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Inside the Mortgage Game: Expert Advice for Homebuyers | All Roads LTR Podcast | Ep. 58
0 Playsin 1 hour
In this episode Matt sits down with Ayaz Rahemanji, branch manager at First Home Mortgage and one of Maryland’s most trusted mortgage experts. Ayaz shares insider tips from his $1.5B career in lending, explaining how to navigate rate shopping, bridge loans, 401(k) strategies, and when (and why) to refinance.
Together, they unpack the realities behind buying a home — from what really matters in a mortgage pre-approval to how trigger leads work, and why choosing the right lender can make or break your deal.
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Transcript
Introduction & Misconceptions
00:00:00
Speaker
So I hear every day people have misconceptions as to what a mortgage looks like in terms of the process, the order of buying a home. We still have the, I mean, talking about the fundamental questions.
00:00:11
Speaker
And then furthermore, we have detailed questions related to the actual process. I'm talking about the nitty gritty. So I'm with Ayaz Ray Hamanji, one of the top ah mortgage guys that you're gonna find in Maryland.
00:00:25
Speaker
Ayaz is the ah branch manager for first home mortgage. So he's in his career done over one and a half billion dollars in loans individually. So congrats on that. Thank you.
00:00:36
Speaker
he He manages the number one branch in the company and he's also the number one loan officer in the entire company yeah just last year in 2024. And i had a baby.
00:00:47
Speaker
And he had a baby.
Meet Ayaz Ray Hamanji
00:00:48
Speaker
So somehow he fit in having a baby.
00:00:56
Speaker
right. Hello and welcome everyone. This is Matt Rhine with All Roads Lead to Real Estate. And I wanted to welcome back a ah ah guest. You are now the second visit up here to the podcast. So I want to first off, thank you for coming back and objecting yourself to the the Matt Rhine experience over here. Thanks for having me.
00:01:14
Speaker
Yes. And so I'm with Ayes Ray Hamanji. And so this has been a long term relationship I've had in in this real estate business. And this is one of the top ah mortgage guys that you're going to find in Maryland. And so I've had the privilege of of working with A.S. before he was like really known as as the I don't know, the person that you are. People have a tendency to understand the bigger players here in Maryland. And now um I think you're officially there.
00:01:43
Speaker
So I don't want to inflate your ego too much, but ah you're definitely one of those guys that people know now. So congratulations
Trustworthy Mortgage Advice
00:01:50
Speaker
Thank you. Thanks. And so I decided to have you back because i I think it would be useful to kind of change the format of today's discussion, A.S. So I wanted to first off just kind of get ah get an understanding for those that might not know you as to why what we're about to discuss makes sense. And, the you know, the source of the information does matter, everybody. So talking to your cousin or your aunt, Janine, at the Thanksgiving, you know, ah
00:02:17
Speaker
dinner table, it's different, right? if they're not a professional and they don't have all this experience to draw on, it's different. And so I hear every day people have misconceptions as to what a mortgage looks like in terms of the process, the order of buying a home. We still have the, I mean, talking about the fundamental questions,
00:02:36
Speaker
And then furthermore, we have detailed questions related to the actual process. I'm talking about the nitty gritty. And a as a I intentionally did not give him any preparation. He has not seen my list.
00:02:48
Speaker
It's going to be more I asked for it. just haven't seen it. Yeah, he asked for it. It's not happening. It's in front of me because I wanted this to be organic. He's someone I know really well, so I get to torture him. I have to be nicer to my other guest.
00:02:59
Speaker
So I wanted to first off start and a little bit about who you are and and why anyone should care to hear what you have to say as to your answers. So Ayaz is the ah branch manager for First Home Mortgage and his office is over in downtown in Canton. Yep.
00:03:17
Speaker
And so in Baltimore proper. And so he's also on the board of directors for first home mortgage. And i just actually heard I wanted to de clarify some of his stats. And I think ah those of you might not know. I mean, it's kind of crazy. I'm impressed over here. So he's in his career done over one and a half billion dollars in loans.
00:03:35
Speaker
individually. So congrats on that. Thank you. he He manages the number one branch in the company and he's also the number one loan officer in the entire company yeah just last year in 2024. So, and I had a baby and he had a baby.
00:03:48
Speaker
So somehow he fit in having a baby. First born and number in the company. There you go. That's, that's, uh, that's, ah that's, that's it. That's the highlight. and we appreciate the Matt Ryan group for being my top referral partner last year and honestly every year. So thank you too. Thank you. So it's you i nothing is given, everything is earned is what I like to say to folks. So i've I have lots of lenders that, as you know, come and try to earn our business daily. And I'm exceptionally loyal because um of what value I think you bring for folks. And I always say in all honesty, as much as I think I've appreciated our relationship, the moment I think the clients aren't getting the best service or value,
00:04:25
Speaker
That's the day everything switches. So um it's just being transparent and honest. It's a great relationship. And I think our clients um have a smooth process and transaction. You
Complexities of the Mortgage Process
00:04:33
Speaker
have a great team. you don't You don't get the numbers I just described by not having your stuff figured out.
00:04:38
Speaker
how I feel. Yeah, there's definitely, it's not just me. It's definitely the team behind me, Kate, Mary and James, everybody, our underwriting team or processing team or closing team. I mean, it's ah once the loan's in, there's I feel like there's really not much worry about up front where, you know, you're negotiating the offers. I'm making sure the interest rates make sense, make sure the down payment makes sense. And after that, I feel like, I feel like me and you never even talk about the loan themselves, honestly, which is a good thing.
00:05:01
Speaker
Yeah, it is pretty remarkable. If you're in the business and you'll understand what I'm about to describe, it's it's how many variables, at least as a real estate agent, can I remove from this equation? Because you what I want is a seamless transaction, something people don't have to worry. When I get this homeowner contract, I want it to go to the settlement table and I don't want any additional risks. and you are, as you know, like i try to have preferred lenders. I have several. You're not the only preferred lender, but the preferred lenders that I have,
00:05:31
Speaker
I trust to get it done. And that's part of my sales pitch. So when I'm talking to the listing agent, trying to get my offer accepted, you are part of the pitch. And it's and it's um remarkable what a difference that can make. I don't want to go with some lender I've never heard of and I can't attest to to their process and the likelihood it's going to all work out. So it matters, everybody. So who you work with matters. and And you know there's just so many options. How many lenders are there out there? It's probably like agents. Too many still.
00:06:00
Speaker
It's too many. Too many not doing enough loans. Yeah. It's a lot. I mean, there's like, hey there's it's like you can't throw a dead cat and hit ah hit three lenders in a bar, right? it's And there's not enough loans to go around right now. So they're all chasing over the same thing. And it it makes it a little complicated right now. And also confuses the bars a little bit because there's so many different ways you can chop up an estimate. And it's just to be just transparent up front. Sometimes it makes sense to buy points. Sometimes it doesn't.
00:06:25
Speaker
You also just give people the options. Well, and that's what we're going to try to discover and go through today. So if you're listening to this, it's, I think, I'm trying to hit it from both sides. So I wanted, so if you're a professional listening to this as a real estate professional, this should be of value. But I really want to also do this and to help people that are going through it or about to go through this process and buy a home, because I don't think there's a good source of localized information that just cuts,
00:06:52
Speaker
through through all the noise. And it's hard. And I think it's very confusing for most buyers. And um I wanna make this as as a reference
Spam Calls & Legislative Changes
00:07:01
Speaker
point. of right of you know Because some of this is kind of evergreen. This is not necessarily changing tomorrow or last year. It was totally different. you know it's A lot of this has been consistent throughout your career, I would imagine.
00:07:12
Speaker
Yeah, I mean, there's some major shifts, you know, through COVID in 2009. But yeah, besides that, most information should be pretty pertinent. Obviously, the market conditions will change from, you know month to month, year to year. But yes, I think the the basics are the basics.
00:07:24
Speaker
Right. And I agree, you can Google search whatever you want. Right. but half the time just gets convoluted and doesn't really give you the information you need. And there's a lot of online lenders right now and a lot of just different ways to get to a lender, um which we can you know dig into a little more. um Trigger leads is a big thing that we could talk about afterwards. What is that again?
00:07:43
Speaker
Trigger leads. So there's actually a- Trigger leads. Trigger leads. That's actually a very good topic if we have a couple minutes to talk about that now. Sure. um Oh, I'm going to hit you up all over the place. So go ahead. You can start there. So you come to me today and you want to buy a house.
00:07:56
Speaker
So I say, no problem, Matt. I'm going need your financials. I'm to need your W-2s, your bank statements, your pay stubs. going to pull credit report. Is that okay, Matt? No problem, AS. I'm happy to do so. I have to give you two options then.
00:08:07
Speaker
I have to say, Matt, i'm gonna pull your if you're in an urgent rush, Matt, I'm going pull your credit today. You are going get spam calls anywhere from 50 to 100 in the next 24 to 48 hours. We've had a client that had this happen to before.
00:08:19
Speaker
And I just let you know, because it's not us, it's the credit where selling your data. I have zero control over that. Or I can have you opt out of that, but that takes at least five days to go through. And if if Matt's trying to write the offer this weekend, I need your credit report because I can't always website, for the record, is it PrescreenOptOut? PrescreenOptOut, yep. So guys, PrescreenOptOut, I believe,.com.
00:08:38
Speaker
Yes, and we can we can upload that to the website too. Right. The good news is they just passed a bill banning trigger leads. Oh, wow. It's going effective in March of 2026. The only people that can reach out to you when your mortgage is listed is your mortgage originator, myself, who did your loan in the past.
00:08:54
Speaker
Because if it alerts to me saying that Matt's going to buy another home. Interesting. So if I used you for my last home, if I apply five years later with someone else, you you can now see that I'm again applying. um That's one of the three. Yes. Oh, OK. Two, if I service your mortgage right now, sometimes we service loans, sometimes loans are sold to larger servicers.
00:09:14
Speaker
Either one, yes, if I service your loan, I'll get an alert and I can say, hey Matt, you doing something with your mortgage or you're moving to your refinance? How can I help you? The third, if I have a banking relationship with you, if you bank with Chase Bank, they get an alert and they're able to retouch you. Only people that have either had your finances or currently have your finances are able to, which I think is fair because you obviously, whoever you bank with Chase, you trust them.
00:09:37
Speaker
You trust me because did your mortgage before. think that's all perfectly acceptable. What you don't want is a person from a random state calling you, or offering you whatever they're offering you from their basement or their house, have no don't even know what the transfer taxes are in Maryland, don't care. They're never going to meet you.
00:09:49
Speaker
They don't care about your real estate agents. They don't care about any of it, but they just care about trying to sell you whatever price they can sell you to to try to get your business. Right. that will go away. and when you're buying a house, there's so many variables and things you're worried about. You don't want 100 phone calls. sure
Financial Preparedness Before Buying
00:10:02
Speaker
And it it confuses people, honestly. And i I'm really, really happy about it i know the entire mortgage industry is happy about it. I think the real estate industry will be, in general, be very happy at once they find out about it.
00:10:12
Speaker
Well, and it's, yeah I want to probably help emphasize that probably the pain in your voice here that is because when you have someone, you're trying to give them good advice and then you get people that might not know anything like remotely close to what you know about the local, like you said, transfer taxes and and all the other breakdown that would go in an estimate, they could be sending your client a very misleading estimate that they come back with you and now they think they're getting ripped off. Which they usually do. Right?
00:10:40
Speaker
And it's misleading. And so then now they're questioning every detail and it's creating a massive headache you know and it's problematic for the consumer and for the loan officer who actually is trying to act in good faith.
00:10:52
Speaker
Now they're spending 30 minutes to an hour digging out of a hole. The biggest thing they'll do is they will disinflate recording fees, title fees, and everything else along line. Right. And make the lender fees look, you make the overall, they'll be, why is your cash to close 90,000 AS when this one's 87? I'm like, we understand where you're coming from.
00:11:11
Speaker
These are disinflated. In Maryland, we pay your taxes that either you know July and September, September, December. There's just certain variables that we do not control. But it's the same with everyone you go to. um I'm really looking forward to not having to have those conversations because it just it just confuses people the end the Yeah, so that's news to me. It just happened this week.
00:11:30
Speaker
I mean, that's incredible. I know one of the things that we've done after we've had a few people complain, just, I mean, it's really miserable. I get spam calls. I'm sure we all do. I probably had, I now on average have five before 9 a.m.
00:11:43
Speaker
and they're all telling me I'm in tax trouble and they would like to help me get out or some of my business. New loans, tax trouble. i'm just I call my accountant sometimes and say, please tell me, do I owe taxes? And I'm not aware of it because a lot of people think I owe taxes and I'm not paying it. And so it gets me concerned. um But jar I don't know what to do outside of have a burner phone. Believe it or not, Apple just released, maybe this is old, but it's new to me. They just released a new feature. If you have an Apple phone, an iPhone, that it it will now require everyone when you make a phone call to hit a number and like say, this is Matt Ryan calling.
00:12:16
Speaker
and it will connect you to your regular cell phone because all the spam calls can't hit the number and say who they are. okay not And that's coming out with the newest iOS. So shout out to those with an iPhone. That's like Monday or this weekend. It's coming I think I just ordered it today. ordered my new phone today.
00:12:31
Speaker
Yeah, so did I. Excited about it. God, we're geeks. just I'm into it. I'm following. You're one of the people that don't have an iPhone case, do you? No. Well, I do right now because I broke my phone for the first time in 10 years. Is it because now you have a baby or is it just you being bullshit? It's me being me. Got it.
00:12:46
Speaker
And my contacts got deleted as well. All of them. You've been very cocky about not having a phone. he's It's a beautiful. An iPhone, in a naked iPhone is actually pretty attractive. It's pretty attractive. When you sell it, who cares if it scratches irrelevant? I get it, but I don't know. i keep mine
Mortgage Rates & Inflation Impact
00:13:01
Speaker
locked up. It's safe.
00:13:02
Speaker
Yeah, I have a case now, but oh yeah, all my, cut so I've had to restart from almost scratch right now. But I'm very excited about the new phone for next Friday. Yeah, it'll be 5% better. Can't wait to. So I got my money. thankss Thanks, Apple. It's 5% better.
00:13:16
Speaker
All right, getting back on task here. So all right, so that's a big update. So one of the things, the one of the initial things I want people to have an understanding, it's like, What I try to describe but to people, if you just called me and I'm going through, and i just did it this morning, I do, it's like it's like every day I have this conversation. So I want to essentially role play it with you.
00:13:36
Speaker
So when someone comes in, most of the time they come because a house popped up they want to see. I always say people want a house or a home, they do not want a mortgage. Yeah, nobody cares about the board. Likewise, most people want a house. They don't want a realtor or a loan officer, right? They definitely don't want a loan officer. They definitely don't want you.
00:13:51
Speaker
So and most of time they don't want me. So we're just one of these, you know, necessities that they have to unfortunately get through in order to get what they want. So, you know, from your perspective, i want to hear I want to let you know what I say and I want your perspective on on what it is or if I should tweak it.
00:14:07
Speaker
So I always describe the very first part of this process is not to go see your neighbor's house that's now for sale or the house down the neighborhood you've been wanting to see forever. First step is to verify the financial piece to ensure that we're in the range that makes sense for you guys and your family.
00:14:22
Speaker
And I always wanna confirm the financials. And in my experience, if I do that, it avoids a lot of pain and heartache because ah you might love, love, love the house, but if it's way too expensive for your budget,
00:14:36
Speaker
Now, every home I do go show you, if it's in your budget, it'd be a great house, but I hate to break it to you. A million dollar house is more is significantly nicer on average than a $500,000 house. You're going to remember that million dollar house every time you get a $500,000. Everything's disappointing. I always make the same lame joke, but it's like, I'm not an awful looking guy, but if you my profile picture was Brad Pitt in his prime, you're going to be disappointed. Yeah. Right? But it's like, if I show up without that as my Facebook photo, you're like, okay, he's okay. He's not bad.
00:15:01
Speaker
So it's like, it's just the reality. like I want to make sure that we're getting the very best option for you within your relative set of options. And that's at every price category. Yeah, so I think the two biggest- agree that that's essentially where everyone should start?
00:15:15
Speaker
I absolutely think it's where they start. They don't want to start there because they want to go see the kitchen in the dining room and the bedrooms in the backyard. I think it should be reversed. I think the very first thing is they should see, you know, not only price point, honestly, it's monthly payment in my point of view, because you can buy a million dollar house, but if you want your pay to $5,000 a month, I should work backwards and say, okay, if you have 20% to put down and you you want your payment to be 5,000,
00:15:39
Speaker
you're buying baltimore county here's the tax rate here's what insurances are because they're much higher than used to be you're you should buy 800 000 not million dollars and that's what you because that's what they're going wake up and pay every month right they're not going to remember they paid 800 000 that's kind of irrelevant at that point also they're going to if they're going in the home for 10 years the value is going to change so substantially that it doesn't the pay that the actual purchase price is honestly at that point relevant um the payment again can you can vary in many ways like right now rates are finally coming down thank god um we're in a good place we're in the below sixes right now low to mid six to many credit score we were back to seven and we're in september were recording this in september of 2025.
00:16:17
Speaker
And I'm hoping in October of 2025, they'll be at six or lower. And I'm hoping next year that they'll be under six, which I think they will be. A normal market's in the 5% range.
00:16:28
Speaker
Nobody's asking for a three. We're asking for just a five and a half. I think that's, in my point of view, I call that the make me move rate. So you think it's right around five and a half? i think five and a half historically, if you average the last 20, 30 years, that's what your rate's going to be. Five, five and a half.
00:16:43
Speaker
I think that people, ah the you know, the the COVID years, let's call them 2020, 2021, me and you being one of them, our rates are in the twos. um People feel like that even if they need to move, they're not moving because they don't want a seven.
00:16:57
Speaker
Yeah. Yeah. Rates make a big difference. And in it yes, we're in the real estate world, but in the automotive world, I follow that closely. As you know, I'm a Tesla nut. and Good day for Tesla today. Fantastic.
00:17:09
Speaker
Thank God. We've had some rough turmoil. Hopefully we're not talking about politics in Tesla anytime soon. oh It's a rough go of it for those of us that like the actual business. But the reality is, automotive...
00:17:21
Speaker
sales are tremendously impacted by interest rate environment that they're in. Because people, again, the car dealers are calling people saying your payment's $700 here. can get you a 650 Here's car if rates down. six fifty payment here's new car if rates go down Well, and I don't want to just go through too quickly with what you just described, because I think if you're good at your job at a loan ah as a loan officer or, quite frankly, a realtor, you can speak to the bigger picture and help people get out of the weeds. So some people are super focused, and we're going to go back. like The average sale price in Maryland is around $425, $450.
00:17:55
Speaker
However, if you're looking in that range or even higher, a $5,000 or $10,000 swing in terms of the purchase price is going to make very, unless you're paying cash, it is not the same. And especially if you intend to occupy it as a primary residence and you're going own it for 10 years plus, yeah it's helping people understand that let's focus on the right aspects of this transaction.
00:18:16
Speaker
and And that's part of what you have to do and remind them sure what is and what isn't as important. So a car payment, an average car note is five to seven years. Every thousand dollars is about $20 a month on the payment, 20, 25, depending on your credit score. That's called a cost factor of money, right? Yes.
00:18:31
Speaker
And that's 20, 25 bucks, whether you lease it or you buy it. So if you go $5,000 up in purchase price on a vehicle, it's 100 plus. $5,000 in a mortgage is $25 or $30 a month. So when you put it in perspective, people are perfectly fine.
00:18:44
Speaker
So instead of, you know, if the house is listed at 500, but they have to make 510, I explain to them, I understand $10,000. If I had to ask so you, Matt Ryan, say for $10,000, that's a lot of money. But if told you, hey, Matt, your payment's going to be $57 higher a month for the next couple years until we refinance you, is that okay?
00:19:01
Speaker
to get your dream home. It's a lot more palatable. right um Let's even say 50, it's $600 for the year in additional payments, personal and interest payments, which you're gonna deduct the interest off your taxes anyway. So when you break it down that way, it doesn't sound as, it sounds a lot more bearable yeah and it makes a lot more sense still. Then you go in to search for your next home for the next, or you're renting. If you're renting right now, you're paying, let's say your rent payment's $3,000 a month, okay?
00:19:23
Speaker
So that's a purchase price of $150 a month different if you take your $3,000 and you divide it by your yearly you know annual difference. um When you break it down like that for people, the rent is going nowhere, where there's no tax deductions, there's nothing they can do with it with that money they're spending, and it just goes nowhere, there's living there. No equity, no... Well, not let's not forget that everyone's aware of inflation these days, and we did a very good, I can't wait, I don't think it's out yet, but we did a podcast recently on Bitcoin.
00:19:48
Speaker
And I'm learning a lot about Bitcoin right now. And I'm learning a lot about the monetary system. My degree's in finance, but it was some years ago. I'm not quite that young anymore. And I'm relearning
Financial Steps Before Home Buying
00:19:58
Speaker
a lot about what I learned in school and and understanding all about inflation that's happening right now to all the currencies. I mean, we are in a tremendous overload of debt in this country and it's getting worse by the day. I mean, as I'm sure you know, we're in the mostre the most, I don't know if we're ever going to dig out of it. We actually have to outproduce the debt, if that makes sense. That's the only out we have left. We're not going to pay it down at this point.
00:20:21
Speaker
So we have to outproduce. And so let's all be Tesla fans for that reason, by the way. That's the humanoid robot is really, if that works, we might actually have a chance. That's a side note. But the reason I say that is is, when you're renting, you're in an, you're inside of a product, if you will, like a rental lease or or contract.
00:20:39
Speaker
And it's very much inflationary because next year the landlord is going to do what? It's going up. Yeah. So it's going up. Whereas when they have a mortgage, it's a it's a way to hedge against inflation because you're locked in. Right. You're locked in.
00:20:53
Speaker
long as you have fixed rate. Yes. Yeah. As long as you and we have lot and we're going to discuss all the different options. But majority people have a fixed rate. Yeah. And so the reality is it's a way to hedge against inflation because even as the money you have in the bank is worth less, your home is locked in.
00:21:08
Speaker
It's generally speaking, and and houses will always be an inflation buster. You'll always be okay owning a home and inflation is 3%. Your house is probably going to be 4, 5, 6, 7%. on average, that's accurate. it's gonna be more It's gonna be more than what you're paying for the cost of money right now.
00:21:23
Speaker
um So we had ah the consumer price index this week, wanna say it was in the in the high twos again, it's just a roundup, say 3%. The Fed wants it to be at 2%, which is their going average rate, is that what they think is is, but the more I research this down my quest of learning more about it, you learn the basket of goods that they look at determine- It's handful stuff. It's a handful of things, and housing is housing one of them.
00:21:47
Speaker
They take it out a lot of times. Shelter. Yes. The point is they take out shelter. Yes. It's crazy. The point is, so the cost, it should include the cost of shelter. It's some of the basic goods. They don't. It doesn't. It's more, it's your groceries. It's eggs in particular.
00:22:00
Speaker
It is, um so again, they they take out shelter and energy a lot of times. So, that you know gas is out of there. Yeah. Your you gas and electric bill and your housing bill. Usually out of there. It's out. So, the point is inflation, in my humble opinion, is much higher than 2.8%.
00:22:13
Speaker
I know that's their target. It is. i i think you lose confidence. The more you learn about all of this, the less confidence you have in some of the decision policy makers. and it's That's the challenge.
00:22:25
Speaker
um Yeah, and again, with inflation, you know it's going to keep going up and down. I think in a 2% inflation rate, that might have been okay 15 years ago. Maybe the normal is 3% now. I don't know.
00:22:36
Speaker
Maybe the Fed needs to cut rates and be okay with the 3% inflation rate because that's what needs to get the housing market going. right I think that's food for thought. It's a lot, but it's these are these are wormholes you can go down and spend all the time you want in in research because it's ah it's kind of crazy the more we learn about it. But I want to try to stay on focus and keep going through. So definitely those are all good points. so So we're in agreement that the first stop in your so search process needs to be talk to someone about your financial piece. So if you're gonna pay cash, let's figure that out and figure out how much cash you have access to.
00:23:10
Speaker
You know, a lot of people these days are now paying cash, but they're using the cash from ah like a parent or grandparent. And lots of gifts, yes. And lots of gifts are happening. And then another strategy sometimes, especially in a multiple offer situation, they pay for it in cash and then they refinance it. Delayed financing. And they delay the finance. Up to six months after, yep.
00:23:29
Speaker
and then pay back mom or dad or grandpa. And then they're able to, they won the house in a multiple offer situation, and then they'll get traditional financing afterwards. And the flip side of it is what me and you have done many times. We waived the financing for the very, very strong buyer. We've collected all their documentation that but I'm 99% sure they're going to qualify for the house, minus the fact that they lose their job.
00:23:50
Speaker
um In that situation, we waived the financing and- We just did it this week. Yeah. Yep. Cash is going to beat that in my point of view still because just people want that feel. Sure. surely We're going to get really close with waving that stuff.
00:24:01
Speaker
Yeah. So it's it's limited risk. So sometimes in a very competitive situation, like we're describing, you have to take the best shot you have and mitigate as much risk as you can. It's not zero, but it's as close to zero as you can get.
00:24:14
Speaker
Yeah. Minus, again, you know losing a job or something of that nature. so Right. um Yeah, I think with the the first step, it's not sexy. It's not fun. yeah I need your paystubs, your W2s, your taxes, all that stuff. I got to pull your credit.
00:24:27
Speaker
you might get some spam calls for the couple of months yeah after it once you're done with that part of it then whether you look at the first house or the 10th house it's really easy for me to tell you what what you're looking for i also can figure out your comfort zone how much access you have can you have 401k you can borrow from a lot of people don't know that a lot of people think a 401k is for your retirement for many things actually you can borrow to fifty thousand dollars borrow against your foreign k fifty percent of it and or a max fifty thousand dollars at your current employer at generally speaking- You said $50,000? $50,000 max up to 50%. So if you had a 100 grand, you can borrow $50,000.
00:25:01
Speaker
It's penalty free and tax free to buy a home. And then you just pay yourself back. For your primary residence. Primary residence. And what's the payback period? um Generally 15 years. Okay. And they pull it from your pay sub directly.
00:25:11
Speaker
Oh, wow. So it's like, you're in but it's your own money. You're not borrowing someone else's money, it's your own money. And it's pre-tax dollars? it's Yeah. So all pre-tax goes back into your, just just literally. So if you're, you know, they'll divide the math over and then you can pay more back.
00:25:23
Speaker
If you sell a home, you can use it a bridge too. It's very flexible. So there an advantage to that? Because if I pay taxes, let's say I make a hundred grand and a bonus. Okay. I have a great job. Got a hundred grand bonus. I pay taxes. 40% of that's going to the government in a bonus.
00:25:36
Speaker
But if I had that say, and that then if I needed to put that amount of money into my down payment, That's after tax dollars going to the down payment. If I pull from my 401k, are you saying I could take pre-tax dollars? No, they're still going to tax you on the money up front.
00:25:50
Speaker
Okay. That's the question I was gay Yeah, they're still- you're son It sounded too good to be true. It's too good to be true. They're still going to tax you. You're not going to pay taxes on pulling the money out of it and you can put the money back into it, but it's the way that they figure you're yeah at the end of the year, you're still going to catch up on those taxes.
00:26:04
Speaker
So they're still gonna take, so the max this year is right around $24,000 you can put into 401k. That portion is tax-free still. But at the end of the year, your W-2 is still gonna show it a higher amount and you're still gonna get taxed on the difference.
00:26:15
Speaker
Got it, okay. Well, that almost sounded too good to be true, people. I was gonna have to- You're gonna go get a 401k loan tonight. Yeah, well, if I had one, I'm self-employed. um But it's still a great option. You'd be shocked to have people don't know that that's an option. yeah And that's one of the first things I bring up. And the the first answer I get is, don't want touch my retirement.
00:26:32
Speaker
You're not touching your retirement. You're borrowing against yourself. Would you rather pay a higher interest rate or would you rather have to do it? We offer a bridge loan. It's a great loan. Bridge loan means you take some money from your current house, buy a new house.
00:26:43
Speaker
We have to charge you for it. It's money. It's cost of lending. If you go get money from yourself, you bring yourself back. Yeah. um which is which is a great tool. So we've used that a lot recently. a lot of people will, yeah you know, when you come to meet the client, you're like, hey, I need these guys non-contingent.
00:26:58
Speaker
You can't get them off. If they want a nice house right now in a nice neighborhood. It's got to be clean, that offer. Clean, and it can't be contingent. So my job is to figure out how to make it. And contingent, guys, is simply, I can only give you this loan if you do X, y or Z, like sell your house or do something else.
00:27:14
Speaker
So yeah my job is to clean it up, right? So what I try to do is make it non-contingent. One of the easiest ways to do non-contingent is, okay, I know you have a bunch of equity in your home. Why don't we borrow from your 401k for ah a bridge for two or three months um and use that to buy your new home, put the minimum down on your new home, which is generally going to be 5% on average. And then when you sell your home, Matt's going to do great job. He's going to sell your home right away.
00:27:37
Speaker
you know And then once you take that money, let's put it in back into your new home and do what's called a recash. So you can take the lump
Exploring Loan Options
00:27:43
Speaker
sum of money from that home, 100, 200, whatever the number is, dump it on your new mortgage.
00:27:48
Speaker
It's not a refinance. You don't have to pay closing costs. It's very, very cheap. not a refinance, right. it's easy and quick, and your payment gets lowered accordingly, and your term does not change. Right. um Which is a great, literally an awesome tool.
00:27:59
Speaker
This is something, hopefully everyone was listening intently, because that's something we've had to explain many, many times, because part of this puzzle, which is the whole point of why the very first question was related to let's figure out the financial piece,
00:28:11
Speaker
because that could be overwhelming. And I think most people avoid it because we don't really wanna look necessarily, like you don't wanna step on the scale in the morning sometimes. you know It's like, i don't really wanna look. But the reality is there are options that that could be out there you're not aware of.
00:28:26
Speaker
And that's only one of them. There's plenty of others. so That's one, and it's a good one. But yes, that's there's there's plenty of other options out there. you know there's for first-time home buyers a lot of down payment assistance programs a lot of there's there's good and bad to all of it the 401k one of i think the simplest ones sure or you go gift right so a lot of people think that there's you know there's different estate taxes a different situation of the gift but like in our world in the mortgage side of things where we don't send any tax forms out ours is we have a gift letter you sign it and you you can give a family member um money to buy home right simple as that
00:29:00
Speaker
You know, there's not you're not going to get a higher W-2 that year. You're going to anything crazy like that. So that's a that's something that a lot of people, know, don't know is an option out there as well. um And then the bridge, the you know, taking the money from the current home for the new home, that's also an option. So, yeah. But at the end of the day, the s summation of this is, is have these conversations before we find the perfect dream house.
00:29:20
Speaker
And now we're in stress mode because offers are due at 5 p.m. And now Sunday and one o'clock. Yes, the Ravens are playing. Oh, now I got to get a hold of Ayaz, but he's not there. Like it's it could be so unnecessarily stressful.
00:29:33
Speaker
And this is the biggest thing that we can help people with is to understand this. And you don't, by the way, we can have these conversations six months, a year before you even buy the home. Yeah, mean, we don't have, so a lot of people are scared getting pulled their credit, right?
00:29:44
Speaker
We have a softball option now. If you truly are going to buy in a year, you can do a softball. No harm, no foul to you. It doesn't cost you anything. I can go through your finances with you. I can explain to you what's good and bad.
00:29:55
Speaker
Maybe there's something on your credit you don't even know about. Maybe you have a collection that wasn't yours because you moved and it was a BG&E belt, your old home or your rental property, right? I had one time um someone's credit score was 780. Everything's perfect.
00:30:05
Speaker
Took a year under contract. They had Terminex bill for $200 for a property they don't even own. Their credit score went from 70 to 680. Wow. I think I was devastated. And I, you know, at that time there wasn't soft pulls. This was eight, nine years ago.
00:30:18
Speaker
um So we couldn't we couldn't have monitored it. So now we have the ability to, so why don't we take advantage of the tech technologies that we have? So if you tell me you're going in a year, maybe there's stuff that you don't know, or maybe there's just ah advice I can give you based on the information I can get.
00:30:30
Speaker
yeah And doing a soft pull, a zero effect on your credit, you don't pay anything for it, and I can get you in a much better spot financially right um moving forward. so Now, all of this, this is the strategy part of the purchase process.
00:30:44
Speaker
And I want to make sure I highlight this, and this is why i i have what I call like my preferred lenders. so So the conversation you just heard, if you were even just yourself, you're certainly way above average in terms of capacity you have in this industry. However,
00:30:59
Speaker
um Some of the advice and the strategy that I hear from my average loan officers that are, let's say, pre like the other clients I might have that are new to me that have been pre-approved, the amount of the options that they're aware of are almost zero.
00:31:15
Speaker
I feel like, and it's my biggest gripe about your industry, is that people say, hey, I want to get pre-approved. They they tell the loan officer, I want 400,000. and they tell them what they want, and then they get a piece of paper back that says, here you go.
00:31:30
Speaker
And I'm not kidding you, that on average is the level The common practice. That's literally the level of detail in which they've gotten. And they say, I'm good with financing, man. I have a piece of paper. I'm good to go. I don't need to talk to anybody. You know, I'm good. I got a piece of paper.
00:31:43
Speaker
Prime example, you sent me a past client last week. Got move that bamboo closer. I sent me a past client last week that moved out of state, talked to out-of-state lender. um You put me in touch with them and I had a simple conversation with them.
00:31:57
Speaker
They sent me what they received. They were never explaining the information. but They're buying the rate down. They weren't sure about the closing costs. talked to her for five minutes. She goes, I just did that, did they offer you any these questions? She's like, no, they they only text me back saying, let me know if you have any questions.
00:32:10
Speaker
They didn't go through anything, they had no idea. And they didn't feel comfortable, even though they bought a home before, yeah they didn't feel comfortable. And i was like, they really didn't say this stuff to you? They're like, no. as I said, they didn't give you any options. So I give people a zero point option, one point option, two point option, depending on their appetite and depending on what they want.
00:32:26
Speaker
They want the lowest payment. always people, you want the lowest payment or you want the lowest cash to close? What's more important? i want both. Everyone wants both. Yes. So I explain them, you can't have both. You got to pick. What's more important, money in the bank or is it having a lower payment? There are, you know, depending on your appetite, you may not want to hire mortgage payments. Some people will say, I'd rather have the safety in the bank.
00:32:44
Speaker
To find either way. I don't, to me, it's your personal preference. um And my job is to do is figure out how to get you there. Right. Same with, it like we were talking about adjustable rate mortgages earlier. They're great for the right person.
00:32:55
Speaker
They're not scary. They're not like they used to be back in the day where the payment's gonna go up thousands of dollars. It's not like, everything's regulated, right? So it's all within a scope of what we're able to offer you, like a three-year arm, for example. Well, let's discuss that, because you opened the door. Literally, the next question I have in my lineup here is to help explain to folks the difference between the most standard options. So we have a 30-year mortgage that's fixed, 15-year fixed,
00:33:20
Speaker
and you have adjustable rate mortgages. Those are are the biggest three, correct? Yeah, and government loans, yep. And government loans, like a VA loan. VAFHA. So let's let's go down the right. You started with ah you with your adjustable rate, your arm.
00:33:32
Speaker
So let's let's let you continue. I just wanted to set that up because I want you to explain it. Sure, and i'll actually, I'm going to backtrack. I'll start it with 30-year fix. okay That's your standard, you know your your vanilla ice cream, when people give the, when if you read what a rate is online, they're quoting 30-year fix. Always, 30-year fix. Okay.
00:33:49
Speaker
That's your vanilla loan. That's what 80% of mortgages are. When did that product even start? Because that was not something the United States had. It's, by the way, not almost anywhere else in the what else in the world offers a 30-year mortgage.
00:34:03
Speaker
Most mortgages are three-year year adjustables in the entire world. Like in Europe, every three years. Europe, Canada, everywhere. Sometimes less. Yeah. It's so different. When I get international folks coming, they're like, you offer 30 years to pay this back? And if it's bananas. Yeah. The normal, the normal is, you know, three, three, of let's say even five years. Right. Right.
00:34:20
Speaker
Everyone America wants 30 year fixed. That's what they're, that's what they were told by their parents and and whoever to do a 30 year fixed mortgage. And when did that come out? I remember there was a year. 2009 was kind what. So before that, you could do 40-year, you could interest only, you could do AMS, all kinds kind of stuff.
00:34:33
Speaker
um It kind of got, that's what, you know, ah how we got in the bubble. We got into because the biggest difference with 2009 versus 2022, 2023, 2024, you had to qualify for a mortgage. Back then, you could have been ah self-employed borrower, you know owning your own business, making whatever you wanted to make on paper that you told me and that that was okay. Now I'm asking Matt for his W-2s, his pay stubs, his bank payments. You're talking to your accountant. I'm doing everything. That's why it's less likely ah this could be bonus. Almost impossible for two reasons. One, because I to verify what you're doing.
00:35:03
Speaker
Two, because all these, generally speaking, people that buying homes that are putting in these aggressive offers are having a cash difference. for what the appraisals are versus what they're doing. So they they they're not going into these things under water.
00:35:16
Speaker
Got it. You can't. So the difference is before I could have borrowed 500,000 on a 450 house somehow. Whereas now- Can't do that at all. If the appraises at 450, I have to pay cash for the difference. And then put your down payment.
00:35:28
Speaker
And then put a down payment from the difference. Which is why there's no bubble. There's nothing that's gonna burst. Yeah. So that's your plain vanilla 30 year, right? Then you got your 20 year and you got your 15 year mortgages. The benefit of the 20 or 15 year mortgage, you're gonna have a lower interest rate, but a higher payment.
00:35:41
Speaker
Some people don't want that. um There's not a huge appetite for a 20 or 15 year. So let's say the market rate today is at 6.49%. Your 20 year might be six and a quarter. Your 15 year might be 599, 875, something like that.
00:35:54
Speaker
In my point of view, you want to save at least a percent if you're going to from 30 to 15 year. What a lot of clients will do is they'll- At least 1% on top. Usually, because then your your payment's still higher, but it's not crazy higher. So a lot of clients, they take your 30 year mortgage today.
00:36:09
Speaker
The more and more people do 15 year mortgage, the more aptate comes back for that. So do you believe as as rates progress lower, are we gonna see more and more 15 year? I do, yeah. Simply because the difference? The difference of the spreads will be more normalized.
00:36:22
Speaker
So a normal market, say the 10 year yield hit under 4% for the first time yesterday in very long time. It was 3.99, now it's about 4.05. The spread on a mortgage rate should be a percent and a half-ish, maybe two on that. So in a normal market, if the 10-year yield is a 4%, then the mortgage should be have five and a 5.5, 5.75. So there are about 6.25, 6.5.
00:36:40
Speaker
For a second there, there are 3% spread difference. We still have some ways to go. We have about 40 basis points. Why is there 3% versus the average? Illiquidity. Markets are <unk> confused still. There's not enough liquid assets in the in the markets. there's not We're not normal still.
00:36:55
Speaker
We're getting there. We're not there yet. So when things normalize, say nothing changed in the in the mortgage world. But rates just stayed. Volatility also causes that. Let's say that things stay status quo. Rates will gradually come down as long as the 10-year stays where it is.
00:37:09
Speaker
Even though no one buys mortgage-backed securities, as long as it stays status quo, the mortgage rates would reach under 6% without doing nothing. um which could happen. yeah um And then your other mortgages are your, you so that's conventional is what we were talking about. for So most people in this market should go, in your opinion, for a 30 year fixed.
00:37:28
Speaker
Conventional third year fixed is the normal loan. Then there's government loans, there's FHA and there's VA. So your FHA mortgage is generally gonna be for first time home buyers, which you generally want a 3.5% down payment.
00:37:40
Speaker
We do have programs now, First Home actually has our own program that's 100% financing, where we actually give you a second lien for that 3.5%. It's actually 100% financing. got it That's not your normal loan. Your normal loan is a 3.5% FHA. um So if you're asking how much down do I have to have, because that's a separate question. That's one of the biggest questions I have, especially first-time homebuyers.
00:38:00
Speaker
So we'll get to that. But you just answered for FHA. 3.5%. 3.5%. Or you're if you're a veteran, you know obviously, if you serve our country and you serve long enough, um you get 100% financing, no mortgage insurance. That is the best loan in the world for the people that obviously earn it. mortgage insurance. No mortgage insurance. That's what a VA loan is. yeah And no down payment.
00:38:17
Speaker
Right. um So you could put down zero, you could put down 10 or 20%. The only difference going to save on the funding fee, but there's no other difference besides that. Got it. Absolutely wonderful one.
00:38:28
Speaker
um Also a common misconception about VA loans is people think that you get a, like the appraisals are harder or things like that. It's all the same thing these days. Honestly, they're more lenient than any normal loan you get out there.
00:38:41
Speaker
And there's no like strict DTI restrictions. It's actually like, it's actually the opposite what most think. Well, the VA a gets a bad rap in terms the loan simply because of those appraisals. Everyone's afraid of the appraisal or they're afraid of the appraiser acting almost like God where they come in and they they start doing mini home inspection and they start demanding handrails and they want this done and they want that done.
00:39:05
Speaker
And you don't typically see that with a conventional loan. You don't. It's a little
Understanding Mortgage Products
00:39:09
Speaker
less regulated, but there's still it's not that far anymore. So your your government loans, your FHA, the biggest difference chipping paint.
00:39:16
Speaker
If you have chipping paint on your front doorstep, then they're going to ask you to fix it. they're not unconventional. That's really honestly the main difference. Or handrails, like you just said. Handrails going down in the basement. yeah They're not that expensive. shocked, everybody, how infrequently we see, or how I should put it the other way, how frequently you don't see handrails. But again, we're not asking for some gourmet handrails. I'm talking go to Home Depot. You can do it yourself. Slap a piece of wood up there. Call it a day. And they're Government-backed loans. Yes, Fannie and Freddie are also government-backed entities, which we can talk about that too later if you want to. they're They're trying to take them out of government entities to create more competition and more liquidity in the markets and more options.
00:39:50
Speaker
but um And then your last one is going to be your your non-conforming, which is your jumbo space, which in Baltimore County and Maryland, generally speaking, is $806,000 loans, or your adjustable rate mortgage.
00:40:03
Speaker
So the going rate today is about, let's call it six and a half, six and a quarter. Your adjustable rates are about mid fives. The benefit of that is you're taking a lower insurance rate front, knowing that we think rates are gonna fall further in the future, or say it's fixed for seven years. A lot changes in seven years. no the yeah The reason the rest of the world doesn't do a 30-year mortgage, because no one keeps a mortgage for 30 years. You gotta pay it off, you're gonna refinance. What's the average?
00:40:25
Speaker
Today, three or four years, lot over life, two, three, four years, it just depends on how, fat you know, 2021, 2022, 2023, a year.
00:40:36
Speaker
Yeah. Because that's how often, guys, that that everybody, and that that everybody's refinancing. So typically... For different reasons. Yeah, sometimes for multitude of reasons. But you took on average, don't get a 30-year mortgage and forget about it for 30 years. Never. Never.
00:40:49
Speaker
Nobody ever does. Yeah, so you can't compare when people are like, oh, well, I'm going to save $50,000 on our life loan. You're not keeping it for 30 years. Nobody literally keeps mortgage for 30 years because you're going to pay it off quick. You're going pay it off.
00:41:02
Speaker
You're going to do a rate term refinance from a 30 to a 30 and save money. You're going do rate term refinance to a shorter term, like we just discussed, a 15 or 20. I did mine because rates at the time were going down so fast. I switched from a 30 to a 15. Yep.
00:41:15
Speaker
I went down like 2% because I refinanced. It was going down. i just timed it just perfect. It went down 2%. So my 15 year at the time, I'm i'm locked in at 199. Great. It's fantastic. And it's so, I really didn't pay a whole lot more to do the 15. That's just dumb luck. That's not being good. That was luck, yeah. So again, so say you have a 30 year fixed at 6.5% and I can get you a 4.5 on a 15 year in a couple of years.
00:41:39
Speaker
Deal might make sense then. Yeah, because you're like, well, I'm used to paying X amount. I'm going to pay similar to that, and I'm going to have it paid off half the time. I'll pay a little extra, you know, couple hundred bucks. but Or people do cash out refinance. I do a lot of investment properties.
00:41:50
Speaker
that's Investment properties strictly cash flow, right? um So a lot of people will say, okay, look, if I can go pull 20 or 30 grand out of this and buy another investment property, this makes perfect sense. If I can cover my mortgage still, and I'm making money still, and I'm going to buy another house, no brainer to them.
00:42:07
Speaker
They don't care. it doesn't matter what the rate is. that right They're doing that for that reason. um Say they have a credit card debt. Say their kid's going to college. They don't have a 529 plan. Okay, what makes more sense? Taking a higher rate student loan or taking a cash out on their current mortgage to pay their loans and get tax deductibility, build a kitchen.
00:42:24
Speaker
and like Or a home equity line. A lot of people do a home equity line. They pull the equity out of the house so because a lot of people look at that as a savings account. Look, I put all this money in the house. Let me take it back out. And I think it's perfectly fine as long as you're not going vacation with it.
00:42:36
Speaker
Well, most of the time, i because i read the statistics about the average net worth in this country and the biggest, the single largest ah qualifying factor between the net worth of individuals in this country, it's it has nothing to do with, you know, any demographic, race, religion, any of this.
00:42:52
Speaker
The actual number one statistic is whether you're a homeowner. and and that And it's really, it it changes in the direct proportion of the average price of a home in the United States. Because it pretty much is their piggy bank.
00:43:05
Speaker
It's what they refer to as forced savings. Yeah, and it's wow the difference on those numbers because I'm going butcher it. I'm sure now with ChatGPT you'll find it in two seconds, but it's something in the order of like $5,000 net worth at the age of 60 versus like $400,000.
00:43:23
Speaker
four hundred thousand it's Yeah, it's night and day. It's like night and It's not close is the point. Yeah, um which I agree with again. Like when I, some people, and also it's not too late if you're 40, 50, whatever, it doesn't matter. Like it all still makes sense to buy a house.
00:43:36
Speaker
The last couple of years, a lot of people looked at and said, does this make sense? Because of the rates. Absolutely did. People that bought three years ago, now they're like, man, i don't care. My rate is seven. My refinance is six. and now homes are worth x amount of more dollars. It's simply because, and I can't tell you, and that is my next question, so hopefully we discussed the 30, 15, and ARMS and all of that, and when you have a consult, that's the time to revisit this, because it does change based on your your credit, your yeah like your your net worth, like your bank account, it can change what's right for you.
00:44:08
Speaker
So definitely have that conversation in a consultation. But the next piece is is related to rate and that and people wait and have waited to make a purchase. I know people that are in bad situations, like they don't like where they are, they hate it or they've outgrown it.
00:44:22
Speaker
They have three kids now and they bought the place with when they had one child and they can't fit. yeah But they're there because of the rate and I don't want to do this and I'm going to wait. And if they've waited three, four, five years, the price went from whatever, I'll make up numbers, 300,000 to 400,000. And and like they could have just bought it at the higher rate and refinance when it goes back down.
00:44:44
Speaker
And they would be in such better situation long term they're going to live there. The sticker shock up front from 2022, 2023, when rates went from 2-3% 7% was scary, right? Yeah.
00:44:55
Speaker
By mid-2023, definitely by 2024, people are like, okay, this is what we're dealing with. Then you heard the term date to rate, marry the house, you know? rates are finally in a better place where you can lower it a little bit but i'm a big believer hey if you can afford it right now if it makes sense for you and your family you should do it knowing that i'm not going to give you a time frame but that you will be able to refinance a lower rate we all know that yeah but be comfortable now right and when rates go to five percent this house i can guarantee you's gonna cost more it does today So you make that decision. do you want a year or two of equity in your house or do you want to spend renting and and have zero equity, right no ownership?
00:45:31
Speaker
And yeah, sure, well, your initial rate would be lower, but if the house goes up by $50,000 and the rate goes down by percent, you're still paying more money. So it's all you got to talk to professional like myself, go through the numbers, look at your finances. And also, there are plenty of times I will tell you that I tell people it does not make sense for you buy home today, depending on your situation.
00:45:52
Speaker
say Say someone's living at home with their family and they need to save some more money and they're not paying rent and they're going to change jobs or they're a resident, they're going become a doctor. There's plenty of situations okay, look, here's today's market. Or if you wait six months, here's what it's gonna look like for you. That's okay too. um I think the right mortgage professional will give you the right advice and not assume, know, like if you walk into car dealership, they're going try to make you buy a car.
00:46:13
Speaker
You don't have to buy a home if you walk in and talk to us. We'll give you the information and say, look, here's what it looks like today. But we're not going to make assumptions that rates are going to go down or prices are going to change. You have to be able to afford it today. You're going to be able to afford it today. I'm going to give you advice based on your current situation and what you're looking to do, not based on these market predictions that no one really knows what's going to happen. Well, it's like you have to be aware of the source. I'm aware of the source. You're talking to a person who sells real estate and someone who sells mortgages. So when's a good time to buy? We're talking to us, it's right, it's today, now. yeah So I'm fully aware of what we do, but I believe we actually believe it.
00:46:45
Speaker
yeah um It's not necessarily something, and I've looked at it from different angles, I've talked to so many professionals over the years. I actually believe what I say, I know I own a lot of real estate myself, so it's ah it's an asset class I believe in, and it's just something I think most people don't have, a net we talk about our iPhones, I think more people have an understanding of the intricacies of iPhones, and the feature set, and the cost, and when they're released, and when they're released, and like It's just like compare that to the amount of knowledge most people have in what we're discussing right now, and it's night and day.
00:47:15
Speaker
yeah And I know like there's plenty of people, my wife, she'd be bored to tears. This podcast is, most of the time, not for her, because she would care, she just isn't into this. But um for those of you that are, that want the education, i'm just i wish I wish some of what we're discussing found its way into high school and college.
00:47:30
Speaker
yeah um More specifically, high school. I just think, we're we typically we're educating people from a a level of almost a zero. Yeah, and some people that I talk to have really good jobs and have college degrees, have not only bachelors, have masters, doctorates, and it'll be you'll be so shocked with how little they know. Well, they're experts in their field. Yeah, or even like, you know, doctorate, heart surgeons.
00:47:54
Speaker
Sometimes they miss payment. Sometimes they don't have the highest credit score. So you'd be shocked. Like there's certain loans for Like they make a half a million dollars a year and they and they have horrible credit. they have horrible credit. That's why there's these doctor loans out there to pay that person.
00:48:05
Speaker
Yeah. um which I think wild because again, they can fix some it can fix your heart, but then they don't know about the finances. So yeah um I do think that if there's a class, whether it's in high school or college, um I think that'd be great. i would I would be fine teaching one or two myself actually. learn any of this ah now back in the day. And you're not going to. And now at least there's information out there. There's online. 10 years ago, there was none of this. you know You went to your loan officer and you hopefully got the right loan officer because otherwise might not have the right advice.
00:48:31
Speaker
Now, you can fact check things a lot better. You can go online and say, okay, look, the price is here, or this is that, or I'm getting bad information. But yeah, i mean, I think there there is no education. There's no class.
00:48:42
Speaker
Also, you don't go to school to be a realtor or a loan officer. So there's no training. to become one, but there's also no class on teaching the basics of finance of you should save X amount of money, okay?
00:48:54
Speaker
If you want to buy a house and yeah when you're 25, here's what it looks like. It's okay to buy a starter home because once you buy a starter home, put down your... Say you do an FHA loan, you do 3.5%. Okay? Buy this for two years, go live it for two, three years, and then move to your next home.
00:49:07
Speaker
And then you are you have that equity, you've paid it for a couple of years, right? And at that point, you can- potentially keep it like I would describe and then you have an asset, but that takes a little bit of strategy to buy knowing it's a starter home, knowing it's a great rental. Like I go through with this with people constantly because I start talking about assets and I start talking about what where do you want to be when you're 40?
00:49:28
Speaker
or 50 or whatever the age is. It's just like, where are you now and where do you wanna be? And oftentimes i I do the opposite of what my job title would be, which is to sell it. I help people maintain it and hold it. yeah and they And they appreciate that if you teach them the right way. And again, like I tell people all the time, especially people buying, let's say they buy in Baltimore City and they're gonna move to Baltimore County. I'm like, look, do you wanna keep this as a rental?
00:49:47
Speaker
Because you do, It's much cheaper to keep this today than you call me in six months say, want to buy a rental. When you buy an investor property, you have to put 15, you really have put 20 or 25% down. I put 25% down. 25 is the right number. It's just the rates are better. The less you put down in a rental, the terms are worse. 25 is the perfect number. I'll always stand by that.
00:50:06
Speaker
But if you bought your home today, 3.5% down to 3% down conventional, and then you have 7%, 8%, 8%, whatever, 10% equity in a couple years, and you turn on a rental, you're going to better interest rate, you're going pay less for it, and you're in a better situation. So I will always advise first if that's what they want to do, own a bunch rentals, that is best way to do it. You don't even have to own a bunch, just eat in couple. Whatever, one or two, sure.
00:50:27
Speaker
It's going to make more sense to do it that way. So yeah um again, a good loan officer will walk you through that and a good realtor won't be offended if you don't want to sell your house because they'll keep coming back to you for the next one if you give them advice up front.
00:50:38
Speaker
Right. Well, I want to get into this and try to kind of go fast and go like hyperspeed now. I want to get a few questions in that I had on my list. One of them is ah it's it's a hot seat because loan officers don't exactly love talking about it, but it's it's the real thing. like So people shop rate, rate, they hear rate, rate. rate rate rate So what do you believe is the best practice if someone's going to shop a rate?
00:51:00
Speaker
We touched on this briefly about what to look out for um because people want to shop rate. it yeah It typically happens. And so what's the best practice? What would you say if you're going to do that? This is what you should do and what you should consider.
00:51:12
Speaker
Sure. So I see I'm on both
Shopping for Mortgage Rates
00:51:14
Speaker
sides of it, right? I pre-approved people all the time. They come to me, then they go back to their bank or they call their friends lender whatnot. And I say, get me an estimate in writing. Let me see what they're actually, let me see a real time estimate. Rates change multiple times a day. I need to see it today.
00:51:26
Speaker
i need to make sure they pulled your credit. I need to make sure they have accurate information. need to make sure their fees are correct. Then I'll compare it. Well, you know, if we can do better, we always will. But, you know, we we have to, yeah you have to charge a certain price and there's crazy people out there charge whatever to do, just like a real estate agent. It might Redfin or whoever it may be, a discount brokerage. So there's lots of discount mortgage lenders out there too.
00:51:45
Speaker
Um, The flip side of it is to say I'm the second person coming in. I'll ask the client, say, I'm happy to give you a second opinion. he Instead of wasting your time or my own, can you please send me the the written estimate from that current lender from today?
00:51:58
Speaker
Can you please tell me your credit score is? Can you tell me your assets and your libelts? Or can you fill an application out so I can compare apples to apples? Then I'll look at both. And a lot of times I'll say, hey, you're getting a great deal. You should stick with that current lender. They already put the work in there.
00:52:10
Speaker
Or if I can get you better deal i'm going to give you the option that you pick. Sometimes if it's a little bit off, because again, every day, if you go buy a car from this Ford dealership and this dealership, you're going to get a different price, right? As long as it's close enough to me and you and you like your lender, you should stay with them.
00:52:24
Speaker
I'm never going to pull something away from somebody else unless I can get a a much better deal. um and i think that's fair so i think if you're if you're going to shop right which is fine get everything in writing don't it's not a phone call situation not that email your current lender or your prospective lender your information be honest with them a lot of times i'll have clients back i heard i could get a five and a half okay no problem please send it to me um you have to send them it's complete it's also compliance risk so yeah me as a lender i can't give you a different rate the next person but for no reason you know If there's a better rate out there that you are getting offered based on you know your credentials and what you've been what you've what you literally have in writing, that's a whole different story.
00:53:00
Speaker
Right, and I want to highlight that. So oftentimes people, almost like they've been told they're going a certain deal, and but it's never in writing. Usually it's not. It's not. And so they get disappointed. It's like, to me, it's a big point of contention because i i want I want both. I want to get the best terms and the best rate for folks. And I want them to go with the lender I actually trust.
00:53:19
Speaker
Because you have no idea. I want to reduce the risk associated with a mortgage. And funding the mortgage, being on time, making sure the appraiser that is dispatched over to the appraisal actually knows the area and knows what they're doing. yeah like That is a massive risk when you like get a discount broker that has a You know, they're working out of a, you know, their basement somewhere in Florida and they try to come up here to Baltimore and they just they pull from these appraiser pools. That's the cheapest appraiser they can get. yeah And might they may be from another state. I see appraisers from Virginia all the time. Right.
00:53:52
Speaker
They come up here and have no idea what even we're trying to offer. It happens all the time. So I'd say, yes, you got to be credible, too. um If I get someone's estimate, I'm looking at reviews online. and I'm checking all out. Yeah.
00:54:03
Speaker
I'm not playing ball with some random person in random state that has no idea what they're doing. They refuse your one out of 10 and it says they never commit. yeah We're not doing that. It's legitimate lender. Sure. We'll do whatever we can to make it work. And there are certain times that I will say, okay, you know it might might happen rarely, but if they're getting a much better deal, I understand.
00:54:18
Speaker
No hard feelings. I can speak because I work with you all the time. and The vast majority of the time, if they do end up shopping, you're able to you're already very similar to that rate, if not better, or you match it. Yeah. have As long as they have everything right and we can do it compliantly and fairly.
00:54:31
Speaker
Not a problem. so that So that's it. But the key is the reason why it can get scary is that it's not always apples to apples. And the good thing is there are written estimates. They're formatted in a very similar, identical way. they have to certain things on there.
00:54:43
Speaker
APR, your fees and all that. had another client this morning. He went to his current lender and um I was the second person. said, can you send what they have? He did. And I said, look, this is two weeks old. You should get an update estimate for them too. Because the last thing I want do is waste a bunch of our time getting your information.
00:54:57
Speaker
And then back to your line. Because I'm being very transparent. Rates are better than they were two weeks ago. Okay? He texted me again at 12 o'clock today. um I don't have their information. So they told me you do this. You're here.
00:55:08
Speaker
What's your link? Can I fill your application? I said, no problem. You know, he's like, can you do it over the weekend? I said, no problem. I'll help He's already in a contract closing 30. I said, if they truly could get this to you, they know you're in a contract. You are, they already have your information. It doesn't take that long.
00:55:19
Speaker
Yeah. 10, five, 10 minutes. Right. So, um, he's going to use me now because i was upfront with what I could do. Yeah. I explained to him the difference in the points options, what he makes a year. He's able to itemize his tax returns. So he's able to write off discount points. Right. And I explained that to him.
00:55:32
Speaker
Sure. And he's like, should buy points? I said, well, it depends two for two reasons. One, can you itemize? If you do, yeah yes, because you can write off the points. Two, you know if you're buying an interest rate down, then you're you're projecting that rates you're going to refinance, but it's going to take you longer to refinance. For fly example, say the market rate is 6.49% today, and to buy the rate for one point is 599.
00:55:53
Speaker
You're not going refinance at a 549. You're going to refinance at a 499-ish at that point. So you're hedging your bet. It's going take you longer to refinance, which is okay, because you'll gain your savings in that difference that you're waiting for. So it's all about educating the borrower and giving them sound information.
00:56:07
Speaker
Well, demystify this. Why are there different rates? People will ask, why does one mortgage company offer me a six and a half and the other one's six and a quarter and the other one's five, nine, nine?
00:56:18
Speaker
Explain to people when you're, because you're the branch manager, you deal with this, you're on the board of directors, you see the financials. How do you determine what's the rate your bank or your mortgage company will charge? like So we we all got money from the same place, right?
00:56:32
Speaker
um Then there's obviously you got to run a business. So there's certain costs because there's certain licensing. There's certain, you know, E&O insurances. We have to pay for all those things. We have to pay for the bodies. have to pay for a great processor, a great underwriter.
00:56:44
Speaker
um We have to pay for a services department that if you call me in six months, you have a question on your loan, I'm going to be one answer it for you. Some of these other lenders, they're working out their basement and they're just got a headset on. They're just like, hey, Matt, what do you want today? You know, here's your rate.
00:56:56
Speaker
um Try calling them in three weeks. not going give you any answers. So um it's kind of like when you- where does everyone borrow the money from? You say the money comes from the same spot. It's either, it's you know, the the Fed funds rate sets what overnight lending rate is for the banks.
00:57:07
Speaker
And then everyone gets them through what's his thing. So what is that currently? Currently, their Fed funds rate right now is in around the 4% range and I think will be in the 3% range once the Fed cuts next week. um That's their overnight lending rates. That's what banks get money at. And then you add that what the banks need to charge to lend the money back out.
00:57:22
Speaker
And that can vary. so That can vary. there could be a spread between what... what you described, what their overhead might be, what their what their value proposition is. If they're desperate get a loan, you know, there's there's multiple factors. I've always noticed on my side that typically these really big banks that that honestly don't pay for top talent, like I think the top, maybe this is just me as an outsider,
00:57:43
Speaker
The top loan officers want to get paid, don't they? It's any other industry. Yeah, just like top road or, you know, you that's why you like you don't work at a Redfin because you shouldn't. I don't want to talk about other brokerages, but yes, you do have considerations once I've reached a certain level of experience and talent. Pay for what you're worth. I'm like, yeah, I'm now now looking to see where I want to put myself. And I think loan officers, that matters, but that's only if you understand enough about the process to say a loan officer actually matters. Some of them at a bank need to work at a bank because they need that, because you bank at Chase, so you're coming to because of that. unlimited customers. Yes. Bank of America, Chase, they have millions of customers. And they don't, and so what the difference is what they do is they lend off their deposits.
00:58:21
Speaker
So you put your money into Chase and they're giving you 0.02%. They're relending it out at 6%. They're making a margin already right there, right? Yeah. They don't care that and they're going to pay the loan officer really less. They don't care if for the loan closes on time because the relationship is not with Matt Ryan.
00:58:33
Speaker
It's with yeah whoever that client is. They don't care about the realtor on the other because you bank with them. You're going to come back to them anyway. So that's the biggest difference with them is they don't care if it closes on time. they don't care Banks used to offer. Certain ones do still. If they don't close on time, they'll give you $10,000.
00:58:46
Speaker
Someone's willing to pay $10,000. That's crazy. Just close on time. Also, think just small things like the underwriting process at banks. I had one recently, I'll tell you this actually. FHA loans with the appraisal transfer to the government loans, like an FHA loan.
00:58:59
Speaker
We had an FHA loan. um They weren't happy with a couple different things. We said, no problem. If you think get a better experience, better rate, whatever, we'll transfer your appraisal. Transferred out to a bank. The bank wouldn't accept it and wanted another appraisal. Got another appraisal. It came in lower and had repairs.
00:59:13
Speaker
The sellers were at a rate. They came back to us. We closed them within than a week after that. So it's, again, it's just because it sounds too good to be true doesn't mean it actually is. right That situation, that was a prime example of showing that yeah you get what you pay for.
00:59:25
Speaker
Yeah. So, okay, so that kind of helps explain it. So you should, you know, it's not a bad idea to shop. Just recognize it's not all exactly the got to be apples to Everybody thinks money is money.
00:59:36
Speaker
And to a certain extent, that's true. But then there's also additional pieces to it. And I don't get mad if someone's like, again, also if someone put a lot work into you for six months, helped you on Saturday and stuff, I don't wanna take that loan from them. That's their loan. They help you stick with them.
00:59:49
Speaker
Is the $5 here and there gonna really change the difference? No. So I'm a big believer of if I can get you a much better deal from that person, absolutely, I'm happy to help you out. If not, if you're in good hands, I'll just let you know that. Right.
00:59:59
Speaker
And so, okay, so now I'm looking to buy a home. This is my next question. I think it's an easy one. Well, not easy, but it's it's something that I know you have to explain constantly. How does someone understand what their true cash to close would be?
01:00:11
Speaker
So if I want to buy a house, let's say it's a $500,000 house, I know I want to put down, how much do I need to save to be able to buy it? Sure. So you have your down payment. So let's say you're putting on 5% 500, $25,000.
01:00:23
Speaker
You need to pay your closing costs and your tax and insurance on top of that. So let's slow down. So what's our closing cost again? Your closing costs going to be all of your fees, your appraisal fee, your title fees, your transfer fees, et cetera, if you just decided to buy any discount points.
01:00:35
Speaker
Then you pay your tax and insurance in advance and or pay the sellers back. So a lot of people think $500,000 house, that you're gonna pay an additional three to 5% on top of that for your closing costs. There's three to 5% on top on average. Depending on loan amount, depending if you buy the rate down, depending for you need to pay the sellers the state in which you're- In the state which you're in and the jurisdiction too. Baltimore City's more expensive than Baltimore County. We're sitting in Baltimore County, correct here? Yes, County.
01:01:01
Speaker
Baltimore City's 10 minutes down the road. Right. So you can buy, if you put the same house 10 minutes down the road, you're paying 1% more in fees. Right. Well, and your insurance will be higher. Everything. there's This goes back, by the way, to why when I'm going through this process of of the understanding someone's financials, you want I like to get something in writing to give me an estimate.
01:01:18
Speaker
Like, show me a house you're semi-considering. That's what I do I say, give something you like. And then you can absolutely see the right, because I don't want the first time you see that piece of paper is when we're
Market Trends & Rate Influences
01:01:28
Speaker
writing the offer. Yeah, and then you're in like gun mode, like under the gun. like I want you to already know with all those are gonna be. So all the basic questions are answered well in advance of decision time on price. Like, what do you wanna offer?
01:01:39
Speaker
it Like, I- That's the right way to it. wanna eliminate as much of the pressure as we can and you know during the heat of the battle. I don't, when you're calling me for pre-approval, I want everything to be done at that point. I don't want to have to call the bar and explain them. That's why i i do exactly what you just said. so said, why don't you send me some, hey, I'm sure you looked online, right? You looked on Zillow, wherever it is Send me that listing.
01:01:58
Speaker
And I'll mock that to show you what you owe because, again, nobody knows what they really owe when they have to buy at home until you actually see the numbers. Let me show you the numbers based on what you see. Right. So let's think about this because we talked about rates quite a bit.
01:02:13
Speaker
If the Fed is gonna lower rates, because I believe, everyone believes that it's gonna happen. So the Fed's gonna lower the overnight lending rate. just wanna be specific about that. Which does not necessarily mean mortgage rates are good Mortgage rates are forward thinking is the best way I can describe them. I'll give you an example. Last September, everyone had these, they posted online, the Fed's gonna cut seven times. Rates gonna go down. Rates went from seven to 6% pretty quickly.
01:02:36
Speaker
But that's mortgage rates were forward-thinking, assuming the Fed was going to cut seven times. They cut four times. Four total, 100 basis points, three times, 50, 25, 25. Then when they realized inflation might be picking up a little bit, the Fed cut back.
01:02:48
Speaker
Rates went right up. Because rates, again, whatever – so the Fed – The Fed will cut next week. And yeah, that's on Tuesday and Wednesday. We'll announce Wednesday. And September, that's December. mean There's November meeting and December meeting. They're more likely to cut all those meetings.
01:03:03
Speaker
It's quarter basis point, 25, maybe 51 of those times. So the rates will be, the overnight lending rate will be a quarter. Guys, just so 25% 1%. 25 points And it'll be anywhere from 0.25 to maybe a 50 basis points between that year. So by January 2026, we'll be somewhere between 75 to 100 basis points better than today in the overnight lending rate.
01:03:25
Speaker
That's already factored into the mortgage rates. That's why rates are almost 6%. If that story changes, rates will stay the same or go up. If inflation ticks up, rates will probably go up. If the job market improves, rates will probably go up.
01:03:39
Speaker
The biggest factor driving interest rates down today in September is the job market. The job revisions have been revised drastically. We're not creating as many jobs we used to. The Fed looks at this as if they can create easy monetary policy, meaning rates are lower, meaning businesses can borrow money at a cheaper rate. They will hire more people and invest in growth.
01:03:57
Speaker
right That's what it comes down to. Simple as that. So you've said a lot. So most people aren't, I, in my humble opinion, aren't going to think that's super simple, but the reality is we can boil it down.
01:04:09
Speaker
It's a lot of what people wait for are better rates. They want to pay a lower mortgage rate. So you just said there's going multiple rate cuts, right? That's what they That's what hear. And then they go, well, I guess I should wait. I need to wait till these cuts happen. They're already in.
01:04:23
Speaker
So if, and if the economy- I got to wait. You told me it's going to keep getting cut. So I'll wait till next year. So next year, say say they cut three or four times next year. Once we signal that coming, rate will drop right away or they'll keep dropping it.
01:04:36
Speaker
We're refining it until then, but if rates go to 5% next year, you're paying way more for the house than you're paying for it today. can guarantee that Everybody has to understand rates are, how they're in they move in opposite directions, right?
01:04:47
Speaker
So if if rates are going up, but if there is pressure put on the sales price. So the sale price will either stagnate or sometimes go down, which makes this market a little yeah unusual because rates went way higher. Prices still went up. And prices still went up. This is very unusual.
01:05:04
Speaker
Nobody would have bet that. Nobody could bet that, no one could predict it. That's why no one believes anybody anymore, because what we heard, even what I've been yeah told. No, but we don't even know. like Some of these economists are, yeah if you look back at these economists for last three years, none of them are right. yeah you know It's wild what they say and what happened.
01:05:19
Speaker
Not saying they were giving any malicious information. It's like the weatherman. They're right they're wrong half the time. Yeah, they're wrong half the time and they have a job. It's kind of like this. It's exactly like this. um So yes, i do I think that long-term rates will keep going down? Yes. Do I think it'll push pricing up to an extent? Yes.
01:05:34
Speaker
But what I think the biggest thing is, like I was saying earlier, is if you have a rate in the 5% range, if you're sitting on 3%, you have a kid, you have two kids, you need to move, your downside or whatever it may be, you're way more likely to move and a 5% than 7%.
01:05:48
Speaker
right And I think it' people can stomach that. Their parents had a five. They've they've had a five before in their first house. They're okay spending the difference. They also saw rates of seven. So five looks like it's on sale.
01:05:58
Speaker
Right. um I think that's the biggest thing. I don't think we need a four. I think if we had a four or three percent, the market would go bananas. Yeah. the price would go out the roof. I think we just need to get to a five. Five and a half is my point And it's so regionalized because we're sitting here in Maryland and our market is nothing like the market in some of these other places. i think Some are going down drastically. I think if you look there, I just saw a statistic that there's more sellers in the United States versus the number of buyers. I believe that. The difference is the widest it's ever been in U.S. history.
01:06:27
Speaker
And that's sound that's a crazy statistic. So you would think that, wow, prices are plummeting, right? You can't sell anything. That is not happening in our region. No, not for a normal single family home that somebody wants to buy it. No way.
01:06:39
Speaker
No, I still, I just sold something very close to where we're recording and near Towson. And it had multiple offers one day over list. It's so, it's so, and you know, probably well qualified buyers, i'm assuming.
01:06:52
Speaker
Oh, exceptionally. they They were able to waive everything and they gave a free rent back to the seller. So it it's not everywhere. That's why it's like, you know, that the old adage is like, tell me the, you know, how humble valuable is, what's the average weather forecast in the United States today and plan your outfit accordingly.
01:07:10
Speaker
Max 24 hours, what other people can do. I was going to meteorologist, actually. That's what my what i wanted when I was
Refinancing & Professional Guidance
01:07:14
Speaker
younger. could see you doing that. Yeah. But now they're never right, so doesn't even matter what they do, right? yeah But it's a similar situation to that where um they're they're they're predicting with what the information they have.
01:07:23
Speaker
Saying the mortgage market, again, these economists are predicting what they have. I think finally they're at a point where the Fed has had enough reports recently where they're going to cut rates. um The administration's pressuring the cut rates. The housing market needs some they need their they need something. yeah And I think we're all finally at that point where we're going to get something. so But...
01:07:44
Speaker
It's there's no like the the whole waiting game. ah refinance, ah the myth is costs 10, 20, 30 grand. It costs a couple thousand dollars unless you decide to buy the points. Let's say three to five thousand dollars. You'll eat that cost up in three to six months, 12 months maybe.
01:07:58
Speaker
Also, say you want me to refinance. If you want me to refinance you today, there's a thing called a net tangible benefit form. It has to physically make sense on paper to the underwriter to do this loan.
01:08:09
Speaker
Government loans have even stricter restrictions where you have to recoup the closing costs in under three years, you have to save a half percent interest rate. Is that that's to kind of protect the public? Protect the public. So if Matt Ryan wants to, if I have a 5% interest rate, it's going to cost you 10 points. I can't do that loan for you because it's not going to pass that tangible benefit.
01:08:26
Speaker
yeah That's interesting. And which is good. um I believe in safeguarding. I think that's fine. I think that the should have the right to what they want to do. But think that that blocks, unfortunately, some loan officers from taking advantage of clients. I think that's perfectly fine to have. ki think there should be checks and balances. Sure.
01:08:41
Speaker
Wow, that's fascinating. Well, I mean, at the end of the day, there's there' are so many questions people have. Hopefully we've addressed some of them. We've gone on over an hour. I don't want to keep you here indefinitely here. So I want to try to wrap this up. But the reality is it's like there is so many.
01:08:55
Speaker
It's such a relatively simple process. if it's done with thought and with preparation and- Preparation, that's the biggest thing. It's just so much preparation. And so there's a million things that people are probably gonna ask in addition to this, but these are the basics. Like how do I time it?
01:09:11
Speaker
How do i think about what I can afford? What type of product should I get? And um the reality is you should be asking these questions and whether it's us, hopefully, you know people that are listening to this know that we're resources.
01:09:24
Speaker
And ah but reality is, if they can't, if who you're working with can't um speak to this at, you know, in great detail, like find somebody that can. There's so it's just it's like two weeks to become a ah realtor in Maryland. How long does it take to get your loan officer license?
01:09:38
Speaker
If you work for a bank, you don't need a license. You through bank regulations. If you're a normal and offshore, you get under a month. Probably two weeks to four weeks. it's just It's just wild. The discrepancy between the folks that we work with is so vast.
01:09:51
Speaker
And it does scare me because people sometimes value what we do for a living ah very differently when you meet them because their past experience could have very, very poor. Yes. Because they've had experiences with people that didn't know what they were doing or didn't add a ton of value.
Future of Real Estate with AI
01:10:06
Speaker
And it's just...
01:10:07
Speaker
it's ah It's like attorneys. like and i mean I don't know many people that love attorneys, but there are really good attorneys out there that know their stuff that are yeah super worth having, and I don't despise them. But boy, there are a lot of crooks out there too.
01:10:20
Speaker
and you know So, it's I mean, we're no different, but what we have is way easier to get than a JD. um Yeah, it's almost too easy. um And like you'll see when the waves come in, when the rates are lower and business is crazy, everybody wants to be a realtor and a lender.
01:10:35
Speaker
yeah When it gets harder over the last couple of years, everybody gets out. I bet you the wave starts here in the near future because they hear things are going on and everyone's uncle or their sister or whatever, now they're a lender again.
01:10:47
Speaker
Well, i I have to ask because I just you made me think of something. I didn't write it down. But the reality is I am very much aware of what AI, you know, artificial intelligence is going to do for real estate in general. I know certainly the real estate community that does does what I do, the realtor version is going to be dramatically affected in the next just a couple years. I mean, not in 20 years. I'm talking yeah in the next 12 months to 36 months.
01:11:10
Speaker
Do you know, are you as a lender aware of what you think the changes might look like or how that's going to impact you? Or is that something that no no one's really focused on yet? So we've had to, over the last couple of years, like lenders had to figure out how to, our cost to produce was too high with in 2021, 2022, 2020, even early, I'd say by the end of 2022, to do a loan, we had to get technology involved to- So lower the cost of a loan?
01:11:38
Speaker
Because the cost was too high. um A lot of things on the back end after you close loan, which we're still doing a lot of work on, a lot of that stuff is automate can be automated, checks and balances. um That's the biggest piece.
01:11:50
Speaker
What we do not want to do is we don't want to lose the human experience. We don't want to be push button, get mortgage ever. um 20 years from now that change? I don't know. I don't see that happening foreseeable future. I think people want the human touch still. You don't think Zillow's of the world are gonna try to do a click a button and everything's done? They've tried a lot of stuff, right?
01:12:05
Speaker
But they want that connection. They want to have that conversation. They want to go to Matt and say, okay, who you recommend? Who can talk me through this right now? They want that and that you have to pay for. um Your 10% of people don't care.
01:12:16
Speaker
They'll take whatever works experience. It doesn't matter to them. um The 90% will care for the foreseeable future because their largest investment. So I do think that that will change. But I think if you need to embrace AI. I think that AI can, there's AI under, and there's all kinds of different AI stuff. I think you need to use AI to help expand your business, but not to be your business.
01:12:34
Speaker
Yeah, that's ah that's a good slogan. We'll put that on a t-shirt. So it definitely, it's not something we want to hide from. I want to embrace it and utilize it, but boy, is it not always right. And I think the human element we haven't yet replaced, I think it's coming. um i think I think lenders are going to go very similar, by the way, of of like financial advisors.
01:12:54
Speaker
I think financial advisors had a wave of, I think it's probably 30% to 50% of financial advisors were out of the business after like, you know, Fidelity and all these major online brokerages came up and that works for a ton of people. Yeah. It's autopilot. It's autopilot. But boy, especially as you start to amass more money and you have more wealth and you then it's more if you have more decisions to make. I think a lot of those accounts that are self-managed are usually smaller. Yeah, I think so, too. And they're just kind of put in these buckets. You don't need advice.
01:13:24
Speaker
Yeah. So you have a financial advisor and I have a financial advisor. I pay for that service and I'm fine with it. You know, I don't want to pay anything. I'm like everybody else. I want to pay zero, but I also want a a person I trust that knows me, knows my family. I can call and can kind of see the whole picture. ye And I think that's going to be similar to loan officers. I think there's going to be a tremendous, like maybe more than than your industry likes to admit that are going to click a button. It'll all be packaged in a Zillow and they bought the house in two minutes. Like I think a lot of that's going to happen.
01:13:51
Speaker
lot of title work is going to like, i know title companies should be terrified. um I think title, so no one knows what title company is. So I think yeah that goes first. Yeah, title companies that do the legal, like verify the chain of title, like that that business is going to be tough.
01:14:05
Speaker
I think that's going tough. I do. Because it's, nobody knows what it is to begin with. Everyone knows you got the loan officer, you got the realtor. Yeah. Nobody understands the title piece of We have to explain to them what the title piece of it is, right? They don't, and they typically don't shop that part. It's like kind of one of the things you just- background.
01:14:20
Speaker
Yeah. And to me, I hate to say it. I have, I use a preferred title company for a long time. Shout out to lawyers express title, but the best title company is when you don't even think about. Yeah. It's just everything works and they don't have a comment either way at the end of the settlement. It's like yeah, they're fine. They're fine. I didn't even notice them.
01:14:35
Speaker
But if you ask them three weeks later, who the title company, say, say your friends buying a house. And they're going to say, oh, yeah, he's Matt. He's great. Oh, who's your title company? i I don't know. I can't remember. I'll, you know, I get home. I'll look at the folder. So I hate to say that to them because I do love them, but it's it's something that's less obvious. So, but I i just think both both of our industries are going to be. We have to embrace it again.
01:14:56
Speaker
Use it to expand your businesses. And I think it's fine. think if you shy away hurt And it's good for consumers. I do think it's going to narrow margins. an extent, yeah. And- it'll narrow margin for sure. Yeah. For all of us, it's going to narrow a margin. So from a consumer perspective, it's good, but I still- we can pass the cost on the consumer, sure, no problem. I'm all for that.
01:15:12
Speaker
The savings, yes. Yes. So we're going to pass the savings on. So I think it's not doom and gloom, but I think the number of loan officers and the note number of realtors on average are going to go down. I'm fine that. So, and we, for the for the good ones out there producing, I think it actually could be a net benefit to the consumer. I think so.
01:15:28
Speaker
and yeah and and again if they if the consumer can save money and they have less people hands are about just like this trigger thing we talked about before that's great people don't want 500 phone calls and if there is also services if people want to be called by 50 people they go to lendingtree.com they will get those phone calls yeah but people should have the option do that and i there is a certain small percentage of people that'll do that that's fine yeah um but the masses don't want that right Well, that's ah that's interesting. So I, first off, appreciate You're one of the only guests I've ever had back again. So I, you know, last podcast did very well for us. I'm hopefully... yeah I think we got some good reviews, a lot of views last time, right? Yeah, I don't know if we became more boring or more interesting, but a couple years later, we're still hanging in.
01:16:08
Speaker
I'd have to look at look at both of them, see you see we get more views. Well, there you go. I don't want to look in the thing. I mean, we I don't think we're we're getting more youthful, so it's... Let's not look at the, and the Lord knows we have enough cameras in our studio now. We continue to expand and ah it's something. So what do you think of the studio now? It's a little bit different. It's great. Yeah. I mean, it sounds great. I mean, there's there's cameras everywhere. Yeah. um I think it's stepped up.
01:16:34
Speaker
Yeah. Yeah, I like it. Yeah, we're going to have to have spokespeople one day come in and do our thing. It makes you feel comfortable to to have an open conversation. You know, I like it. I like not knowing what questions you're going ask cause it's more organic.
01:16:45
Speaker
Well, it's the lender. I could have you back every year because some of like it people need to hear it. I think in a more timely fashion because the concerns will be different next year than they were this year. six months, it's good. Even couple months that what we talked about now is gonna be very, very different. It is, but um all I have to say, it's like you have to trust the people you choose to work with.
01:17:04
Speaker
and so everybody has to feel that level of trust or else it's scary. yeah And there are so many people out there that are going to take advantage or give you poor information because they don't know. And it could be good intentioned advice, just poor advice. Sure.
01:17:18
Speaker
And so the the better that we can do to get, i don't know, some more of the good stuff out there, the better. Yeah, I'm happy to be back anytime. so Well, thank you, AAS, for joining to have all his information in here. So if you have a question want to bug him and talk to him about your mortgage or refinancing or anything else, or i don't know, get a job, work for your branch, any of the things. Sure. And that hopefully ah next time we come back, right, it'll be a lot lower. So there we go. Something fun to talk about. We'll have shots of tequila out here. We'll celebrate.
01:17:44
Speaker
All right Thanks, everybody, for joining Thank you.