Do you have questions about the 2020 Housing Market?Verify your mortgage eligibility (Aug 15th, 2022)
Would you love to ask a professional Realtor or Mortgage Broker a question about the Real Estate Market or do you have a mortgage-related question that you want to be addressed?
In today's live session, Jeb Smith of Coldwell Banker Realty and Josh Lewis of Buywise Mortgage are going to answer your questions about the housing market, interest rates, lending guidelines, and anything else you want to be answered.
Some of the questions we will be tackling today include:Verify your mortgage eligibility (Aug 15th, 2022)
- Have you refinanced or are you thinking about refinancing and have questions?
- Where are interest rates today, do we still think they are headed lower?
- What is happening with the additional fee that Fannie Mae and Freddie Mac added to refinances
- What are your thoughts on the California housing market?
- Do you think we are in a housing bubble?
- Do you expect a market crash?
- What are your predictions for the real estate market 2020?
- Are you buying a home or selling a home this year?
- Do you believe there is a foreclosure wave coming after the foreclosure and eviction moratorium ends?
After watching this video, what are your thoughts on the real estate market?
– Hey guys, welcome back. Jeb Smith, real estate broker, Josh Lewis mortgage broker here in Southern California.Verify your mortgage eligibility (Aug 15th, 2022)
We’re back once again, doing a live question and answer feed because you guys are requesting it. You guys keep coming on saying you like the information, you have questions. So we’re here to continue that.
We’re gonna start today’s conversation by just asking if you’re watching this, and you like the content, give us, you might be on Facebook, you might be on YouTube, give us a thumbs up, like the content, again, it helps more people see it, and helps the algorithms out there and helps us educate, which is the goal with the channel.
So Josh, last week we talked about Fannie Mae, and Freddie Mac doing a kind of an urgent announcement. we made, we came on as soon as it was announced and did a live broadcast to talk about the half percent fee that they were adding to all refinances.Verify your mortgage eligibility (Aug 15th, 2022)
So we got, I believe the day before yesterday, some updates on that. I’ll let you talk about that to give people what it means that delay, is it a good thing?
Is it a bad thing? It’s inevitable. It sounds like one way or the other, but what should people do now with that looming out in the future?
– Absolutely, so our urgency, when you and I jumped on that announcement hit my desk at like six o’clock and called you and we’re talking about going, this is crazy.Verify your mortgage eligibility (Aug 15th, 2022)
It was urgent in the sense that if you were talking to a lender already and could get them on the phone and get it locked, we got a handful of borrowers locked that night before it got implemented.
And now what we’re talking about is early yesterday, they did announce that they’re gonna postpone it. So they’re not eliminating it, they’re postponing it. So let’s talk about what it was.
It’s a half-point fee for all refinances they’re coming in an adverse market fee. So what does that mean?Verify your mortgage eligibility (Aug 15th, 2022)
They’re saying that due to all the forbearance risks, the downturn in the economy, that these loans are riskier and they need to be paid.
What my big concern or what my thought was and I said from the very beginning is, okay, well, justify it, show us what that cost is and how this covers it. In the announcement yesterday, they did a brief amount of that.
The crazy thing is the costs that they said, the billions that they expect to suffer in losses will pale in comparison to what this half-point fee is. So the fee is out of proportion to what it should be.Verify your mortgage eligibility (Aug 15th, 2022)
But, it is what it is. What we, one of the things we’ve talked about since the beginning of the year or the beginning of coronavirus when rates spiked up relative to the tenure treasury, and they still are elevated relative to the tenure treasury, what that means is that lenders are making a bigger profit, they’re making an extra half-point, a deal than what they normally do. And there is a valid reason for it.
It’s not, it’s not just gouging.
– Well, let me just stop you real quick. Before you change that thought. When you say leader, are you talking about you as the lender or are we’re talking about the company that you’re sending it to?Verify your mortgage eligibility (Aug 15th, 2022)
Just to be clear, I know what you’re talking about, but to clarify it.
– Me as a broker, we don’t see any of that. Any retail lender, so whether it’s Chase Bank like a bank or like a new American funding here in California, and in other States.
Those lenders that are actually making the loan and selling the closed loans, they have about a 1/2 point of extra profit in there, of what they over, what they normally do.Verify your mortgage eligibility (Aug 15th, 2022)
And you wanna say, Oh, that’s price gouging. They’re taking advantage of the situation. Really what, for the most part they were trying to do is, they only have so much capacity.
And so when they get backed up and can’t do any more loans, one of the ways to control that is to bump rates up. The thing is, everyone’s backed up.
Everyone has bumped their rates relative to where they should be. And at the end of the day, Fannie and Freddie looked at that and said, Hey, if there’s gonna be an extra half point in the transaction, why don’t we get the extra 1/2 point in the transaction?Verify your mortgage eligibility (Aug 15th, 2022)
I don’t have any proof of that, but I honestly feel like that’s what it was, because there’s not any level of additional losses on these loans, on the refinances, being put on the books right now.
So it’s not really justified. So what we got yesterday, great news, we’re delaying it. That was probably my biggest problem with it. Fannie and Freddie, even though they’re quasi-government enterprises, they are private companies.
They can do whatever they want. They set their pricing however they want. The problem was by saying, Hey, this is any loan that can’t be purchased by September one. Well, every lender on the planet had a huge book of loans that were locked and committed to the consumer.Verify your mortgage eligibility (Aug 15th, 2022)
They’re not gonna go to you the consumer and Hey, I got an extra 1/2 point. They can’t, it’s not an actual valid change of circumstance. By law, if they’ve committed a locked rate to you, they couldn’t change it, couldn’t recover it.
So as an example, this would be a smaller midsize lender. Gentlemen, that I was in an email chain with, he had, his company had $800 million of loans that were locked and committed to the consumer. It’s a $4 million cost to him.
It’s basically Fannie Mae and Freddie Mac saying, these are locked, you’ve committed to the borrower. You can’t get them to us by September one. So guess what? We’re taking $4 million of your profits.Verify your mortgage eligibility (Aug 15th, 2022)
So it’s just not a cool thing to do to throw on the market. Consumers that were kind of waiting, weren’t sure maybe they needed some information. Maybe they’re finishing some repairs on their home and can’t have an appraisal yet.
Any number of reasons, why someone wasn’t in a position to lock a rate. So to say, you’re screwed. You’re on the wrong side of that. Just give us the heads up. So I still don’t think it’s justified, but it’s much better that we now have a heads up. So here’s the important thing.
It doesn’t mean that all loans that are locked before December one are going to avoid that. We’re probably gonna be saying October 15th, November one, is when lenders will add that back in there knowing, yep.Verify your mortgage eligibility (Aug 15th, 2022)
Knowing that they have to get the loan closed and delivered to Fannie and Freddie to avoid that. And there were a couple of carve-outs depending on where you are in the country. Loans under $125,000, won’t get hit, which is good.
Just because those loans are already disproportionately more expensive. You and I are talking a little bit about closing costs here later. But the smaller loans, because some of those costs are fixed costs and not variable, smaller loans are already more expensive.
So at least they took the 125,000 and below loans out. And I think they’re carving out home possible and home ready, which are, they’re low-income programs. So for certain people, you’re going to avoid the fee. It is what it is. We just all have to adjust.Verify your mortgage eligibility (Aug 15th, 2022)
I mean, at the beginning of the year, if we’re talking between 2.99 and 3.125 rates, at the beginning of the year, if anyone had told you, you could get that or told me I would be getting that for my clients, we’d be ecstatic, but that’s the greatest thing ever.
So this isn’t the end of the world, but it does mitigate and take away some of the benefits of the ultra-low rates that we’ve been seeing.
– Well, at least now you have time, it just wasn’t thrown on you, right? Because last week it was literally thrown on you and you had less than two weeks to kind of act or figure out what was going on.Verify your mortgage eligibility (Aug 15th, 2022)
So let’s move on. Again, I encourage anybody watching to ask questions. This is only as good as the questions that are asked, otherwise, Josh and I are sitting here rambling and looking at each other funny. So there is a question here.
We have Natalie saying hello. She’s saying that the mic is much better now, thinks that way that’s-
– No technical this week. But we’ve got Jose here asking a question about FICO 10. If so, does it benefit people in the mid 600s or hurt compared to the previous FICO model?Verify your mortgage eligibility (Aug 15th, 2022)
So I don’t know how much you know about that, but, throw it out there.
– Haven’t heard anything about FICO 10 yet. I’m still using the nine model. And every time it comes out, we hear that there’s gonna be these big changes or it’ll impact certain people this way.
And just have not seen many benefits most times. Most benefit or downside to it. The big one, two years ago, we were hearing there were to put trended credit data.Verify your mortgage eligibility (Aug 15th, 2022)
So like, if you go had a run up a bunch of debt and decreased your credit score if you pay it off the day before you go see a lender, they were supposed to be able to see that.
The trended credit hasn’t really been much of an impact. And I wouldn’t expect whatever the next model is to be any dramatic change.
The big thing that I always say, when someone’s asking about credit bureaus and credit scores, I got a question in a forum for veterans that was asking, Hey, my husband applied for, my husband and I applied for a loan yesterday.Verify your mortgage eligibility (Aug 15th, 2022)
They pulled our credit and we got 25 calls today from lenders wanting to sell us alone.
That’s my big gripe with the credit bureaus and something I always like to tell people if your credit record contains your credit score, and you pull a mortgage, a credit inquiry, you’re gonna get bombarded with phone calls, because although we are required to go to TransUnion, Experian, and Equifax, and pull your credit to give you a loan, they are then allowed to turn around and sell that to any other mortgage company that would like to know who’s in the market.
So it’s something for you guys to be aware of, especially in a strong refinance market, where you’re out there looking and talking.Verify your mortgage eligibility (Aug 15th, 2022)
– Now understood, and then I just gonna make this real quick, in another video I did, I had mentioned about, lenders pulling credit, shopping around for credit.
And, there was always this idea that if you had your credit pulled by multiple mortgage companies, the credit score would drop.
I think the new model, I don’t know if that was nine or whatever the model is, allows up to 45 days. I believe.Verify your mortgage eligibility (Aug 15th, 2022)
– It’s 45 days.
– Lenders are using it. So I don’t know if that was part of nine or 10 or whatever, but it is 45 days just to clarify.
– Yep, so when you pull the mortgage credit report, it knows who, what type of account is signed up. So if you go to an auto dealer, it knows that’s an auto inquiry for us. They know it’s a mortgage, you have 45 days.Verify your mortgage eligibility (Aug 15th, 2022)
And there’s a couple of thoughts there of why the government mandated that they all be treated as one. If the mortgage is a big purchase, it’s important that you be able to check with more than just one source.
And then most importantly, people where they’re shopping for mortgages. If you go shop for credit cards and you have 10 credit card inquiries, you might actually get 10 credit cards.
If you go and you shop for a mortgage and you have 10 mortgage inquiries, you’re not gonna get 10 mortgages. You’re gonna get one.Verify your mortgage eligibility (Aug 15th, 2022)
– Right, okay. Now, good info. One of the other questions here is about solar panels. This comes from Natalie. If you wanna buy a home with leased solar panels, can I buy them out and be added with my mortgage loan?
I really want to buy the home, but do not want to be on a lease agreement. I can answer that. Or you can jump into it either way. So, I mean, you’re on the finance side. Talk about solar panels.
– Yeah, from our end, as long as they’ll allow you to buy them out and we can close the loan with leased solar panels. There’s some documentation that we have to get from our end, mainly for you as a borrower, as a buyer, it’s transparent.Verify your mortgage eligibility (Aug 15th, 2022)
But, if you don’t want that and you wanna buy them out and there’s a buyout option, I think the question behind the question here is can we add it to the loan?
– Can we finance the solar panels?
– Yeah, so if you’re putting 5% down, and, say it’s a $500,000 loan, you’re putting 5% down. That’s $25,000 and they want $20,000 for the solar panels. We can’t add that into the loan because now you don’t have your 5% down.Verify your mortgage eligibility (Aug 15th, 2022)
Now let’s say on that, on that same purchase, 500,000, you’re putting $150,000 down and we just put less down and you’re still meeting your 20% down requirement. Then, by all means, we can do that.
– Now understood. And we had one, I did one last year that had solar panels, they were leased. It was a, it was quite an ordeal, but essentially what we ended up doing was listing the property for less than it was worth.
And, the buyers put in an offer somewhere around that. And then, they didn’t want to pay the solar panel. So we said, you know what, we’ll add them to the purchase price and essentially pay them off through the loan. So the seller will end up paying them off.Verify your mortgage eligibility (Aug 15th, 2022)
Which it all ends up being the same thing. In that case, the seller just needed out and they were willing to do that. But in most cases, the seller is not gonna be able to be willing to do that.
So, but to answer your question, you can buy them out, but you’re gonna have issues, financing otherwise. So question about interest rates. I don’t know if you wanna go into interest rates right now, but you can talk about interest rates.
And we also have one asking about shopping around with different people. So that’s, you know.Verify your mortgage eligibility (Aug 15th, 2022)
– So here’s the thing. I own a Toyota Tundra. I was in the Tundra Forums the other night looking at something, and the guy popped up said, Hey, we just got under contract in our first home.
What’s your, anyone ever asking everyone, what’s your advice to first time home buyer. So I’ve done this for a while and piped in there. And he was saying that he had gone to his bank, and they said, it’s a logical place to start.
So if you have a bank or a credit union that you bank with, check with them. I would always recommend checking with a broker.Verify your mortgage eligibility (Aug 15th, 2022)
You say, Hey, that self-serving, you’re a broker. It’s a different channel. So if I were serious and I knew nothing, and I just wanted to say, Hey, I wanna get some options to compare.
I wouldn’t go to three people in the same channel. I wouldn’t go to three brokers, probably not necessary. I wouldn’t go to three banks, probably not necessary, but there are really only three categories.
There are your direct banks and credit unions like a Chase or a school’s first credit union for us here in Southern California. There are your mid-size mortgage banks, actually big mortgage banks.Verify your mortgage eligibility (Aug 15th, 2022)
Quicken Loans is a mortgage banker. Guaranteed Rate, New American Funding for us here. Those are mortgage banks. They actually loan the money, but they sell the loan immediately.
On the broker side, we’ve placed you with a lender that funds the loan. A lot of those lenders keep the loans. A lot of those undersell the loans, just like a midsize mortgage bank. Some of them they’re the same.
So I always like to recommend if you wanna shop around, if you feel the need, if you’ve talked to one person and you don’t feel great, check with three, and check with one in each different channel, just so you’re getting a different feel for it.Verify your mortgage eligibility (Aug 15th, 2022)
And the advice I gave the guy in that forum the other night is, I think one of the biggest mistakes you can make is choosing the lowest bidder. Going with whoever is the cheapest.
I’ve seen a lot of the times, someone’s $500 cheaper. Someone’s $700 cheaper and they go, Oh, they were cheaper. It’s gonna save me money. There are ways of kind of manipulating the numbers. So to me, anything within a thousand dollars, anything within a $1,500 is probably a very similar number.
And the most important thing you can have is having an expert on your side. You guys have heard me say, I think you’re better served with a broker. I probably should say, my number one thing is you’re better served with an expert.Verify your mortgage eligibility (Aug 15th, 2022)
An expert lender that’s been in the business a while and knows what they’re doing and has your best interest at heart, versus someone in any one of those channels. I’ve seen people get a great loan from a bank. I’ve seen people get a great loan from a mortgage bank.
And I’ve seen people get a great loan for a mortgage broker. The common denominator is usually there was a really good loan officer in there in the process. If you go to your bank, they really have glorified bank tellers.
I said, here’s probably the biggest tip that I would say anyone that you’re considering shopping with. If you go talk to Jeb and Jeb says called Josh, or you go talk to Susie and she says, call Bill, look, any of their communication has to have their NMLS ID on there.Verify your mortgage eligibility (Aug 15th, 2022)
Go to the NMLS website, look up their NMLS ID. For newer people, it’ll have 10 years of self-reported employment history. For people who have been in the business, it will show where they’ve been for the last 10 years.
The two biggest things or biggest people that you wanna avoid is someone that is very new in the business for obvious reasons. And a lot of times when you see those, especially with dealing with a call center. If you call Quicken, there aren’t 10,000 loan officers in Detroit.
So they put him in school for six weeks in one of their classrooms and then roll them out there. So if you look at a Quicken Loan Officer’s NMLS ID, it’s gonna show that they haven’t been in the business very long.Verify your mortgage eligibility (Aug 15th, 2022)
And a lot of them have worked as pizza delivery people. They worked at Vitamin Shoppe. They were trainers at 24 Hour Fitness. That’s not really what you wanna see. You want to see someone with a long history of helping people in the mortgage business.
The other one that you’ll see, there’s mortgage guys and girls that bounce around. They’ve been at 20 different places in the last 10 years. If they can’t stay somewhere and be stable, they’re not gonna be able to be stable and help you through your process.
So look for an expert. Look for that, check a couple of different channels, you’ll see different pricing and cost structures. Pick who you feel has your best interest at heart and has a fair and good number for you.Verify your mortgage eligibility (Aug 15th, 2022)
– And I’ll add to that as well. I mean, the one thing you need in a mortgage professional, if you will, is somebody not only that they can provide the service, the rates, all that stuff, but somebody also that picks up their phone.
Somebody that you can call an email on the weekends, at night. A lot of these places, the call centers, the banks, these people aren’t working, they’re paid nine to five. They’re not paid to do your loan. And they’re very hard to get in touch with.
I mean, I can tell you being on the real estate side, when somebody gets pre-approved through one of these banks, or one of these other companies, it’s impossible to reach the person on the other line. And in a lot of these situations, you need to have that communication.Verify your mortgage eligibility (Aug 15th, 2022)
If you’re writing, I’m gonna take it off the refinance side for a moment. If you’re writing an offer to buy a property, and you’re using one of these banks, and it’s seven o’clock at night, we need an updated preapproval letter because you just found your dream home, and we have to submit at night.
And I can’t get ahold of that person. That’s a problem, right? So you also, not only do you need the expertise of your mortgage professional, you need somebody that’s gonna be there to guide you, to answer those questions.
When there’s, maybe, when it’s after hours and what have you. So that’s my two cents on that.Verify your mortgage eligibility (Aug 15th, 2022)
– You know Jeb the last thing I would say, what’s important in a lender, we live in a world where you’re bombarded all day with TV commercials, that say, push button, get mortgage.
You guys have already heard my thoughts on that. It’s just not the real world. It doesn’t happen that way. No one has magic technology that anyone else doesn’t have.
My job primarily is to use 25 years of experience to ask you the right questions, to pull out all of the information that I’m seeing around the corners, that I’m doing what the underwriter is going to do and taking that file apart in my mind.Verify your mortgage eligibility (Aug 15th, 2022)
And then we have all of the answers up front. We get everything on the table. We have all the answers up front. So we’re not getting surprises. We’re not getting curveballs.
And you just can’t do that after one or two years in the business, maybe you can five, six, seven years in. But it is important that you have someone that knows what the heck they’re doing, especially on purchases. You can get away with a little bit less.
Refinances are easier. You can have a lower caliber of loan officer handling those. I still think you’re better off with an expert. But it is important. As much as people wanna say, Hey, technology has changed things. It just doesn’t exist.Verify your mortgage eligibility (Aug 15th, 2022)
Our business is still an ugly dirty business in terms of what has to be done with the files.
– Now, understood. And if you guys see me looking off-camera, I’m looking at questions that are coming in. So I’m not preoccupied with something else. I’m really just trying to look at the questions here and see what’s coming up.
So we’ve got one from Janet asking if it will be harder to get alone if the housing market crashes, and I don’t even know that we need to address the question. Not that, we’re far from a crash, in my opinion, Janet.Verify your mortgage eligibility (Aug 15th, 2022)
I don’t know that we even wanna go down that road because it’s, we don’t know what’s gonna happen, right. I mean, if that were to happen for any reason, we don’t know if it would be harder to get a loan in theory.
The answer is yes. But I don’t see any sort of crash happening. I don’t see any sort of collapse happening, any foreclosure wave, anything of the sort for the foreseeable future.
– Jeb, you and I are on the same page with that. The numbers back it up, their support and reasoning for that. We still have fairly tight underwriting from the last market downturn, and what we saw then, so lower loan to value appraisers in adverse markets or in down trending markets.Verify your mortgage eligibility (Aug 15th, 2022)
They had to comment on that. So you just see lower loan to value. So bigger down payments, primarily if you have good credit, really the only big difference you would see would be a bigger down payment.
– Got it. We did have one here that I skipped over by accident. I’m asking about down payment assistance. You guys have an idea when lenders are going to start lending with DPA, you can definitely touch on that. I’m out of the loop on Down Payment Assistance.
– So it’s a tricky question in that we don’t know where Rocio is located. In California, my business partner Scott Shang started our website findmywayhome.com in 2007. And in 2007, he started writing about teachers’ programs and then all of the Down Payment Assistance Programs in California.Verify your mortgage eligibility (Aug 15th, 2022)
And if you see, we still have all of those pages up on our website, ’cause people love to come and visit them. And they say this program no longer exists.
For the most part in California, when they balanced the budget in 2011, they shut down all of the redevelopment departments of the city, so that they could take back their funding.
And because of that, all of those city programs are gone. CalHFA still exists. There’s still a couple of programs on a statewide level. I don’t love them, we do them.Verify your mortgage eligibility (Aug 15th, 2022)
We will map them out for our client, and say, this is what it looks like. Here’s what your other options look like. And nine times out of 10 of the borrower’s gonna go give me the other option.
Now, in other States that still have those redevelopment agencies that still have funds, there are good Down Payment Assistance programs. So really a resource that I would recommend. And of course, I’m probably gonna get this wrong downpaymentresource.com.
They have every program in the United States listed there. And they can break it down and kind of tell you what’s required for that and direct you to lenders in your area that offer them.Verify your mortgage eligibility (Aug 15th, 2022)
– And Rocio is in California. So it came back up to there. So, yeah, so not a lot of help there at the moment on Down Payment Assistance, but check out that website, if you want some more information on it.
Someone came and asked about the biggest factor in getting a rate. So we know there’s more than just one factor in getting a rate, whether it be loan devalue. So how much you owe on the property versus what it’s worth. The credit score and loan amounts.
The list owner-occupied versus non-owner-occupied single-family versus a condo. I don’t know if there’s one of those factors more than the other, probably-Verify your mortgage eligibility (Aug 15th, 2022)
– Over 40 factors that go into it. But far and away, the most important is the credit score. A lower credit score is gonna get a much higher rate than anything else. I shouldn’t say that.
The other thing that will make a big difference is occupancy. Non-owner occupied is two points right off the bat. And in a normal market, that’s about-
– It has two points to the rate-Verify your mortgage eligibility (Aug 15th, 2022)
– 2 points in fees. So in a normal market, that adds about a half percent to the rate. But right now in the current market, lenders don’t want any rates on the books that are a half percent higher, ’cause they’re petrified they’re gonna sell-off.
That they’re gonna refinance and that loan is gonna get paid off. So they’re making them even more expensive than that.
So you’re generally looking about a 1/2 point plus 1/2 point in rate, and you paying a point because once we get to those higher note rates, they don’t wanna pay a premium for it.Verify your mortgage eligibility (Aug 15th, 2022)
So that would be your biggest one is if it’s not owner-occupied. If it’s an owner-occupied residence, your credit score is the biggest factor.
And then after that, you start looking at loan to value. How much you’re putting down. The more you put down or the more equity you have in your home, the better off you’ll be.
– Got it, and so this isn’t a question, but we, it’s come upon a couple of different videos that I’ve done with regards to refinancing and talking about loans and interest rates and all of that good stuff.Verify your mortgage eligibility (Aug 15th, 2022)
And the question has to do with closing costs. So there’s this big mystery out there with regards to how much closing costs should be when refinancing your home.
And so I know it’s a big question to tackle. I don’t expect you to give some clear cut answers, but I think any sort of directive, or direction rather, and giving people an idea of what they should expect to pay on a refinance or what fees are, or even in there. What fees are built-in and what have you.
– So we’re here in California. So our average loan amounts use a little bit higher than nationwide in the refinance market that brings your loan amount down. ‘Cause a lot of people have been in their homes awhile.Verify your mortgage eligibility (Aug 15th, 2022)
They bought at lower prices. They’ve built up equity, they’ve paid them down. On refinances our average loan is about $375,000. For that loan, you’re looking at either about $1,600 in closing costs or $2,000 in closing costs.
That’s all of our first-party fees and third-party fees. When I say the first party, we don’t charge anything. As a broker, we have no processing fee. The lenders that we work with, we don’t charge an underwriting fee, admin fee.
And that’s been a big trend. We’re not, we used to be very unique in that five years ago. And now it’s probably 50, 50. 50% of lenders aren’t charging for that stuff anymore. 50% still try and charge it.Verify your mortgage eligibility (Aug 15th, 2022)
So when you’re looking, if you see someone tell you it’s $2,500 for closing costs or $3,500 for closing costs, it’s because they have admin processing dock fees, that type of stuff. So on our end, we collect for credit report and that’s your actual charge at closing.
So we have to provide the invoice. It’s anywhere from 25 to $50 in most cases. The appraisal, the actual charge of the appraisal. We have to go through an appraisal management company for most single family homes, under 750,000, it’s about 500 bucks.
That’s gone up a bunch in the last 10 years, thanks to the government regulations, that we have to use an appraisal management company. So those come through us, but they don’t come to us.Verify your mortgage eligibility (Aug 15th, 2022)
They get paid to the credit company, they get paid to the appraiser. You’re gonna have escrow and title. And again, some of this is California specific. You’re gonna have escrow who handles all the documentation, ordering your payoffs, updating your insurance.
And then you’re gonna have title insurance that protects the lender that says there’s clear title, and they’re getting a first position lien against the property. Now on our end, we negotiate those. We do a lot of refinance business. So we have very low negotiated fees.
I don’t ever see anybody lower. You see some of the big places that have similar numbers, but that’s a big area where I see someone goes to a lender that mainly does purchases. They don’t do a lot of refinance volume.Verify your mortgage eligibility (Aug 15th, 2022)
They don’t negotiate those fees, and you can end up four or 500 bucks higher just on escrow and title. So the last kind of piece for the most part, people, especially in coronavirus, don’t go to escrow and sign their loan documents anymore.
A mobile notary is gonna come out to you. We quote 200 bucks for that. And it usually ends up being about $150. That pays the notary for actually notarizing your loan docs, and for their trip fee to come out and see you.
The last thing you’re gonna have is your recording fee. In California, the recording is about $150 to record your deed of trust. And then we have a wonderful tax in the Golden State here of $225, that supposedly is going to affordable housing initiatives.Verify your mortgage eligibility (Aug 15th, 2022)
Although I’ve never seen any benefit from it in the five, six years that we’ve been collecting that SB2 fee. So that amounts to about $2,000 total on that average loan amount. If you get up to a six or $700,000, it might go up about a hundred dollars.
For the most part, we’re able to keep everything on a refinance as fixed costs. Little bit of variable in terms of title insurance, be a little bit more expensive on a bigger property. And appraisal can be a little bit more expensive.
The big one in there right now with refinances, a lot of high, low loan to value high credit scores. We’re getting a lot of appraisal waivers. So that’s the difference between, if you need the appraisal, you’re looking about 2100 bucks.Verify your mortgage eligibility (Aug 15th, 2022)
If you don’t need the appraisal about 1600 bucks. And I’d say if I went and did an analysis on our pipeline right now, more than half of our refinances are getting waivers.
– Now, get a waiver, and I’m thankful for that. You know, Nicole has asked a couple of questions here. I skipped over her by accident. I’m sorry, Nicole. So she asks if you wanna buy, well, let’s just put it up here.
If you wanna buy an $800,000 loan, or if you wanna buy a house, I assume with $800,000 along with a 10% down payment and wanna renovate for a hundred grand, do I need the down payment on the 800 or the 900?Verify your mortgage eligibility (Aug 15th, 2022)
So I will start by saying, Nicole, you can’t build the renovation costs into your initial loan purchase unless you’re doing some sort of FHA 203K Loan that allows the renovation to be added as part of that.
I don’t even know if we wanna get into that, because it’s a super, that’s a whole different video in itself-
– It’s a whole different animal. And what I would say is I got a buddy who’s also here in Southern California that lends in multiple States, that’s all he does. And he’s a monster expert at it. It’s probably a good question.Verify your mortgage eligibility (Aug 15th, 2022)
We should have him on. Nicole, if you’re interested, I have, I’m not sure where you’re at, but I’ve got a buddy here in California that covers a bunch of States and the buddy in New Jersey that covers a bunch of States. And they’re experts at renovation loans.
If that’s what you’re looking at doing. So just reach out.
– And also on that same token here, if you go to my YouTube page and look for the 203K video, I did a video on 203K’s that explains how you do the renovation, how they come up with the cost, breaks it down in a little bit more detailed to give you an idea of how that works.Verify your mortgage eligibility (Aug 15th, 2022)
It’s not gonna probably solve all your problems, but it’ll give you a good basis to start and answer your question there. And also, and I’ll link to that too in the after video here for anybody who wants it.
There was a video also that she, or another question she asked about mortgage financing options. If you wanna add an ADU. So I don’t, again, I don’t think you can add that as part of your original purchase, but I’ll let you just summarize there.
– Very difficult for the same reasons we just talked about to do it as part of the initial purchase. One of the things you wanna be super aware of is the Fannie and Freddie guidelines, which 80% of loans, 75% of loans fall under those guidelines.Verify your mortgage eligibility (Aug 15th, 2022)
They’ve not really updated and modernize them to account for the ADU. So a single family residence with an ADU totally acceptable. They don’t have a problem with it.
They won’t allow you to use the rents from the ADU to qualify. So it’s not as easy on the qualifying as it can be. What we’re seeing most of our clients that are doing ADUs they’ve owned their home for awhile.
They’ve built up some equity. They take some cash out, build the ADU and add some value back into the home-Verify your mortgage eligibility (Aug 15th, 2022)
– And for all those watching that aren’t familiar with what an ADU is. It’s an auxiliary dwelling unit. So basically a granny flat, it’s a separate unit in the back of the house. Can be rented out, can be a kids room, can be a number of things.
But in the state of California now, they’re pretty much allowed anywhere. So, chances are, Nicole might be in California. But Reaz is asking us to, for you guys to give us a like, I like that. So we’ll do that.
– I’m in favor of that.Verify your mortgage eligibility (Aug 15th, 2022)
– Yeah, we got a Mopar4Life asking, some lenders skipping the termite inspection during the pandemic, close to signing doc and have yet to do an inspection, so-
– I think Jeb, I have the answer to this one. If I remember from last week, he’s in the middle of doing a VA refinance, which is most likely an IRRRL. On the IRRRL, you’re never gonna have to do the termite inspection.
If you’re doing a VA purchase, VA cash out, you will. So I don’t think it’s gonna be required on your IRRRL and any other type of loan. VA is the biggest stickler on the termite inspection. FHA and conventional it’s only required if your realtor writes it into the contract.Verify your mortgage eligibility (Aug 15th, 2022)
– Got it, yeah, there you go. So I won’t even go into that, just to get some other questions here ’cause we’re pushing 32 minutes. We have a question here asking, basically say they’re getting charged $9,000 in closing costs for $270,000 refinance.
They’re in New Jersey. I’m asking basically if they’re getting hosed on this thing. So, you talked about, you broke down closing costs a minute ago. And what I’ll say is, it’s really gonna be hard for Josh to, or anybody to tell you whether or not you’re being taken advantage of without actually seeing the numbers.
But when he’s talking about closing costs, he’s literally just talking about closing costs. There are other things added on that refinance in some cases that Josh didn’t mention because they’re not really closing costs, and their prepaids, which, if you’re getting impounds or something like that on your new loan, because of the time of the year, that can equate to seven, eight, nine months of taxes being added to your refinance.Verify your mortgage eligibility (Aug 15th, 2022)
So, Josh, I don’t know if you wanna jump on that.
– No, the thing that I would say, Jeb is absolutely right. It’s impossible with that information to answer.
If you’re getting taken advantage of, what I will say is Quicken in the six-week training before they turn the kids loose in the call center to call themselves loan officers is very good at showing them how to make a rate look really good and then put some fees down there on the loan estimate.Verify your mortgage eligibility (Aug 15th, 2022)
So it is quite likely you’re paying higher fees than you need to, for the rate that you’re getting. We just closed a loan this week.
I think Tuesday for a lady that same thing. She says, “Hey, I got these numbers from Quicken and they just don’t look quite right”.
So we ended up being an eighth lower in the interest rate and $5,000 lower and closing costs. So the easy thing is just get someone to compare the numbers. We’ll throw up my contact info here.Verify your mortgage eligibility (Aug 15th, 2022)
I’d be more than happy to take a look at it. If it looks out of line, I’ve got really good people on the East Coast that we could connect you with. And I will say, I don’t always see quotes from the big box lenders that are awful.
Occasionally they’ll surprise you. And there’ll be one that’s reasonable.
– Right, and on that same token, like Josh just mentioned, if you guys are in another state a lot, I mean, there’s a lot of you guys have a region reached out and guys and girls, I’m asking for contacts with regards to mortgage brokers, realtors in other States, I encourage you to still do that.Verify your mortgage eligibility (Aug 15th, 2022)
When I don’t have the contacts. So reach out to Josh to get those contacts. And we’re trying to align you with people that we know who does a good job, both Josh and I have run a relational business.
So referral is a big part of what we do. And so we wanna make sure you’re taken care of. So if you guys do have questions about good contacts in any of these States, feel free to reach out. I’m happy to connect you.
Email me is usually a little bit better than me posting it on YouTube. I don’t put people’s contact information in there for various reasons.Verify your mortgage eligibility (Aug 15th, 2022)
But email me, and I’m happy to provide you with that info. So we’re pushing 34 minutes here Josh. But we still have 40 some people watching.
– We can’t be as boring as our wives think we are.
– Yeah, exactly. So we got, let’s see here, Leon asking a question about closing a loan 3% down on a $360,000 loan. 740 credit score asking about what the rate should be. I feel like there are still factors that aren’t, that you don’t know, so-Verify your mortgage eligibility (Aug 15th, 2022)
– Well, let’s look at this. The question two above that is what’s the current interest rate, and this is, hey with these factors, what’s my interest rate. We have one a little bit lower than that.
What’s an average interest rate with a 640 to 660 credit score on a Fannie Mae HomeReady? The answer is right now. Most everything is plus or minus 3%. It could be a little bit below it, a little bit above it, depending on how well qualified you are, for an owner-occupied primary residence.
That 640 to 660 credit score that can certainly throw it off there. So again, if any of you have questions, just reach out to one of us. We’ll get you connected to someone. If I can help you here in California, fantastic. If not literally we have 50 state coverage of people that are really good and can help you.Verify your mortgage eligibility (Aug 15th, 2022)
– Now for sure. You know, guys, we will continue to do these lives as long as you guys wanna see. So, you might be watching this after the fact, if you’re still, please leave your questions. I mean, they can make a good topic for our next video.
And I’m always happy to go back and address those as well. Again, if you’re watching us on Facebook, hit that like button, give us a thumbs up. YouTube, same thing. It helps us get around out there and make an impact on educating buyer sellers.
Refinancing all that good stuff borrowers if you will. So we’ll end it on one last question here. What’s a good site to track and lock interest rates.Verify your mortgage eligibility (Aug 15th, 2022)
– I, all of the sites I use, I know there are a couple of consumer-facing ones out there. Let’s, research it and try and put it up next week just because I know they’re out there. All the ones I use are pay sites that you gotta be behind a paywall.
– Okay, the last question I said, last question, last question. Short-sale seasoning. How long do we need on a purchase for a short sell? How long does it need to be your credit or-
– Four years you’re okay. Two years FHA. Four years conventional.Verify your mortgage eligibility (Aug 15th, 2022)
– And what about foreclosures while we’re talking about it?
– Foreclosure is gonna be seven and three. So three FHA, seven Conventional, and both of those VA is a little bit more lenient, but also a little bit vaguer in their guidelines. So if you’re a veteran, just reach out and we get you the right answer on that.
– Got it, so Josh put your information up there in case people wanna contact you. You guys are watching this on one of our feeds, my contact information somewhere. If you need to reach out, if you have a purchase question, selling questions. I’m happy to help. As always guys, we appreciate the support and we’ll be back next week. Talk to you soon.Show me today's rates (Aug 15th, 2022)