Come To Find Out
Welcome to Come To Find Out- your resource for all things real estate. You can come here to find out about the current market, terms that you see and hear during a transaction, things to do and not to do when you're in contract. The show will also feature interviews with industry partners and leading experts to help you choose who you want on your home buying journey with you. The home buying, selling and investing process can be so overwhelming, so this guide is meant to make it just "whelming."
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Come To Find Out
You Can Shop Your Mortgage And Save More Than You Think
Think your mortgage rate is carved in stone? We open the black box and show how rates are actually built—by margins, overhead, and secondary market pricing—not just headlines about the Fed. Joining us is veteran loan expert Sean Morrow of Affinity Group Mortgage, who explains why two borrowers with similar profiles can see very different offers and how a hybrid lender model can unlock better pricing and faster closings.
We get tactical about closing costs, separating third-party charges you can’t change from Box A lender fees you absolutely can. Sean unpacks discount points and temporary buydowns with clear, practical math: how to find the breakeven, when a 2-1 buydown helps cash flow, and when the exact same dollars should go toward a permanent rate reduction. We also talk through the realities of underwriting—why sourcing large deposits matters, why missing “blank” bank statement pages still get flagged, and how agency rules from Fannie Mae, Freddie Mac, and Ginnie Mae drive documentation. If you’ve ever wondered why your loan officer keeps asking for one more item, this conversation will save you time and stress.
We dig into income nuance too. Variable pay like shift differentials and overtime looks great on a pay stub but can’t always support a 30-year commitment unless averaged correctly. That’s protection, not paperwork for paperwork’s sake. You’ll hear when builder incentives are a smart, obvious win and when outside financing with tighter margins beats the shiny teaser. We wrap with a smarter way to shop rates without hurting your credit, the questions to ask about compensation and Box A, and how to start with a monthly payment you can live with before choosing your product.
If this helped you see the mortgage process with fresh eyes, follow the show, share it with a friend who’s house hunting, and leave a quick review so more buyers find these insights.
Sarah Thress
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First Time Home Buyer course: https://sarahthress.graphy.com/
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Hi, and welcome to this week's episode of Come to Find Out. This week we are joined by Sean Morrow with Affinity Group. And I just recently met him at a collaborative divorce luncheon. Because as a lot of you know, I specialize in divorce real estate and also first-time home buyers. And Sean and I got to talking last week and you know he brought up a really interesting thing that I had never even known about interest rates and closing costs and how those are all negotiable. And so I thought, oh my gosh, if I am, you know, just learning this, there's so many people out there that would love to learn this as well. So Sean graciously agreed to come on and record a podcast episode and uh explain all of that because he'll do it way better than I will. So Sean, thank you so much for joining us today.
SPEAKER_01:Thank you, sir. And I appreciate the opportunity. And I think I begged him about coming on more than you asked me to, I think. But anyway.
SPEAKER_04:No, you're great. You're great. I love it. Um, but yeah, like I said, you know, when we talked last week, you just had all of these amazing things to share. And I thought, oh my gosh, like other people need to know this. So uh I'll let you kind of jump in and and explain to everyone. I don't want to take any of your thunder away.
SPEAKER_01:No, that's okay. I appreciate it. You know, and it it's funny because um when we a lot of people they know the the mortgage industry, right? They it's but but what's funny about it is it's it's a little bit different than what most people think. Interest rates are you know obviously controlled by you know the economy, right? But when we hear about Fed rates, the Fed rate is being cut, that kind of thing, that has no immediate direct impact on the mortgage interest rates. It has an effect on the market, which then affects our interest rates. But before that, I kind of wanted to explain exactly what the mortgage industry is. And uh everybody's like oh rolling their eyes right now, going, oh my God, this is gonna be terrible. But it's hard to like make mortgage funds. So I'll just try to kind of put it to a relate it to other businesses. So if anybody's ever heard of Fannie Mae, Freddie Mack, and Jenny May, those are the three government service agencies. They're controlled, they're not run, but they're overseen by the government. And that's where all the money comes from, you know, unless it's a portfolio loan, which is a little bit different. And if anybody cares about that, I'll explain that. But for the most part, all the money comes from those three entities. And what happens is that the big banks will say, okay, I'm gonna deliver to you$100 million worth of loans in November, and I want a better rate than what's happening on the street. And then you got a guy that delivers a million, he's not gonna have a uh as as good of a rate there because he can't deliver as much. What the banks do is they'll they'll bundle all their services from all the different companies out there, they'll they'll put all their they'll gather all those mortgage loans and then they'll sell it to Fannie Mae. That's why they can offer a better rate. But look at it this way the mortgage interest rate is like any other widget that any other industry has, okay? So just like if you produce a ball of some sort, you know, there's a cost to produce it, and then they have a margin, just like any business. So view the interest rate as like the product, and then the company that's working with you, the originator, has a margin that he has to work off of, because obviously we're in business to make money. Um, but some of those margins are significantly different than some of the other ones. And I'll explain. So just like any assembly line you have, if you have a thousand workers, you have to pay all thousand of those. Those margins are going to come a little higher, right? So, big mortgage banks, if they have an opener for a file, when uh they have a processor, they have a closer, they have, you know, somebody that orders the appraisal, there's somebody to disclose. They have five or six people that are in the middle of a file, which is fine because it's efficient. Typically, those margins are higher, all right? And so when the margins are higher, the rates are higher. Okay. So what you should be looking for as a consumer or as a real estate agent is someone that has a little bit more control over those. And you know, I'm not necessarily saying that all mortgage banks are like this, they're not. Um, but brokers or hybrid, which is what affinity group mortgage is, is we have we can be a lender or we can be a broker. So the reason why that's good is because we can go to those big banks that said to Fannie Mae, hey, I'm gonna deliver you a hundred or a billion dollars worth of mortgages in the fourth quarter of 2025. We can take advantage of those rates from Fannie Mae that way. So I guess the bottom line for me, you know, what I was trying to get across is that typically mortgage rates, because there's a margin, there's no hard cost, or there is a hard cost, but there's no set hard costs, are typically negotiable. And a lot of people don't think that. So if you've got a realtor or a buyer or a borrower, buyer um that's thinking they can get a better rate and they're currently with a mortgage, they're their mortgage guy, and the rate's a little bit higher than what they thought it should be. That's the question. Look, I'm seeing you know, six and five eighths, and you've got me at 6.875, you know, can you can you do anything? They may be able to or they may not be able to, but typically the smaller the companies, the less overhead, the better the rates are gonna be. Not always. You know, Rocket, for instance, you know, that's our big competition. Rocket has great rates, but it's an assembly line. So you don't always know who you're gonna get. So when I say go go for the lowest rate, you also have to make sure that that company has the ability to get things closed on time. Because as an agent, you know that missing the closing dates and no-no.
SPEAKER_04:Yes, yeah, no, absolutely. And um, you know, uh the other thing to look at is uh, you know, with some of the the larger uh companies they may have, you know, one person that uh they get they get a bonus based on, hey, you filled out the application, cool, here's your bonus. And then, you know, and like the person that that got you to fill it out gets the bonus. And then if that person then gets you to move to the next step, they get a bonus. If they go to the next step, they get a bonus. Those people don't always have your best interest in mind because all they're trying to do is make that money. So you also want to make sure that whenever you're talking with your lender, you're you know, you're finding out like, uh, you know, you can ask, like, how do you get paid? Do you get paid based on you know us closing or do you get an incentive every time I, you know, click a button for you? Um because that can also make a difference between feeling like a number and feeling like a person that's truly, you know, trying to buy something and fully supported by someone that truly cares about your well-being versus just checking a box and having you check a box so that they get a little bonus. Um, so you know, I think those are those are other big things to, you know, kind of look at whenever you're shopping around.
SPEAKER_01:Huge things. You know, like one one one key indicator is when I when I first talk to a client, I will walk them through the process, but then I always start with what payment are you comfortable with? And you know, and I go in this, you know, because our industry has based everything off of gross income. Well, gross income is awesome, but you know, you have taxes, you have federal, state, local, you have all you know, benefits come out. So let's say you make$2,000 a week. Well, you might, or you know, you might only bring home a thousand or you know, something close. But the banks all do all of their qualifying off of their gross income. So that's significantly different. So what I always try to do is say, listen, what what what what payment are you truly comfortable with? And let's go through your budget to make sure. Because I do care because I think repeat business is something that's very difficult to get. But if you really if you're talking to your originator and he's not asking you more questions than telling you how great he is, then that's a problem. You know, yeah, that's someone that's looking for the commission and kind of he's the guy that you're talking to at a party that his eyes are wandering all around about hey, who's where's my next person I'm gonna go talk to? You know, you got to have a loan officer that looks you in the eye and says, Okay, how can I help you? And yeah, if you have somebody like that, then they're probably looking out for your best interest because most of us in the mortgage industry are commissioned. And I would have I'd say that the majority of the loan officers, probably 80% or more, and that is a statistic that just came into my head. So, you know, don't quote me on that, but are probably 100% commission based. Now, some of the banks will have salaries because they do other things, but um, for the most part, mortgage loan officers are 100% commissioned, so they are they are looking to get as much business as they can, but the good ones get that business because they care about their people and they get referrals from those people that they close. That's that, but yeah, to your point, if there's an assembly line and all it's going is okay, this is my job is to order the credit, and I get you know five basis points for doing that. And then I've got a that it goes to the next person, I order the appraisal, okay, I get a hundred dollar bonus for that. And then the processor, if he if they pro, you know, it goes down the line, and that does increase their overhead, which then translates increased margins. All right. That's that's how that that's how that kind of works.
SPEAKER_04:Yeah. Now, um, does that play into your closing cost fee? Because I feel like, you know, some uh some lenders that uh I've had um, you know, my buyers working with their closing costs are significantly less uh than others. Uh so is that another thing that's negotiable?
SPEAKER_01:Yes. So everything on a mortgage is negotiable with the exception of third-party fees. So credit report, because we're we're we're we deal with the monopoly right now. You know, you've got Equifax, Trans, uh, transunion experience, no other ones. So they set their prices and that's it. All right. So you have to pay it. Appraisers, you know, that's usually pretty across the board because what we've had to go to because of the laws back when it was the mortgage was wild, wild west and TRID. You know, we we have to hire uh management companies, um appraisal management companies. So they kind of control the prices, all right. And everybody wants to be, you know, competitive. So appraisers don't get out of hand. Those are the kinds of costs that we can't control. Title Company fees. It's a third-party fee. So whatever in central Ohio, it's a little bit different than some of the other areas because central Ohio is typically the seller or the seller's agent picks the title company because most consumers don't even know what a title company does. If you were if you were to, you know, if you were to go down the street and go, hey, what's a title company doing? I don't know. I have transferred titles. I mean, you know, it's like right.
SPEAKER_02:I don't know.
SPEAKER_01:I have no idea. You know, in fact, if you ask half the real estate population, they may not exactly know what they are, but that's a trust company, right? And what they do is they they handle all the money, they're the ones that move all the money around and make sure everything's filed. It's a very important um piece of the transaction. But most consumers, although entitled to pick a title company, they they don't. They just do what the realtor says or whatever the company is. Um, and I lost my train of thought about where I was going with that. But close, so some of the closing costs um are not negotiable. However, the lender fees are negotiable and they can range from zero money to 2,500 or whatever. Just you when when there's a lender estimate or on a closing disclosure, it's box A. Okay. Box A is what you want to look at, and those were all the lender fees are. And if the lender fees are seem high, they probably are. Um I wanted to tell talk about something else along with those lines. So closing costs are negotiable, rates are negotiable. But remember when we were talking about the margins, right? So the margins, you still have to have a margin. We can't give the business away, or everybody would be out of business, right? So you have to have some profitability on there. Well, interest rates, again, you know, you can buy an interest rate down by paying points. Okay, they're called bona fide discount points, meaning that, you know, if my margin's set here, all right, I can deliver this rate. But with one point, which is one percent of the mortgage amount, not the sales price, but the mortgage amount of amount you're mortgaging, um, can buy your rate down. You know, typically a good rule of thumb, it doesn't really hold true anymore, but historically, throughout my I've been in the mortgage business almost 40 years now, sadly. It just makes me old and you know, no, it just means you started at like 15. That's it. Yeah, 15. Okay, not exactly, but thank you.
SPEAKER_04:You were a prodigy.
SPEAKER_01:Yeah, I was. I was no, hardly. But so you could buy a rate down, it used to be one point would get you about a quarter better, okay? But see, uh and and a lot of times the loan officers will try to talk the borrowers into that. A lot of areas, that's typical. You pay a point, your your traits are a little bit lower. But all you have to do is the math. That's why I love what I do because math doesn't lie, it's all numbers. Does that point get you enough lower in an interest rate to make up the difference of what you're bringing to closing within the first year or two? If it does, then it might make sense. But if it doesn't, why put the money up out front so you don't need to? So those closing costs. So a lot of times I can offer zero lender fees in my in my box A because I have enough in the margin to cover it. Does that make sense? So I will because I want to make sure people come back. And that's the other thing. If somebody's short on closing costs, you know, it's it's difficult these days, right? I mean, you know, some people have just mountains of money sitting there that they can have put down, but other people, like normal people, you know, they're struggling to get three and a half percent. Well, okay, if you have three and a half or three percent, you can buy at home, but you may not have a lot for closing costs. Your lender can help you with that. So maybe if they have that, they have to meet their margin, but maybe they go a little above their margin and it doesn't raise the interest rate too much or raise the payment too much, then they'll be able to cover all your closing costs. So there are certain ways you can do it. That's why it's important for the loan officers to ask as many questions as you possibly can to understand the entire situation of the borrower.
SPEAKER_04:Yeah.
SPEAKER_01:You think I put everybody to sleep with that?
SPEAKER_04:No, no, I love that because I think that it's um, I just think it's it's knowledge, you know, knowledge is power. And I think, you know, not everybody, you deal with this all day, every day. And people that are listening are not dealing with it all day, every day. So I think it's it's nice to know, you know, because a lot of times people just think like, well, that's what it is, that's what I got a penning, okay, you know, and they think that all lenders are the same, you know, just like when I, you know, got into real estate, I thought all brokerages were the same. Like, you know, you just don't, you don't know what you don't know because you're not in it all day, every day.
SPEAKER_01:So it's well, so I think it used to be the person, the average person would move about every seven years. I think it's gone longer now. I think it's like the average person moves every 10 years. Well, if you do something one time every 10 years, you're not that you don't you can't remember everything. You know, so so if you don't do this on a regular basis, there's a lot of things you forget, right? So you have to have somebody you can trust. And I'm gonna give a shameless plug to my company if that's okay with you.
SPEAKER_04:But you should. I was gonna ask you because I know that you haven't always been with Affinity. Um, you know, I know you've uh kind of ventured off, but uh, you know, kind of came back. And uh, I'd love for you to kind of explain, you know, why did Affinity Group uh, you know, get you back and and what what makes it different from other lenders? So yeah, please do your channel's plug.
SPEAKER_01:Okay, thanks. I appreciate that very much. So Affinity Group Mortgage, I actually started it in 1996 with three other people. Um, and then the gentleman that owns it now, Stephen Scott, and uh his partner, Roger Teal, have kind of kept it going since 1996. Um, and Steve and I have remained friends, he's a great guy, so is Roger. Um, but what they've done, which I think is very unique, is they've really kept it to seasoned professionals that have been in the business 20 years or more. And it's kind of a boutique. So what we've done is we said, okay, you know, we've come a long way. And and Steve's like, we want you guys to have your own business. You know, you you know what kind of database management you need, you know how to process a file, you've been here. So I'm going to have you guys come to the company and you're on your own profit and loss. Now, because of the laws, that we have to get paid the same on every loan. But then what happens is after all of our expenses, we share in a in the cost center, right? So we have control of our costs and our rates. And I think it's vital that that you do because you know sometimes somebody comes to you and they want a million-dollar mortgage. Well, all right, if your margin is typically two and a half or two and three quarters or three and a quarter, I've seen I've seen much as four percent. You're okay. That just that you you don't need to make$40,000 on a million-dollar mortgage. You're not doing it any differently than you do a$100,000 mortgage, right? So, you know, you got to be able to go, I'll do that for a point or less, okay? Which we which we do because you have to be competitive, but you have to have the ability to do that. Okay. Yes. So, you know, it's like we you know, we don't need to make$40,000 on a loan. That's absurd. That's back, that's what got us into this trouble with all of those B and C lenders way back in the day when they would charge, they would make ridiculous amounts of money on every, but it's a that does not help the consumer. That's a negative for the consumer. So, you know, the trade laws were were were enacted to protect the consumer. And I think they are. But at affinity group, we only take seasoned veterans that know and understand the business and know, again, how to maintain a margin, a healthy margin, not an absorbent margin. But we also want to be very competitive because as as more information is out there on the you know the web, right? It's easy for people to look stuff up. So um we we want to be able to go ahead and go, okay, for the sophisticated borrower, they're gonna know what the rates are, right? So we just want to be low out of the shoot, just right out of the beginning. Just here's what our rate is. This is giving us a healthy profit, but it's not gouging the consumer because there's a lot of gouging that's going on out there, trust me. And and you don't know because they're big names and they've got you know their names on football stadiums and they do commercials and they do all kinds of stuff, but the rates are high. You know, I always I always do it this way. Um, I've worked for companies in the past that said, well, you know, you should be able to sell a quarter better on an interest rate, you know, if you're a good salesman. Well, I don't I'm not a salesman, I'm here to help people. And here's the thing so if you have two blue Honda cords, exact same specifications, right? Sitting right next to each other, same mileage, and one's a thousand dollars more than the other, well, why are you gonna buy the one that's a thousand dollars more? Because you like the salesman better. I mean, come on, that's you know, be real. They're gonna go for the best deal as long as it's it's equal, right? As long as it's you know, it's it's it's the same. So it's important for people to shop. But what we've done, what affinity group has been able to do is we only have two people in the whole organization that are even on a salary, so everybody else, including the owners, are 100% commissioned, and that has taken out the individual. So at Affinity Group, we fund our own loans, uh, with the exception of obviously the ones that we broker, but we go to about 15 different lending organizations, so big banks, and the ones that do the best. I'm I'm sorry. You're okay. The ones that have the best rates and have the easiest process are the ones that we send those loans to, or the ones that match up with the borrower, you know, as as as best that we can. So we can go to those same companies that the mortgage banks are going to and deliver it through our little brokerage or a little hybrid, you know, mortgage bank brokerage situation and just do it a lot more effectively and a lot less expensive.
SPEAKER_04:Yeah. Well, and you probably have uh shorter close times too, you know, because I find that the ones that have uh less people, you know, they've got a well-led machine, but it's less people having to touch it. You can close uh, you know, a loan in 14 days, 21 days, you know, something less than the 30 and a lot of the bigger, bigger box banks, or people that have multiple people that have to touch it, you know, in the scenario like only this person does this one thing and only one person does this one thing, you know, it tends to be closer to 30 days. And so right now, while being competitive in the market isn't really tied to how fast you can close. Um, like it was back in 2020 and 2021. Um, you know, if you couldn't close in 14 days, like people didn't want your your offer. And now it's a little less competitive, but it's also nice to know, you know, hey, if I'm, you know, going with you, we can close this in, you know, 21 days, 14 days, whatever. And then that means I get it into my house faster, which is, you know, always a good thing.
SPEAKER_01:So well, it's nice if you're in a competitive situation, which many of us are right now, right? When they're making an offer on a house and you say, I can close this in 21 days, and everybody else is at 30 or 45. But to your point, I'm glad you said that. I I felt I feel like I was typing you that question because it works perfectly. So the reason why we can close a lot quicker than most is because most big companies have uh service level agreements, you know. So what they have to do is, okay, a file comes to the desk. Okay, I bring a file in as a mortgage loan officer. The processor has 24 hours to view it, okay, and to start working on it. Well, I don't see I can actually start processing it immediately. Um, and I work with uh I work with a couple other people sometimes that will start processing it immediately, and we can turn it into underwriting right away. Whereas some of the other companies, they have so many people, they have 24 to 48 hours to look at the file to start processing it. Once they start, and that's after the opener sees it. So my file goes to the opener for some companies, and what they do is they set up the file, then with it, and that has to be within 24 hours, then it goes to a processor that's 24 to 48 hours from then to start looking at it and get it ready for underwriting. And then underwriting has another 24 to 48 hours, but in the meantime, these guys still have to perform functions on that. So it could be two weeks before an underwriter even looks at it. Whereas if you're you know, if you don't have that many people, I can turn my stuff into underwriting the same day I take the loan application and be done in two weeks. We've we've done it as, and I'm not advertising this as a regular thing, but you know, we've we've closed loans in seven days before. Um, yeah, everything has to work perfectly. The borrower had to have everything right in place and went right there, but it can be done. And then that's a property inspection waiver, meaning it's an appraisal waiver. So there's a lot of things in that, but honestly, it can be done. It can't be done by big companies, they just they're just not equipped to do it. So, and I'm not bashing the I'm not on, I'm not here bashing the big companies because there are some big companies that are very good. Um, but sometimes smaller is better.
SPEAKER_04:Yeah. Yeah, no, I totally agree. Uh, and to your point, uh, you know, just because the lender can close that quickly, it's also on the borrower because if they ask you for all of the documents, you have to make sure that you're getting them right away to them. Because any delay that you have in getting them the information they need is just gonna delay the lender on being able to process everything. Because, you know, we can't just willy-nilly hand out stuff. Because again, that's how we got into the situation back in like 08-09, where you know, it was like, oh, you have a pulse, great, here's$500,000. Go buy a house, have fun.
SPEAKER_01:That was literally how they did it. Yeah. Yeah. They called it the mirror test. If you could breathe and there was, you know, fog on the mirror, then you got a loan. Um thank you for saying that because it is 100%. If you're not working together, if the borrower and the loan officer aren't working together, it could take forever uh to close that loan. Just honestly, it's it's really kind of it's like, okay, I don't know how many more times I have to ask you for, you know, last year's W-2. Shouldn't be that hard. This is where you can get it. Just get it too, you know. If you if you're if you're a borrower and your loan officer's asking you for stubs because they really do need it, they're not doing it just for entertainment, you know, they just need it because the underwriter said. And some people, excuse me, some people question why the underwriters need it. So, uh can do you mind if I address that real quick?
SPEAKER_04:No, I'd love that because I get asked that sometimes too. They're like, well, why do they need my last three years of you know, taxes or why, you know, why do they need this? Why do they need that? So, yeah, I think that would be great.
SPEAKER_01:So remember when I was talking about the government agencies, Fannie Mae, Freddie Mac, and Jenny May, they all have their own guidelines. Okay. So, and and those guys go the book is like, you know, a thousand pages. Like there's all kinds of stuff for every scenario that you can think of. And in that, it says how you have to document certain situations that come in. And I'll give you examples, but um, and and if you hear people say, Hey, I have to run DU or LP on that, and that's desktop underwriter or loan prospector, um, and Jenny May actually takes either one, but it's a program where you put all the information in from the borrower uh about the transaction, and then it spits out, you know, are you approved eligible? Um, or you know, and if you're approved eligible, then it'll tell you exactly what documentation we need to use to document the file. The reason we do that is because then that file can be sold to Fannie Mae, Freddie Mac, or Jenny May. If you don't meet those guidelines, then it can't be. Okay, and then that's when this the mortgage lender starts to get into trouble. Because if we fund a loan that can't be purchased, and we have to buy it back, and that gets very, very expensive. So what happens is you have to make sure that everything's in there and documented, eyes are crossed, T or I's dotted, T's crossed. Um, and and I'll give you a perfect example. The only time you ever need three years' tax returns is if you're um doing a first-time home buyer program through OFA, because they require, because they want to make sure that you haven't owned a home in the last three years. That's the criteria for first-time homebuying. A lot of people don't know that. If you haven't owned a home in five years, you qualify for first-time home buyer money, which is huge. Again, you just have to make sure your loan officer knows what he's talking about, and you know, when when you're talking to him. Um, but for example, for example, uh, the Patriot Act has made us document where large sums of money come from. Okay.
SPEAKER_02:Yeah.
SPEAKER_01:Um, sometimes it seems ridiculous, but when you look at the reason behind it, you know, because when you know on 9-11 we were attacked, a lot of the money to finance that attack came in through real estate transactions and laundering it and doing, you know, the they come in, they pay cash for a house for a building, they refinance it, now that money's clean. Okay, so they want to know where you got the cash, is it legit? And if it's not, we can't use it for that transaction. So they say, okay, document where that$10,000 deposit came from a month ago, when typically your deposits are$1,000 to$2,000 uh a week or a month. Um, they do that so we're we're the the consumer is not laundering money. I know it sounds ludicrous, but it's really uh for a protection. It's not, it's not, it's not the consumer's not being penalized. We're trying to protect the country with that. So it gets annoying. Now, one thing that I, you know, that I think is ridiculous if you have your bank statements that says, you know, page 104, and page four has absolutely nothing on it, we still need it. No idea why, but we do need it. So I mean, you know, it is stuff like that that's kind of crazy. But and then when you send stuff in, there might be something on the bank statement that the underwriter is looking at that says, okay, well, I need to make sure that this isn't an ongoing monthly charge. So um, you need to address this. Well, people get irritated about it. No, it's not, but their job is to make sure that what you put into the computer, all that data is accurate, and that's what the underwriters are doing. So people are like, oh, underwriters. Well, they have their job is to make sure that everything that you're putting in there is accurate and verified. So sometimes the stuff that you give us adds to other questions, which is where the consumer gets upset. So it's important to have a loan officer that when when somebody's giving you a pre-approval letter, a lot of times they're not looking at the information up front. So make sure your loan officer that you're working with looks at all the documentation up front. Because I'll give you a perfect example. Nurses. Nurses are the hardest income to figure out because they have shift differentials. So, you know, one nurse may work every night of every weekend, right? Well, she's making a fortune or he's making a fortune. Um, and somebody else may work, you know, during the week, but during the summer. You know, they don't because now they're working all the weekend shifts. So how do you do that income? Well, they may say on their application, I make this amount of money. We may see it differently because, you know, because they may not have made that all year. So we have to use an income that is realistic, not what they're making that particular time of the year because it's higher than what they normally do. So that's a protection. Because if we qualify them on an income that's not maintained throughout the year, it's going to be harder for them to make the payments during the times that they're making less. Does that make sense? Anyway, no, you're fine.
SPEAKER_04:And I love that you pointed that out because, you know, a lot of times uh, you know, I'll be talking to people and they're like, well, I'm paying more than that in rent right now. You know, what do you mean I can't get, you know, qualified or why do I have to show all of this additional information? And, you know, and I always try and explain that it's the lender looking out for their best interest because, you know, good lenders uh like you are going to not be able to sleep at night if they know that they're just putting people in houses and, you know, they're not gonna be able to afford it, you know, if their shift differential goes away or if any of their overtime or whatever. So, you know, I think it is important to know that if, you know, if your lender's asking for additional things, it's for your protection. It's not for anything other than to make sure that you're gonna be comfortable, you're actually gonna be able to pay that mortgage, you know, year round and also still be able to live because none of us want you to be house poor and you know, just have you, you know, you can't go out to eat anymore, you can't go on any trips anymore because all your money is going to mortgage. So absolutely, yeah. To your point, it's you know, if they're asking for information, it's for their own good, it's not just just for funsies.
SPEAKER_01:Yeah, well, I mean, that's the thing. So back in the day, you know, like in the early 2000s, you couldn't have been in the business then, but um I was because I've been in the business. I started in the 80s, and I sold real estate for in 1986, was my first time I got licensed uh to sell real estate, and that really wasn't my thing. I I have the most respect for you guys, you know, driving people around and showing houses at all hours of the day and night. So thank you for that. But I that wasn't my cup of tea. Um I'm more of a numbers guy, but um, you know, it it and I forgot where I was going with that, but um back in the early 2000s, you literally had a loan where you could do what they call a three, two, one buy down, okay, and they would buy new homes. And this is what happened. This really made the this tank the economy. When you do a three, two, one buy down, that means that the interest rate that you have, okay, on a new home is let's just call it four percent. All right. At that time, you would qualify at four percent, okay? But then the next year, the rate would go to five percent, all right, which is a significant increase in monthly debt. Not only did on a new home, because we do taxes uh almost a year in the rears, when you have a new home, that first year you're only paying taxes on the lot. That second year now, the the the county that you live in has re-evaluated the the value of your home and are you're now paying taxes on the entire value of what you purchased. So that could be a five, four hundred dollar a month increase alone in your in your in your monthly payment. So not only did you go up a full percentage point in your rate, but you also went up significantly on your taxes. Well, that threw a lot of people out. You know, if you're on a fixed, if you're on a fixed income, fixed income being if you have a job, right? Let's say you're making$50,000 a year. It's great. Let's just make it easy math. Let's say it's$60,000 a year,$5,000 a month. Well, you know, you're bringing home maybe$3,500 a month out of that, maybe. Um if your payment goes up$500, that's over 10% of your take home. That's that's significant. That made a lot of people no longer be able to afford their house. And that's when all the foreclosure started because they were building everywhere and getting anybody in that they could. You know, we're there was one company that, and I'm not gonna say the name, they would allow us to give uh an investment for someone to buy an investment property. We could finance them at a hundred percent. All they had to do was tell us their income and tell us what their assets were. That was the only requirement, other than they had to have a 600 credit score or higher. Okay, that's ridiculous. I mean, I never did one of those loans. I just couldn't, I couldn't, I couldn't go to sleep at night, but it was available and a lot of people used it. The rates were outrageously high, and it was greedy on the bank's part because they knew nobody's gonna be able to do that. But that was what led to the whole meltdown, you know, that was part of it. There was a lot of other things involved, but that was a big part of it.
SPEAKER_04:Yeah. Well, and to your point, um, you know, there are a lot of uh there are a lot of new builds uh out there that are offering that, you know, two one buy down and all of that. And so I always just caution my people, just make sure, like ask what year three through 30 is gonna look like. And if you can afford that right now, then great. If you like don't get it because you can afford the year one right now and you're hoping, you know, that you're gonna get a promotion and then, you know, all of that. Like, don't don't base this on hopes and prayers, uh, you know, and you know, because yeah, of course you could go get a new job or you could lose your job. Like, you know, so it's just like let's make sure that, you know, you're looking at it from year three through 40. So, you know, I think that the the buy downs are a great incentive for people and that's a great deal for people as long as you can actually afford the year three through 40.
SPEAKER_01:So now I'm against some of the changes that were made because I think it doesn't, it it really doesn't help the mortgage industry. It's kind of like some of the people that made those changes weren't in the industry every day. But some of them, some of the changes were good. So on the buy downs, you have to have to actually qualify at the note rate. Okay. So you're your the buy down rate, you can't qualify that anymore. So if you're at four, five, and six, you qualify at six, you can't qualify at four. So the buy downs are good, uh, particularly if like, well, I can save some money because now I'm you know at four percent, I can save an extra five hundred dollars a month, you know, because you know my rent, it's less than my rent for the first two years. I can stop stock that money away, and then by year three, I can still afford it. I just now have savings. So there's a lot of reasons to use the two one buy down, yeah. Um, or any buy down for that matter. But a lot of times with the buy downs, if you were to do the math, you can use that same amount of money on the buy down just to buy your rate down permanently for the full 30 years because you're basically spending about two and a half points for a two-one buy down, I think something like that. Don't quote me on that, but something like that. And then you can use that money if you really want to use it just to buy the rate down permanently. I mean, again, it's all math. And if your loan officer is looking out for you, he'll give you the option and say, Well, if it were me, this is what I would do. And send because you're in this situation, so maybe maybe you don't start at four, but maybe, and again, these aren't actual numbers. I'm just throwing them out for simple math. But you know, you may be able to do the same thing and be at 5.125 for 30 years using the same amount of money as opposed to four, five, and six. Does that make sense?
SPEAKER_04:Yep.
SPEAKER_01:So there's a lot of things you can do.
SPEAKER_04:Yeah, exactly. And that's where I think that uh, you know, just making sure that uh anyone that's thinking about buying, you know, takes this to into consideration and you know, definitely just have that conversation with your lender and make sure that you know that you have all of your options and then figure out what makes the most sense because what makes the most sense for one person isn't for the next person, and that's okay. Like that's why there's so many options.
SPEAKER_01:Absolutely. And and and rates are all driven by, you know, I love it when somebody's like, Well, what's the rate today? Well, okay, there's about a thousand one of my one one of the loan officers I work with, her name's Amy Lewis, she's awesome, and she explained it this way, and I loved it. Your credit score is well, your interest rate's like a fingerprint because and everybody's different because it's down payment, it's reserves, it's your debt-to-income ratio, and your credit score, and a multitude of other factors, what what the rates are, and they can vary by a half a percent. I mean, it's significant. So somebody says, What's rate? I go, they think I'm avoiding the question because I don't know the answer. That's not it. I'm like, okay, well, you I got about 15 questions I have to ask you before I can even give you remotely uh an answer. But you know, I always try to give somebody a range. It could be, you know, today it could be anywhere from 6.375 to 7.375, just depending on where you are. People don't like that answer, but that's the actual fact. I don't know until I look under the hood, you know, what's the engine look like? I don't know. I got to see what it looks like. So that's that's thing. I did want to say one thing about builders. So when when when when the builder is offering like uh an incredible rate, most of the time, as a loan officer outside of that lender, uh outside of that builder, uh, we can't compete with it. And the reason is because the builders build a certain amount into the price of the home to keep their in-house financing competitive, like outrageously competitive a lot of times. It's okay because they don't give you, if you go to another mortgage company, they don't give you that money that they built in for on the sale of the house. They that's just more margin for them. So you gotta go, you gotta use their financing. I mean, any good loan officer will tell you 99% of the time, you gotta go with them because it might be 25 grand that they give you. That's significant. So take advantage of it, you know. And most most good loan officers will advise their clients to do it that way.
SPEAKER_04:Yeah, I love that.
SPEAKER_01:Yeah, I love that.
SPEAKER_00:It is what it is.
SPEAKER_04:Yeah, yeah. Well, thank you so much for taking time out of your day. I know you're super busy, but um, all of this information was so great. And I think, you know, bottom line is just, you know, just know that everything is negotiable and you know, ask your lender. It's okay to shop around. Um, you know, if you don't like what you're hearing, it's okay to talk to somebody else. Um, it's not the same, yeah, it's not the same as whenever you're shopping for a car and every car dealership you go to when they pull your credit, it dings your credit. You know, you have a short little window of time. Uh, you know, generally it's about 30 to 60 days, depending uh, you know, on who you ask. It's about 30 to 60 days that you can uh shop around. And even if every single one of them pulled your credit, it's not gonna ding it because this is such a large uh purchase that they assume, you know, the credit companies assume you're gonna shop around. And if people are they want you to. Yeah.
SPEAKER_00:Yeah. So they won't ding you. So yes.
SPEAKER_04:Yeah, I love that. Well, I will make sure that in the show notes we have ways for people to get uh a hold of you and uh learn more about Affinity Group. Um that way, you know, anyone that was listening that's like, oh my gosh, I have to work with Sean. Um get right in touch with you.
SPEAKER_01:Well, I appreciate that very much, and I appreciate the opportunity to come here. I hope I didn't bore everybody to death. But again, mortgage is hard to make exciting.
SPEAKER_04:So there's a lot of things about real estate you can't make exciting. The only exciting part is showing houses and you know the the sighting and closing.
SPEAKER_00:That's the fun part. But yeah.
SPEAKER_04:Yes, I love it. Well, thank you so much, and uh thank you so much for tuning in. We will see you next time on Come to Find Out.
SPEAKER_00:Thanks.