The Accunet Mortgage & Realty Show 1-19-25

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 (00:21):
Welcome to the Anette Mortgage and Realty
Show, getting you insideinformation on buying, selling,
and financing your home withexpert advice from Anette
Mortgage and Realty. And now,here's Brian Wicker and Tim
Holman.

Speaker 1 (00:36):
Welcome to the Anette Mortgage and Realty
Show. I'm Brian Wickett,licensed real estate broker
with AC Realty Advisors and themajority owner of AUM Mortgage.
Here today with my son-in-law,senior loan consultant , uh,
Tim Holden. Tim's NMLS IDnumber is 1 5 9 3 1 4 6 and
mine is 2 5 9 6 1 0. If you'vegot a question or a comment,

(00:56):
you can call or text us on theWTMJ talk and text line , which
is 8 5 5 6 1 6 1 6 20 . Andremember, you can get a copy of
today's show or any of our pastshows wherever you normally get
your podcast. So Tim, thanks toyou for you and David doing the
show last week. You did a finejob.

Speaker 3 (01:12):
Thank you very much.
It was a good time. Here we

Speaker 1 (01:14):
Are in the middle of January, still looking ahead to
the new year by the way. I'vegot the December and total year
home sale numbers Nice forsoutheastern Wisconsin that
we'll do a little bit later inthis show. Um, we saw some
thank goodness improvement inmortgage rates this week.

Speaker 3 (01:31):
Some welcome news.
Yeah . LA

Speaker 1 (01:32):
Last week you and David described how the monthly
jobs report kind of was wayhotter than expected. Yeah.

Speaker 3 (01:39):
Put a damper on rates a little bit.

Speaker 1 (01:41):
Caused rates to go up about one eighth of 1% from
where they were. And thankfullythis week we got a major
inflation, a report, theconsumer price index. Yep . And
that showed that , uh, pricesyear over year as of December
went up. Only air quotes, 2.9%,

Speaker 3 (01:59):
Only 2.9, which was better than anticipated, which
that's

Speaker 1 (02:02):
Kind of the main of the game . I think it was
pretty much darn right on. Yeah. I think it was the core
inflation that was just alittle teamer . That's right.
Yeah.

Speaker 3 (02:08):
Yeah.

Speaker 1 (02:08):
Yeah. So it's kind of weird that we got this big.
Maybe it was just relief thatthey thought it was gonna be
worse. Sure. Yeah. Uh, but wehad a nice improvement in rates
this past week and, and sowe're back to where we were.

Speaker 3 (02:19):
Yeah. We're basically back to where we were
about two weeks ago, I wouldsay. But it's uh , nice to get
a little bit of a bounce backwherever we can get it and

Speaker 1 (02:25):
We'll, we will take it, man, because it seemed like
we were on the road to nowherefor a while . Um, is , remember
the Fed wants inflation to getback to 2%. Right . So we're
still above, you know, whenwe're sitting there at two
target nine the target . Yeah .
Um, now let's just , just saybriefly where we were or where
we are here currently on a$250,000 30 year fixed rate ,
uh, to buy an owner occupiedsingle family home or a condo

(02:47):
with 25% down on all the of theright stuff. We're back to the
point where we ended the weekand we could offer a 6.99% rate
with about $1,800 of total loancosts , which brings the a PR
to 7.02. Or if you wanted topony up an extra 4,700 bucks
mm-hmm . Inpoints, which is interest paid
in advance to permanently lowerthe rate, you could snag a six

(03:11):
and a half percent rate. AndI'm sure a good practitioner
like you would probably makethat 6.49. Yeah. But , uh, at
six and a half , the A PR wouldbe 6.7. By the way, in exchange
for that extra $4,700 upfronton a $250,000 loan, that would
lower your payment $81 comparedto the 6 9 9 rate . Yeah. So if

(03:32):
you do the math, and this iswhat we help people do every
day, is we say, well, how longwould it take for you to recoup
those upfront funds, by the wayof lower monthly payments? The
answer is 4.8 years. Yeah.

Speaker 3 (03:45):
So call it, call it five years. Just for the sake
of round numbers. Call

Speaker 1 (03:48):
It five. Yeah . So if you believe that mortgage
rates are gonna come down, youknow, to around six and a half
in the next 4.8 years, youwould say, yeah, I'll wait.

Speaker 3 (03:57):
As David likes to say that the decision to pay
points or not pay points isreally an indicator on your
opinion as the customer onwhere you think mortgage rates
will go in the future. That'sthe way to look at it. Right.
So if you think that rates willnot fall to at or below 6.5%
within the next four and a halfto five years, then pay the

(04:17):
points, right? Yeah . Becauseyou'll keep the mortgage longer
than that and ultimately save alittle bit of money at the end
of the day, but yeah .

Speaker 1 (04:23):
Over the 30 year life. Oh yeah . Yeah . That's
what the A PR is. The APR sayswhat's the total cost of the
upfront points plus theinterest over time. Yeah . Over
the whole 30 years. Right .
That's what the A PR is.

Speaker 3 (04:32):
Well , and PMI if there's

Speaker 1 (04:33):
PMI involved .
That's correct. Good

Speaker 3 (04:34):
Point. Yeah. But it's like most people and , and
nobody knows the right answer,by the way. That's the
frustrating part. No one canaccurately predict where
mortgage rates are gonna benext week, much less four years
from now. But I'd think the ,the general consensus, both
with customers and industryprofessionals is that rates
will be below six point halfpercent, four point a half
years from now,

Speaker 1 (04:55):
But yeah, some at some point during that time.
Yeah . We don't know if it'sgonna be there at four point a
half years, but sometime inthat window.

Speaker 3 (05:00):
Yeah , exactly. So if you took the 6.99% and just
kept that extra four plus grandin your bank account and use
that to subsidize the highermonthly payment, true debt ,
you could do that for 4.8years. That's right. Before
you'd run outta the money inthe bank. Good

Speaker 1 (05:14):
Way to put it. Yeah.
So we're seeing a lot of peoplehere in mid-January. Both our
past customers that werepre-approved in 2024 but didn't
find a house, they're comingback in and said, sign me up
again. Let's, let's go again.
I'm ready to shop for sure.
We're also seeing a lot of newcustomers. Yeah. Uh , say, you
know what, it's 2025, whateverthe case. I don't care where
interest rates are, thankgoodness.

Speaker 3 (05:35):
This is the year we're gonna

Speaker 1 (05:36):
Get , we wanna get out there. We either, you know,
have grown out of our existinghome mm-hmm . Or
we wanna become homeowners. Yep.

Speaker 3 (05:41):
I got customers that will we'll talk about later in
the show that firmly fit intothat category where it , they
want to buy their first homefor family and life reasons.
Not at all financially related.
So ,

Speaker 1 (05:53):
Alright . So, so I took a little look at , uh, how
is inventory looking Yeah. Herein the middle of January. And ,
uh, we're going to cover thatwhen we come back. You are
listening to the Aced Mortgageand Realty Show on AM six 20
WTMJ

Speaker 2 (06:10):
Home buying advice from the guys who know it best.
This is the Accu Net Mortgageand Realty Show with Brian
Wicker on WTMJ.

Speaker 1 (06:19):
Welcome back and thanks again for tuning in
today. I'm Brian Wicker,majority owner of ACU Mortgage.
That's Tim Holdman over there.
Good morning. Senior loanconsultant and , uh, all around
. Great guy. My son-in-law,father of my grand , two of my
grandchildren. So , uh, interms of looking at the demand
side , uh, for homes startingon the new year, demand seems
to be plenty. Let's look atsupply. And so the data that

(06:41):
I'm about to share is forsingle family homes and condos
in the five county Milwaukeemetro area. Courtesy of the
multiple listing service ofwhich I'm a card carrying
member and through my academicrealty advisors , uh, uh, real
estate brokerage. Well, so Tim,the last two January, so 2023
and 2024, we have seen justover 1200 new condo and single

(07:04):
family homes come onto themarket. Just to give you some
Okay . Uh , perspective. Yeah.
It's kind of looking like we'reon pace for about the same
number because in the first 15days of January we had 592
listings Sure. Show up on theMLS if you compare that, you
know, it's always what are youcomparing to? So I'm gonna say
it's probably gonna be similarto 23 and 24. Yeah. But if you

(07:24):
go back to look at 2019, thelast kind of pre covid normal
year , normal January , uh,we're gonna be shy by about
1500, I'm sorry, not 1500, 500.
Oh okay. Listings. So we'regonna be about 30% lower , uh,
or the last three years, youknow, including this year. Yeah
. Compared to that. So is it abuyer's market, a seller's
market, or a balanced markethere in southeastern Wisconsin?

(07:46):
For that, we look to thecurrent number of homes listed,
which is 2,400, and then do wedivide that number by the
number of sales in a particularmonth? And so the question is,
do you divide it by Decemberwhen we had 1,317 close sales,
or do you divide it by morelike a typical January, which
is more like 830 close sales.

(08:09):
Right . Do you have an opinionon that? Which way would you
go? Um , I would probably goJanuary. I would too. All right
. And so if we do that, we areat a three month supply, which
is kind of at that upper end ofstill being a seller's market.
Yeah. You know , where there'stight inventory or tight
inventory. Yeah. Um, four tosix month supply would be kind
of in the middle Right. Balance. Yeah . Right. Yeah . And then

(08:31):
, uh, six or greater would be abuyer's market. So I'm gonna
say we're, we're kind of stillin a, a , um, seller's market.
Yeah. By the way, I went on thepublicly traded Redfin website,
and they do a thing called a ,uh, uh, market heat index. And
so they have the city ofMilwaukee rated at a

(08:51):
competitive index of 67, whichthey call somewhat competitive.
Hmm . Okay. And where theyobserve that quote, some homes
get multiple offers, theaverage home sells for about 1%
below list price and goespending in about 45 days. Hmm .
Sure. Uh, hot homes can sellfor about 3% above listing
price and go pending in about29 days. Other municipalities

(09:14):
that I just thought I'd pick onBrookfield is also 64, somewhat
competitive. Franklin alsosomewhat competitive with a
Redfin score of 64 WWA rankedat very competitive with the
numeric score of 77. And WestDallas gets an 82

Speaker 3 (09:30):
Wow.

Speaker 1 (09:30):
Competitive score

Speaker 3 (09:31):
Up and coming West Dallas .

Speaker 1 (09:33):
All right . Yeah.
Where they observe many homesget multiple offers with the
average home selling for about1% above listing price and goes
pending in 36 days. And by theway, hot homes they say in OSA
can sell for about 6% abovelist price.

Speaker 3 (09:47):
And I think , I think it's smarter to look at
more , uh, narrow data likethat, Brian . For sure. I mean,
if you look at just the fivecounty average, very few people
are shopping in that wide of aradius . Right? Well , nobody
is. Yeah . Nobody is . Yeah.
Yeah. I would venture to saynobody. So really the, whether
it's a buyer's market or aseller's market is gonna vary

(10:09):
way more about specificallywhere you're looking. If you're
looking at a , you know, TOSAbungalow Yeah. It's gonna be a
hot market, right ?

Speaker 1 (10:17):
That's right .
You're probably gonna be facingmultiple offers and that's
where your buyer's agent has tobe your coach. Exactly. Right.
To say, okay, what do we fagainst here? Right?

Speaker 3 (10:24):
Right. If you're making an offer on a house
that's been on the market for180 days and they've had a
couple price reductions, it'slike, okay, you know, you know,
people aren't lining up aroundthe block to make offers on
this place. And you can adjustyour strategy accordingly.

Speaker 1 (10:36):
As for where home values go from here, the latest
numbers I have from Zillowwhere they actually go out on a
limb and they predict where dowe think home values are gonna
be in a year? Okay. Uh, they'resaying up 2.4% for Milwaukee,
up 2.8 for Madison Green Bay up4.4 Appleton up 4.1, Racine up

(10:57):
2.8 , uh, Eau Claire up 3.4. Sodue to that imbalance of, you
know, supply and demand, wherewe're still tilting, you know,
in that there's not enoughinventory out there. Yeah . By
the way, I saw some stupidarticle, frankly, on MS
NBC or not msn , bbc , CNBC,that's said , why are, are ,

(11:19):
uh, first time homes , uh,starter homes hard to find .
And , and the answer they took,you know, several paragraphs to
say this is 'cause buildersdon't build them anymore. Yeah.

Speaker 3 (11:29):
It's true. They're building $500,000 homes, right?

Speaker 1 (11:31):
Yeah . They're not building 1400 square foot, you
know, starter homes , uh, thatare affordable. So I think
we're gonna still see the , um,supply in in the year 2025. I'm
gonna go on , on a limb andsay, yeah , uh, it's still
gonna be a generally sellersmarket. Well, with that in
mind, let's , uh, turn thepage. We usually talk about in

(11:52):
terms of what buyers can do tomake their offers more
attractive, I thought, let'stake a look at, hey, if I'm a
seller Sure. And I'mentertaining multiple offers,
what should I be looking forthere ? There you go . Yeah .
Let's do that . When we comeback, you are listening to the
Academic Mortgage and RealtyShow on Wisconsin's radio
station. AM six 20 WTMJ,getting

Speaker 2 (12:10):
You into the home of your dreams. Here's more of the
ACU Net Mortgage and RealtyShow with Brian Wicker on WTMJ.

Speaker 1 (12:18):
Welcome back and thanks again for hanging out
with us , uh, here on Sunday.
Or if you're getting this on apodcast whenever you're
listening to it. So if you're aseller out there in this , um,
still seller's market, in themost case , uh, what you're
looking at, if you're gettingmultiple offers, you know,
obviously you're looking at theprice.

Speaker 3 (12:35):
Right? That's al that's always the big one.
That's the big one. But it'snot that simple either.

Speaker 1 (12:40):
It's , it's not the end of the story. Yeah. Uh, you
know, for some sellers it mightbe when can you close, may
maybe you wanna wait closing,you know, maybe that's
important to you. Uh ,

Speaker 3 (12:50):
You want fast , maybe you want , maybe you want
to close fast, but then havepost-closing occupancy.

Speaker 1 (12:53):
Right? Yeah . Right.
So good, good buyer's agentsand listing agents will
communicate that with eachother. Hey, what's, what's I ,
I'm about to submit an offersays the buyer's agent, what's
really important to, to yourclient? The seller? Yeah . Um ,
so the, the majorcontingencies, 'cause obviously
what you want as a seller is acash offer . Yeah .
That has no contingencies. Yeah. Hey, I will buy your home and

(13:14):
I don't care what it appraisesfor, I'm not gonna inspect it.
Whatever. I don't needmortgage.

Speaker 3 (13:18):
I I have the money, I'm just gonna do it. Yeah.
That, that's the best,

Speaker 1 (13:21):
That's the ideal.
But not very many go that way.
In fact , uh, I'll tip , uh, wedo have the , uh, December home
sale , uh, information and 22%of offers in December were cash
offers. Okay. So , um, so themajority, vast majority are not

Speaker 3 (13:37):
Cash offers are not .

Speaker 1 (13:37):
Yeah. So the one contingency that no seller
wants to see, of course, is thesale of home contingency
because hey , it's like, Idon't wanna be waiting for you
to sell your house. Yeah. Whoknows what kind of house that
is or how crazy you are aboutthe asking price. Yep . The
next one is the homeinspection. And of course, you
as the seller would love it ifthe buyer waived the home
inspection, but that's risky.
So the next best thing when thebuyer clicks that box on the

(14:00):
offer is that the buyer givesyou as the seller the right to
cure any defects. Sure. And Iwould say we see that a lot.
Yeah. Pretty , it's commonalmost percent . Yeah . Yep .
And , and then the other thingyou'd like to see if they're
asking for home inspection isthat, hey, I, the buyer will
actually pay for the first fillin the blank dollars mm-hmm
. And any repairsYeah . For defects that come up

(14:22):
on the home inspection. Oh,that's nice. Yeah. Um, and then
I , when I sold my last house,by the way, the, the , um, it
was without an inspectioncontingency, but they said,
Hey, we still wanna do aninspection just for
informational purposes only.
Sure .

Speaker 3 (14:36):
No problem. That was great.

Speaker 1 (14:37):
Yeah . Alright , here's the, here's the trickier
one, the appraisal contingency.
So on the Wisconsin offer topurchase , um, there's a box,
and if it's checked , uh, itmeans, Hey, my offer's
contingent upon an appraisal.
And the default , uh, is that,man, if the appraisal comes in
$1 less than the asking price,I the buyer can scratch the

(14:59):
deal. Yep .

Speaker 3 (15:00):
All

Speaker 1 (15:01):
The power is in the hands of the buyer. So that's
the least attractive to you asa seller. Right. The next box,
which I think is probably themajority that we see, I don't
know . You can, is that whatyou're saying? Yeah . Thinking
Yeah . Yeah. Because it says,Hey, you know what, if the
appraisal comes in low, we'regonna give the power to you,
Mr. Seller. Right. And say, ifyou,

Speaker 3 (15:21):
You , you can drop the price down and match the
appraised value kind of

Speaker 1 (15:24):
Unilaterally. You can just say, I'm gonna force
the transaction forward Yep .
Uh , at this lower price. Andthen the , um, buyer is pre
agreeing to sign thatamendment. Right. And then the
third option that I don't thinkwe've seen so much during this
winter period, but uh , sure.
We're seeing it in , in thisspring and summer of last year,

(15:45):
is where the buyer says, Hey, Iwill still pay you, let's say
$500,000 for this house, evenif it appraises as low as four
90. Right.

Speaker 3 (15:55):
We call that the appraisal gap , uh,
modification, if you will.
Correct.

Speaker 1 (16:00):
'cause that again, is giving you peace of mind as
the seller. Um , and , but thenhere's where you really wanna
be careful as a seller, youwanna see that the terms you're
seeing in the contract, if thebuyer is getting a mortgage, do
they match the terms of theirpre-approval letter?

Speaker 3 (16:15):
Right.

Speaker 1 (16:15):
So for example, if you're saying, Hey, I'll still
buy it at 500, even if itappraises at four 90,

Speaker 3 (16:22):
Can they still get a mortgage if it appraises for

Speaker 1 (16:24):
Four 90 ? Right .
Don't you want to see that?
Yeah . On , on the pre-approvalletter? And if you Oh , you

Speaker 3 (16:28):
Should. Yeah.
,

Speaker 1 (16:30):
I doubt that many of them do that.

Speaker 3 (16:32):
No, because the, the sneaky inside baseball is that
if they write that really nicemodified appraisal contingency
to make the sellers feel goodabout it, but if they actually
couldn't get their mortgageapproved, it had , if it
appraised at four 90 in thisexample, they can just get
outta the contract by exercisein the financing contingency.

Speaker 1 (16:51):
Correct. Well, and that, that leads me to another
thing that I've seen at leastonce or twice where the
appraisal box, the appraisalcontingency box is not checked.
See , I don't, I don't have anappraisal contingency, but the
buyer is putting three or 5%down. Yeah. , that's a
big red flag for you as aseller, because as you just
pointed out Yeah. That is whatI call the stealth appraisal

(17:11):
contingency.

Speaker 3 (17:12):
Absolutely. Yeah.
You're really just leaningfully on the financing conting,
you know, contingency as thesafety net that the buyer would
exercise to get out of thecontract, whether it's due to a
low appraisal or , or any otherreason that they couldn't get a
mortgage.

Speaker 1 (17:25):
Exactly. So, so again, you know, that's why
sellers intuitively like abigger down payment. Right.
Because they kind of know,well, if the appraisal comes in
a little low Yeah . They

Speaker 3 (17:34):
Probably got the It

Speaker 1 (17:35):
Shouldn't creator the deal.

Speaker 3 (17:36):
Exactly. Yeah .
Right .

Speaker 1 (17:38):
Um, and , and so then a couple of other things,
and I think we're gonna have totake care of this after the
break in comparing thefinancing contingency terms to
the actual wording in the , uh,preapproval letter. Mm-hmm
. That'scritical. We're gonna cover
that , um, after we take thisbreak. And Tim, you've also got
a great story about some firsttime buyers Oh yeah . Who you

(17:59):
met with this last week and ,uh, along with one of their
fathers mm-hmm .
And how they kind of came inwith one idea on how dad could
help, but left with a differentidea after some good consulting
by you. We'll cover that rightafter this news break . Right
now it's time to turn it overto the WTMJ Breaking News
Center.

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

Speaker 1 (18:25):
Welcome back and thanks again for , uh, hanging
out with us. So , uh, I'm BrianWicker, the elder. That's Tim
Holdman, the younger and , uh,senior loan consultant , uh,
with academic mortgage. And so, um, we're just talking about
if you're a seller, you know,and you're really comparing
offers , uh, between A and Bhere, or a B and C, maybe you
got three offers and , and the, and, and a couple of your

(18:48):
buyers have financingcontingencies. Take a close
look at how well does thepreapproval letter match up
with the terms and thefinancing contingency. And I am
amazed when I've seen someother deal, other preapproval
letters Yeah . How they are

Speaker 3 (19:02):
Lacking

Speaker 1 (19:03):
Light on the facts.
So thing number one is, doesthe preapproval letter have an
interest rate? I've seen 'emwhere they don't Yeah.

Speaker 3 (19:10):
Or, or they literally have one singular
rate, which isn't wise in myopinion, either, because no, no
one can lock in their ratebefore they're under contract.
So what if the rates change,which sometimes they do swing
pretty substantially within thecourse of a few days. It's like
if they were gonna get 6.875and all of a sudden they have
to get correct 6.9 or 7.1, thatthat could be enough enough to

(19:34):
push them out of qualifying.

Speaker 1 (19:35):
So let's, let's say that the , uh, financing
contingency says my, you know,offer to purchase is , uh,
contingent upon me getting a 30year fixed rate loan of this
dollar amount at a rate ofseven and a quarter . Right.
But then the preapproval lettersays 6.875, eh . Yep . That's a
problem. Yep . 'cause you wannaknow, as the seller, does this
buyer qualify, still qualify atthe rate that's stated in the

(19:55):
contingency. Um, so that,that's critical. Another thing
you wanna look at is, what doesit say the lender has verified
so many bank pre-approvals. I ,we like to call 'em flimsy bank
pre-approvals, only verify thecredit. Yep . And that is not
where the problems youtypically lie. No, it's in the

(20:15):
income and the down payment.
And so you'll see a typicalbank pre-approval letter will
say, Hey, we verified yourcredit. And based on that and
the information you providedabout your down payment,
and, and , and , andjob employment history and
income, you're, you'repre-approved for such and such
a mortgage amount. Well , uh,what if, what if you don't make

(20:36):
what you make? Right. You know, what if you're ,

Speaker 3 (20:38):
Or what , what if you don't have the money that
you put down when you filledout that online form? Right.

Speaker 1 (20:43):
So the benefit of course, of the academic
mortgage guaranteed fullyverified rock solid
pre-approval is that we say wehave verified not only your
credit, but your down paymentand your employment and income.
Yep . And you are good to go.
And in fact, we guarantee thatwith a $2,000 guarantee. Um,
you know, the, the other thingthat is true about , uh,

(21:05):
preapproval letters is there'ssome implied property tax

Speaker 3 (21:10):
That's

Speaker 1 (21:11):
Right. Embedded in there. And I don't see anybody
else putting that on there . No. Our preapproval letters say,
Hey, this is for this purchaseprice at this interest rate
with this loan amount and thismuch in And you'll property
taxes.

Speaker 3 (21:22):
Yeah . We enlist a maximum total monthly payment.
'cause for a condo that couldinclude HOA dues , uh,
absolutely has to include , uh,monthly allocations for
property taxes and homeowner'sinsurance. And really
fundamentally, Brian, I mean,what a pre-approval comes down
to is it's telling the seller,this buyer qualifies for a
mortgage payment where themonthly total house payment is

(21:46):
up to x

Speaker 1 (21:46):
This dollar

Speaker 3 (21:47):
Amount. Right .
Yeah. And as long as it's at orunder this total monthly dollar
amount, they qualify. Yeah. Soproperty taxes are like
literally the second biggestfactor. Correct . Besides the
principal and interest. Andthat can be a big deal.

Speaker 1 (21:59):
You know, I had a , a customer I was working with
in the Chicago suburban arearecently where , uh,
homeowner's insurance, andthere's a big article in the
Wall Street Journal a coupleweeks ago about Yeah .
Homeowner's insurance rates areskyrocketing. They are, yeah .
And in this particular case ,uh, they wanted to retain their
existing condo Okay. So thatthey didn't have to sell, you

(22:20):
know, and then go find a placeto live. Yeah.

Speaker 3 (22:22):
They can sell it later after you ,

Speaker 1 (22:23):
They're gonna sell it later. Right. Yeah . And,
and so our financial bloodpressure or the debt to income
ratio , um, we were kind of upin the upper regions. Right.
Right. And so I forwarded thema , um, a website, mattick ,
MATI c.com , maddock.com onlineinsurance broker where they
could get a quote, they couldjust plug in a, a , a property

(22:44):
that they're looking at. Sure.
And I had 'em do it, and Imean, the, it came back, the
lowest number was $3,800 here .
I mean, that's over $300 amonth. Yeah. So it's like that
was important information toknow Absolutely. The devil lies
in the details. Hey, it's notgonna be a hundred bucks a
month. Yeah. For you, it'sgonna be over

Speaker 3 (23:02):
300. And this is where they probably, because
based on their income, theyprobably didn't think there
would be any concern becausethey didn't understand that we
have to qualify them with theircurrent house payment plus the
new house payment plus whateverdebts they have in their credit
report. You know, they'rethinking, oh, well yeah, I'm
only gonna have that othercondo payment for like a month

(23:22):
or two most, and they're Right.
But in the mortgage world, wehave to qualify them as if they
never sell that condo.

Speaker 1 (23:29):
Right . Right. And so on our preapprovals, if if ,
uh, the sale of the existinghome is not required

Speaker 3 (23:35):
Yeah. We put it in bold. That's right. We , we
want to point that out. 'causethat's a big piece of mind to
the seller, right? Correct . Ifthey see that on the
pre-approval, yes. This buyerowns a property, no, they do
not need to sell it before theycan buy the new property.

Speaker 1 (23:48):
So there's your primer on , uh, what to look
for from the eyes of theseller, which of course feeds
into what you need to put inyour offer if you're a buyer.
Right. Tim, you wanna set us up, uh, for your first time home
buyer meeting that you had thatwe wanna

Speaker 3 (23:59):
Describe? Yeah . So , uh, I think a , a couple
points that we'll get into withthis story, but , uh, earlier ,
uh, last week I met in personat my office with , uh, a
really nice young couple, gonnabe first time home buyers and ,
um, uh, the , the wife's dadwho's a past customer of mine.
So that's how he , uh, sent inhis , uh, daughter and

(24:19):
son-in-law. And , uh, basicallyhe wants to help them out , uh,
with some financial assistanceto, you know, afford living in
their new home. And he had oneidea on how to do it. And then
through some consultation, weactually came up with a much
better game plan on how to doit. So we'll get more into the
details after this next break.

Speaker 1 (24:38):
You were listening to the Academic Mortgage and
Realty Show on AM six 20 WTMJ.

Speaker 2 (24:44):
Important home buying questions and answers
you can count on. This is theAcuate Mortgage and Realty Show
with Brian Wicker on WTMJ.

Speaker 3 (24:53):
Good morning and welcome back to the Acuate
Mortgage and Realty Show. I amsenior loan consultant Tim
Holdman, joined by , uh, chiefHonesty Officer Brian Wicker.
Uh , Brian , I wanted to sharea story , uh, and this is
honestly the favorite part ofmy job, is the, the
consultation with customers andtrying to help craft the
smartest and best game plan forthem. A lot of people can just

(25:16):
slap together a mortgage. Sure.
You know, the assembly of thatisn't rocket science. Uh, but
what I like to do is, you know,help balance all those
competing factors thatespecially first time home
buyers have to deal with , uh,you know, when getting ready to
buy their first home and , andfeel comfortable and confident
about everything before they goout and find the house that
they fall in love with andwanna make an offer on. So, to

(25:39):
set the table on this , uh, Ihad , uh, uh, really it's the ,
uh, the wife's dad email me.
'cause uh , the dad is a pastcustomer of mine that we've
helped several times. And hesaid, Hey , uh, you know, my
daughter and son-in-law,they're getting ready to maybe
buy a home later in the springand summer of 2025, we wanna
meet with you . All three of usare gonna come in and we wanna

(26:00):
figure out what they qualifyfor, what they can afford, all
that good stuff. I said,awesome. Let's all, let's all
sit down together. Let's allget together. Right ? Yeah . So
they come in and the dad , uh,wants to help them out , uh,
financially with , uh, youknow, affording to live in the
home. Okay . You know, whetherthat's assisting a little bit
month over month with themonthly payment, or maybe

(26:20):
gifting them a big chunk tohelp with the down payment.
He's not really sure which wayhe wants to go on that yet, but
he said, well, Tim, I shouldprobably co-sign on this loan
ah , you know, so that I can,my income can help them qualify
for more. Ooh .

Speaker 1 (26:33):
That, that, that is not a good idea. But why don't
you explain, or if you canavoid it, I mean, if you gotta
do it.

Speaker 3 (26:38):
Yeah . Yeah . Well, right. And I , I didn't
initially shoot it down rightaway because I didn't obviously
, uh, know any about anythingabout the financial particulars
of the kids. But I said, okay,well let's, let's dive into the
details and figure out ifthat's even necessary. 'cause
frankly, it might not be, youknow, parents out there, you
know, you co-signing on theloan isn't a requirement to

(26:58):
still help your kids out.
Correct . Financially, like youcan do that really independent
of, of the mortgage. Um, so Igather the kids' , uh,
financial information. We wentthrough a pre-approval, you
know, in person on the spot.
And it turns out the , thekids' , you know, excellent
credit scores both above seven80 and the husband has a really
good, you know, salary W2 job ,uh, as an engineer making, you

(27:21):
know , decent money. So for theamount of house that they
wanted to buy, which they toldme their max price range was
360. Okay. Um , looking in theWaukesha County area, like,
like many others , uh, theyqualified for that with just
his salary. Okay,

Speaker 1 (27:36):
Great. A little high on the debt, 10 income ratio or
middle of the road or

Speaker 3 (27:40):
Little, little high.
Yeah. But , uh, enough wiggleroom where, you know, I, I felt
I , I even ran it through itwith the smallest amount of
down payment that they would doand it still went fine. Uh , so
really they qualify with justhim . The , the dad's income
being added on as a co-signerreally wouldn't further improve
that situation. 'causequalifying for mortgages pass
fail essentially, as we know.

(28:02):
So I said to the dad, you canco-sign, but actually it would
ironically hurt them in termsof the mortgage that they can
put together because the dad'sincome plus the son's income,
who together exceed all of thefirst time home buyer income
programs ,

Speaker 1 (28:21):
Ah , thresholds.
Right? Yeah .

Speaker 3 (28:22):
Right . Right .
Whether it's WIDA or HomePossible, or HomeReady, all
those things, if we added thedata on as , as income, it
pushes them above that incomethreshold where they wouldn't
qualify for those programs. SoI said, dad, if you co-sign,
they're gonna actually get ahigher rate , worse deal .
Yeah. And , and a moreexpensive mortgage. Oh ,

Speaker 1 (28:39):
Surprise.

Speaker 3 (28:39):
Yeah.

Speaker 1 (28:40):
So by the way, the, the limit for uh, uh, Fannie
Mae and Freddie Mac special ,uh, home buying programs is
$81,680 in Waukesha County. Andif we go with Wisconsin's , uh,
special 30 year fixed rate, Inever call it wida , by the
way. . Okay . Justbecause some real estate agents
actually have a aversion tothat because that's , think

(29:02):
it's like FHA

Speaker 3 (29:02):
Or something . Yeah.
They don't know. It's stilljust a Fannie Mae back mortgage
. Right .

Speaker 1 (29:05):
It's Fannie back point . Good point . Point . So
the limit , uh, for the incomelimit for a two person
household is 102,100.

Speaker 3 (29:11):
Yeah. Not bad. And if you have kids, which they,
they do, they have Oh, they do.
They have two kids. One on theway. Yeah . Oh,

Speaker 1 (29:16):
So $117,415 is the three plus household person
income. Yep . Okay. Yeah . So ,uh, what's their down , so how
else, how, how can the dad help'em ? So

Speaker 3 (29:28):
They were trying to decide, but , and they , I
don't think, they still haven'tdecided. 'cause it's gonna vary
on I think what house theyultimately wanna buy. Um, if
they're gonna go with a lowerdown payment and have the dad
help them month over month withthe mortgage payment. Uh, or
the dad might , uh, decide tojust give a large lump sum gift
to towards the down payment, inwhich case, obviously that

(29:50):
would drive down the monthlypayment as a result. And this
was another , uh, I think aclassic , uh, you know , pain
point for a lot of customers isthey qualify no problem for a
$360,000 home purchase, but themonthly payment that would come
along with that was higher thanwhat their stated goal was.
Okay . For their, their monthlypayment. So really that's the,

(30:13):
that's kind of like the, youknow, the , the big competing
factor with most folks is I canqualify to buy this much house,
but I wouldn't be comfortablemonth over month. Their , their
stated monthly payment goalthat they would really like to
stay was between 16 and 1700 amonth. Okay . And the only way
they get there on a $360,000home is by putting probably
around 25% down. And just fromtheir own funds, they had

(30:37):
enough for about 5% down. Okay.
So it's either gonna be biggift from a relative, you know,
to get you there, or monthlypayment assistance. I

Speaker 1 (30:47):
Like the idea of, hey, give them a gift, but
don't use it for down payment.
Yeah . Give them a gift ,

Speaker 3 (30:51):
Keep

Speaker 1 (30:52):
It in the bank, and then take out $400 a month. I
mean, that's only $4,800 over ayear. If you said, I want to
help my kid $400 a month, youknow that their income is gonna
grow. Right. And , and sorather than giving 'em , you
know, 50 grand to try to movethe payment down by , uh, not
that much , you know,maybe, maybe give them that
subsidy. Alright . When we comeback, let's , uh, just take a

(31:14):
quick look at December's homesale numbers. You are listening
to the Accu Mortgage and RealtyShow on AM six 20 WTMJ.

Speaker 2 (31:22):
Find a place to call home without the headache. This
is the Accu Mortgage and RealtyShow with Brian Wicker on WTMJ.

Speaker 1 (31:30):
Welcome back and thanks again for joining in.
You know what, I decided wedidn't have enough time here in
this last segment to do justiceto the December and 2024 , uh,
home sale numbers. We'll

Speaker 3 (31:40):
Save

Speaker 1 (31:40):
It for next week .
Yeah. We'll save that for nextweek. But , uh, I did have a
conversation this last weekwith a Wisconsin past client
looking at buying a condo in ,um, uh, on the East Coast over
near Fort Lauderdale inFlorida. And , um, the
interesting thing about Floridacondos since that tragic surf

(32:00):
side Yeah . Uh , collapse , uh,is that the condo projects now
are under intense scrutiny. Sothere's regulations in which is
good if you're a buyer Now inFlorida, new rules that were
effective, I think it was July1st, 2024, where condo's three
stories and higher must undergoan inspection after 30 years

(32:21):
and every 10 years thereafter.
Yeah . Oh, did I mention thisbuilding that he was looking in
was built in 1968. Ooh .

Speaker 3 (32:27):
So getting up there.
Yeah.

Speaker 1 (32:29):
Dang. Is that 50 years? Uh, yeah, over 50 years.
Almost

Speaker 3 (32:32):
50

Speaker 1 (32:33):
And

Speaker 3 (32:33):
Almost 60.

Speaker 1 (32:34):
And then this will determine whether the building
is structurally sound and ifrepairs are needed on top of
that, buildings that arealready 30 years or older must
have inspections completed bythe end of 2024. And luckily in
this case they did.

Speaker 3 (32:47):
Okay. That's good.

Speaker 1 (32:48):
Uh, condos over three stories or higher must
review reserve funds before theyear is over, meaning 2024 and
every 10 years thereafter , um,to make sure you're saving up
enough money to do the repairs.
And obviously that

Speaker 3 (33:01):
Was once they come Yeah.

Speaker 1 (33:02):
A bone of contention. Right. Because the
surfside condo building hadmillions of dollars worth of
repairs that were needed. Yeah.

Speaker 3 (33:09):
And they weren't doing, and they were ,

Speaker 1 (33:10):
They were not doing.
And then , uh, also condoprojects must have a budget
adopted on or before January1st, 2025 based on the findings
and recommendations of the Yeah. Review of reserves and

Speaker 3 (33:23):
All these rules do make it harder to get a
mortgage for these types ofproperties. But I think it's
worth noting that like, as apotential buyer, you should
want these things. Absolutely.
Like, yes, they do make gettingthe financing in place more
difficult, but it's really themortgage lender doing a lot of
the legwork that you shouldwant to know to make sure that
the property that you're buyinghas adequate reserves, has

(33:46):
money saved up for repairs thatare, it's a matter of when not
if Right. These things aregonna be coming down the pike
at some point. So,

Speaker 1 (33:53):
So again, is that , so those are actual regulations
from the state of Florida

Speaker 3 (33:57):
Right.

Speaker 1 (33:58):
Irrespective of mortgage lending requirements.
Oh , I see . Yeah, yeah. Inmortgage lending, we would have
the association do a moredetailed questionnaire, give us
any engineering reports mm-hmm . We don't
necessarily have to look at thebudget or the reserves. Right.
And then Well ,

Speaker 3 (34:12):
If it's, if it's less long form , if it , well
yeah, actually yeah. For asecond home condo with 30%
down, 30% down , uh, or more,we do not have to, if it's less
than 30% down, we still have

Speaker 1 (34:21):
To get the structural Yeah .

Speaker 3 (34:22):
Report. We do have to do a full condo review at
less than 30% down. But yeah .

Speaker 1 (34:26):
So luckily amazingly this project that they were
writing the offer in hadalready done all that, in fact
Awesome. We looked it up inFannie Mae's condo project
management software. It wasalready pre-approved. Oh ,
fantastic . As long as weclosed before February 25th.
Okay. And they wanted to closeon the 20th of February. So I'm
thinking, okay, this looksgood. Yeah. So the other part
of this story is though theywrote it using the Wisconsin

(34:49):
No, I'm sorry. The Floridaoffered a purchase form called
the as is contract .
And so there was a cash offerOkay . As is . But the weird
thing about this particularform in Florida is you have 15
days to cancel the transactionfor any reason. Right. And you
can still get an inspection.
Okay. You just can't, you canspike the deal for any reason

Speaker 3 (35:09):
Within 15 days within

Speaker 1 (35:11):
That inspection contract. That's right. And so
they did get an inspection.
There were a few minor thingswrong, and they ultimately
decided to cancel thetransaction. Wow. And in , in
the text message that I got, itreally wasn't about the
inspection so much, it wasabout the fact that the HOA
dues were $15,000 a year. Whoa. Then you got taxes on top of

(35:34):
that.

Speaker 3 (35:34):
That's why they have so much in the budget .
Correct . Yes . They're

Speaker 1 (35:38):
Charging people for it . Yeah . Right . Because
they are now maybe making upfor lost time. Yeah. So
ultimately second homes areexpensive. Yeah. Uh ,

Speaker 3 (35:45):
And you got, I think you got it ultimately comes
down to you want it , you haveto want it bad enough. That's
right. And if you don't, that'sfine.

Speaker 1 (35:50):
It's not a great use of money, but it's Sure. Can
bring a lot of enjoyment. Hey,that's all the time we have for
today's show. Thanks again fortuning in. You've been
listening to the AcademicMortgage and Realty Show on
Wisconsin's radio station AMsix 20 WTMJ.

Speaker 4 (36:04):
The proceeding was a paid program. Advice and
opinions expressed during theANet Mortgage and Realty Show
are solely that of the host orguests of academic mortgage and
Academic Realty advisors andnot WTMJ Radio or Good Karma
Brands. Milwaukee, LLC.