of, well, even thoughthey're buying new
construction, there's stillsome things they wanted to do.

(26:08):
They didn't wanna deplete alltheir savings. And so they
answer came down to, Hey,you're gonna only put 18% down
'cause we're going to hit atarget. And they were already,

Speaker 3 (26:18):
That is specific 18%. Okay ,

Speaker 1 (26:21):
Well, 'cause there was a number we were shooting
for. Okay. And , and so theyare gonna pay $40 a month in
PMI. Um , but again, that'sgonna keep enough money in
their pocket that it'sworthwhile to them. Now there
are other lender,

Speaker 3 (26:35):
When you say 18%, I'm just thinking to myself,
you did you prod them like,well, why not 17.5%? No , why
not 17%? No ,

Speaker 1 (26:45):
No. I , you know, they, they were, they , they're
high earners and so they caneven accumulate savings. Um,
okay . A after they buy thehouse. So no, I wasn't gonna go
down that road. Okay . Um ,plus time was of the essence.
Um, but this other lender hadtold, oh, you know what, you
can drop the p your PMI isgonna drop right away

(27:05):
automatically. And I'm like,that is false. Um, the
automatic dropping of PMIoccurs when you pay down your
loan balance not to 80% of theoriginal purchase. It's 78%.
And so that's not gonna happenuntil August of 2028. So I'm
just saying, hey, the automaticdropping, it's gonna take a

(27:25):
while , but once you doactually pay it down to 80%,
you can ask for the PMI to bedropped. Yeah . So just a
little sidebar there. Um, andthen it also turned out, David,
that they had moved money fromtheir non-retirement investment
account to their bank account ,uh, in order to fund the

(27:45):
earnest money, which wassubstantial. Okay . And it
turned out that all thatmovement of money happened
after the statements , um, hadcome out. 'cause this was all
now happening in middle ofOctober. Remember, we're gonna
close on November 6th. So nowall of a sudden I've got this
gnarly movement of money , uh,that I have to document. But in

(28:08):
talking with them , which is apain. So folks, if you are, if
we're only documenting barelyenough money for you to make
this transaction happen, wehave to account for the
movement of money and all thebits of money, including their
earnest money. However, if alender like Akina can document
that you have 20% more thanwhat you need, then we don't

(28:29):
have to trace the money. Wejust have to show it. So, turns
out the husband had a rolloverIRA with six figures in it from
a different job. So it's like,great, we are gonna document
your IRA even though they'renot really gonna use that
money.

Speaker 3 (28:46):
Okay . Well, yeah. I , I I'm gonna rephrase it.
Let's point to a pile of moneyto prove, look, there is money
and then we don't have todocument how then does money
arrive to the closing table?
And some of the artistry ofmortgage lending is don't
answer questions that don't getasked. Yeah. When we meet the
threshold to show you've gotenough funds, thumbs up, see

(29:08):
you at the closing table. Yeah.

Speaker 1 (29:10):
Other , otherwise it was gonna be torturous , right?
Going from one account. Oh ,

Speaker 3 (29:14):
Just , just picture , you know , the transaction
history from your online login. Oh . But you know, it's gotta
be formatted this way. Sounderwriting will take it. It's
not fun.

Speaker 1 (29:22):
Yeah , yeah . Does it have your name or the
account number on it? Does ithave all the dates in between?
It's a pain. So I was reallydelighted about that. Um, and
then lastly, there were acouple of inspection items.
Even though it was newconstruction, you know, this
was a model home. So it's beenstanding for a year or
something. I don't know exactlyhow many months, but they found
a few things and they wrote upan amendment to have those

(29:44):
things fixed. But it requiredsomebody to go back out there
and check to make sure it wasfixed. The original inspector
would ref did , would unwillingto do that. So we had to find
them another inspector to goout and do it. Bottom line is,
it's all getting done and we'regetting ready to close. Wow .
On November 6th, a happyending. Hey, when we come back,
I've got one more story , uh,about somebody who we helped ,

(30:08):
uh, buy their next home inFlorida. We'll get to that when
we return. You are listening tothe Academic Mortgage and
Realty Show on Wisconsin'sradio station AM six 20 WTMJ.

Speaker 2 (30:20):
Find a place to call home without the headache. This
is the Acura at Mortgage andRealty Show with Brian Wicker
on WTMJ.

Speaker 1 (30:28):
Welcome back and thanks again for spending some
minutes with us , uh, hearingabout real estate, how to do
it. And this particular , uh,situation. This just closed on
Friday, November 1st , uh, downin , uh, Southwest Florida. And
these are some folks who we'vehelped multiple times. They're
Wisconsinites , uh, they're,they're now Floridians. They've
had, we've helped 'em withproperties in both states. And

(30:49):
so , uh, they had a super lowtrophy rate on their existing
home. And then once, you know,in the same community that they
live in another home, likeliterally a block away came up
on the market and they said,Hmm , that house has a lot of
updates that ours doesn't. Andyou know what, if we did those
updates, it would cost us like300,000 and we think we can buy

(31:13):
that house for about a hundredgrand more than what we can
fetch for our house. And so ,uh, they put in

Speaker 3 (31:21):
An offer, Nope , sorry honey, you have to stay
in the ugly house 'cause I'mnot willing to give up our
2.99% rate. Right. Said nohusband ever.

Speaker 1 (31:32):
Exactly. Exactly.
And so , um, they were able towrite a cash offer , uh, which
you can do if you actually havethe cash , uh, and can prove
that to the seller. But then,you know, all the way along
they were looking to , uh, geta mortgage on this property and
the whole object of the game,of course, was to do this
without the contingency ofselling their home. So this is

(31:54):
where it gets kind of clever.
Um, as is the case. And we'vetalked about this many times.
We were gonna point to , uh,his IRA as a source of income
and he needed to begin taking ,uh, money outta the IRA so it
could say, look it , there'senough money for him to qualify
for the loan. Interestingly, hehad just moved all of his I rra

(32:16):
money and the money for thedown payment from one
institution to another. So itwas, and it took it , that
happened over the course of twomonths. So luckily this guy's
great with documentation. Heunderstands he's a retired
accountant, so he had to get usall kinds of good documentation
to show Yeah , the money movingright from IRA custodian A to

(32:38):
B, which again happened overtwo months. And then also the
money that we were gonna pointto for the down payment. So IRA
income , uh, IRA funds forincome pointing to their
non-retirement money for thedown payment. But then here's
the really clever part. Hedecided, you know what, I'm
actually gonna take the moneyout of the IRA and use that for

(33:01):
the down payment and then I'mgonna hope that I sell my home
within the 60 day period that I have to return
the money, I mean to my ira.
Yeah. And so , um,

Speaker 3 (33:16):
That I , I don't know if I would do that playing
chicken with the 60 day, youknow, clock.

Speaker 1 (33:23):
I, I, I too would have pause in that. But the
alternative was to suffer thecapital gains from his
non-retirement account. Right.
And have to pay that income taxtax . Well

Speaker 3 (33:34):
I just al also for anybody thinking about that ,
uh, for a non-retirementaccount, a margin loan may also
afford you to not incur thetaxes on liquidating that
non-retirement security.

Speaker 1 (33:48):
Good point. But margin loans are kind of
expensive right now, I think.
Well ,

Speaker 3 (33:51):
But it's an annual

Speaker 1 (33:52):
And we have to count that interest. We have to count
that payment. Yes . You know,which would make, anyway , so
bottom line is the co

Speaker 3 (33:59):
Believe I just , if I'm picking between margin loan
at 11% and playing chicken withthe 60 day clock with the IRS,
I'll, I'll suffer the interestexpense.

Speaker 1 (34:11):
Well, the backup plan was that he could always,
you know, liquidate his , um,non-retirement or , or get the
margin loan or whatever Yeah .
And use that money to pay backthe IRA. Well, as it turns out,
they end up getting a cashoffer on their existing home,
no contingencies.

Speaker 3 (34:31):
And , but I hope that the buyer shows up on
let's not make it day 59. How'sabout that ? No , it's not .
Let's make it day 49.

Speaker 1 (34:39):
That , that's gonna close the first week of
December. So they got a littlewiggle room there. But isn't
that the most amazing , uh, ofstories that wow. Financial
engineering, that guy's anaccountant so he knows what's
going on. Alright, so let'ssee. We covered on today's
show. Hey, interest rates arehigher than anybody would like.
And by the way, what do youthink it's gonna take for

(35:01):
interest rates to come backdown? David, do you have any ,
uh, comments on that?

Speaker 3 (35:05):
You know , uh, the, the data, we've lost weight on
inflation, but it seems to havestalled. And so I think we're
gonna continue to have to proveto ourselves report by report
that we continue to take astick to inflation. And if
inflation starts to tilt theother way, that's not gonna be
welcome news to bond markets ingeneral. So we gotta keep

(35:28):
eating eggs and lentils to loseweight on inflation. That's
what it's gonna take. And it'snot gonna be overnight. It's
gonna be consistent data thatrescues rates.

Speaker 1 (35:39):
And then also I think some more tamed jobs
reports are gonna help us.
Yeah. Um , so that's one thingwe're ready to help. Uh , first
time home buyers and move uphome buyers . All you gotta do,
if you want to help with a refiorder to get a rock solid
guaranteed preapproval to buyis click on that blue
[e-mail]. That's all thetime we have for today's show.
We'll see you back here nextweek. You've been listening to

(35:59):
the ANet Mortgage and RealtyShow on AM six 20 WTMJ. The
proceeding was a paid program.
Advice and opinions expressedduring the Accu Net Mortgage
and Realty Show are solely thatof the host or guests of Anette
Mortgage and ANet RealtyAdvisors, and not WTMJ Radio or
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