How Home Lending REALLY Works: Insider Secrets to Getting Approved | Real Estate Unfiltered Ep 4

Is the home lending process a mystery to you? It doesn't have to be.

In this episode of Real Estate Unfiltered, we're pulling back the curtain on the mortgage industry. We sit down with experts to break down exactly how home lending works behind the scenes, from the initial application to the final

"Approved" stamp.

If you've ever felt overwhelmed by hidden fees, confusing jargon, or the fear of being denied, this is the deep dive you've been waiting for. No gatekeeping, no fluff-just the unfiltered truth about getting the best deal on your home loan.

In this episode, we discuss:

•  The #1 mistake buyers make when applying for a loan.
•  How to avoid unnecessary headaches.
•  What is the market ACTUALLY doing.
•  Insider secrets to speed up your approval process.

Don't leave your biggest investment to chance. Watch now to take control of your financial future!

Transcript

SPEAKER_00 0:00

Let's be real. Most people have no idea how home lending works. Today we're going to set the record straight. This is Real Estate Unfiltered. How's it going, everyone? Welcome back. My name is Memo.

SPEAKER_04 0:16

Welcome. I'm Chris. And today we are with a very special guest, Brian from Direct Home Lending.

SPEAKER_02 0:22

Hi everyone. I'm Brian with Direct Home Lending. Uh, we've been around uh for about the past 20 years, and I'm the owner and operator.

SPEAKER_04 0:29

So where you're as we're in today, where do you see the rates as of maybe today? And where do you I mean obviously nobody has a has a crystal ball and knows exactly what's gonna happen, but what do you foresee maybe in the next two weeks, two months, or anything going down the line?

SPEAKER_02 0:43

Um, so we're in the middle of March, right? So obviously with uh war in the Middle East, um it's really gonna be driven by that news, right? What's happening with with oil, what's happening with the Strait of Hormuz, and our boats come in and out, or are they are they limited? So it's difficult to kind of judge the next couple weeks. It's really gonna be based on what's happening over there. Um in the long term, I think rates are still coming down. Uh I feel like they're gonna come down through 2027. Um, but in the short term, with what's happening in the Middle East, it's it's it's kind of volatile.

SPEAKER_04 1:15

Yeah, I'm kind of two questions on that. Like we when you mentioned oil. Do you think oil is one of the bigger factors in it that's um that's keeping the rates where they're at?

SPEAKER_02 1:23

Yeah, so so rates were headed down, right? Um beginning of the year was really good. We got to about a 30-year fix at around 5'6, 5'7 with no points, which is we haven't seen that in probably four years. Right. Um, and then obviously oil spikes. So when oil spikes, the cost of everything goes up, right? Because you know, every transportation cost, right? They put stuff on trucks, the trucks have to deliver, the cost is more expensive. So the market gets scared, they sell bonds, makes the rates go up because they feel like inflation is gonna kick up because the cost is going up for oil.

SPEAKER_04 1:58

Right. And we said the the rates did go up. Didn't you mention there's like right around six ish or six point one or something like that?

SPEAKER_02 2:03

Or yeah, rates today are probably uh 30-year fix with no points, probably around 6.125.

SPEAKER_04 2:09

So, yeah, they're not horrible.

SPEAKER_02 2:11

No, no, still still great rates. I mean, there was a point in 2023 we hit eight percent. Yeah, so when you're comparing it to where we were in 2023, it's phenomenal. If you compare it over you know the last 35 years, the average 30-year rate is I'm kind of going off of memory, but I would guess it's around 7.7 to 8%. So even historically, the rates are really good still.

SPEAKER_04 2:31

So then hypothetically, again, because nobody has a crystal ball after let's just say the oil prices come down the back in in the Middle East, everything gets kind of settled like over there. Yeah, when they rates do cut come down, I mean, realistically, uh how lower like do you think they'll go? I mean, obviously, I know it's spec speculation, but yeah.

SPEAKER_00 2:50

I would I would say let's like like let's think of the short term, right? What does this summer look like, in your opinion?

SPEAKER_02 2:57

It depends how long this war goes for. Um let's assume by summertime, you know, hopefully, God willing, the war is over. Right. Right. Um, now we go back to data, right? We go back to where's inflation, is it coming down, which it should, because that's where it was, it was headed down. Um, jobs were getting worse and worse, meaning people were more people were getting unemployed. Unfortunately, they were staying unemployed longer. That that helps rates stay down because it's more anything volatile usually will help rates come down, right? Because investors are going to invest in something more secure when it's a volatile environment. Um, so war being over, we should slowly come back down, right? Um, I thought at the beginning of the year, 30-year rates would probably by the end of the year be around 5.8. I was off because in February we're at 5.6, 5.7. It was way faster than I expected.

SPEAKER_03 3:46

Okay.

SPEAKER_02 3:47

Um, so assuming by summer the war's over, I think by the end of the year uh we'll be, you know, probably close to 5.6 again. Um by summer, hopefully 5.8. It just depends on obviously, you know, are we back to not fighting or what's happening?

SPEAKER_00 4:02

Yeah, it's always fun when an extra wrench gets thrown in the system that no one expected.

SPEAKER_04 4:06

Everything was going smoothly, then all of a sudden something happens. It also it always does. It's real estate, you know. Yeah, it's I mean in between those two price points, they have like you said 6.1 or 5.8 or something. Realistically, let's say we're like, we have a buyer. I mean, should they wait for that to go down, or what's that really gonna do to their monthly payment if they say, hey, I'm gonna wait to the 5.8.

SPEAKER_02 4:24

Yeah. So it's a good question. So, you know, we've all heard, you know, what is it?

SPEAKER_00 4:30

Uh Mary the House Gate the Rate. Yeah, I'm gonna go.

SPEAKER_02 4:33

We talked about that, I think, in our second episode. Yeah, yeah, but it sounds it sounds salesy, right? It sounds like I tell my client that they're like, oh, he just wants to sell a home or he just wants to do the mortgage. But I've been telling clients that since 2023, right? 2022. Look at where rates were, right? Rates have come down, even where they're at today, they're still lower than they were, and values are up. So if the client would have done it, they could have purchased the home cheaper because you can't go back, right? So a client buying a home in six months can't say, Well, can I have the price from two years ago? Because I thought about doing it then, right? You can always refi, rates will be coming down when the market gets back to normal, there's no war, you know, everything that was coming out of the White House, everything that was coming out of the Treasury Secretary, they were all aiming to help do things that are gonna lower rates. Yeah, they're putting someone that replaces the head of the Fed, uh, even though he's maybe not the most dovish person, he's still in interviews that I've seen, he's still trying to push where rates are now. He feels they're too high and he he wants to push them down. So everything's pushing the rates down the right direction. So 100%. This, you know, for the past four or five years, I've told everyone, you know, actually, if you talk to my family, I've told them since 2010, buy the home as fast as you can because you're gonna do nothing but pay more. Don't worry about the rate because you can always refi.

SPEAKER_04 5:52

And I'm sure you've come across a lot of people that did take your advice, they bought with the higher interest rate. So, right now, are you guys getting inundated with refines?

SPEAKER_02 6:00

Yeah, so so it slowed down a little bit, obviously, with the rate rate jumping a tiny bit, but um, as you know, it's refines are very sensitive to the rate, right? Uh, even today, though, there's people that you know bought in 2023, bought in part of 2024, and they're at eight, seven, high sixes. And if you're at a high six and I can get you down to six, one, and what we try to do on refinance, especially with our past clients, is we try to give them a lender credit to cover all their costs, okay, right? Because if I have a client, let's say they're at 6.8 and I can cover their costs and get them to 6.1, well, now they they saved a good amount of interest. They didn't incur any title and airscale fees because we help cover with the lender credit. And then as the market improves, and if I'm right, by the end of the year, we're at 5.7, 5.6 again. Now I can do another free loan for them, cover their closing costs with the lender credit, and lower the rate even more.

SPEAKER_00 6:50

So let me let me ask you this what is that threshold where you would say it makes sense to refi? Is it 1%, 12%, quarter percent? Like, where does it start making sense and where does it not?

SPEAKER_02 7:01

So so to me, there's no like there's no rate amount, right? Because if you have a million dollar loan, a quarter percent lowering of a million dollar loan is a much bigger hit to the payment than if you have a hundred thousand dollar loan.

SPEAKER_01 7:15

Yeah.

SPEAKER_02 7:15

So what I always tell my clients is look at the cost you're paying for the loan, right? And then look at the savings, right? So if I'm if you're saving 200 bucks but it's gonna cost you ten thousand dollars, well, is it worth it? You know, I don't know. Probably not. But if you're saving a hundred bucks and it's costing you zero, well, I'd rather put the hundred dollars in your pocket and in your family's pocket and put in your savings, then you keep giving it to the bank. So I'm more about the dollars you're saving, the dollars you're paying. Yeah.

SPEAKER_04 7:42

Is there any myths that maybe our our our viewers don't know that maybe for refi, like, yeah, I have to wait a year to refi, or I can only refi so many times in a year?

SPEAKER_02 7:52

So typically there's what's called an EPO. So normally what happens is if you do a loan for someone um and they refinance within a six-month period, um, we as as the uh direct lender have to pay the investor back everything they paid. So let's let's assume you know we charge the point. So on a $500,000 loan, a point is $5,000. And then I was trying to help that client. So I gave them $3,000 of that money or $2,000 of that money to help pay their fees. So I made $2,000 or $3,000, they got two or three thousand, right? When that EPO happens, I not only have to pay back what I made, I have to pay back what I paid them. Oh wow. So basically you're losing total. Yeah, you're losing. So normally what I usually tell my clients is, you know, we'll we'll help you with the refinance, we'll cover your closing costs, but typically we we can't close within a six-month window.

SPEAKER_00 8:44

Okay. So so and I and I've heard that a lot, but or what I hear a lot too, or what you hear from clients that, hey, my lender said I can't uh refi for six months. Like it's illegal, like you can't do it. But that's what people don't realize. It's it's not illegal, it's just they're not gonna tell you the truth because they don't want to get hit with the fee on the back end.

SPEAKER_02 9:01

And I and I'm pretty up front, like there's no point in lying to people. It's there's nothing illegal about it. It's just hey, like we all work, right? I did this business because I honestly love helping people. I used to be in the fitness industry, you can't really tell right now. But it's just it's the camera. So I so I used to be in the fitness industry, and I I did that because it's just the reward of seeing people get healthier. Um, I have always liked finance. I I studied finance. Um, so that's kind of what led me to this. Um, but no, for sure. I lost my train of thought a little bit on that one. But um ask your question because I totally lost my train of thought.

SPEAKER_00 9:42

What was the question? What was the question? Um no, about so the like the EPO you're saying about the $5,000.

SPEAKER_02 9:50

So I I'm pretty up front with it.

SPEAKER_00 9:51

Yeah.

SPEAKER_02 9:52

Right? Like I work, I make money, and I'm helping in you know in business, the best thing to do. Compared to the pricing, I'm gonna give you the best deal, but I'm also gonna be honest to say, look, you know, you have to hold it for for six months, right? Let's say the rates plummet. I usually tell my clients because we can do a longer lock. Like, let's say I do a loan, and in three months, the rates just for some reason plummet. And my clients are calling me saying, hey, like I want to do a loan. I can do a 90-day lock, lock the rate for three months, so they don't lose the deal, but we're still closing it outside of the six months. So it's also fair to us as people that work for a living, and obviously, you know, you have to pay bills and feed your family. Still a win-win. Yeah, everyone wins. And honestly, uh, it's worked great. I have clients now that call me and they're like, hey, someone else called that once this gave me rates, but I know you helped us last time, but you were gonna give us a lender credit. You know, I loved working with you. So, you know, it's it's that's also rewarding, right? So as long as you take care of them and you're honest with clients, they're gonna reciprocate.

SPEAKER_04 10:49

And probably waiting the full six months is gonna benefit them in the long run, like anyway, because that's gonna give more time for everything to settle down, and the rates are probably gonna go down for sure, especially especially today. Yeah, so don't do multiple refines, let's wait it out and see where see where it goes and then do a big one.

SPEAKER_00 11:03

Yeah. So sorry with with the rates, obviously, it's it is what it is. It's it's a volatile market, and and I'm buyers always say, Oh, I'm gonna shop the rates around and everything like that. For the most part, rates are what rates are. The differences are either which lender's giving kind of cutbacks more to bring the rate a little lower on that kind of sense, or credits back type of thing, because that's what could change the rates, right? For the most part.

SPEAKER_02 11:25

Yeah, so so you know, lender by lender, uh you know, broker or you know, a large institution like a B of A or someone like that, rates will change, credits will change, right? Um, I always tell clients, look, one, you want to feel people work with people they like. Yeah, you want to feel the person's honest, you want to feel that they're trying to take care of you, you want to feel they're knowledgeable, right? And usually most people can talk to someone for five, 10 minutes and figure out, okay, they know what they're talking about, they're really genuine about trying to help me or not. Or they're just bullshit. Yeah, and I'm trying to get though. You know, having the lowest rates is great, but it's still you still want to take care of the client, you still want to service the client because I, you know, I for example, I have some investors sometimes that'll have a quarter percent better rate, but I know if I take them there, the client's gonna have a terrible experience because their process and their underwriting is just horrendous, right? So usually I'll just be honest with the client, but like, look, here's here's where I would go, here's what the rate is. If you go here, I can get you a better deal. But here's what you're gonna go through. You really want that experience, right? And then I'll I'll let them decide. Um, but you know, I try to be as upfront as I can. We should all do that in this industry, and and and uh but but yeah, it's it's it's uh it'll change a little bit, you know, and in big institutions, for example, let's say you're working, and I don't want to name on all this, just assume you're working with a big institution. The reason typically like a broker's pricing is gonna be better or or a small direct lender is gonna be better is overhead, right? So if you're working with a big institution, the person that's sitting across the table from you has to get paid. They have a uh assistant manager in the in the store, they have a manager, they have a uh district manager, they have a regional, a VP. Every single person gets a chunk of that money. So that's why 100% of the time working with a broker or a small, like a direct lender, they're priced way better than what you're ever gonna get at a big institution because you're paying for all those people.

SPEAKER_00 13:22

Yeah. So it makes sense. Um, all right. So let's let's kind of reverse back a little bit. Let's let's kind of dumb it down. Walk us through like a normal bringing you a buyer as agents. Where do we start? Because everyone always has the conversation with us like, hey, I want to buy a house, I don't know what I qualify for, I have bad credit, whatever the case might be, but they just don't know where to start.

SPEAKER_04 13:43

I don't have 20% down, I don't have the money.

SPEAKER_00 13:45

Because and that's a big myth too, and we get it a lot where everyone automatically assumes I need 20% down to buy a house. So we know that's obviously not the case, but let's talk about just we bring you a buyer, hey Brian, they want to buy a house. Where do you start from here? What's your process? What do they need to go through?

SPEAKER_02 14:01

So normally I I the agents I work with, I tell them, hey, put us on either let's do a call entry call together or put us on like a three-way like text, right? So everyone knows what's happening. Um, normally the first call to the to the client is just getting to know what they're trying to do, right? What what their goals are, what their outlook is for their family, for themselves, like how long did they see themselves staying in this property? Is it a first step and then they're gonna want to go to something bigger, like kind of what they're trying to do, right? And then kind of I'll sit down with them and go through, you know, what the process looks like, right, from beginning to end. Uh, because a lot of first-time buyers, and I remember myself, you know, it's exciting, but it's also scary. Oh, yeah, they're all stressful, and you don't know what's coming because you've never done it. So the more we can tell them, hey, here's exactly what happened from A to Z at the end, the easier it is, and the process becomes more comfortable for them. So the first call is really getting to know them and them really getting to know us, right? As a company and as as an LO. Um, and then the second call is usually we've done their application already. We've already kind of ran through what they qualify for, what programs they qualify for, and then really tied into what their goal is. Like how long do they see themselves living there, what you know, what what they're trying to do with the property. Um, and then on that call, it's either in person or we'll do it on a Zoom usually. Um, we'll kind of go over the programs they qualify for, what the payment looks like, what the cost estimates are gonna look like that they're gonna they need to expect. Because a lot of people think, hey, my down payment is this much, I'm good. But they forget about you know title fees and escort fees, and you got to pay you a full year of insurance when you buy a home and all the other fees that come come with purchasing a property.

SPEAKER_00 15:39

Yeah, so it's not just it's not just the down payment. I mean, obviously, there's we're able to, as agents, get them seller credits, that'll cover it lender credits, whatever, but it's not just the down payment.

SPEAKER_04 15:48

Right. And I think a lot of lenders out there too, like they will just say, okay, here's what you're approved for, here's your pre-approval letter. Right. It sounds like you actually go the extra step and say, Okay, here's multiple different loan programs that you qualify for. They might be a little different in payment and this and that, but then you kind of sit down with them and help them pick which one's best for their family.

SPEAKER_02 16:06

Yeah, I mean, we you right, exactly. Part of that also is uh, so what happens when our loan closes with us? Um, they the client goes into a system that on a daily basis is checking the market against their particular loan. So let's say they have a 30-year fix. So that system is it's an AI, it's automatically checking rates every day. As soon as the rates are a quarter percent lower than what they have, and we can cover their cost, the system will actually notify the LOs, right? So part of what we cover for them is that hey, you know, don't look at us as a we're gonna help you buy this home and then we're gonna say see you later, right? Um, my goal is to, you know, you have an investment person to help you grow your money. My thought is, hey, I'm the person that's gonna help you reduce as much debt as possible.

SPEAKER_04 16:50

And that's something cool that they don't have to watch the market, they don't have to say, Oh, it just dropped up, it's time for for me to call Brian back. That's something that you're already doing for them, like on the back end.

SPEAKER_02 16:58

Yep. And it's all automated. So, because I there's no way we can keep up as an individual and check everyone. So it makes it, you know, they can feel comfortable getting it to the loan they have, and this is where that should I buy now or later comes in. They can buy now and know that as the rates drop, they're gonna get notified right away.

SPEAKER_04 17:13

So, so kind of like when you do sit down with them and you give them like the different programs, and there's FHA conventional VA. Yeah. Can you kind of like touch what are those different programs and how can one benefit more than the other?

SPEAKER_02 17:24

So so there's not one program better than the other. Okay. Right. Um, I always tell clients like it just based on your needs and what your goals are, there's a program that's gonna be best suited for that. Um, obviously, VAs are our veterans, um uh 100% financing. Um, if if they're if they have a 10% more disability, their funding fee that VA charges is waived. It's probably one of the best loans, and I I love VA loans. It's one of the So do I.

SPEAKER_04 17:50

I don't know why a lot of listing agents frown upon them. I don't get it either. They want that person to get into the house and they will work with you. I mean, that's why they have the the tide water so you can just you know fight the the appraisal, but they actually want their VAT. They want the veterans in the bottom in the house, so they're the most easiest to work with, uh like I feel.

SPEAKER_02 18:08

Yeah, they're the most lenient on debt to income ratios, which is how we kind of qualify everyone. Um, they have the some of the best rates in the market, way better than conventional rates. Um, I mean, there's no other 100% financing with no mortgage insurance.

SPEAKER_01 18:20

Yeah, right.

SPEAKER_02 18:21

I mean, it's it's by far the first question I always ask clients are you a veteran? Right? One to thank them, and secondly to because that's the angle I'm gonna take because it's the best thing for them if they could qualify.

SPEAKER_04 18:32

Kind of like a follow-up question on the VA that probably people a lot don't know. Can they have two VA loans at one time?

SPEAKER_02 18:38

They can. It's it's a little tougher, especially in California, it depends on home prices. Um, but uh uh person can have a VA loan, then purchase another home, rent that V home out that still has a VA loan if they have enough left on their on their eligibility. Gotcha. Okay.

unknown 18:54

Cool.

SPEAKER_00 18:55

So so talking about that real quick too, like how does that eligibility work? Like what's the the number just based on how long they've been in the service type of thing, they get a X dollar amount that they're able to utilize, or how does that work?

SPEAKER_02 19:06

So so honestly, I don't I don't know 100% how that works. Um they can they don't have to be in the military, they can be in reserves too. Yeah, um, but normally what we'll do is we'll just uh the eligibility we just request it basically. Right. And it'll tell us if they've used it before, if they haven't used it, if they're eligible, or that if or they use their full one on a different problem. So VA just says okay, this is the give us a like a certificate that basically lets us know if it's available or not, and then it tells us based on a calculation how much of it is available, right? If they've already used part of it. Um, but yeah, probably the best loan in the market. Um, FHA is great. Um funny story. My first loan when I I bought my first home, I say 22, my wife says 24. So she's probably right. She's probably right. She's probably right. But it was a now that looking back, because at that time I was in the gym business. I had no clue what I was doing in the more for the mortgage. Um, but it was the FHA loan that I did. Um, I thought it was the best thing ever. I put down like three and a half percent. I remember it closed, I got a check back, and I'm like, I just made money like buying a home. This is the same thing. I was like, I still remember that. I was like the feeling I had was like amazing. Um, so uh FHA is a great loan too. It just depends on the scenario, right? FHA is good for someone that wants to put a little bit of money down, maybe has a little bit lower FICA score, um, maybe a higher debt to income because FHA will let you go a little bit higher than conventional loans. Um and then your conventional loans, you can put down 3%. Like again, you're right. Uh majority of the public, and I do I've done multiple videos on this because majority of the public think I have to have 20%. I gotta sit here and wait and rent.

SPEAKER_04 20:51

You get that all the time. Yep.

SPEAKER_02 20:52

Um, well, when you rent, you're paying 100% interest. Yeah, you're getting no write-off when you do your taxes, you're getting no appreciation because you don't own the property. Like the sooner they can get in, the better for sure. Um, but conventional is great too. 3% down for a first-time homebuyer, um, 5% if you're not a first-time home buyer. This is owner-occupied. I mean, you know, there's so many, you know, I don't want to put everyone to death. Yeah, but no, unless there's a lot of cat, there's a lot of things to it.

SPEAKER_00 21:18

But yeah, and that's why the first call is always kind of getting to know the client, their goals, what they've done in the past, you know, kind of so let me ask this with that with that first uh intro call or whatever, what can a buyer expect to need to provide to you to start the process?

SPEAKER_02 21:34

Um so on the initial call, it's really just talking to them, right? But I do tell them like if they're self employed, um, typically we'll need tax returns. Um if they're W two, we'll need W two and pay stubs. Um obviously bank statements for wherever their assets are coming from for the down payment or the or the cost. Um and those are things that we'll collect after the first call so we can prepare for the second call. Um, but really, the the initial stuff, and this is the difference, I'm sure you guys are gonna ask pre-approval, right? Pre-approval.

SPEAKER_04 22:07

Pre-approval, pre-qualification.

SPEAKER_02 22:08

Um, so for those people out there, do not do a pre-quall. A pre-quall means I just picked up the phone, you told me a story about where you're at, and I said, Great, you're good. Here's how much you qualify for because I saw none of your income. I didn't look at your credit, I didn't really dissect, can you really qualify for this? Um, a pre-approval is we've looked at your your credit, not only the score, but we've looked at your liabilities. And do you have any derogs and do you have any charge-offs? And we've looked at your income, we've looked at your assets, and we've actually ran in the most cases. Um, and this is one of the great differences. Like I know there's other companies doing it too, it's not just us, but we can do a fully underwritten pre-approval, yeah, which means not only did I look at it as DLO, but I actually sent it to my underwriter. They reviewed the income, they reviewed the assets, and they said, here you go, this is approved at this max dollar amount.

SPEAKER_04 23:00

And doing most of that work up front, yes, it's more work for for you, but it just makes it easier down the line. You can close quicker. Yes. And in sending those offers to the listing agent, I mean, that's what they want to work with as well. Right. So, yeah, doing the work up front, I think definitely benefits the buyer for sure.

SPEAKER_00 23:15

And it gives us the opportunity as agents too, where if we do have that fully underwritten pre-approval, now we know, hey, we could close 14 to 17 days. If needed, yeah. If needed, we could lower contingencies. So it's making our offer stronger to that agent. Definitely. Because if it's a multiple offer situation, too, you come in with three, four other buyers and say, Hey, look, yeah, we have a loan, but we've fully ran through the process. We're able to go in, we could cut contingencies, remove them in in certain situations, whatever the case might be, but it just makes us look stronger. And it's because we did our homework, it's because we've done all that background work, versus, like you said, hey, how much do you make? Oh, you make a hundred grand a year, okay, and you have 500 in credit card. Okay, cool. You'll get it. Here you go. Go shopping.

SPEAKER_02 23:55

Yeah, I I tell I tell all my team, like, majority of work is done on the pre-approval. When the when the offering is accepted, like, I'm there's not much for me to do. Yeah, you can't. Right. Maybe I need an update to pay stuff because mine are a couple weeks old. I update. That's done. Everything else is finished. Like, if you if you're a good LO, the work is on the pre-approval, right? The rest of it is easy. Yeah. Because you already done all the work. You got it approved. You know where you're at. You just need to maybe update documents and you just shoot it through. Like that part's so simple.

SPEAKER_04 24:23

Like, I kind of want to go back to like the current market right now. Cause I know I think you guys probably see it first when the market does shift because the amount of applications, you know, rise and decrease. It's like, where are we at now? Are we these kind of stagnant? Are they dropped?

SPEAKER_02 24:37

I mean, it got really, you know, everyone got slammed in in uh like beginning of the year through like right before the war, right? Um, it slowed down a little bit, right? Uh, it's still good, still getting calls. Um, and you're right, we see it first, right? So consumers that already have a mortgage are the first ones that are gonna jump in and say, Oh, rates are down. I heard the news. Let me try to go get a refinance and lower my rate, right? The ones uh agents see it later because the person wanting to purchase a home is sitting back, they're like, start showing requests slow down.

SPEAKER_04 25:10

Yeah, they it's a ripple effect. You guys see it, and then we see it a couple weeks later.

SPEAKER_00 25:13

It's those buyers that aren't in a need to move. They know they want to move, but they don't need to move right this second. So they'll play the market, they're sitting over here on the fence. Yeah, um, and I mean that goes back to what we've talked about too with sellers and buyers, where you have all these buyers sitting on the fence. So if you're not making moves right now when people don't want to buy a house, yeah, and you wait for something to happen, all those buyers that are pre-approved, ready to go, they're gonna flood the market, and now you're competing with competing with everybody else again.

SPEAKER_04 25:38

Yeah, sure.

SPEAKER_00 25:39

I mean, it's the same thing that happened during COVID, right? Like, yeah, there was fifty, sixty thousand dollars over asking price, all that kind of stuff. Um, but even those people that bought something back then, they're sitting on a great part of equity. Yeah, and those people that were on the fence were like, okay, I'm waiting for something drastic to happen, and guess what? They're still over here.

SPEAKER_04 25:54

They date the rate mayor of the house sounded stupid, but it was actually true.

SPEAKER_02 25:58

Let me help the let me help all the viewers. Values are not coming down. No matter what you hear in the news, no matter who tries to sell some training to you about the biggest foreclosures, are not happening.

SPEAKER_04 26:10

Everybody has so much equity right now.

SPEAKER_02 26:12

We're at historical equity levels, right? Um in the last 85 years of home appreciation, depreciation, there's been only, I think, four or five years out of 85 that values came down. Three or four of them were because of the 2007 crash, right? Where housing caused it caused it, right? If you if you take that one-time event out, I think the largest depreciation we've ever had, which was one or two years in 85, was 1% or 0.1%. Sorry. So values will go up every single year. So you're either gonna pay more later or you're gonna pay less today. No, um, rates are gonna get better. You're you know, and I'm not trying to push anyone to do a loan or not. I just I've seen it for 20 years.

SPEAKER_04 26:59

Again, like you said, you just want to be honest with people that it is what it is.

SPEAKER_00 27:03

This is and it's the same thing going back to what you or what you were saying earlier with a three, four thousand dollar rental, it's a hundred percent. You're giving it to someone else, doesn't benefit you, whatever, other than a roof over your head, doesn't give you a write-off on your taxes. Where people that are making good money that are W-2'd and can't really write things off, they need a house. Yeah, they need that property tax write-off, they need the interest write-off, and that actually saves them money too. And I'm sure you go over that with them. It's like, hey, if you buy the house, sure, it's technically not, I mean, obviously not dollars in your pocket, but it it'll adjust your taxes at the end of the year for what you owe. For sure, for sure.

SPEAKER_02 27:34

It's you know, real estate is probably the number one wealth builder in the in the in the nation, right? It's it's it makes the most money for people, right? Like, look at like I was telling people in 2010 to buy buy a house. The homes are probably probably more than doubled. At least at least in California. They're more than doubled since 2010 at minimum, right? So imagine how much money that those people have that did buy in 2010, right? How much equity they've built by just paying down as they're banking the monthly payments, and how much appreciation they built. So 100%, like, and then again, that comes back to me feeling rewarded as personally. Like my favorite clients are like the young, you know, couple that's in their 30s that are like scared and they're buying because I know in 10, 20 years, they're gonna have so much equity if they just take care of their home that they're gonna be in such such their starter home, they're not gonna be in forever.

SPEAKER_00 28:29

Well, and that's the thing, too. And that's that's a conversation I have with a lot of buyers that are asking me. Everyone, especially or first-time home buyers specifically, they're always wanting that first-time home or first home is to be their perfect home. It needs that money.

SPEAKER_04 28:41

It's like this isn't your forever home. You're gonna be here for a handful of years.

SPEAKER_00 28:44

Like, you're either living in an apartment right now or somewhere smaller with your parents, like get into something. Yeah, I don't care if it's a condo. Call me in three years and we'll turn that into a rental. We'll build you your wealth from there, give that as an asset for you, and then buy something else. Your first home should never be everything you want. It should be like one thing. You can't afford it.

SPEAKER_02 29:02

You can't, you can't, you don't have the down payment for it. Like, buy my first home was a condo. Yeah, you know what I mean? Like, and I uh I was like, I'd rather do this than go pay rent.

SPEAKER_00 29:11

Yeah, you know what I mean.

SPEAKER_02 29:12

So it's and if I didn't have that, like I remember selling it. I'm like, then I got the check and I'm like, this is this is amazing. Yeah. Um, but no, no, for sure. Like your first home doesn't have to be your forever home. You're right. Yeah, um, it's just getting in.

SPEAKER_04 29:24

So I've just I think a quick question for our viewers what's something small and easy that they can do to boost their credit if they're kind of maybe on the low end and they just want to get it up a little bit.

SPEAKER_00 29:32

Is there something and you know everyone's on credit karma or those are never those are never accurate like here?

SPEAKER_02 29:39

So yeah, let's so let me let me kind of talk about a few. Sorry guys, I like talking a lot, but but um so regarding credit, um, what you pull on credit karma on any consumer credit pool, even car credit, is a different score than what you're gonna get on a mortgage pool. Uh the bureaus do not tell us how their calculation and why it's different because they don't want anybody to try to manipulate it, but it is always harder to get a higher score on a mortgage pool than anything else. So the first thing I think you guys, I don't know if you guys asked it or it just came up. The first thing I would always do is check your credit, right? How do you get, you know, what should you do at the very beginning, even when your thought is maybe in six months I want to buy a home, start paying down your revolving debt. Don't pay off your loans that are installment. What really helps you is, or one of the things that I help you the most is having the least amount of revolving debt, right? So what the bureau wants to see is hey, look, let me ask you something real quick.

SPEAKER_00 30:36

So you mentioned revolving installment. Explain those. What's the difference for people that don't know?

SPEAKER_02 30:39

So so revolving is like a credit card, right? Meaning I use it, I pay it, I can use it again. Yep. An installment is like a personal loan. Car payment or something. Yeah, car payment. I I I buy a, you know, I got a loan for $10,000 as I make my payments, I pay it down, but I can never use that money again, right? Where a credit card, as you pay it, it empties out, you can use it again.

SPEAKER_04 30:58

So for credit card, is it a myth that you don't want to pay it down to zero?

SPEAKER_02 31:02

So so typically you want to have like, you know, I I've heard different things. Usually the most I've heard is five to ten percent. Right. That's kind of ideally where they want to see you use it, but not need it, right? And that's really what they want to see. And the and the crazy part is like years back when I put someone's credit, it didn't show me their payment history. It just showed me what their balance is, how much they owe, what the normal, you know, what the payment is right now. Now, what the underwriters are seeing is your entire history of how you've paid, how many late you've used, right? Look at the balance going up and down on the credit card, and then how much are your monthly are you paying minimums? Because that's what they're looking for. Like, okay, are you increasing your balance and you can't afford to pay it off, so you're barely making your payment, right?

SPEAKER_04 31:46

Make sense, yeah.

SPEAKER_02 31:47

Um, so but easy way to fix your credit, start paying down your revolving credit cards, right? And your you know, Nordstrom cards or whatever, anything that's that is reusable, like a revolving, you pay those down, you're gonna get the best increase in in score.

SPEAKER_04 32:02

Okay, I think that's good advice.

SPEAKER_00 32:04

And um, so so talking about credit too, um, there's ways that you're able to get someone's score up quickly versus having to wait the 30 to 60 days.

SPEAKER_02 32:14

Yeah. So so that's the same thing. So what we can do is we can pull someone's credit, and it again comes back to revolving credit cards. If I can see that, okay, hey, you have you know $20,000 limit, you're using 10 of it. Well, if we pay five of it down, we we have systems we can run that'll tell us, okay, well, with a $5,000 usage, the score goes up 20 points. Um, and if they do that, basically what they'll do is they'll they'll pay down the credit card, they'll ask for a letter from the credit card company that says how much their new balance is. And we typically can rescore them within probably two to five days versus having to wait 30 days for the credit card to report.

SPEAKER_04 32:54

So that'd be something good for someone that's selling the house and then purchasing. Yeah. Because then because they're selling and then they can use that equity to pay off the those cards or whatever that they need to do. Yes. Then you do a quick rescore, and now they're pre-approved to buy it.

SPEAKER_02 33:07

A much better rate. You know, let me let me one other thing for credit cards. Um, I've this happens all the time. I call my client, I'm like, hey, you know, you said your credit card balances are zero, but you owe this much on the report. Go put money on it. And they're well, they're like, well, I paid off every so what happened is their credit card companies report once a month. And if you look at your state bent, it shows you when your when your cycle is, the monthly cycle. What you want to do is about four or five days before that date, pay your credit card. Because when they go to report now, four or five days later, it's got to report zero. What's happening with the clients that always tell me they pay, but there's a balance is they're paying it after that. So the credit card company is reporting the balance and then they're paying.

SPEAKER_00 33:46

And this all happens before it's due, too, because there's a statement cycle and then it's due the next 15th or whatever it is. So don't pay it after that because then it reports, it's before the statement closes.

SPEAKER_02 33:56

Yeah. And you'll see it on your and if you can't figure it out, just call the car company and say, hey, what's the date you guys are reporting? So you can pay and pay it a few days before.

SPEAKER_04 34:04

Oh, so kind of shift, like shifting gears here. Do you have any sort of horror stories that you might be able to share with us? Like uh some deals you might have saved, some crazy stuff that came up during the process. Basically, tell buyers what they shouldn't do. What not to do and how they can be saved.

SPEAKER_02 34:19

So from all the horror stories, now we give them a a like a uh a form that basically tells them all the do not do these things. Don't do any of these things. Don't do because we've gone through all of it.

SPEAKER_04 34:28

Oh yeah. People go out to the like, like you said, Nordstrom's and they'll get a credit card because they think that they're saving the 10%, and then all of a sudden, oh, I can't buy my house now for something so small like that.

SPEAKER_00 34:36

Or they go to Best Buy or Lowe's or Home Depot, like, oh, zero interest for 72 months on all the appliances that I need or all the couches I need.

SPEAKER_02 34:42

Yep, okay. I I've had all of it. So so investors can recheck credit at the end. Now they don't run a hard pull, right? But they can see if you've added liabilities, right? So I've had it all. I've had clients in the middle of a loan process unfortunately uh get separated. Okay. Right. I've had people like you know quit their jobs and try to go, you know, open their business in the middle of a loan. Yeah. All the things not to do. Um uh those are probably the worst ones, like where you your hands are tied, like I can't, there's not much I can do anymore.

SPEAKER_00 35:17

Yeah, well, and that was gonna be my question right now. So, like of those two, those are dead in the water.

SPEAKER_04 35:22

If you just quit your job, you don't have half income, so you're starting a business. It's kind of okay.

SPEAKER_00 35:26

Quick on that though, but there is a caveat on that, right? For which one? So if if someone quits their jobs and starts a new job, because I know the answer to this. So it depends.

SPEAKER_02 35:34

If it's in the same industry, so so so it depends. So are they quitting and now they're still W-2? Or are they quitting or are they self-employed? Because if you're self-employed, it's gonna change things because self-employed, I don't know what your write-offs are gonna look like. I don't know what your expenses are. Yep, so majority of underwriters are gonna be that's a no-go. But now I quit my job and I went W-2. So if you go from self-employed to W-2, or you go from W2, you quit your job and you're still W-2. We can still make that work. Yep. Um, it just you know, I don't want to bore you guys to death on this one, but that can still work. So that doesn't end things. Um, trust me, we do not only us, even though sometimes clients don't feel that way, underwriters really want the loan to close. They're not trying not to close loans, you know, but they're very nitpicky, but yeah, but they're wise.

SPEAKER_04 36:20

They gotta do their job.

SPEAKER_02 36:21

At the end, you know, what everyone's got to understand is roughly 70 to 75 percent of all mortgages in the country get sold to Fannie or Freddie, right? So Fannie and Freddie put down their guidelines, and that's why every investor basically follows that because they want to be able to turn around and sell it to the biggest buyer in the in the country, right? It's when they need to liquid liquidate a little bit. So underwriters are really just following whatever Fannie says, and if if their loan isn't sellable, then obviously I I messed up, and now I can lose my job. So, you know, they're they're they're trying to save, make sure they don't lose their job. Yeah, exactly. Um, but um on a good note, so I'm not gonna take credit for this. This was an LO in my office, but it it's just recent and it's a good story. Um, we all have heard about the California Dream for All, right? Yep. On the f uh on the first run of it last year, um the LO's name is Anwar. Um he he got a call from a client that was approved for that program with someone else. And that program you guys just because you're approved, you don't get it, it's like a lottery. So they got lucky to get picked. And now they're getting from you know zero to up to 125,000 down payment, which is phenomenal. Well, the other lender pre-approved them, they got picked, so they're excited, and they just you know they came from a different country. Um so they didn't have two years' history here. Well, then that lender says, Well, sorry, you're yeah, you got the up to 125,000 to help you. Congratulations, but I didn't get to qualify, right? So somehow Amor got in got in touch with them. Um, and he went on and above. It was pretty phenomenal. Like he went and through the jobs they had in the country they came from to be able to show a two-year history of, hey, look, they were in school, then they worked, and this is in another country. And he had to prove this by documentation.

SPEAKER_04 38:12

And then might have been a different country, but it's the same type of thing. But it's work, right?

SPEAKER_02 38:15

That's what they want to see. Is and now look, they're here, they're working. So he tied it all together, they got their home, which was it was it was a great story. Like they were awesome.

SPEAKER_00 38:23

Like that so you're basically saying all lenders aren't created equal. For sure not.

SPEAKER_04 38:28

Just just like realtors, but for sure not. Yeah, I think on that note and that story, probably a good time to, you know, do you do you have any final thoughts that you would like to address?

SPEAKER_02 38:37

Or no, these guys are awesome, you guys. They uh not just because I work with them, but they they're awesome, awesome realtors. Um shameless plug. Shameless plug. Awesome LO2, by the way. Um no, I'm just kidding. But but no, no, no, but definitely like no matter who you do the loan with, um, if you're thinking about buying a home, don't sit on the sideline. I, you know, I've sit I've had family members that I've told since 2010 buy a property and they were like, well, no, I can't afford a house. I don't want to get a condo. They still don't own a property. The amount of money that that person has lost, I feel terrible that I didn't push them enough because they've lost so much money they could have for their family. So for sure, you know, your first home doesn't have to be a dream home, but buy something to start building wealth.

SPEAKER_04 39:23

Correct. Yep, and on that, but thank you again for watching. We look forward to seeing you guys next time.

SPEAKER_00 39:29

Subscribe, like, share, and Brian, we want to thank you for coming on. Thank you for being on you.

SPEAKER_04 39:34

Thank you so much. Appreciate it.

SPEAKER_00 39:35

Thanks, everyone.