Scott: [00:00:00] Dollars and Cents with HAPO Community Credit Union helps empower our listeners to achieve financial success while living for today and planning for tomorrow. This podcast focuses on financial education, community support, fraud prevention, real life stories of financial transformation, and much more.

HAPO Community Credit Union serves Washington and Oregon with over 18 locations. Bank on more when you bank with us. Hi, everybody. And welcome back to another episode of dollars and cents. HAPO community credit unions, financial literacy podcast. Today in the studio, I've got Brittany and Carol, two loan officers with HAPO mortgage.

We're going to be talking about the current landscape of mortgage out in this world right now. We're going to touch on a kind of a touchy subject, high rates, how to navigate those what's going on with that and who knows where else the conversation is going to take us ladies. Welcome.

Carol: Thank you. Thanks for having us. 

Scott: Oh, our pleasure. So let's get started right out of the gate. What does [00:01:00] everything out there look like? We'll, we'll avoid the rates conversation for the moment. But I guarantee we'll get there soon enough. 

Carol: Well you know, without talking about rates, we're still inflation is still a huge topic.

And so that's kind of been driving the fed. And, you know, their decision to cut rates and, you know it's, it's a day by day scenario. I think with some of the reports that come out on a weekly basis or daily basis is, is what determines whether they're going to in the future cut rates right now, they've kind of held off on it for the last few months.

And so that's really kept us steady at, at, you know, the, the rates that we're at right now. So I think right now, a lot of people are getting comfortable with the rates. Whereas, you know, maybe a few months ago, they weren't so comfortable seeing that the, the rates were a little bit higher. You know, but historically they're still low compared to the way they were.

I think a lot of people 

Scott: don't [00:02:00] understand, like the, the rollercoaster that, that rates in general have been on over, over the last couple of decades. I know that I got really lucky where where mine is, is at probably one of the lowest that we've seen in, in a long time. How does that impact people with say the prices in housing markets as well being pretty much if I'm not mistaken at a quite a bit of a higher rate than they've been previously.

Carol: Well, I know that one thing that I have seen, you know, in the last five years or so is the, the values of the home, especially here in Tri Cities, they've, they've been very steady, steadily going up. And I think what happened, you know, pre COVID was the, the values were going up. There was you could, you know, make, offers.

There was multiple offers on homes that were for sale. And so what started happening is that started increasing the values of the home faster than, you know, than what we were comfortable with, I think. And so when COVID hit, They, you know, they decided [00:03:00] to lower the rates to kind of keep everything moving and, and the housing market moving.

And so I don't know that we'll ever see rates that low again, because that was truly an exception for a time, you know, that there was other things happening, we're going through a pandemic. And so they were trying to keep the the market going. And so I think with rates that low at that time, a lot of people refinanced.

And so, After that the rate started going up you know inflation was going up. And so the fed decided that they were going to start increasing the rates to kind of slow down the market because things had gotten so, you know, expensive and, and there was you, you could make a, an offer on a home and there was 10 other offers and there were.

Bidding for higher than what the people were selling their homes for. 

Scott: Yeah, I do definitely remember that environment being out there where people are like, yeah, I put my house on the market at 250, 000 and I closed in I had a an accepted offer within a week for [00:04:00] 50, 000 over asking price. Wow, what, what is going on here?

Why don't I have a house to sell? Right. 

Britany: And so, yeah, we've been hit on both sides at this point. with the rates going up and the house prices increasing at the same time. It's in this area. It's made it even harder for people to be able to qualify right now. And so you do have to do more planning up front in order to be able to to make it work these days.

Scott: And of course, this is a big financial decision. So planning is Pretty much what we want people to be doing on previous episode. We had a couple of people in and I chatted with them about what they want out of a member that's coming to them to get a loan. I was asking, do you want them to go out and find a house that they're interested in first, or do they want to come talk to you first?

And hands down, it was come talk to your loan officer first. get a pre approval, know what range you're looking at, because the last thing you want is to go out and be like, I found this beautiful house for 600, 000 and find out you're only approved for 350, 000. 

Carol: Yep. [00:05:00] Especially if you have, and that's completely 100%, right?

I, you know, we have to look at your specific scenario. What, you know, what's your income, what's your credit, how much down payment do you have? And then, you know, a lot of people, especially if they're first time homebuyers, they're not aware of what. The mortgage payment consists of. So you have, you know, your principal interest taxes, insurance, mortgage insurance, HOA fees.

So there's additional costs to owning a home than just let me get a loan and let me buy a house. And those are the things that we can help them navigate. 

Scott: Yeah. There's a number of things. When I first got into my first house that I got to kind of slide around. I, my original first home was my grandfather's and I took it over while he went into nursing care.

But it was a family loan type of a situation. And I, I got a really weird scenario when I walked into that one. But then I went and got my first. Actual mortgage and who boy yeah, just, just a little bit different. 

went through a [00:06:00] refinance for some home improvement work that we wanted to do.

So did, did some equity stuff. So I've been through it a couple of times at this point, but yeah, everything has definitely changed since, since I since I went through those two things, the the insurance and the taxes, I think were, were an interesting one for me looking at those right out of the gate.

Carol: And that, you know, with the increase in values, the counties are also increasing property values, property taxes, and so that's been a big impact on what they can qualify for. 

Britany: And homeowners insurance. We've seen large increases because The homeowners insurance companies don't have enough in reserves to cover the claims.

So people's policies are doubling. So that is making a big impact. I was going to say with the value of a home. 

Scott: Yeah. With the value of a home being much more that insurance policy should not shockingly also go up because that's. You're now covering more value. Like the house itself hasn't changed any, but the price to repair it or replace it [00:07:00] definitely has.

Carol: And you know, I think one of the most common things that we see, and we were talking about this as like with first time home buyers is like having, you know, them be aware of what they can qualify for because you know, the, the interest rate. does affect your payment. And so when we're sitting there calculating, you know, a lot of it is some financial counseling and getting them prepared for that payment, but also for them to be aware that, you know, this dollar amount, this is what your payment's going to be.

Are you comfortable with that? And then they see that and they're like, no, I don't want to pay that much. Then, you know, then, then we have to go, you know, either scale back or get ready for that. That's 

Britany: a conversation I just had with a, actually an employee here the other day that was, it was a shock to her when I told her what the payment was going to be, but we had a really good conversation about her being able to, over the next six months in order to prepare for her down payment, she basically was going to start putting away the amount of that monthly payment [00:08:00] we talked about each month so that she could see what it felt like in order to be able to Pay that payment each month, but she was also accomplishing the goal of being able to meet that down payment at the same time.

Scott: That's a fantastic budgeting maneuver for anybody that's looking into to getting into something, having a conversation, finding out what that monthly dollar amount is going to feel like, not just look like, not just looking at that number and being like, yeah, sure. That's what a house costs. But to actually pull that from what you're working with, as well as then to put it aside and start to build up that down payment.

Which of course, if you do that long enough and you're lazy and you forget to actually pull the trigger now, you know, suddenly you have a massive amount of money put aside for a down payment, which could then effectively lower that, that monthly costs that you're looking at. 

Britany: Also, the thing is, is we were talking about this earlier was that people don't consider as a first time home buyer.

Typically they don't have a washer and dryer. They don't have a refrigerator. They don't have the lawn mower and everything else that they need. That you need to be able to maintain a house. And so all of those expenses are [00:09:00] additional things that they don't consider when they're moving in. And a lot of people end up having to get a credit card to be able to cover those things.

And now you've added another payment that has to be factored in as well. And you get the, 

Carol: the borrowers that call you like a week or two before closing and say, can I go get my refrigerator and my sofas? No, you can't. That's a really common one. It's like they, they start to think like, I'm going to need this, I'm going to need that.

And, and it's like, you know, that there's a lot more expense to it than just, I'm going to go buy the house. 

Scott: Well, and it's possible that, that when the house that you're looking at, they might opt to leave behind. The appliances that were there, which is great because you don't have to go out and get them.

But what you don't know is the state of those appliances as far as additions that you might be picking up. I know for me with the, with the the house that I moved into with my real mortgage we'll call it that for now. I did actually get lucky and have they left behind the refrigerator and the washer and dryer.

And within the first two [00:10:00] months, the the washing machine broke. And it. Just that's the type of thing that happens. It was older appliances, which was perfectly fine. But yeah, we had those types of things where, okay, now I, now I need to go out and do this and I didn't plan for it because it was something that was in the house.

They also left me a pool table because I think it was too heavy for them to move. Well also with new construction, you know, with new construction, they sometimes they, they don't put the fence, they don't do the backyard, they don't do certain things. Rain, gutters. I mean, sprinklers. Sprinklers. And so it adds up.

Carol: Mm-Hmm. . Oh yeah. It really does. Yeah. 

Scott: And then sprinklers are something that is just a joy in and of itself. Since we are just hitting. spring and summer, I have gone through the standard homeowner re upping my sprinkler system. I replaced almost an entire line of those 

Britany: trencher. That's a lesson.

My husband learned was that you using a shovel doesn't get you very far. 

Scott: It will, it just won't get you there as quickly. Luckily, I didn't have to [00:11:00] go down to that level. I was only swapping out a sprinkler heads, but again, that's like outside of the range of a, of talking about a mortgage, but homeownership, that is another one of those things that oftentimes people don't immediately think about is like, Oh, I have to adult much more than just.

Having a place to live, I have to adult in a manner where I have to maintain and upgrade and, and, and deal with all of those situations of having a house. 

Carol: And even with all of that, I would still encourage those that are not homeowners to go and look and see what they qualify for, because that is still.

The best investment you're ever going 

Britany: to make, right? And 

Carol: so even right now, what we're seeing is there's not as many offers on homes, homes are on the market a little bit longer. And so they have some, you know, the sellers are offering some incentives. I know builders are offering incentives on closing costs.

And so, you know, they're, they're able to maybe drop the price, maybe give him those incentives. And so [00:12:00] it's still a good time to buy, even with the rate. I mean, we have this saying it's kind of been around for the last year or so, but marry the house, date the rate. 

Jeff: Yep. 

Carol: You know, because you want to make that investment as soon as you can, because that's going to build you wealth.

But the rate you can always refinance on average, I'd say, you know, I was looking at some statistics that say that most people will refinance at the seven year mark. So, you know, even if you bought a home now and the rate's a little bit higher than you're comfortable with, Buy the home because you're going to get a better price for it now versus waiting, you know, six months or a year when the rates drop and those values are higher.

Scott: So then you've also got more competition because everybody else is waiting for that time frame to get out there. But that, that marry the house, date the rate. I like that, that phrasing because the odds of you being in a home longer than you're going to be at that rate that you bought the home at is pretty high.

I know the house that [00:13:00] I'm currently in I believe we've been there for eight years now. And it's, I, the, the house before that, I think we were there for 


So if we're 

talking the seven year mark is the refinance, I may have pulled the trigger on my refinance a little earlier but it was a really good move.

Right. Because there was that in rate environment, that really low rate environment was You know, that was just not normal. And so a lot of people took advantage of that. So those people that refinance during that 2020, 2021 are the ones that are holding on to those homes, unless they have some kind of life change that, you know, forces them into having to refinance or sell.

Carol: You, you're going to see that there's a group of people that don't really want to get. Let go of that, that low interest. Kind of stuck on that a little bit, that that's what they've seen now. So they don't understand that that wasn't the norm. And it got a little spoiled. Yes. And so getting that, I mean, people that have not even bought a house and didn't get that interest rate, they've heard about those interest rates.

Britany: And so that is [00:14:00] what they are, feel like they're targeting. And so they feel like they're not going to move forward until. We get to that point again and getting people to understand that we may never get, we're probably never going to get to that point again. Like you said, it's pull the trigger and start building that investment unless we have another pandemic.

Scott: Yeah. And then if, if rates do drop, then obviously you've got an eye on those to refinance, to do those things. And of course, refinancing can come with some other things. I know when, when we did ours, we actually did a a cash out. refinance, which allowed us to grab some money too. And we used it as a as effectively a consolidation loan.

We paid off a bunch of other higher interest debt and basically rolled that into our mortgage with basically just pulling that equity out of the home on the refi. And paying off those, those other, those other loans. I think we paid off a car and, and some other loans that were probably sitting at like the 11 percent interest, something along those lines.

Carol: And refinance still makes sense [00:15:00] today, even with the rates, the way they are, it still makes sense for certain. For example, I mean, one that, you know, it's, it's more common than people want to talk about, but divorce, you know, in divorce situations, you know, that one keeps the house, the other one wants the, you know, their share of the equity.

So the one that keeps the home has to refinance to remove the other one off the property and the deed. And so, and, and in order to cash them out, they have to refinance. So in that situation, there's. There's no other option but to refinance. And sometimes, you know, if they have high interest debt that is way higher than what they would get if they were to refinance, that makes sense.

And you know, we'll calculate those numbers for them. I've done it before where, you know, we'll look at all their debt. What are your rates? What are you paying on those specific in that specific debt and what would it look like on the refi? 

Scott: Because this, the rate might not look great to you when you compare what you've got to what you could end up with.

But if you're looking at. Rolling all of that other higher interest [00:16:00] debt. Like if you're, if you're running a high interest credit card and you're putting everything on that, you have a running rolling balance with that. Being able to pull that. Cause some of those can get up to the mid to upper 20 percent range.

As far as those, those rolling balances. Yeah. Being able to pull that down to a 7 percent range. Wow. 25 percent of the interest rate at that point, just gone. 

Carol: Yeah. The rate. And then you're also looking at their minimum payments. So if they have all this debt and it, do you add up their minimum payments?

Sometimes that's way more, maybe double than if they were just refinance and have one payment. If 

Britany: they can pull that. What they were paying towards those credit cards and put it back towards the mortgage, they're going to decrease the amount of time that they have that loan anyway, and save themselves on the interest if they can do that.

But a lot of people want to take that savings and be able to live more comfortably when they do that refinance. But they 

Carol: could, they could always do a fifth, you know, a 10 year, 15 year term, 20 year term. [00:17:00] You don't have to go back to a 30 year. Yeah. 

Scott: I was saying the, the interesting thing to me is there, I was Thinking about this on interest rate percentages and whatnot, but the number of payments that you're making, those minimum payments requiring cash out monthly to those things that that's a part of that, that I hadn't considered previously.

If I've got eight different. That's that all have a minimum payment. You can't get around it. If you can lump those all down into two or three, then I mean, you can probably pull down the amount of, of payments that you have to make each month as well as that minimum payment so that you can make more progress on, on different aspects.

Carol: I just had a client who, or a member who I helped she, I've helped her a couple of times over the years, but she came to me just. In tears a couple months ago and she was like, I don't sleep at night. I have so much debt. Her son had gotten into himself into some trouble and so she had helped and helped and helped and to the point where she was a hundred thousand dollars in debt.

[00:18:00] And her husband was like, we need to do something. And so she came in, we crunched the numbers for her and you know, her monthly payments. I mean, they went down significantly to the point where she was just like, she, she messaged me the next day and she's like, this is the first good night's rest I've had in months.

Like, this is gonna save my marriage. It's gonna save my life, you know, to that point where, you know, it's like before you get all, you know, to that point, like talk to a financial advisor, talk to your mortgage loan officer. If you have a home, like you could always pull, you know, some equity out of the home and, and do some, you know, equity loans right now.

Scott: Well, and even if you're not in a situation where you can leverage something like We've had episodes with our certified financial coaches on before always worthwhile to, if you have any questions, come in make an appointment with the certified financial coaches. Those are free appointments for members and non members come in.

They are more than happy to take a look at your financial [00:19:00] situation and assist with what you can do to. Kind of wrangle that to get it under control. And again, like, yeah, that's a good night's sleep at 

Carol: HAPO. Oh, absolutely. Yeah, it is. Yeah. 

Scott: Being able to say that I had a financial conversation that led to a better night's sleep is, I think, More impactful to a lot of people listening than like the amount of debt that that person may have had, like the fact that this impacted probably their health along with their relationships and everything else, being able to look at a thing like, like that and be like, Oh, well, maybe I don't really like the rate that much, but my mental health and physical health are kind of 

Britany: important.

Scott: Yeah, 

Britany: well, in maxed out credit cards are something that obviously affect your credit Credit score as well. So getting those to be paid off and zero balances is going to help your credit overall as well. So there's, there's a lot of benefits to being able to, to 

Scott: be able to try and remember off the top of my head.

I think you want to be somewhere [00:20:00] around 30 percent of your total credit usage as far as your credit score is concerned. Now anybody listening, don't quote me on that. I'm, I'm spitballing this off the top of my head, but. There are additional, much like the financial coaches, we have a number of other tools that you can use that are much more accurate than listening to me.

Like savvy money, I believe is, is one of those free services that we have that can give you some information on that. And like making on time payments, how big that, how big of an impact that can make on your credit score. And of course, then if you've got all those things under control, your credit score is going to put you in a much better position.

When you start looking at rates for things like car loans and mortgages and refis say I have a project coming up that I want to do on my house. I've got a decent amount of equity in there and I have a ridiculously nice rate at the moment. I don't want to refi that. What can I do to avoid those current rates?

Because for me, it probably doesn't make sense. 

Britany: You don't have to, [00:21:00] that's the good news. Hooray! Just going back to debt consolidation, same thing and home improvements. You have home equity options. So basically keeping or doing a loan that's completely separate from your existing mortgage home equity fixed or a home equity line of credit.

Basically are the two that you can choose from here at HAPO. So if you're doing projects, I would probably suggest if you're doing them over time the home equity line of credit is a great option because you can take the money as you need it and only pay interest on the balance that you have there versus our home equity fixed option.

You have to take it all at once with the amount that you're approved for. And if it's going to take a few months to be able to get things done, then you're correct. You're still paying interest on that amount, even though you haven't used it yet. 

Scott: So if we're looking at say a number of different around the house projects, we're going to be replacing cabinets or building shelving.

And we've got a half dozen different projects that we're looking at. Line of credit's probably going to be a better one. Head down to [00:22:00] your local hardware store, buy the materials that you need. If you're doing it yourself or hire somebody. And then a different somebody, and then a different summer for each of the different projects.

But if say we're installing a swimming pool which is going to be a big cost right out front. 

Britany: And you know how much it is. You have a bid for it and you can do the fixed, the big difference between the two for most people. If I say variable on the interest rate, that is going to be either a go or a no go for somebody on which way they're going with that.

So the HELOC, I mean, I typically will ask the question as far as what it is that you're using those funds for, because people can be flexible if they do understand the benefit of having that flexibility and that line of credit that's available to you for emergencies as well. So even if you're only going to be spending 50, 000 on those projects, maybe we get you a limit.

That's up to 100, 000 to keep your balance under 50 percent of what the limit is, because it is a line of credit. 30 percent will, I mean, there's definitely different numbers there when it comes to that. [00:23:00] But that being there to where if you had something come up that you didn't plan for, You can pull from that again for up to 10 years on the line of credit.


Scott: so remodeling my kitchen, I find out that there's, you know, damage to the, to the floorboard, some water damage. That's going to be a much bigger project than I would ever want to take on. 

Britany: Steering away from putting that back on credit cards. So if that was the goal when you came in, so even if you did have a few credit cards that we could wrap into that line of credit, if the beginning plus get those projects done, you can do all of that in one.

So it's not one or the other for usage. So, and 

Scott: of course, that's again, not refinancing the entire thing to pull cash out with a refinance. There's both cash out and non cash out where you can just refinance where like, I like this new rate. I would like to refinance and get myself at that rate. And then there's also, I would like to refinance and pull some equity.

Out of here for a project if refinance was what looked like a good idea. 

Britany: The other thing is, is the cost. So home equities come at a very [00:24:00] minimal cost to do versus a refinance. Refinance typically is going to require an appraisal. There are those one offs that you can get waivers on those, but even an appraisal costs up to a thousand dollars.

And then you have all the other origination and other costs that go into a refinance, which Again, it's, it's worth it in the, in the right scenario and we can calculate those things for you. But if we're looking at, you have a 3 percent interest rate and you're wanting this project done now, we'll get you the rate that's available today.

And then maybe in a couple of years, the rates go back down to the 4 percent rate. We can also look at combining those and putting those back into one loan at one point, and then you're not paying. Full closing costs twice to be able to get you the money that you need. So home equities are very popular right now with the right environment, with those people who do not want to touch that 3 percent mortgage that they have.

Carol: Well, I had a borrower who I thought this was a fantastic idea. [00:25:00] They decided it was, they came last summer and they said, we want to buy a new house. They have their house owned free and clear. They were like, we're going to upgrade, you know, we've been in this house for so long. So we got them pre approved.

They were looking and they happened to go to Mexico in December and we're like, you know, took a two week vacation, came back and said, we're not going to buy a new house. We want to buy a condo in Puerto Vallarta. So we did a home equity line of credit for them. And. They're in Mexico right now. The condo on vacation.


Scott: there we go. I'm going to say vacation. So obviously they're not looking for a primary residence at that point. Does that change what they're getting as far as the like you said that they were doing a, a home equity, 

Carol: equity on their current home? So their home is on free and clear. So we focus on that property.

So that property is, you know, what the loan is on and you know what they do with that money. Obviously we will ask like, what is that money going to be used for? But. [00:26:00] You know, for you, you can use it pretty much for anything you want. 

Britany: I just did a home equity for a guy who didn't own his own free and clear, but he had enough equity available.

And we were going to go through with a purchase, but closing costs on a purchase are more expensive. And using his primary residence, he was buying a property over in Idaho as a second home. They go over there on the weekends and it was only 130, 000. So he basically took the equity out of his existing property to pay the full amount on.

That property over there. And he didn't have to come in with the 10 percent down that's required for a second home. We were able to get him the full amount to be able to cover that cost in a second, which you're looking at a 10 or a 15 year term on it. So you do need to take a look at payments to make sure it makes sense for them in, in their financial situation.

Cause sometimes that 30 year mortgage is going to be the only route if the debt to income ratio is low. is an issue. Yeah. 

Scott: Okay. And then just back to my, my first comment on that one. So if they were to have gone through with getting a loan to upgrade to a new home, 

that would 

have [00:27:00] been a primary residence type of a mortgage.

Whereas the, the other scenario was buying a secondary home, which is two different. Mortgages, correct? 

Britany: Yes. And two different requirements for down payment. So you can, if you're going into it as a primary residence, the down payment requirements, depending on the loan program, anywhere from three and a half to 5%.

And then with a second home or an investment property, you're looking anywhere from 10 to 20 percent down required on, on additional residences. 

Scott: And so if somebody was looking at buying a property for say using it to rent out, that would be an investment property. 

Britany: Right. Yep. That's going to require the higher down payment because it's for business purposes.

Basically, you're making income off of it. And so there's a higher risk. You're not going to make that payment first. If you get into a financial situation where that person, that renter moves out and you have to cover that payment. That's basically, we're counting on you being able to cover those additional expenses.

And so they want a little bit more of a down payment to cover [00:28:00] the lender in that situation. 

Carol: Okay. So here's the other scenario that I'm seeing around the purchases and investments is, there's a lot of people that don't want to let go of that lower interest rate, right? And so they're keeping those home as investment properties and you know, they still want to upgrade and buy another home.

So they asked me like, what can we do? We want to keep this, it's going to be a rental. What would you require? And it's like, well, we want, you know, as a lender, we're going to want a 12 month lease agreement to show that you're going to be renting it and that you're going to be receiving income on that property that you're the departing residents.

And so we can use that rental income in most cases to offset the payment. And that way that. doesn't affect their debt to income ratios when they're trying to apply for the new home. 

Scott: Interesting. That's a, a fun fact that I was unaware of. I did have another kind of topic I wanted to kind of circle back to.

You mentioned about kind of the requirement in the situation of a [00:29:00] divorce where somebody might have to refinance because they want to keep the property. I was thinking about that as we were talking and other things where people might be required to be diving in and they don't really have the option of of waiting for a better rate.

We talked about how it's a really good moment to jump in, get get in, get the house or whatever. Marry the house as we, as we said. But what are other situations out there where somebody might really not have an option out when they're looking at things like that? The first one that came to my mind was relocating for say, work a new job opposite side of the country.

Literally my neighbor in the last month. Relocated to I believe they said Washington D. C. 

Britany: It's a big move. 

Scott: Yeah. From one Washington to the other. I may not 

Britany: want to keep that house here as an investment in that situation because you're not close enough to be able to handle things if something goes wrong with it.

There are companies you can hire to be able to. Help with that kind of thing, but it's some people have an issue with that, not being able to see what's going on with their home. So, 

Scott: and I'm, I'm 90 percent certain that that, that, that particular house is on the [00:30:00] market now. But obviously where they're going, they're probably going to have to be looking into getting a new home.

Britany: Expensive one. 

Scott: Yeah. What other scenarios are out there where people might really not have much of a choice in how they go about things? 

Britany: I would say death. So losing a spouse where they can't financially afford the payment on the existing home that they live in, needing to downsize, basically. That's a big one.

Carol: FHA. So if you started with an FHA loan FHA, if you had the loan after, Oh, What year was it? 2013. I think after that they require private mortgage insurance on your loan for the life of the loan. So I have a lot of people that want to refinance if that mortgage insurance is still, well, I mean, you know, they still have it on there.

So, and they have enough equity now to where if we were to refinance it, it would remove mortgage insurance. It would, you know, re amortize their payment. And it, it, it's very specific. Specific [00:31:00] to their situation. So in those, I think that that's why we say it's kind of a case by case and we would look at the numbers and re, you know, kind of run those numbers for them and see if that makes sense to remove the, the mortgage insurance and then you know, see what the rate environment is like right now and how that would affect their payments.

So I get a lot of that questions on the mortgage insurance just because people are, how long am I going to pay for this? Well, until you refinance that loan. So, 

Britany: Another one I thought of, I mean, growing families, there's only so much room in an existing house, so that's one I've dealt with recently with purchases where people just cannot fit anymore children in their existing home, it's time to upgrade.


Scott: bunk beds only get you so far. I grew up sharing a room with my younger brother. And 

Britany: I've seen the three stacks. Luckily, 

Scott: I know we never had to get there. The old, the other one that I thought about would be a potential medical issue where somebody suddenly doesn't want stairs [00:32:00] in their home or can't do stairs anymore.

I'm finding those situations where maybe they, they need to look into. The current rates and whatnot. 

Carol: There is, there's so many scenarios that I mean, we can go back and kind of like all the ones that we've dealt with, but you know, that, that's a big one, the medical one, especially as you have, you have older, maybe older parents that are, you know, not, you know, maybe keeping up with the property the way they should, or they, they, they can't anymore.

I've had like, you know, where the son wants to take over the home and because the parents are now going into a nursing home. And so, you know, in those cases, it's like, how, how do the children take on that property when the parents, you know, are wanting out or. That's another one with even just combining residents.

Britany: I've seen more requests for like what's called a ADU or Basically a like a mother in law suite to be able to build homes that have space to be able to move parents on and be able to combine that income. That's something that I have [00:33:00] had the question a lot about where people are thinking about ways to be able to live more comfortably by combining incomes, basically, and, It's becoming a little more flexible.

I know out in the Pasco area, they've removed some limitations on the size of the mother in law suites that you can build. 

Scott: Now, just to, just to clarify, the mother in law suite as it's kind of informally known is a separate building on the property. It's not actually attached to the main residence.

So it's almost like a, a tiny home or a mini apartment that's just. Detached from the rest of the house. 

Carol: Like some of those homes have like a, a separate like shed or, or like a separate garage and they turn it into a dwelling unit. 

Britany: Well, there could, there are, excuse me. They are building ones now that are combined because the different cities have different rules on whether they are allowed or not.

And again, They are lifting some of those requirements, but there I have seen some that have been built where the main house has like a [00:34:00] hallway that attaches the other in law suite basically, and they have a full kitchen. At which point it 

Scott: officially counts as one building as opposed to multiple. I'm sure that comes down to zoning requirements as well with cities, which is probably a lot of those changes are coming from what you're talking about.

Britany: That's definitely one of those things that people will ask us those questions. I'm only aware of it because I've helped people with the loan side of it. But you definitely want to check with the, the city that you live in to find out what the requirements are for where you live. 

Scott: If I'm looking at, at trying to get in and doing this, and I've been planning ahead because I have done this podcast long enough to know that planning ahead is always a good move.

I'm going to come in and make an appointment with a loan officer Go and we're going to calculate a bunch of stuff. That's what we've been talking about this whole time. What should I be looking at as my first meeting with you? Am I supposed to show up with nothing? We're going to have a conversation and you're going to tell me what I need, or should I be showing up with every like the last 10 years of [00:35:00] my bank records?

Income far. So what are, what, what, what is that first appointment going to look like? I would say. The key word there appointment. A lot of times we get people who assume that it's a quick conversation and they can just stop by and be able to get some of those questions answered. But we really do want to schedule time so that we have given you the list of documents that we need so that we can get the full picture of what your financial situation is.

Britany: And then yeah, We have enough time to be able to go through the details because there has been times where I have been rushed through a process, and maybe we didn't really fully cover closing costs because we kind of generally went over it, but they didn't understand what the details were. And once they got into the process, it was a whole lot more overwhelming for them.

And so it's, it's a good thing to make sure that you have time. And then two years W 2s, two years tax returns 30 days pay stubs, typically is the income side of things that we're looking for. And then assets, what, What money do you have available [00:36:00] for this transaction? So typically I, I mean, two months, big statements or most recent quarterly statements for retirement accounts is what you mentioned.


Scott: mentioned time, making sure there's enough time for this appointment. Do I need to block off like a half day? Oh, are we talking 15, an hour? Okay. 

Carol: I'd say for the first appointment, at least an hour, because you know, one thing does lead to another and your conversations can go an hour, an hour and a half.

And so, you know, by, by an hour and a half, I mean, we're all tired of talking, but yeah, but I mean, we can keep going cause that's what we're there for. But I think if you block out an hour. You know you can come to an appointment, not bringing anything. If you just want to ask questions, we can do that.

But if you want a more effective and, you know, make the most of your time with us, then the best way would be to bring those documents in. Okay. Two years tax returns, two years W 2s, one month pay stubs, two months pay. Being statements and you know, if you're self employed, that adds a little bit, you know, maybe another document [00:37:00] there.

If you pay child support, if you receive alimony, if you receive child support, if you are using any income other than a W 2 income, then that could add some, you know, additional documents that we would need. So most likely what I'm going to want. to do is get on the phone with you first and write down a list of things that I should probably gather up.

Scott: Quick phone call. 

Britany: Typically I send an email to the member with, I ask what kind of incomes they're receiving what kind of liabilities they have, and I will send them a quick list of things. That's good 

Scott: because my handwriting is terrible and I'm not going to be able to read half of the things that I write down during a phone call like that anyways.

Carol: A couple, we all work a little bit different, you know, we can you, we can do email, we can text you that list. We, you can pick it up. At any bank, you know, just, or you can even go online. I think it has somewhere on Happo there. I'm sure there's a list of documents, but the best way would be just, just call or swing by.

We'll give you a list. We'll make an appointment, come in, we'll sit down, we'll look at your situation, specifically your numbers. [00:38:00] If you're ready to, you know, to do the app, we can do the app right there. We can. text you the app. We can email you the app so you can do it online. So there's so many options.


Scott: our previous conversation on this I had heard six months was a pretty good window for somebody that wanted to do this to come in and make that first appointment. Now, if I'm ready to do the application, we can do it like right then. 

Britany: Right then. 

Scott: Okay. Yeah. 

Britany: The thing with the application is that people need to understand that we do need to pull credit in order to be able to look at the financial picture.

We get a lot of times where people are wanting to shop around and they just want to know what rate we can give them. And really, I can give you a rate off of our website, but it doesn't mean that's what you're going to qualify for based off of your situation. So the really, the best way to get the most accurate information is for us to be able to do a full application.

Look at the debt to income ratio, and we can take a look and see what obstacles we're going to run into that we need to have a conversation about. Because then 

Scott: be able to plan for 

Britany: correct, because if [00:39:00] they didn't mention child support, or they didn't mention one of these little things that. End up showing up on the credit report that can kill the amount that you qualify for.

So you get excited about going to shop in that 400, 000 range that can really quickly change on a mortgage. And with all of those different factors that Carol mentioned earlier, mortgage insurance, property taxes, homeowner's insurance, with all of those different layers, without us putting it into the system to be able to really look at the big picture, it is really hard to give.

We can give generalized information, but it's not going to help you. I mean, you want to know what your scenario is. 

Carol: Right. Because, you know, a lot of times credit karma might tell you your credit score is 800 and it comes back at 

Britany: 630. 

Carol: Yep. Or, you know, it could be that the, I have had people who tell me my credit score is like 640 720.

That's more common actually. Yeah. Yeah. So it, it goes both ways, you know, we really want to be able to give you the best information possible. And in order to do that, we would have to look at [00:40:00] the whole picture, you know, 

Britany: end up going and spending like double the time. If we're not looking at the application, we're going in 12 different directions, giving you all of these what if scenarios that are just going to cloud the picture for you when it is so much easier for us to be able to target exactly what your situation is with the application.

Scott: And then, of course, after walking away with that information, now I can go start to look at either a the the project of building the mother in law suite or start picking out the neighborhoods that I want to start looking at houses in because I'm going to have a much better idea of what I qualify for.

And actually probably what about, as I'm thinking about this pre approvals I believe that your real estate agent is going to love you for that. 

Carol: Yes, they are. They're going to be so happy if you show up with that pre pre approval letter. Yeah. And you know, the pre approvals that we do are good for 90 days.

So we, we give you one, it has an expiration date on there, but it's good for three months. So I 

Scott: don't have to go shopping this weekend and make the. That final choice [00:41:00] right out of the gate, 

Carol: even at the three month mark, if you're still looking, all we have to do is refresh the application. We saw it. We already have it.

Scott: Everything's still good. 

Carol: Update your information and then pull credit again. And it's good for another three months. And that's 

Britany: a big thing right there. So they came in, let's say today to be able to do an application 90 days from now, the rates may look completely different. So What they qualified for today may change by 50, 000 when we go 90 days down the road.

So it's something we'll reevaluate at that point and just make sure that we got the most up to date information for them and the most accurate approval amount. If the rates go in the opposite direction and they go up, that absolutely could decrease the amount that they qualify for. So then of course, if they 

Scott: go down, then all of a sudden you might be able to look at that house with a pool.

Britany: Exactly. 

Carol: Can I go down a rabbit hole on rate shopping? So here's my, here's my what is it? Soapbox. So I ha, you know, if, if you're out there rate shopping, here's a tip I'm going to give you make [00:42:00] sure that you're getting this, you know, rate shopping on the same day. 

Britany: Huh. 

Carol: Because rates change. They could change daily.

They can change hour by hour. They change often. And so you could check a rate with one lender today, check another rate tomorrow and check another rate next week. You're going to have three complete, you're not comparing apples with apples. Okay. So you 

Britany: got a picture of Happo from the first lender where the rates were higher.

Exactly. We have the same rate that that other lender did because you didn't come back and check back in with us. 

Carol: Make sure that you get. your fees sheet. So ask for an a loan estimate, ask for a itemized fee worksheet, whatever they call it. They call it different things at different places, but you want to know what the fees are for that specific loan that you're asking about, because you can come to me and tell me, Oh, you know, so and so is offering me a 6 percent and you're telling me you're at 7%.

But you're not, what you're not telling me is that they're charging you 7, 000 to get you to that [00:43:00] 6%. You 

Britany: remember they had an FHA loan and not a conventional, and it means that they're paying more in mortgage insurance because they're getting a different type of loan. So without those details there, There can be a lot of things that have caused those things to be as different as they are.

And that's 

Carol: huge right now. Everybody is about rate shopping. And so they think that being able to go online, you know, calling different lenders is just, it's that easy. Well, it's not that easy. Like we really have to know what your credit score is. Like Brittany was saying, you know, it's, there's so much detail into getting that pre approval done for you that, you know, I could quote you a rate.

But if you want to be able to compare and for those comparisons to be equal, you have to be able to give us all that information. 

Britany: There is, that's a big thing with credit reports. So you have two weeks to pull your credit as many times as you need to with all the different lenders where it only counts as one inquiry on your credit report.

So if you are going to [00:44:00] be shopping around, which Happo is very competitive on our interest rates and our fees. And a lot of times what we'll find is as we're comparing those loan estimates next to each other, what will happen is, is our origination fee may be a little bit higher, but they have a processing fee that is double the amount of ours.

And typically when we're looking at it, Happo is. Either beating or we're going to be very competitive to what the other lenders are and we're always happy to match take a, taking a look. Sorry. We are always happy to take a look at matching interest rates in terms of what other lenders are offering.

Carol: And it's, you know, there's, I think a big part of our job is educating our members because, you know, they might not know that that origination fee, that processing fee, that administrative fee, it's all the same thing, but they're called different things. So they, it may look like a different line item and You, when you combine them, it's still, you know, a lot higher than what we would charge on one line item.

So, you know, it's just one of those things that it's [00:45:00] sometimes challenging because I don't think that a lot of people understand how that works. You know, when you call in to ask for a rate. 

Britany: Well, just the buy down that she mentioned, people really don't understand that part of it. And it's very deceiving for first time home buyers for lenders to show an interest rate at six and a half percent.

But The little fine print at the bottom says that costs you 2 percent in origination costs 


be able to get that at that interest rate for me with my loans. I'm going to quote them the interest rate that costs them no additional money at closing. So it's going to look a little bit higher a lot of times.

And then 

Scott: maybe have the conversation that says, and if you want to look at this. 

Britany: Correct. This 

Scott: is what it would look 

Britany: like. Most of the time people are not. They don't have a ton of extra money sitting aside to be able to throw at an interest rate. And it may be more beneficial for them to go ahead with the higher rate that's available right now, save that money in their pocket, and then look at refinancing when those rates go down and put that 7, 500 [00:46:00] for that rate buy down towards the closing costs when it comes time to refinance down the road.

Scott: Because then you're not having to pull that extra money from somewhere else that maybe you weren't planning for. 

Britany: Correct.

Scott: Sorry, I was attempting not to burp into the microphone. 

Jeff: We'll keep that in. Yeah, 

Scott: perfect. So is there anything else that you ladies want to talk about today as far as our members go, as far as our listeners are concerned, any more heads up or last minute pieces of advice? 

Carol: Well, you know, like Brittany had said earlier, we are going into, you know, the spring, we are in spring.

And so we're going into the buying season where, you know, things get a little bit more busy with rate shopping and trying to get ready to buy a home. And for those that are selling for them to get their homes listed in, you know, on the market. So, you know, if you're interested in, in, you want, To know more about [00:47:00] what you can qualify for, what your options are, the best way is to just reach out to us or to, you know, to a loan officer and have that conversation because everybody's situation is so different.

So you know, that's what we're there for. We'll listen to it and analyze your situation and then give you that feedback that you're, that you, you probably didn't know you needed. 

Britany: Just like Carol said, when you're. When you are getting serious about that process You need to be serious about having those when we ask you for certain documents when you're coming in for that appointment it is important that you bring all of those things with you because a lot of people don't understand the impact of not having one of those items can stop us from being able to Run your application for underwriting and getting an official pre approval.

So That is one of those things. If you are serious, make sure that you've gotten everything together that we have on the list. Do the little bit of extra work to get that copy from whoever you, because otherwise it's going to 

Scott: be another meeting to bring in that and then the next one. And it ends up feeling like a, bring me another rock type of a game.[00:48:00] 

Britany: It's a much more efficient for them and us. And people don't realize that they, a lot of time assume it's just us. That's keeping the process held up, but it really is. A few. Bring everything we asked for at the beginning. We can get you a pre approval very quickly. 

Carol: All right. One thing I'll say for HAPO is that we have local underwriters, we have local processors, we have local management.

So it's really easy to get, not easy, but it's quick to get your application through and pre approved. So it's very efficient, the, the process that we have down. So, 

Scott: All right. Well, ladies, thank you very much for coming and chatting with me on the podcast today. For those of you listening, if you want, we do have a the ability to schedule an appointment on hapo.

org. Go out there under the contact menu. I believe there is the ability to schedule an appointment. You can go take a look at all sorts of information on HAPO's website under loans in the mortgage section where you can find out some more about some of the products that are offered and then schedule yourself an appointment.

Come [00:49:00] in. Have the conversation with a loan officer, learn about what it is that you need to bring in. If you've got a plan, if you're thinking that you might be in the market soon, never hurts to come in and have that first conversation. Nothing says that you have to go any further than that. Learning all about what your situation is and what you can do and what your options are.

You'll be better set to make a quality financial decision. With your current situation. So until next time, this has been dollars and cents, HAPO community credit unions, financial literacy podcast till next time.