The Accunet Mortgage & Realty Show 2-2-25

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 Accu Net Mortgage and Realty Show,
getting you inside informationon buying, selling, and
financing your home with expertadvice from Anette Mortgage and
Realty. And now, here's BrianWicker and Tim Holdman.

Speaker 1 (00:36):
Welcome to the Accu Mortgage and Realty Show. The ,
uh, early February edition. I'mBrian Wicker, licensed real
estate broker with Aedt RealtyAdvisors, and also the majority
owner of Aedt Mortgage, wheremy individual N-M-L-S-I-D
number is 2 5 9 6 1 0. I'm heretoday with my Sonin Law . Tim
Holdman. Tim, what's yourN-M-L-S-I-D number ? Good
morning,

Speaker 3 (00:57):
1 5 9 3 1 4 6 .

Speaker 1 (01:00):
Alright , thank you.
Tim Holdman , senior loanconsultant. So , uh, Tim, lots
of topics to talk about today.
We had a treasure strove ofeconomic reports that at the
potential to

Speaker 3 (01:09):
Impact Yes , indeed, mortgage rates

Speaker 1 (01:10):
This week. Um , got a , uh, quick look at Wisconsin
Home affordability based onhome sales and median prices
statewide. I've got a storyabout an inspection fall
through in , uh, Illinois,which is a little bit of a
different animal compared to ,uh, Wisconsin plus a divorce
related refi. That was quiteinteresting this week. Do you

(01:30):
have any stories to share?

Speaker 3 (01:32):
Yeah, you know , uh, uh, just a , a little , uh,
teaser for some of the storiesof customers I talked to this
week. Um , helping a home buyerrefinance his ex-girlfriend off
of the mortgage and title. Ahhuh . So, just a couple , uh,
unique , uh, details aboutthat. 'cause they were never
legally married , uh, when theybought the home, nor anytime

(01:53):
thereafter.

Speaker 1 (01:54):
We can pull those two topics together, the
divorce related and the , um,couple that's not legally
married. Yeah, that's cool.

Speaker 3 (02:00):
, right?
Yeah. And then , uh, a firsttime home buyer buying a very
interesting three unitproperty. Uh , not many of
those out there and some of the, uh, interesting property
condition related details thathave gone into that one. So.
All

Speaker 1 (02:13):
Right , cool. So we've got lots to talk about
today. Let's start out with theeconomic reports and potential
mortgage rate moving , uh,numbers that came out. Uh,
remember for mortgage rates tocome down, we need either
inflation to keep coming downtowards the fed's 2% target and
or we need the job market orthe economy , uh, to cool off.

(02:33):
So last week, right , the Fedhad a meeting, first of all on
Wednesday and , uh, that waskind of a big nothing burger
because they did absolutelynothing and everybody expected
them to do nothing and theydidn't see anything surprising.
So check that one off the boxdodged a bullet, maybe nothing
really happened. Uh , then onThursday , uh, we got the , um,

(02:56):
gross domestic product , uh,and the gross domestic product
report for the fourth quarter.
The last four , uh, threemonths rather of 2024, showed
that the economy grew at a 2.3%annualized rate. Okay. And the
economists were expecting 2.5.
So a little bit of a miss onthe low side. Also down from a
3.1% , uh, growth rate in thethird quarter , uh, just by the

(03:21):
way, for all of 2024, theAmerican economy, 'cause that's
what the gross domestic productmeasures in a very complicated
way, is all the goods andservices that people bought.
It's a little more complicatedthan that, but on a year over
year basis, the Americaneconomy grew at a 2.8% clip in
2024 versus 2.9 in 2023 .

Speaker 3 (03:43):
Yeah . So pretty much right in line

Speaker 1 (03:45):
Hanging in there.
Yep . Consumer spending,remember drives most of the
gross domestic product. It'slike two thirds of the entire
economy is based on what youand I and all of our listeners
spend money on. Right . Andthat was up a robust 4.2% on an
annualized basis in the fourthquarter. So, so, you know, that
one kind of had the potentialto make rates a little better,

(04:06):
and I guess maybe it did asmidge better.

Speaker 3 (04:09):
A smidge. Yeah.
Smidge did make 'em didn't ,didn't make 'em worse. So
that's good.

Speaker 1 (04:13):
That's right. And then on Friday we got the Fed's
favorite gauge of inflation,the personal consumption
expenditures index thatmeasures inflation based on
what consumers are actuallyspending their money on versus
the consumer price index, whichis just what are the prices of
this whole huge basket of goodsregardless of what people are
buying. And so the PCE index ,uh, came in and showed us that

(04:36):
, uh, on a year over year basis, uh, prices were up 2.6%. Um ,
oh , you know, lemme make sureI got that right. It's , uh,
two point, yeah . 2.6% on ayear over year basis. And then
if you strip out the , uh, foodand energy, which the Federal
Reserve likes to do, that camein at 2.8% Right. Where the

(04:59):
market's expected.

Speaker 3 (05:00):
Yep . Matched expectations. Exactly. So , uh,
literally a big nothing burgerfor mortgage rates again. Yeah.

Speaker 1 (05:06):
Uh , despite all that though , we did get a
little bit better here thisweek compared to last week ,
uh, by a smidgen. Let me tellyou where we ended the week.
Uh, if you wanted a $250,000 30year fixed rate loan to , uh,
buy the median sales price homein southeast Wisconsin of 3 35
, uh, low overhead AC unitcould give you a 6.875 rate.

Speaker 3 (05:30):
There you go. With

Speaker 1 (05:31):
An ap . Yeah. So that's a smidge lower with a
6.91 a PR . Or if you , um,wanted to pay no points and
have accurate pay for $600 ofyour closing costs , that would
be 6.99 with an a PR of 7.004.
By the way, your net loan costthen would be like about $950.

(05:52):
Or if you wanted to get thattrophy 6.375 rate with an a PR
of 6.61, you'd have to forkover $7,300 Yep . In total loan
cost . So that's an overallimprovement , uh, from last
week, I'd say the closing costYeah . On a 6.99 rate , about a
thousand dollars lower thanthey were last, last week. So

(06:13):
better than a sharp stick inthe eye. Next week on Friday,
we have the jobs report, whichis the next economic report
that has the potential to , uh,move the market. Alright . When
we come back from this firstbreak, let's talk about , um,
home affordability in our finestate. You are listening to the
Accident Mortgage and RealtyShow on AM six 20 WTMJ

Speaker 2 (06:37):
Home buying advice from the guys who know it best.
This is the ACU Net Mortgageand Realty Show with Brian
Wicker on WTMJ.

Speaker 1 (06:46):
Welcome back and thanks again for hanging out
with us. Uh , I'm Brian Wicker,the elder. That's , uh, Tim
Holdman, senior loan consultantat ACU Mortgage over there, the
younger, taller mortgage . Good

Speaker 3 (06:55):
Morning

Speaker 1 (06:56):
Guy on the show today. Hey , you

Speaker 3 (06:57):
Got more hair than I do though.

Speaker 1 (06:59):
Well, that's true.
Okay,

Speaker 3 (07:00):
.

Speaker 1 (07:03):
Um, we , uh, now have the statewide home sale
members from the WisconsinRealtors Association for 2024.
And , uh, I want to talk aboutthat in, in the context of
affordability. So, first ofall, let's just say that
statewide, there were just over67,500 homes that changed hands
in 2024 with the help of, of alicensed member of the

(07:26):
Wisconsin Realtors Association.
That's 4.75% more sales thanthe year earlier. Yep . A
little more than 3000 more homesold. Um, but let's put it in
further perspective. If youlook at the four years, Tim
preceding the Covid pandemic.
So if we look at 2016 through2019, okay . Um , uh, and

(07:48):
remember I just said 67,500 wasthe number for 2024. Do you
think that home sales were10,000, 15,000 or 20,000 units
higher during that period? Hmm.

Speaker 3 (08:01):
Uh, I'll go 10,000 higher. Okay.

Speaker 1 (08:04):
Good. Guess it was , uh, 15,000 ish. Ah ,

Speaker 3 (08:07):
Should have picked the middle. All right .

Speaker 1 (08:08):
Yeah, yeah. You know, right . Go for the middle
. So there was about83,000 homes each year that
sold. Then I was looking atthis chart at the WRA site, and
I looked back at the housingcrisis time and , uh, during
the housing crisis from 2008through 2010, we had an average
of only 45,000 homes sold .

(08:31):
Wow. Statewide. Think aboutthat. Yeah. So it's all the ,
you know, when you're lookingat comparisons, it's all , well
, what are you comparing to, bythe way? The peak was 91,000
units sold in 2021. Alright ,so what about median sales
price? The median sales price ,uh, clocked in at 310 grand
statewide. That's up 25,000American dollars from the year

(08:53):
earlier, which is an 8.8%increase. By the way, in the
five counties SoutheasternWisconsin area, the median
sales price increased 8.1. Sokind of similar. Okay . Yeah.
Um, what do you, what do youthink statewide the median
household income is? Do youwant me to give you multiple
choice?

Speaker 3 (09:09):
Uh , no. I'll, I'll take a stab in the dark here.
So it's a statewide medianincome household. Yeah . Yep .
Uh , I'm gonna go with 72,000 ayear.

Speaker 1 (09:20):
Wow. You and you didn't cheat, did you ? No , I
not 74,631

Speaker 3 (09:26):
All

Speaker 1 (09:26):
Dollars. Okay . That comes out to right around
$6,200 gross per month tax .
And by the way, tax , that wasfor the year, most recent year
available 2023. Okay . Alright. So if you take that $6,200 a
month in income and you say,all right , now you're gonna go
out and you're gonna buy themedian and priced home at
$310,000. And the way therealtors do this is they use
20% down payment and I use the6.993 year fixed rate and I

(09:50):
assume $6,200 of propertytaxes. That's a big assumption.
Right. 'cause that's a bigcomponent. Yeah. And I used
$1,500 for annual homeownersinsurance that would give you a
total principal interest,taxes, and insurance payment to
buy the median priced home of$2,300 a month.

Speaker 3 (10:05):
Oof . Yeah.

Speaker 1 (10:06):
That comes out to 37% of that median household's
gross monthly income, which isa little on the high side.

Speaker 3 (10:16):
Oh, for sure. When you're thinking about, it's
like that's not your take homepay. It's like you have state
and federal income tax, andthen you have deductions for ,
uh, health insurance, which isa big one. And then, you know,
socking away money into aretirement account, which a lot
of people are doing. Right . Soreally, it's even higher than
that percentage of , of theirtake . Yeah . For historical ,

(10:37):
we get to use the gross , use

Speaker 1 (10:38):
The gross income, and we should also say that ,
um, that's a very approvable ,uh,

Speaker 3 (10:44):
Oh absolutely.

Speaker 1 (10:45):
Income ratio. Right?
Yep . We could run that all theway up to, you know, into the
forties mm-hmm .
Technically, I guess all theway up to 49%, 49.9

Speaker 3 (10:53):
most likely.
Yeah .

Speaker 1 (10:56):
And , uh, so anyway , so 37 percent's a little on
the high side , uh, habitat forHumanity. Uh, FHA hud, they all
like to use the benchmark of30%. If you want an affordable
housing payment, you know, youshould pay 30% of your gross
income Rent .

Speaker 3 (11:11):
Yeah . Rent . And you can afford to live rent .
Yeah .

Speaker 1 (11:13):
Correct. Or, or your total housing payment. Now, we
don't include utilities inthat. Mm-hmm . That's just
principal interest, taxes andinsurance that the way the
conservative financial guruDave Ramsey recommends you
spend no more than 25% of yourgross income on your housing
payment. But that's kind ofhard to do, I think in today's
world. Now, to afford themedian price house and have

(11:35):
that be just 30% of the incomeyou'd need to make $92,000 year
. Right. So, kind of a gapthere. But if we look at
southeastern Wisconsin, wherethe median price is higher at 3
35 in , uh, $335,000 in lastyear, the median income in was
in southeastern Wisconsin is alot higher. It's 102,400. Okay.

(11:59):
So there , when you pencileverything out, sure. The
payment's higher at 2,780 bucksa month. But because the income
is so much higher, we're rightat 29% Sure.

Speaker 3 (12:09):
Uh ,

Speaker 1 (12:10):
Yeah . So very , you know , right , right on the dot
for affordability

Speaker 3 (12:12):
Right in line. Yeah.

Speaker 1 (12:13):
Alright. Hey, so there's your little look at,
you know, it all depends onwhere you're living, I guess,
and what the , you know, whatyour income is relative to the
house you're buying, you know,is where it ultimately comes
down to. But Yeah .

Speaker 3 (12:25):
And we help , we , well, and I'll just say real
quick as a PSA, it's like, thisis what we focus on when we
talk to our customers, Brian,is what do you qualify for?
Yes. But what do you actuallywant to afford? Right. Because
sometimes there's a disconnectthere. So if someone tells me
that their monthly housepayment goal is no more than
$2,500 a month, I'll runthrough the math with them and
show them, you know, whatamount of house , uh, gets them

(12:49):
in line with their monthlypayment goals . So yes, it's
important to determine what youqualify for, but we're not
gonna just make you do this onyour own to figure this out.
This is just part of what we doto help people with. Yeah.

Speaker 1 (12:58):
Just because we say you can't afford it from a
mortgage standpoint doesn'tmean you could or should or,
you know, want to. Exactly.

Speaker 3 (13:04):
Yep .

Speaker 1 (13:04):
Alright. When we come back, let's talk about ,
um, helping people refinanceeither after divorce or after
they break up with theirsignificant other and they
weren't married. You'relistening to the Accu Mortgage
and Realty Show on Wisconsin'sradio station. AM six 20 WTMJ,
getting

Speaker 2 (13:20):
You into the home of your dreams. Here's more of the
Accu Mortgage and Realty Showwith Brian Weer on wtmj.

Speaker 1 (13:28):
Welcome back and thanks again for joining us
this morning. Uh, Tim , uh,we're gonna talk about , um,
divorce related refinances andthen also, well , what happens
if you bought a home withsomebody that you're not
married to? Right. And then youbreak up. Why don't we , uh,
start with that version ofthings? Sure. And , uh, kick it
over to you.

Speaker 3 (13:49):
All right . Well, the, I think the key difference
is, is that normally whenyou're married to someone and
then , uh, get divorced andthen, you know, one party
decides to keep the property.
'cause you know, there's oneversion where that you decide
to sell the property Yeah . Andboth parties go somewhere else.
Um, but if one person wants tokeep the home, then they need

(14:10):
to refinance that existingmortgage to get the ex-spouse
off of that mortgage and alsosimultaneously remove them from
title of the property as well.
Right, right. Uh , I have a , apast customer where I helped
him and his , uh, life partner,girlfriend, whatever you'd like
to call it. Uh, they bought ahome together probably about
four years ago. And actually Ifirst spoke with him about this

(14:33):
whole refi scenario like abouta year ago. 'cause you know,
they had broken up, she hadmoved out, he was still living
there, and they were trying tofigure out like, okay, you
know, does he even want to keepthe home? What would that look
like? They had a bunch ofongoing verbal discussions
about what a fair buyout amountwould be for her. Yeah . So he
comes back to me about a monthago and said, yeah, you know,

(14:55):
I'm , I decided to keep theproperty. I wanna move forward
with refinancing to get herthe, the buyout amount that we
agreed upon and kind of, youknow, move forward with this
whole thing. I said, sure,sounds great. So, you know , he
qualified for the mortgage, noproblem. We lined up the
numbers so that , uh, he's, youknow, buying her out for the
equity amount that they hadagreed on. And we get the

(15:16):
initial approval back fromunderwriting. And they actually
were asking for a formal buyoutagreement where if , if this
was a divorce situation, thatwould obviously be included in
the marital settlementagreement. Right, right. But
they didn't have that maritalsettlement agreement 'cause
there was never a marriage. Thereason that this is actually to
their benefit to, to puttogether a , a buyout agreement

(15:39):
and the title company's gonnahelp them put this together, is
that it actually has somebearing on the transfer tax
amount. Oh, really? So, yeah.
So if there is no formal buyoutagreement, the state will
calculate the transfer taxbased on the fair market value
of the property. And in thiscase, through , uh, the

(16:00):
appraisal and some otheragreements that they made, they
were actually using a adifferent value amount, you
know, for their buyoutagreement for her. So if they
didn't get this buyoutagreement, the transfer tax was
actually gonna be about $600higher , uh, than if we get the
formal buyout agreements inplace. So, you know, in the

(16:21):
grand scheme of things , 600bucks is in the end of the
world. But at the same time, ifyou can avoid paying $600 more
in transfer tax just forputting together a pretty
simple document , uh, that isthe way to go. So really that's
the only key difference that Ithink is worth mentioning, is
that if you are, you know,buying out an ex, you know ,
uh, girlfriend, boyfriend,partner, whatever, a lot of the

(16:43):
nuts and bolts are the same.
But at some point, you'llactually still need to put pen
to paper and put together a , awritten buyout agreement of
what the other party isreceiving, you know, as part of
the refinance. Well, and

Speaker 1 (16:55):
That kind of makes sense too, just from a closure
standpoint. You know, you wouldthink that , Hey ,

Speaker 3 (17:00):
This , you know, you would , you would want that in
writing. Yeah. , youknow , they're , they're very
amicable about everything and,you know, they had , they had
agreed verbally , uh, on , onit. But yeah, I think it's, you
know, it's prudence to get thatdocument no matter what.

Speaker 1 (17:13):
Well, and you know, I, I've had situations where it
has not been amicable. Right.
You know , and , and so, youknow, the, the unmarried couple
can stay at loggerheads becausethere's nothing that can force,
you know, the other party tocooperate. Right . Whereas in
the situation of a marriageYeah. We have a whole court

(17:34):
system , uh, that , uh, youknow, comes in and , and , and
is the, you know, enforcer ifyou will, or

Speaker 3 (17:41):
Yeah. They're , they're the straw that's
stirring the drink. Yeah, yeah,

Speaker 1 (17:43):
Yeah. And , and you end up with a written
agreement. So when we come backafter , um, the bottom of the
hour here , um, I've got astory where somebody called me
this week , um, not a pastcustomer, but somebody who
knows us well and , uh, hadtheir divorce decree. I mean,
literally just came in theemail stamped by the court ,

(18:04):
uh, on Monday and it's like,okay, now I need to refinance
and remove my ex-spouse fromthe mortgages and from title.
And they started out , um,saying, Hey, he had called his
current loan servicer. Uh , Mr.
Cooper a big loan servicer.
'cause he has a VA loan. He'sa, he's a veteran. Um , no long
. Yeah. He's a veteran. And soit's like, oh , you know ,

(18:24):
think about doing a VA loan andOkay, I thought through that
and when we come back I'm gonnatell you why we decided not to
go the VA route and some otherinteresting things about the
divorce settlement that comeinto play. And we'll do that
right after we turn it over tothe WTMJ Breaking News Center.

Speaker 2 (18:46):
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 (18:53):
Welcome back. I'm Brian Wicker, the , uh,
majority owner of ACU netMortgage. That's Tim Holdman
over there. Uh , senior loanconsultant and my son-in-law.
Thanks for filling in today,Tim. Appreciate it.

Speaker 3 (19:04):
My pleasure. We got sickness rolling through the
David and Christie Wickerhousehold. So it's just one of
those things. It's STI theseason. Okay ,

Speaker 1 (19:12):
There you go. So , uh, we're talking about , uh,
divorce related , uh,refinances. And my story is
that , uh, the person had theircompleted divorce , uh, decree
and marital settlementagreement all wrapped up
stamped by the court fresh. Andnow they wanted to proceed with
the refinance process. And it'simportant to say you can't do

(19:33):
the refinance when you're inthe midst of a divorce because
we don't know how things aregonna shake out in terms of,
you know, liabilities. So inthis case, great news. It's
all, you know, taken care of.
And so we always have to get acopy of the divorce decree and
the marital settlementagreement. And in this
particular one, you know, oneof the questions we ask, we

(19:54):
should maybe just point outthat it's typical for one party
if there are kids to have topay child support. Right . And
then no kids in this case wherethe kids are adults. And so in
this case then the nextquestion is , um, maintenance.
Mm-hmm . Separatemaintenance. We don't call it
alimony in , in uh , Wisconsin,we call it maintenance
payments. And so interestingly,if you have to pay child

(20:15):
support that counts like a carloan or any other monthly
installment debt and it impactsyour debt to income ratio
because hey, here's anotherthing you gotta pay. If it's
maintenance, oddly enough, wecan subtract it from the , uh,
borrowers, we can subtract thatamount from their gross income
and then calculate that toincome ratio. And that is

(20:38):
almost always a better

Speaker 3 (20:40):
Better. Yeah, for sure. You

Speaker 1 (20:42):
Know, especially like if it's big, if you have a
high earning , uh, client orhomeowner, you know, let's say
they're making 20 grand a monthand they gotta pay their
ex-spouse, you know, fivegrand, that's a lot. On a
percentage basis it's uh , yeah.

Speaker 3 (20:57):
25, 20 5% percent .

Speaker 1 (20:58):
Yeah. That's boom.
But if you subtract it fromtheir income, oh, now I just
have to work with 15,000, thatis a much more favorable
treatment for sure. The thirdalternative, which is the case
in my client's case, was a lumpsum settlement. Oh . So instead
of paying his ex-spouse xdollars a month for the so many
years, they came up with anumber, a few hundred thousand

(21:21):
dollars. So it's not a smallnumber and he's gotta pay that
to her by early April and,

Speaker 3 (21:30):
And no ongoing monthly, you know, maintenance
or support of any kind. Yeah .
So just kind of a one and done

Speaker 1 (21:36):
Is one and done .
But in the eyes of the mortgageworld, that is still a
liability. It is something,yeah . He owes , um, his
ex-spouse. So we have todocument, you know, how are you
gonna pay that?

Speaker 3 (21:48):
Yeah. Where's that money gonna come from? Yeah .

Speaker 1 (21:50):
Where is that money gonna come from? And in this
particular case , uh, it'sgonna come from a cash out
refinance on a commercialproperty

Speaker 3 (22:00):
Oh.

Speaker 1 (22:01):
That our client is part owner in. And, and that
should be wrapped up in just acouple of weeks. The process is
going, but it's like, oh ,you're not gonna believe this
client, but you know , I'mgonna need a copy of the
mortgage and the note and theclosing statement Yep .

Speaker 3 (22:16):
Yep . To

Speaker 1 (22:17):
Show where that money came from and then that's
not all. Um , and also thinkingthis through with him , I said,
great, you're this companywhich he's not a hundred
percent owner of is gonna getthis several hundred thousand
dollars loan proceeds or is thecompany gonna actually pay your
ex-wife? That would be kind ofweird. Yeah . You know , he's
gonna, you know, pay it so themoney's gonna come outta the

(22:39):
company into his personal bankaccount and then he is gonna
pay the , uh, the ex-spouseoff. One other complication I
thought of, 'cause I am abusiness owner, it's like, well
what is your accountant gonnasay that disbursement of cash
is? Yeah . Because it can kindof only be two things. It's
either a distribution of equityor it's a loan. I think the

(23:01):
accountant is gonna say it's aloan from the company to him.

Speaker 3 (23:04):
Sure. Is what , and then are we , are we forced to
use some sort of monthlyliability for that? Yep .
Something they call , we gottabe careful .

Speaker 1 (23:12):
So, so you know, this is always in the, there's
more than meets the eye. 'causefrom this person's standpoint,
it's just like, it's reallyeasy. I wanna do simple this
refinance, I'm gonna get thismoney, I'm gonna pay the lump
sum. And you , he's been verycooperative and understanding,
but it's like, yeah, these arethe devilish details mm-hmm
. That , uh, gointo it. So we're gonna have to

(23:33):
document all of that in orderto say, okay, see that
liability there for severalhundred thousand dollars, it's
taken care of. Um , and theninterestingly in this
particular case , um, the expowasn't actually on title. Oh,

Speaker 3 (23:48):
Interesting.

Speaker 1 (23:48):
Okay. But , uh, we are gonna have to document
through an agreement, kind oflike your unmarried couple that
she's been paid in full. Right.
Yeah . Because we wanna makesure that there's not this
potential lien, you know ,'cause if she doesn't get paid,
she could come after him andget a lien placed Right. As

Speaker 3 (24:07):
A second lien. Is she , is she on his current ,
uh, mortgage? Yes. That that ,yes . Oh, okay.

Speaker 1 (24:12):
Got it. Yeah . So that's why he wants to
consolidate everything and geta little bit lower payment.
Alright . Those , those aresome of the interesting Oh
wait, we didn't talk about themost important thing. The VA
loan. Ah , alright . Yeah .
When we come back, we'll justcover that quickly before we
move on to some other stories.
But hey, he started outthinking he wanted a VA loan.
Why didn't we go that route?

(24:32):
You are listening to theAcademic Mortgage and Realty
Show on AM six 20 WTMJ.

Speaker 2 (24:38):
Important home buying questions and answers
you can count on. This is theACU Net Mortgage and Realty
Show with Brian Wicker on WTMJ.

Speaker 1 (24:48):
Welcome back. Uh , thanks again for hanging out
with us , uh, today or wheneveryou're listening to your
podcast of our show, which weappreciate very much. So , uh,
Tim, we were talking about adivorce related refinance and
the initial call was, Hey, youknow, I was talking to my
existing servicer, Mr. Cooperabout refinancing my VA loan
and kind of just wanna knowwhat you think. And so I'm

(25:11):
thinking about that and I'mgoing, okay, we're taking cash
out 'cause he wants to pay offa first and a second mortgage.
Okay. And then take some cashout to pay off the credit card
bill. Sure. Uh , which is notsmall that he used to pay his
attorneys. Uh, and , and soit's like, okay, well if we're
gonna do a cash out refinanceon a VA loan, you're gonna have

(25:32):
to pay the VA funding fee,which on second use, and I
double checked to make sure hewasn't disabled. Because if
you're disabled then you get awaiver on the VA funding fee
and that was not the case.
Mm-hmm . He'dhave to pay 3.3% of the loan
balance, which is almost 10grand

Speaker 3 (25:52):
Just for the privilege of getting a new VA
loan.

Speaker 1 (25:55):
Yeah. And now would the rate be a bit lower than a
conforming loan? Yeah , but I'mnot , it's, that's a hefty
price , uh, you know, to pay.
And of course, did Mr. Cooperbring that up?

Speaker 3 (26:07):
No ,

Speaker 1 (26:07):
Absolutely not. No.
Did not bring that up. So we,we pivoted and said, you know
what? We're gonna do regularconforming , uh, cash out
refinance.

Speaker 3 (26:17):
And , and there may have been other reasons I, I
don't think your customersituation applies, but, you
know, for a customer that has alower credit score or maybe is
, uh, digging into a lot of theequity that they have in their
home, there may have been otherreasons why a VA loan still
would've been the bestexecution. But I'm assuming
your customer had excellentcredit and has a large amount
of equity in the home, youknow, where they're not. Uh ,

(26:39):
yeah. So in that case, it'slike, yeah, the , the
conventional rate might be abit higher, but you're not
incurring an extra $10,000 feethat you either have to pay or
roll into the loan, which

Speaker 1 (26:52):
Is, that's substantial . Which you'll
never get substantial.

Speaker 3 (26:54):
No. You're just paying interest on that. And
even if the rate's lower, yourloan balance is starting at 10
grand higher. So that's kind ofcounteracting that lower
interest rate.

Speaker 1 (27:03):
That's exactly right. So, you know, that's why
it's good to have more than onetool in your toolkit and For
sure . And acknowledge to , uh,point out the pros and cons of
, uh, each approach. Um , oh,by the way, we also got an
appraisal waiver on that boomrefinance. Oh boom . We're
lending him not even 60% to thevalue of his home. And so that
was nice. Saved him $475

Speaker 3 (27:24):
speeds up the process too and

Speaker 1 (27:26):
Yeah , exactly.
Speeds up the process. Alright. Um, had a , some customers in
Illinois get an accepted offer, uh, two weeks ago. And , uh,
what's interesting in Illinois,the home inspection provision
in the Illinois offer topurchase is a lot faster.

Speaker 3 (27:43):
It's like, oh ,

Speaker 1 (27:44):
Okay . Five business days. Whereas typically in
Wisconsin, I think the, thedefault is 15 calendar days.

Speaker 3 (27:51):
Yeah. I'd say 14 or 15. Yeah. Sometimes

Speaker 1 (27:53):
They do it faster, but , um, and the other
interesting thing is to sayabout Wisconsin versus
Illinois. In Wisconsin, theoffer to purchase has a typical
provision. Says if my inspectorfinds defects, two things, it's
very common for the buyer tosay, I am giving you the seller
the right to cure thosedefects. Mm-hmm .

(28:14):
And it also states right in theoffer to purchase that this
buyer has to give the seller acopy of the inspection report.

Speaker 3 (28:21):
Right.

Speaker 1 (28:23):
In Illinois, it specifically says the buyer
will not give a copy of theinspection to the, to the
seller. And , and it'sinteresting, it's also an
attorney state by the way. Soattorneys get involved. Yeah .
And then if , if, if the , uh,buyer decides within five
business days that there's aproblem with the inspection or

(28:46):
kind of really for any otherreason, attorney review is what
they call it, they can cancelthe deal and get their earnest
money back.

Speaker 3 (28:54):
Boom. Okay . Without even showing the documentation
to the seller of what theirissues were

Speaker 1 (28:59):
Spec specifically is like, we don't wanna even see
it. And you know, the reasonthat why that's kind of a big
issue is especially if therealtor gets a copy of the
inspection report, they'dprobably be smart not to touch
it. Um, yeah. And you know , Idon't know if the seller knows
all the problems. They have aduty to disclose the problems

Speaker 3 (29:22):
If they're aware the

Speaker 1 (29:23):
Property . So , so in Illinois they're kind of
really helping the sellerremain , uh, oblivious to the
problems with their home. And II , I didn't wanna get a copy
of the inspection reporteither.

Speaker 3 (29:34):
No.

Speaker 1 (29:35):
But in the text I said, yeah, we have plumbing ,
uh, electrical and roof.

Speaker 3 (29:40):
It's like , oh , those are big. Those are big
ones. Yeah.

Speaker 1 (29:42):
Other than that, yeah. The only other thing you
left out is foundation, but

Speaker 3 (29:47):
Yeah. True. Those are some big problems. So , you
know, so I'm assuming are, areyour buyers walking away Yeah .
From this , uh, purchase? Yeah.
So the , the sellers are gonnaput this house back on the
market and, you know, if theyget other buyers who are maybe
not getting an inspection orYeah . Uh , something like
that. Uh , they, that thatwhole transaction could go off
without a hitch for the Yeah .

(30:09):
Different

Speaker 1 (30:09):
Buyers . Yeah . If don't have your Right. Right,
right. Which in the , you know,and I'm thinking these are
first time buyers, I'mthinking, man , it's kind of
gut wrenchingly disappointingwhen it's like I had to pay and
I don't know what they paid fortheir inspection, let's say
$600. It's like, really you hadto pay to find out everything
that's wrong with this productthat you're trying to buy and

Speaker 3 (30:27):
Mm-hmm . Just to find out
that you didn't wanna buy it.

Speaker 1 (30:30):
Right. That's just , it's just one of those things
that's true about the realestate world. Alright . When we
come back, let's talk aboutyour first time home buyer
buying the three unit that hassome interesting home
inspection issues. Indeed ,you're listening. Yes , indeed
. To the Indeed at Mortgage andRealty Show on AM six 20 WTMJ.

Speaker 2 (30:48):
Find a place to call home without the headache. This
is the Accu Mortgage and RealtyShow with Brian Wicker on WTMJ.

Speaker 3 (30:57):
Welcome back to the Acue Mortgage and Realty Show.
I am senior loan consultant TimHoldman, joined by chairman and
majority owner of Anette ,Brian Wicker. Uh, Brian, your
story about your Illinois homebuyers reminded me about a , a
customer of mine , uh, that isa first time home buyer buying
a three unit property up inkind of the middle of the state

(31:17):
of Wisconsin Dodge

Speaker 1 (31:18):
County. I think you told me off the air Dodge
County.

Speaker 3 (31:21):
Yeah . Dodge County.
Yep . Three

Speaker 1 (31:22):
Unit is kind of rare. I mean, the most we can
lend on is a four unitproperty. Right . And so he, he
is gonna occupy one of theunits, correct?

Speaker 3 (31:31):
Absolutely. Yep .
And , uh, , this, thisproperty , uh, the issues with
it were very apparent and clear, uh, even from just viewing
the listing. So this is isn't asituation like your Illinois
home buyers where they had toget an inspection to find out
their , uh, their issues withthe property. The, they
mentioned that the roof isfine, but likely at the end of

(31:54):
its useful life, I think wasthe verbiage they used . Oh boy
. And then , uh, in one of thethree units, they said the
plumbing was currently turnedoff , uh, because of a plumbing
issue with a shower head inthat unit. So this customer of
mine is referred from his dad,who's a past customer of mine.
So the , the dad is veryactively helping his son and

(32:16):
they're both tradesmen veryhandy. And , uh, one of the
units, the unit that my buyerwill occupy when he buys a home
is , has been fully remodeled.
And then the other two unitsneed a lot of TLC and , you
know, including the one wherethe plumbing wasn't working. So
they're going in eyes wideopen. You know, I even , I , I
knew he was interested in thisproperty before he even made an
offer. So we had a lot ofconversations about the

(32:37):
condition. I said, Hey, you asa borrower, you're totally
approved, you're great, greatincome, excellent credit score,
you got all the right stuff.
But the flip side of every coinis the property needs to be in
Yeah. Acceptable, livable,yeah. Acceptable, livable,
livable condition, no safetyissues. He's getting a
conventional mortgage, so notFHA, so don't have to worry

(32:58):
about some of the weird FHAintricacies like chipping paint
or, you know, cracked windowsor rotting wood or anything
like that. But I said, youknow, at a minimum the plumbing
needs to be working in allthree units, right? Yeah .
Because when the appraiserwalks through, they're gonna be
aware of that and they're gonnasay, this needs to be fixed
prior to closing. And theysaid, absolutely. We've gotten
permission from the seller. Weknow the, the specific plumbing

(33:21):
repair is gonna cost around1500 bucks. Wow . We're gonna
go in and we're gonna do that.
But they said, you know, Tim,we, you know, we don't know
what other maybe bigger issuesthe appraiser might point out
until they walk through theproperty. And I said,
absolutely. We , we just don'tknow. And even when we get the
appraisal report back, it hasto get approved by
underwriting. And that's reallywhen we know for sure that

(33:42):
we're good to go. So we weretalking through the timing of
things and what we decided on,which I think is definitely the
smartest execution, I said,don't go and do that repair
prior to the appraiser walkingthrough. We're gonna let the
appraiser know that theplumbing isn't done in the
third unit and we're gonna askthem to complete the appraisal
subject to that plumbing issuebeing fixed and then the

(34:04):
plumbing being working whenthey do a return visit. But
that way we'll get theappraisal report and know if
the appraiser called intoquestion or made comment of any
other issues with the propertythat they have may have
noticed. Right. Like a crackcracking a foundation wall or a
hole in the roof. Who , orsomething like that. Yeah. Who
knows. Right. Do

Speaker 1 (34:23):
We have the appraisal report back yet?

Speaker 3 (34:25):
Yes, we got it back.
And , we, I lookedthrough it with Jason Hanson,
our, you know, seniorunderwriting or approval
manager at ANet . And , uh,aside from the plumbing issue,
the appraiser didn't callanything else into question
with the property. Wow .
Actually now it's still inunderwriting. It hasn't been
reviewed or approved yet. Sothat is the, the big hurdle

(34:47):
we're still waiting on. Butthis way I think it, it
mitigated the risk of thebuyers in a, a very smart way
where that way if , you know,if they didn't spend $1,500 on
a repair and then some otherbig deal breaker issue comes up
Yeah . Where they comes up Yeah. Where they don't buy the
property, but then they Yeah .
But then they repair theproperty for the seller that,

(35:08):
you know, that they're notgonna buy. So it , it's looking
good right now, but , uh, this

Speaker 1 (35:13):
Is definitely, and there were presumably other
comparable closed sales ofthree units. 'cause that would
be the other thing that wouldworry me.

Speaker 3 (35:18):
There were the , the , the comps were actually all ,
uh, I think within five milesor less of the subject
property. I mean, it was , itwas pretty, pretty good. Came
in just a couple hundreddollars above the agreed upon
purchase price. Sure . So at ,you know , at a sufficient
value. And , um, yeah, it'slooking like it's gonna go
through fine, you know, knockon wood, pending the review
from underwriting obviously.

(35:39):
But , uh,

Speaker 1 (35:40):
And it's gonna cost them an extra 150 bucks to send
the appraiser back out there,but well worth it. Yes . In the
overalls scheme of things. Allright . Good job.

Speaker 3 (35:47):
Absolutely. Yeah.

Speaker 1 (35:48):
Alright , well that's all the time we have for
today's show, folks. Thanks forjoining us. Remember, if you
were somebody you know wouldlike help buying a home or
refinancing, we would love tohelp you. We're passionate
about what we do and , uh, wethink we're pretty smart about
it. All anybody has to do toget started with either rock
solid, guaranteed pre-approvalor a refi checkup is to click
on that blue [e-mail].

(36:08):
You've been listening to theNette Mortgage and Realty Show
on a six 20 wtmj. Theproceeding was a paid program.
Advice and opinions expressedduring the Accu Net Mortgage
and Realty Show are solely thatof the hosts or guests of Accu
Net Mortgage and Accu NetRealty Advisors and not WTMJ
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