Mortgage and Real Estate Update with Josh Lewis and Jeb Smith

Mortgage and Real Estate Update with Josh Lewis and Jeb Smith

Broker | Owner | Mortgage Consultant
Josh Lewis
Published on September 6, 2020
Mortgage Update with Josh Lewis and Jeb Smith

Mortgage and Real Estate Update with Josh Lewis and Jeb Smith

Jeb Smith, a real estate broker, Coldwell Banker here in Huntington beach. Josh Lewis of BuyWise Mortgage, Mortgage Broker here in Huntington Beach.

We’re back with our live session for this week where we answer your real estate and mortgage-related questions.

We were very thoughtful in tonight’s presentation that we put on the game and the background behind Josh, in case you wanted to keep a watch on what was going on and answer questions or ask questions.

So, if you’re new to us, new to the channel, put your question in the comments there, we go through these. We answer them as we go along. Hopefully, we can provide the answers that you need from it.

And you know, if you haven’t subscribed or you’re not watching currently, hit that subscribe button, we do these every week. As I mentioned, if you like them and share them more people see them and it helps us know that we’re providing good positive information for you guys.

So, one of the things Josh that I keep hearing in our conversations, cause we’re just getting people logging on at the moment. I think there’s 11 or 12 of them. We don’t have any questions is, is now a good time to buy, right?

It’s probably the most common question that I get as a real estate agent, whether it comes from YouTube or comes from somebody commenting on one of the videos. And it’s a really difficult question to answer because you don’t know the full story, right?

People have different goals in mind, different things they’re trying to accomplish with owning homes. And so in that regard, it’s difficult, right?

If you’re planning on buying a house and selling it in two years, because you think you’re gonna make a lot of money and buy another house, then it may not be the right opportunity because I don’t know what the market holds in two years.

I know what it holds now and what it’s doing now, but as we’ve discussed in multiple, on multiple occasions is that, if home prices do go down a big driver in prices going down is likely higher interest rates, right?

We’ve talked about it, on several occasions. I’ve had that conversation with multiple people. And so if you’re looking at home prices now, and you’re looking at interest rates now, and you’re looking into the future, thinking that home prices could maybe go down by say 10%, I think 10% would be high, but say 10%.

But rates went up, we’ve run numbers. We’ve had this conversation where you actually end up paying more money per month for that property. If it goes down by 10% and rates go up a percent from where they are today versus buying now. So,

– Yeah,

– I mean, you want to jump on that and give any information more recently.

– Absolutely, So a couple of things, people don’t generally understand the correlation, the hair, why would higher interest rates, higher interest rates are generally correlated with inflation. If we have inflation, we should have real estate inflation at the same time also, right?

– Right.

– Well, the big thing that we tell everyone is, no one really cares about the price that they pay for their home. Obviously everyone would like to pay as little as possible, but the driver is what the affordability is.

People rarely come to me and say, hey, I have a Max $500,000 limit on what I’m gonna buy, but they will always come and say, I’ve got a Max, I can’t afford more than $2,700 a month. I can’t afford more than $3,600 a month.

Everyone has in mind, a limit as interest rates come down, the dollar price of the home they can afford goes up and up and up. We’ve talked about this. Coronavirus has hit a large portion of the population in a major way, in terms of income and job security.

Those generally where people lower on the pay scale, less likely to be homeowners to begin with. So I won’t say that none of my clients in my database have been impacted very few have. So when you’re looking, people look for you, Oh, we’re going to have foreclosures.

All of those things that you’ve gone through in a bunch of your videos, the foreclosure, everyone uses, you’ve heard the saying, we’re always fighting the last war. Well, people remember the last war and they think 2007, 2008 in a lot of areas we saw 50 to 60% decreases in home buyers you think that’s gonna happen again?

That doesn’t happen. That was the perfect storm of stupidity. That wasn’t just the great recession. It was the great recession driven by terrible lending practices in the real estate segment. So whatever happens next that really slows the economy down besides Coronavirus, whatever structurally happens in the economy, it’s not likely, to be housing-related.

So for us, another thing I always like to tell people, if you look back historically prior to 2005, Really say prior to 2000, there were very few cyclical, real estate markets in the United States. You probably remember people saying, hey, there’s never been a nationwide downturn year over year on home prices.

And that’s largely because other than Southern California, some parts of Florida, some parts of the Northeast, very few areas are cyclical in nature. Now we’ve seen, we see higher home prices. We see more information with the internet, Zillow, Redfin, all of these tools. I feel like they know and get in on things.

There are more cyclical markets than there used to be. And a long way of saying, what I like to say is you go back to the ’70s about every seven to 10 years here in Southern California, we do get a downturn and that market might turn downturn seven, 8%. It might drop 12, 15%. And 15% would be a really high decrease in those cyclical moves.

So in 10% you would expect a correction at some point, but the large driver of that is do we, did we run out of the people who can afford these homes? Interest rates are low. Interest rates are likely to be low for the foreseeable future. I’m not predicting that they’re going to go lower or projecting them to go lower.

I’m just saying they cannot go higher. You and I talked about this before the spread between mortgages and the 10 year treasury is usually 1.5% sometimes a little more, sometimes a little bit less. So right now it’s closer to 2%.

But if people say, hey, interest rates going back to the normal of, of being 5% that I don’t know why people arbitrarily fall on that number. But for that to happen, that tells us the 10 year treasury would have to be 3.5% versus the 0.7 It’s actually back below 0.7 right now. So every five times higher than it is right now.

So put that into context. When Obama came into office, we had less than $7 trillion of the national debt. So eight years of Obama, four years of Trump, we’re banging on the door of $30 trillion.

So when you have $30 trillion national debt, and you talk about the rates that they pay on, that the nation pays on their mortgage, going up five times what they are right now, when the debt has gone up for almost five times itself, it doesn’t happen.

The government can’t afford it, If you look at the national budget and the cashflow where our money goes, they can’t afford that debt service. So the government will at all costs find a way to keep treasury rates low and mortgages will be within about a percent and a half of that.

So the number, that you and I were talking about, we use an example here in California entry-level, home $650,000 right now today with 20% down and a 3% interest rate, you’re looking at a payment of 2192 a month.

– Right.

– Let’s say, let’s say you get that correction. It drops 10% and as part of that rates go up to 4%, you’re looking at it,

– Not a high rate, but higher than where we are now.

– Yeah.

– We’ve been there in, in the last 18 months. We’ve had rates above 4% So you look at that, that payment’s 2234. So we’re looking at a $42 higher payment for a $65,000 cheaper home. So when you talk about rates being this low and the cost of owning a home in terms of your principal and interest payment, it’s just not there.

There’s not, gonna see these big movements and big swings in values unless you have a large swath of the population suddenly out of work. And like, it just, I don’t see it coming. Maybe it does, maybe something happens. Maybe we get a virus 10 times worse than coronavirus and everyone’s out of work and we’ve got bigger problems than what’s happening with home values.

– No, absolutely. I’m gonna get to a couple of the questions here. We’re on the same page with that. And then I just did another video. Now that I’m pushing you out of this to watch, but we, I talked about this in a recent update, a housing update where I gave examples of where home prices were essentially not a year ago, but giving you an idea of where interest rates were a year ago and why home prices continue to rise right now in the face of a pandemic.

And it’s largely because people can afford more property. People can afford, in the example that I gave in that video, I mean, it was a jump of $175,000 that people could afford in a purchase price now versus where rates were at 4.75%. So that, and that was on a $700,000 property. So it’s a big jump in.

That’s why you’ve put people that were in this smaller bracket of purchasing. And I say smaller. I don’t, I’m not demeaning that the value. That they’re purchasing, but in that video, it was 700,000. Those people can now buy 875. So they went from a smaller purchase price to something $175,000 more.

So that’s why it’s so competitive and in the answer Jose’s question here, we’re in Huntington Beach, Southern California. So to get you to answer your question there, and now we have a couple of people talking about Solon, Solon, Solon talks about the United Wholesale Mortgage, UWM. The 30 year fixed at 1.9, 15 year fixed at 1.875.

Now we’ve, I’ve discussed that in videos. We’ve had this conversation in videos that it’s, it’s a marketing gimmick. It’s not realistic, I mean, you’ve talked about, paying three points to get a mortgage for one would be an awful idea, especially when the idea that rates will likely trend lower than where they are now, maybe not down there, but why would you buy a low interest rates, a lower interest rate and pay so much money when you can likely continue to refinance at little to no cost and continue to save money, but we’ve talked about how it doesn’t even pass or potentially pass the, the fees test.

– Exactly.

– Yeah.

– So one thing Jeff, I thought would be interesting for people watching. I was in a private forum on Facebook with expert loan officers the other day, and this came up and like, why are they doing this? Why are they out promoting this on Fox news on CNBC saying, hey, we’re offering this because we can’t, we can’t really deliver it in a way that makes sense.

And most people’s response was most of the loan officers in that forum were saying, is this terrible it’s bait and switch. It puts us in a position where we’re having to have conversations where we’re telling people we don’t have what they saw the person on TV saying they do have, the best answer was from a buddy of mine in Maryland, that you’ve referred a couple of listeners here to really good loan officer.

He says, listen, I look at it differently. It allows me to have a conversation. We start with that 1.99 interest rate. We show the 3.5 points that it costs. And then we look at the real numbers and we say, you would have to be there for this long to even catch up and save the money that you need to if you’re there for any last time.

And then that doesn’t even take into account the tax deduction and any number of things. We just, it allows me to have an educational conversation and show the expertise that a professional loan officer has above and beyond someone in a call center, just saying, hey, pay three points and get 1.99%. So you can say you have the lowest rate on your street.

– Right No. I mean, again, it it’s exactly what you said. I think that’s a great explanation. I mean, I call it a marketing gimmick. They call it a conversation starter at the end of the day. It’s one in the same.

I mean, it gets people to call and you’re not going to get a 100% of those people calling, right? Because people are gonna be pissed that it’s not 1.99, but there’s a percentage there that they’re gonna capture and that, that marketing is gonna pay off. So, you know, and then he goes on to say, in.

Another comment here, 640 for 1.99. No it’s gonna be, I don’t know what the rate is. Josh 780, 760 probably to even get close to those rates at that point.

– Yeah, anything under 700. If you look at the Fannie Mae, Freddie Mac LLPA matrix loan level, price, adjustment, matrix, anything under 700 gets heavy. So those loans are already expensive. When you tack on another couple of points for 640 credit score, it just gets, it gets ugly fast.

Now, Understood, all right So Liza has a question about adding a swimming pool to a house purchase, I’m reading here, so pardon me for a moment.

– What is, what is T-get? Am I missing something?

– Is that an added to the mortgage you’re saying is added to the mortgage? Yeah. Yeah. So, I mean, you can, you can answer the question or I can, no really what you’re gonna do in that situation is you’re gonna put less down and keep the money to put the pool in.

If the pool adds value to the home, you can come and refinance at a lower loan to value and get rid of the mortgage insurance later.

This can be done with some of the renovation products. You can’t do it with two or 3K. Swimming pools don’t don’t qualify, but I believe some of the conventional renovation loans will allow you to do that.

But since you’re talking in the terms of 20% down, where were we tell people like, no, I mean, you’d have to look at some type of renovation. Loan is if you have 5% down and you would like to do that, but if you truly have the 20% down to 500,000 purchase price, keep 50, keep 75 back, put the minimum down on the property and then come back and have it reappraised and do a lower loan to value refinance after the pool’s put in.

– Good, So she was talking conventional there. So I think that was a good explanation of, of what she, she asked. I think for a moment here while we have a second is maybe explain the process of doing a renovation loan, how you, I don’t know if you even wanna go into that or is that a separate video because of the time.

It really is but in simple terms, what it is is the lender is making a loan off of the after improved value. So whatever you’re gonna do, you put a second story on the house. You add a thousand square feet, redo all your landscape hardscape. Maybe it’s a home that is just terrible.

It’s gotta caved in the roof has to be done to bring it up. So what happens is the lender does, they don’t do two appraisals. They do an appraisal that has two values. What is the value as it sits? What is the value after it’s improved? And for the most part, what the lender is going do is they’re going to control the funds.

They’re gonna fund an additional amount, here’s your purchase, or here’s your refinance that pays off your current loan, the additional amount that goes into a fund control that the lender controls, and they will do draws against that. So let’s say it’s a $50,000 renovation.

You’re gonna do five, $10,000 draws. So you front the money and do the first $10,000 repairs. They come out and inspect and make sure you did it. They replenish the $10,000 until you’re done. And you have all of the money and have all your money back in your pocket.

– Right, and I think key component there that Josh, didn’t mention is you actually have to get bids for the work that’s gonna be done. You can’t just tell the lender, this is what I’m doing and this is, you have to have bids. for the work that’s going to be completed by a licensed contractor, whether it’s adding an addition or adding, redoing the kitchen or the flooring or whatever.

And that is essentially how they come up with that after value, is the appraiser takes that stuff into account and creates that after, after completed value, if you will. And that’s how the lender lends the money. And like he said, it’s controlled by the lender and what have you. So I think that was good. So questions guys, if you haven’t put them out there’s 30 something, 32 people watching at the moment.

Mark says golden stuff. Thanks for doing these live videos. We’ll continue to do these as long as you guys continue to show up and continue to ask questions. I mean, at the end of the day I think my life is easier. Josh’s life is easier when people are well-educated in the process.

I mean, we’re happy to have these conversations with buyers, with sellers, with loans, or what have you as you’re going through, but it makes it a lot easier when you have somebody coming in already knowing the answers or having an idea of how the process works.

And so, you know, my goal has always been to educate, the buyers, the sellers, the potentially people refinancing or getting a mortgage, because again, it, it helps have, easier transaction, smoother transactions and life is life is a lot easier Josh.

– Jeb, along those lines, one of the things that, a couple of things that we were talking about earlier this afternoon, if you’re in the market to refinance a really important thing to note, I didn’t think it was possible, but there’s even more loans in process now than what we had 45, 60 days ago. So we’re a broker, we work with 20 different lenders.

We went and did a survey with all of our lenders today is what are the turn times? How long does it take to get a file through the process? And they quote them at each phase of the process and for the underwriting stage, once the loan is set up an in process to get through underwriting, the shortest we had on a refinance was like 13 days and the longest was 21 days, and those are business days. So we’re talking three to four weeks to get through underwriting.

And I don’t think any lender out there is magic. Cause I’m saying all 20 of the lenders that we work with on a regular basis are in a really consistent timeframe. There’s only so many underwriters in the United States of America and they are all pinned working seven days a week, 12 hours a day.

I talked to the, the big manager at one of the companies that we do a lot of business with and he just said, there’s nothing more we can do. We’re paying them as much overtime as they want. We’re paying them profile bonuses to get through more files like you, you’re just gonna kill the underwriters at some point.

So long way of saying, if anyone’s telling you your refinance is gonna get done in much less than 45 days, they’re kind of crazy. I’m telling everyone we’re locking for 45 days. We’re hoping to get the loan done in 35 to 40, 45 would hope it would be our worst case.

And we’ve changed our processes here and done some different things to expedite the things that we control just because there’s such a bottleneck in underwriting.

– Right.

– That that was the one thing that you and I had talked about earlier today, I saw a survey. This was a survey of just the population of homeowners and only 26% had taken advantage of the low rates. But we’ve seen the data from black Knight and a couple of other services with current market interest rates, 65% of homeowners would benefit from a refinance.

And that survey, again, it’s not the entire sample of the United States. We’re saying about 25% of people have refinanced. So kind of blew my mind to think that with as many loans as we, and every other lender are put through the system, that there’s still 1.5 times, that of people out there that could benefit.

So when I just say is the numbers don’t lie. Talk to someone that knows how to analyze numbers, tell them where you’re at and get a comparison of all your, your options. Cause it varies you get these questions all the time and what’s the interest rate. What’s my interest rate.

Well, there’s about 40 different factors that go into it. So we have to have at least a three to five-minute conversation to get all those factors on the table and get you an accurate number. And anyone that’s throwing numbers at you or a billboard or a TV commercial, they’re not accurate.

You need to have a brief conversation, get a little bit of information on the table. Know what, what is actually realistic?

– No, and I think another thing to note on that topic is that even if you think rates are going to go lower, start having the conversation now with whoever it is you’re going to refinance with, at some point in the future. I mean, it’s, you can have the conversations now and not lock alone.

And once you’ve decided on that person, provide the documentation get everything to them and just sit and wait and lock the loan whenever you feel comfortable, because what happens, it’s a lot like buying a house and people not going through the pre-approval process upfront is that everybody sees the rate that they want.

Like, hey Josh, what are the rates today? Well, the rates are two and a half. Well, I want a lock. Well, dude, I don’t have anything of you. Like I have nothing. I don’t even have a loan application. And so if you have that documentation and you call and you get here, the rate that you, that is enticing or something you want to move forward with, you’re in a position to lock a loan, right?

You’re not behind the eight ball. If you will waiting for things to move in your direction. And while I’m on the subject, I’m on my soap box here. If you’re buying a house, do the same thing. Like get pre-approved before you start the process, with full documentation, not the online pre-calls where you just put in how much income you make and all of that good stuff.

Give your documentation to your lender and go through the process. Let them analyze your tax returns, your pay stubs, your assets. Because I can’t tell you how often we have this conversation because things aren’t, they don’t appear. It’s not the same as what I’m being told by the client, right? You have a conversation with them.

– Absolutely

– Analyzing the numbers, It’s completely different than what they thought they were getting because they weren’t, they didn’t go through the full process of upfront.

– Well two, two things. So you put your money where your mouth is because you and I, we had your complete loan file put together in March when things were starting to go, haywire and rates were dipping. And then they spiked real quick before, we were able to get a chance to lock. And we just kept the file updated and around June or whenever it was that the rates made sense.

We were there and ready to go and to follow up on your second point is to do that. Even if it’s probably more important on purchases, you had a client that you referred over to us. It was a Jumbo loan, a unique situation, but in five minutes on the phone, he had told you I’m pre-approved, I’ve talked to multiple lenders on online.

I’m gonna figure out who’s going to be the best terms. And the guy was lucky to get alone. Not because he was not well qualified. It was just some weird stuff in there. And no one had asked the right questions to say, well, where is the down payment coming from?

What have you done to get that in line? So just from that standpoint, if he had had a better and more thorough conversation, it would have saved you some hassles and some bumps throughout the process and who that’s really stressful on, is the buyer it’s stressful on you as their agent, but it’s really stressful on the buyer.

– No, absolutely and that’s, again, we can talk about it another time, but that’s why I always, when I hear a preapproval firm an off wall broker or company, I’m always saying, hey, look, I don’t care who you have the conversation with, but talk to somebody else because of this exact scenario, so we’ll move along here.

So people get their questions answered, but Shenella asks, what’s a good offer If you’re asking for seller credit, when the house is 198. So I’m assuming that the purchase price is 198 and you’re offering for a credit or asking for a credit. It’s really hard to answer that specific question because I don’t know what the comparables in the neighborhood and all of that support with regards to that particular price of property.

But if we’re seeing it’s priced correctly, it comes down to your closing costs. I mean, I would think on a 198 purchase, you probably wouldn’t need more than about $5,000 towards closing costs in order to, as a credit. So, I mean, you could offer a number of things. I mean, it’s really, again, this is a very, it’s a lot, it’s very hard to provide data for you to use.

But I mean, if I were in this scenario, I would say an offer of depends on how long it’s been on the market, all of that, but you know, just over 200 or maybe 200,000 and asked for the credit, if it’s been on the market a while, maybe you offer 198 and just ask for the credit as part of that and see what they counter back at right?

– I mean, maybe they were thinking of lowering the price five grand to start. And so they’d be in the exact same scenario as they are with you asking that credit. So I’m sorry, I’m not a lot of help on, on that specific question, just because there’s a lot of other factors that play in, but you know, don’t be scared to ask for credits.

People do it all the time. And as Josh has mentioned in past videos, another option for you versus asking the seller is talk to your lender about maybe taking a potentially higher interest rate using some of the credit from the lender to help you with your closing costs.

So that could be a conversation that you have with your mortgage professional, as well as, as your real estate agent. Anything to add there, Josh,

– No, other than just to say that really for the seller, it comes down to the net. If they have multiple offers, they’re gonna look at here’s the offer price. Here’s what they want for that, What am I going to net? So if you’re the only offer in town, then you can get much closer to asking price and get that credit.

And in our market, we’re seeing 12, 15, 20 offers on the property. It’s just not, I mean, no credit is the answer is the answer is no credit. So that’s really what it comes down to.

You’re saying a local professional that knows the market and knows how many offers they’re going to get. how many days that thing’s been on the market are likely to be on the market, We’ll tell you what you can ask And Shanella, if you have a solid real estate agent professional, they should be able to answer that question easily for you and give you some insights.

So, Angela comes asking, does it matter to the buyer if a loan is conforming or non-conforming? So right now it would because of the mortgage forbearance, but in a typical market. But what are your thoughts on that Josh? I mean, interest rates, obviously going to be higher on non-conforming in most cases, but it’s important to just define conforming and non-conforming.

So in general, what it actually means is conforming to Fannie Mae, Freddie Mac guidelines. So anything outside of that now about 10 years ago, they came out with the high balance loans.

So a lot of what used to be jumbo loans are called, they’re conforming high balance or conforming Jumbo in markets that allow those a lot of parts of the country don’t, but in high cost areas, Southern California, New York city, you’re able to go to higher amounts.

And for the most part, those are identical to your Fannie Freddie loan. But like you said, that once you get outside of conforming, you’re going to pay a higher interest rate. It’s just the way that it is that there’s no more liquid market for mortgage-backed securities, then loans that meet the Fannie Mae-Freddie Guidelines other than FHFA.

So assuming we’re outside of all those guidelines, you’re gonna pay a higher interest rate. You’re probably going to pay higher fees. And most of those loans, aren’t a 30 year fixed. Some non-conforming lenders do offer a 30 year fixed, but you’re looking at something fixed for five years, seven years, something along those lines.

– Right and another thing, like I mentioned, a moment ago, a big difference right now, and non-conforming and conforming is all the cares act stuff, right? It only protected those homeowners who had conforming loans, then non-conforming stuff, wasn’t part of the cares act. And again, that’s an anomaly I hope in the market and all of the stimulus stuff, but, that’s where people really could take advantage of a situation.

Whereas in the non-conforming cases, there’s opportunities. I mean, unfortunately there were guidelines put in place for the non-conforming. So it’s really hard to say you could have a non-conforming and have taken advantage, but it, there was nothing set in place like there was with the conforming stuff.

It almost came down to, so, my business partner, Scott Schang, and I built a website report to help people get this information. And we’ve got a lot of feedback from people in there, the big servicers that were servicing conforming loans and non-conforming, for the most part, they wanted to stay on the right side of the government.

So they just treated them all the same and followed the CARES Act guidelines, the little tiny servicers that were only servicing weird off the wall, non-conforming stuff. They’re like, no, we’re not that big. We don’t have deep pockets. So we’re, we’re only gonna do what’s required of us.

– Huh, Interesting, Yeah. Nicole’s asking a question about write-offs. What are some write-offs you can write back in as income when you were self-employed or heavy rental. I don’t want to be too aggressive with my deduction so I can refinance. So I’m assuming you’re filing your own taxes, but Josh, jump on that. That’s right in your wheelhouse.

– Yeah, So for a self employed person, you’re gonna be able to add back in any depreciation and that applies to rentals also. So depreciation is always a good expense. Jeb, you actually have a client that they have about five times in depreciation, what they have in net income.

So it works out great because they’re only paying taxes on this little amount, but for us qualifying, we can add that depreciation back in most businesses don’t have that volume of equipment that needs to be depreciated, but depreciation is the big one. Mileage, most people will use the standard mileage rate.

So as part of the standard mileage rate, depreciation is a portion of that. We can add that back in. If you’re working from home, the home office deduction can be added back in on most loans. FHA does not allow that, which is bizarre to me. So anything that is a paper loss, that’s not a real loss, like the appreciation business use of the home, that type of stuff.

We can add it back in on your rental property. It’s really only going to be depreciation. There’s not really anything in there other than that, that’s a paper loss. If you had a casualty loss, hurricane comes through and blows the house apart or blows the roof off and you have to put a new roof on, we don’t have to count that against you because they’re thinking that for the next 30 years, you’re probably not going to need another roof.

What about in the case of this year, if you own a rental property, your tenants not paying rent, and you’re still paying the mortgage on that property, can you write off that those misread payments, it’s not writing off the missed rent payments.

You’re just gonna have less rent. So when you look at your schedule E your gross rents are the first line on the schedule, you’re gonna have a much lower grant, gross rents, and then you’re still gonna have all of your expenses. You’re gonna have a big loss at the end. That’s gonna carry back forward to your 1040. Now that will reduce your taxable income.

– Not good, i forgot about that. So Jose asked a question earlier about, I’m gonna go back up here and put that on the screen. He asked about the New Refi Fee. So he’s saying, should he refinance before December because of that fee? And I think we’ve discussed it in other videos, which you can confirm it and elaborate here in a moment is that you’re gonna need to essentially start that process and lock that loan well before December 1st, right?

– Yeah, So if you look at it, my guess we haven’t seen any lenders implement this or give us guidance on this, but my best guess is they’re gonna say, if December one is our date, they gonna need at least 10 days to get it shipped to Fannie or Freddie to avoid that fee. So they’re probably gonna err on the side of caution and say 15 days, meaning it has to be closed by November 15th for them to avoid having to pay that half point.

So just work your way back from there. After November one, you will not be able to lock for longer than 15 days after October 15th. You’re not gonna get a lock for more than 30 days. So with current turn times, there’s not a lot of time left. It really helped lenders Cause they were gonna get stuck with something.

They had no way of foreseeing and they had a lock to tons of loans. It’s gonna allow them to close out. Most of what’s in process and not be subject to that fee and maybe another two to four weeks.

– Right. So there’s not a lot of time left if we’re working on credit and Jose for your situation. This is a really easy question to answer. We go and say, what’s the current credit score? What are the hits for that credit score? And compare it to the half point hit for the adverse market delivery fee that’s gonna be in place shortly and you’ll know which one’s going to be better.

– Now So Jose, there you go. And again, I’ve encouraged you guys in a lot of you. I mean, I can’t tell you how much people have reached out to myself and Josh about either finding a mortgage professional in another state, Finding an agent in another state. I mean, honestly I probably get two to three emails a day of people looking for a professional.

So if you’re out there and you don’t have somebody, I network Josh networks with a lot of top mortgage people, myself with a lot of top real estate agents. In fact, the network that I network with, it’s a lot of network there, sells one in eight houses in the United States. So it’s a very strong network of people.

Did they do a good job? I’d put you in good hands. if you’re planning on buying something and Josh can point you to the mortgage side of things as well. So on that, so Joe asked a question here about, An agent has essentially told him they would give him 1% towards closing costs.

Now that they’re an escrow, he’s saying the brokers won’t allow it any tips on how I should proceed.

– Talk to his broker, talk to his broker

– Yeah, this is kind of a legal question. And I don’t like to get involved in legal conversations, but the reality is is that, you had a conversation, right? And in California, a conversation like that is almost as good as a written contract. So yeah, it would be a conversation that you should have with his broker saying, this is, what did they decided to do?

And however you want to, to deal with it because at the end of the day, If you were promised 1% or anything for that matter, they should come forth and do it. And if that falls back on your agent, if your agent told you that he would do it, and now he’s saying his brokers won’t allow it, then he needs to get whatever his check is at the end of the day and then pay you out of his funds. I mean, that would be the right thing to do.

– And Jeb, what I would say, Joe to protect yourself since this does sound like it was an oral agreement you guys were talking and he could say, Nope, I never said that he has discussed with you that he’s not allowed to do that. I would send an email and say, I just want you to confirm for me that you are not going to be able to fulfill our agreement, to pay the 1% duty, your Brokerage’s guidelines.

As soon as he responds, yes, you go meet his broker, you have it in writing. Hey, he agreed to do this. He acknowledges, he agreed to do it. He’s trying to back out by saying that you don’t allow it because at the end of the day, every brokerage has an agreement with their salespeople that says there’s a commission paid to the brokerage.

And X percent of that goes to the salesperson. That’s a pretty, I’m a broker. I actually have a couple of sales people that work under my license. And if this situation was brought to me, we would sit down and have a real simple conversation. Like, yeah, we’re gonna do this. And the 1% is coming out of your side and it’s going to this person because either you lied to them or you didn’t clear this with me upfront.

And there’s always the possibility that the broker is the dirty link there and your person would be willing. But just like you said, Jeb, there’s nothing preventing him from getting his check and writing you the 1%. It’s just, I would most likely think that, that the agent is the problem.

But see if what you can get in writing before saying anything that you just get an email, a text, whatever it says and acknowledging, yep. We’re not allowed to do the 1% I told you I would do.

– Now absolutely, I think that’s solid solid information and you know exactly what you should do there. Just so you have something and if you need to do something with it further after the fact you can. Somebody is asking for the forbearance website. I don’t know if you have it typed into one of the banners up there, but if you want to add that, Josh will come back to that in a minute.

So Sandra will answer that question here in just a moment in the forbearance website, he’s talking about it’s called And so Josh, can click it up here in a minute, so you can get exactly what the link is off. and this is a website that was created essentially to tell you exactly what different servicers out there are doing.

They’re providing to their clients, with regards to what options they’re offering, repayment options, et cetera. But the reality is that if it’s federally FHA, VA is kind of not exactly following the same guidelines. Fannie Freddie FHA Is that you have up to 12 months to request forbearance. At which point that 12 months is over.

You should have different payment options, a lump sum or repayment plan, a deferment option, and some sort of loan modification so, but that website also touches on the non-conforming guys as well and can give you some insight there. So anything to add to that, Josh, before I move on? Nope, that’s about it.

Alright, so we’re getting at 36 minutes here. So we’re gonna make this, last comment here and then we’ll, we’ll move along. But somebody is asking, are there set VA loan for Barrett’s repayment options or differ from lender to lender?

– So yeah, they, they don’t differ from lender to lender. So VA loans are federally backed. They do fall under the Cares Act and the guidelines are set out for them. So definitely contact your servicer, tell them you’re interested in forbearance. See what they offer. There should be no questions asked still under the Cares Act.

– Yeah, I know the repayment. I know when I did videos and I was talking on mortgage forbearance, a lot, VA was kind of the, the unicorn, if you will with regards to providing information and repayment and what have you like FHA laid it out very clear. Conventional laid it out, very clear.

VA has always had some sort of forbearance option out there. And so they did it a little bit differently than say FHA. So, you know, I couldn’t, I looked, I couldn’t find a lot of the repayment options out there.

So, you know, the conversation needs to be had with your lender to see, to see what they’re offering with, with regards to repayment. And if you get information, I’d love to hear what it is because you know that that will help me provide additional information to other people. So we’re pushing 37 minutes. So goal here with this live thing is for Josh and I to do this, or at least one of us to do this weekly.

So if you have questions and you’re watching this after hours comment below, we’ll use it on next week’s video to answer that question, anything you want to add, Josh, you can provide some, some information there on the side, your contact info. If people want to reach out to you.

– Yeah, absolutely.

– Probably Financing.

– And just like you said, we both have a big network. Most people are a lot of the people watching. This are not in California, where we can help directly, but we can get you connected with someone on both sides of the equation. I tell everyone it’s about a five to one chance that you get someone that’s not an expert versus getting someone that is an expert, either on the mortgage or real estate side.

And it’s too big of a transaction that has too large of an impact on your financial wellbeing and your just peace of mind and happiness. Make sure you get with someone that’s very good at what they’re doing. And it’s not your cousin that just got his license, the neighbor across the street, who does loans part time, any and all of that stuff.

– Buying a house to selling the house at all falls in their work with a pro doesn’t matter if it’s me. I just want you working with a professional because trust me when I’m on the other side, I’m the listing agent I wanna professional on the buyer side. And when I’m a buyer, I want a professional on the listing side.

It makes life a lot easier for everyone. Anyway, any final words, there is Josh information. If you need to get ahold of me, my email is there, feel free to email me. A lot of you guys have been doing that, but you know,

I’ll definitely go back and answer those questions. But as always, we appreciate you taking the time to watch hit that like button subscribe to us. If you want more info on real estate.

Broker | Owner | Mortgage Consultant
Josh Lewis Broker | Owner | Mortgage Consultant
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