How To Avoid Paying Excessive Points On Your Mortgage Closing Costs

all right welcome everybody to the live stream today we're going to talk about different loan estimates so a loan estimate is a document that you get when you're shopping for a mortgage and you get under contract for a home so you found a home that you like you put in an offer and then your lender is going to give you a document called a loan estimate that's going to detail uh everything about your loan so the interest rate the monthly payment that you have along with The Upfront costs these are going to be the costs that the lender charges and also estimated cost for things like uh your homeowners insurance any taxes recording fees uh different things like that so what often happens when people are shopping um is they either talk with lenders who charge a lot of fees or they don't actually talk with enough lenders to see if they can get a good deal so here with me is Dan Frio um so I am on Dan's team um and Dan could you share a little bit uh kind of about your team and what we do and how we work so actually it's a kind of a unique situation I've been in the mortgage business for 30 January would be 34 years and I've always been a broker or on the lending side and what we recently did is we partnered with Allied First Bank to become federally chartered which that gives us the opportunity to be able to help people all over the country but there's more to it than just that the nice thing about Allied First Bank is we're also a kind of like a broker meaning we are established or we have an affiliation with over 84 of the country's largest banks and mortgage companies just think of it as lenders so that's basically what we do my team we have a whole staff of people so for example Kyle's on our team we have a support staff internally uh to answer any questions that you might have if you call in we have on-site processors and the whole bottle of Wax so we're here basically anywhere in the country that you might need assistance with the mortgage we would love to help yeah and so today what we're going to do is talk through loan estimates that our clients have actually sent in um so these are like real life examples we're not just like pulling up fake examples um we're going to walk through these alone estimates and I have uh one on screen here so this is what it looks like we're gonna walk through these explain what a loan estimate is um and then this is from a different mortgage company so we obviously blanked out a lot of personal information from the client and the company as well and what Dan is going to do is search through our list of over 80 lenders and see if we can beat these uh this rate along with the cost as well just to show you how we work uh when we actually shop with different lenders so let's first talk about uh the loan estimate here walk you through page one now the loan estimate looks the same no matter what lender you're working with this is a standardized document and so everything you see here is going to work with whatever lender you're looking at um I just heard a little beep and I'm not sure what that is oh it's a Spam message on WhatsApp great uh okay so on the loan estimate right up here in the top left one of the first things you're going to see is the purchase price so this is a 650 000 home in Portland Oregon also it's a 30-year loan it's a purchase it's a fixed rate loan meaning the interest rate does not change over the term of the loan and it's also conventional this person is putting 20 down making their loan amount five hundred and twenty thousand dollars now they're getting a 7.125 interest rate making their principal and interest payment thirty five hundred dollars per month okay so that's page one of the loan spent there's a bit more details in here but this is the main thing that we're concerned about where we're actually looking to compare different deals side by side also Drew and Joseph uh thank you for joining us if you have questions feel free to leave those in the chat here um so then what we want to do when we're looking at a loan estimate is looking at page two and this is going to have our closing cost details everything here in section B all the way through I and J these are going to be estimated okay everything in here your lender does not control these fees now they should be estimating them for you so that you have an accurate understanding of what your other costs are what your lender controls right here is section A which are the origination charges what's very common in here is to see various fees so things like an admin fee a processing fee an underwriting fee so we can see that listed here and then also its points now these are also called discount points the way this works is it's an upfront cost that you pay to lower the interest rate think of it kind of like prepaid interest the problem here is that a lot of lenders they want to show you a low rate because they don't want you working with somebody else so what they do is they charge points up front to give you a low rate you see the rate and you say wow that rate is better than maybe another lender but they charge you sixty three hundred dollars and you may not realize that you actually don't have to pay that much money to get a very similar rate so Dan are you ready yes sir cool could you walk us through um the software that you're using and how it Compares lender so we how we actually take a look at the scenario absolutely the system we called is called loan sifter so basically what it does is we put in your parameters into uh this this basically website that we have we have proprietary uh approval to use this system so what you're going to see on your screen is we put in all the data that you provide us on your loan estimate we put it into the system and now what it's going to do is it's going to scan the whole country the 80 84 85 lenders that we are set up with that we can work with their programs and everything else so here's all of those companies that are showing up and also what you're going to notice here is every one of these line items is a different lender okay so you're going to see here here's where the rates are you know the rate right here and Kyle's going to go over that in a minute with you how these all break down but you can just see look through here the rate and then the APR okay so that's what I kind of want you to focus in on a little bit but if you go down through again this is the same criteria for a borrower but these are different lenders that are that are popping up on our screen so obviously if you went to you know if you go down through here this section here means how much points you'd have to pay in closing costs or points like Kyle just went over and he's going to show that again but these are this is how far it goes down you can see how the differences in you'll see in the orange factors okay so when you break this down what you're looking at here is anything in green you actually get a rebate check back from us believe it or not so for example this client if they would have came to us they'd get the same rate it was rate seven and a quarter or seven and eight was uh 7.125 yeah that's what I thought it was okay so in here if you go with us we can get you a 7.125 rate and you would get a credit back of 556 instead of paying can you use 6400 400 in points now here's something else that you know Kyle would like to reflect on is if you want to spend that much money I don't know why you would but if you want to spend six thousand dollars then what kind of rate can you get so in our in our situation if you wanted to spend that six thousand dollars you can go all the way down through here and you can say okay right through here I can actually get a 6.625 rate if I want to spend that much money so we try to analyze for you and help you do this is what is your break-even point do you expect you know someone when you break these down the break-even points 10 15 years from now I would never do that if your break-even point is maybe a couple years from now that's when you might want to entertain this but basically I'm just trying to show you on how we scan the systems so I know there's companies out there like Lending Tree and other companies where you go in and you post all your data then all they do is they sell your data they're going to sell your data to 10 maybe 15 different mortgage companies so what you're going to have at that point is you're going to have all these companies calling you day in and day out everybody's going to promise you and quote you something but they're also going to need to look at your credit they're going to have to pull your credit scores they're going to have to do a lot of things where we can do this just on one you know one place shop for you guys so you're going to talk to one person you're going to have one credit pool and we're not going to send you your information to people all over the country so that's basically in its basic terms how all this works could you go back to that lender list for just a second yes sir there you go so and when people are talking about mortgage shopping absolutely still shop your mortgage whether it's with getting a quote from us and also a couple other companies but when you are shopping for a mortgage you know like Dan mentioned every line item here is a different mortgage company we just have to block it out just because of like contractual reasons we can't show who is on there but if you're going to shop a mortgage you would be calling various different companies like these and not really knowing which is the best one so this is why this software is really helpful for us unfortunately it's not available publicly but it's helpful for us to be able to go in one click and see what really is going to be the best Loan program the best rate for somebody in here um and could you click in on that uh first one yes sir um and then scroll down just a sec uh so in this example if we jump back here to the loan estimate um so we have basically two options that we could do here with this client and I will say too this is with a this client had an over 740 credit score um what we could do is either go with the same rate 7.125 percent with uh I think it was a 500 credit is that right is there 556 556 dollars back to you to pay help pay down your closing costs or the alternative is what was the lower rate with about 6600 in points six point I'm sorry 6.625 625 so you could still pay if you wanted to pay the sixty four hundred dollars in points you can still do that if you want to but instead of a 7.125 rate you can get a 6.625 percent interest rate okay um now Drew said how does this program deal with risk-based pricing uh this is conventional so risk-based pricing is built in it's a loan level price adjustment that's going to be factored into uh the interest rate already so I think I'm assuming that's what you're asking about um so now let's move on to the second one and if you guys have questions feel free to leave them in the uh in the chat you can stop in one section here's here's another thing to watch out for if if and when you get a loan estimate Kyle can you just scroll down just a little bit you can see right there at the bottom on the bottom of page one you're going to see where it says estimated closing costs eighteen thousand dollars that's one area you got to focus in on because with with a lot of lenders are going to try to do they're going to try to you know show you that lower rate but then they're all they're going to start manipulating some numbers so if you go to page two where Kyle is showing you all the numbers that are basically you know you're not shopping for I'm not shopping for with another trick that a lot of these companies do is they'll go in there for example you can see where it says your escrow initial escrow setup so if and when you buy a house what you do is you have the option you can escrow meaning you could put ad into your payments enough to cover your homeowner's insurance and your real estate taxes what do people do in here to make their quote look even better is they'll go in here for example on the homeowners insurance and they'll put in you see how on that estimate it says three months well if I go in there put one month well now I'm gonna now my quote looks better because my fees are lower and then you go down to the one that says property tax and it says four months well let's say if I just put one month in there again well so you could see how you can manipulate these other sections that we don't control but you can manipulate those numbers to make it look better when you're talking to the clients we like to be transparent we want you to see everything so that's why we're doing this video and we're trying to explain to you how all the numbers work in the areas that you really need to focus in on yeah and Drew you said I was asking about if this program you're using already knows a credit score for the rate yes this is priced with a 740 plus so uh this one and the other loan estimate the clients do have above is 740 and 740 is where the risk-based pricing tops out so anything better than a 740 doesn't give you anything better on on the interest rate um so if you if you pull up my screen again we can actually show them the interface page of all the CR all the data that we have to put in there's nothing on there you have to blank out yep so um Drew here's here's how this works all the information that's provided to us on the loan estimate we actually just plug in right here as you noticed we it gave us the purchase price the loan amount the only thing we didn't have is the credit score we just know these ones these because we are doing these loans and we pull the credit so this is where all the data goes into that we put and then what we do is hit the submit button and then it just launches out talk all those lenders were actually tied into their rate sheets with their companies and this does all the things so if you ever saw a rate sheet you'd be amazed because most rate sheets are about 16 pages long to be honest with you so it's really tedious time consuming you can make a lot of Errors so we use this system it's an automated system that automatically just calculates everything in there together it's recording the loan amounts the credit scores uh sometimes the deal we can give you the debt ratio it knows maybe if your state is different you see this one was in Oregon maybe if there's different rates for California versus Oregon that's will pick that up so it picks up everything that we need to know to be able to give you a valid quote back uh that was a great question yeah you said so you're saying that if the scorer was 6 45 that program would give the correct rate not the best rate for that score yeah wait not I can even do that if you want to if you want to see what those rates are I can actually do that real quick and you can see how that rate's probably going to go to eight Maybe let's see it here hold on yeah yeah it is Druid is the low level price adjustments for you LTB score property type yeah so it basically basically what that software does lone sifter pulls in all the rate sheets the lender submit the rate sheets to loan scepter loan sifter does all the manual work of plugging all of that in unless the mortgage company has its own like API which unfortunately not everyone does um does all that for us and then searches through to find the best rate and Drew's calling you out on your uh he said it's Oregon I I'm from like Pittsburgh area so I'm going to say words that might drive you crazy um cool let's go to the second uh Luna Smith here yes sir okay so this one is in Hillsboro North Carolina uh this is for whoa 583 680 um not certain why uh it's this purchase price my guess would be it's a new construction because when those new construction contracts come in they're bizarre so it's probably a new construction I forget this one uh verbatim but um I'm pretty I would be pretty sure that it's a it's a new construction loan that would be that would make sense um and then okay Drew said he was asking because uh if it was the best rate going Lending Tree would be the same um it's possible what I've found with a lot of the Lending Tree rates is that and again you have to understand the bias that like we work for a mortgage company so uh all of that being said the people who I've seen run into Lending Tree usually aren't able to find the rate that they saw online um however it's possible that you could run into a different scenario yeah you just remember Lending Tree and all those how they get you there it's marketing so they're going to publish the best possible rates at the day that they publish um and there's even times where I try to call them out because even in the past I've seen some of those I go to bankrate.com and LendingTree and see some of the rates that are posted and I'm like you know it'd be like me telling you well I got gas you know there's gas station down the street from my house selling gas for 1.99 you'd be like dude there's no way you know well well if you bought three pizzas a case of beer and four cartons of cigarettes you can get that with a car wash but you know so you gotta watch a lot of this is marketing so that's why we're trying to be able to provide you a One-Stop shop so you don't have you know you don't have to do all this shopping on your behalf we can do it and we're just trying to show you this is actually what we truly do on every file it's like a oh so many sirens going okay um so loan term on this one is 30-year purchase it is a fixed rate as well and conventional we probably need to get some loan estimates in here that are more throw in some like interesting government and different things like that uh so they picked five yeah next week they put five percent down uh so this is 500 554 496 uh dollars for their loan amount interest rate is six point nine nine percent uh monthly principal and interest three uh six eight five and if we take a look down here again we're not concerned about what's happening here in section b c or really anything else here when we're comparing lenders we really just want to look at section A because like Dan mentioned earlier these things are going to be the same no matter which lender you close with um with exception sometimes section B does change very slightly but it's very nominal uh so we don't want these different things to impact our decision we really want to look at the lender's cost which are section A so here they're getting a 6.99 interest rate four two points which is eleven thousand dollars now the origination fee here anything around the 1200 range for an underwriting fee a processing fee and origination fee is pretty common across most lenders so this I'm I'm not concerned about what is really high is eleven thousand dollars like this if we take a step back this is not going towards um like it's not a fee that's being charged it's to lower your rate to the 6.99 so that's where the shopping comes into play of saying is there a better option to get a 699 without paying eleven thousand dollars up front now one thing I do want before we look at uh some different lenders I want to mention is that one thing that can offset these section A fees are lender credits so for some reason the government had the brilliant idea to put lender credits all the way down in this section right there where you see lender credits we can see here it doesn't say anything but sometimes what will happen is a lender May charge points up here and offset it with a credit here in the bottom right and if that's the case we can take the section A minus the lender credits and that's going to give us our true section A cost or true lender fees when we're comparing lenders side by side here there are no lender credits this client is being charged 11 000 for a 6.99 um so Dan if you're ready we can go ahead and take a look at this oh you already have so here's you scroll down okay never mind yep I already scrolled it down so you can see there so you can see it's 6.99 that's the same rate that they were they were getting paying 11 000 you can see if you go all the way over to the right the last green tab you're going to see their last green numbers you're going to see is 1292 dollars we're actually giving you that back as a credit so you're they're charging you 11 000. we're giving you a thousand back so by just choosing or going with us on this program that client would have saved twelve thousand dollars in I won't even say interest in just fees because well let's see if rates go down you know a lot of it economists and Wall Street is expecting a recession in 2023 what normally happens in a recession that mortgage rates usually go down in the past five recessions we've seen mortgage rates drop 1.8 percent so if you spend eleven thousand dollars today to buy down that rate and then next year rates go down to five and a half and you refinance well basically all the money you just spent the eleven thousand dollars you just spent just poof it went nowhere because you didn't get the benefits that's what I was saying before we analyzed the break-even point the break-even point on this thing is probably years and years and years out so I would never advise that client to buy down or spend that much money buying down points and this really is what happens is like because if I know these were two different scenarios that we just compared but one was 7.125 and this one is 6.99 and what often will happen is let's say in the scenario it was one person looking at both of these loan estimates often people will go with the 6.99 and they'll say I got a much better rate well it's even slightly but they're like I'm in the sixes now so it's a better rate even though there was these upfront costs and they didn't really like you don't really realize how much that is until you actually have to pay the check uh right before that so in this scenario yeah it's either pay the eleven thousand dollars with that one lender or you can explore getting the 69 9 with a thirteen hundred dollar credit towards your closing costs so like damage it's like twelve thousand dollars cheaper up front or if you still wanted to pay the eleven thousand dollars some people want to pay The Upfront money to decrease their interest rate you could still go to a 6.25 uh percent and just for compliance purposes the rate is on the left the APR is one uh call them over we have the amount of points or credit if you can hover over that on the right one moreover and then also the monthly payment um as well the monthly payment is you can't see it via our heads but they're they're actually over under where our images are right now so I don't know if you can move our images to show the payments so you could see well you can see right through here the difference in the payment so if you were still to buy down that rate and go all the way down to the 6.25 your payment would be 3 414 versus the 3685. so you can see that there's not a huge there's a 200 250 270 savings okay so break that down it's it's saving you 270 dollars a month by paying 11 000 up front I would never suggest to a client to do that yeah and so one one quick thing too if you're already at this point and if you are interested in getting a quote and us doing this the same thing with your quote or loan estimate um you can just go to win the house you love.com slash compare and uh there's a place where you can securely upload a quote in there we'll do the same thing uh shop this around to multiple lenders and see if we can offer you a better rate if we can't then we're going to tell you got a better rate somewhere else but we ultimately just want you to get the best deal possible so I'm gonna put these quotes uh in a software I made called the loan Clarity advisor and what this does is compare these mortgages side by side so you can see true savings over a period of time so if we go to here it was a 583 680 purchase price 699 interest rate and 11 000 endpoints so I can go ahead and put that in here it's a conventional loan five percent down 30 years 6.99 and 11 000 in points 1200 in lender fee and they had 185 and mortgage insurance monthly first option if we go with our company which is Allied first I'm going to call this option one uh I'm actually for clarity Michael low rate conventional and Dan what would it be if we uh paid eleven thousand dollars in points what interest rate was that again 6.25 okay we can also match the mortgage insurance on this first low cost and so you can see how when when you are talking with a mortgage advisor like somebody on our team there's different options that we can take a look at it's not just here's one rate here's one quote good luck we hope you can pay the eleven thousand dollars just in points we can take a look at either going with a really low rate or going with low cost it really just depends on what's going to work well for you so this option was I think we set a 1300 credit out of 699 yep you put 133 . oh you're right credit yep okay so over 30 years going with the low rate option obviously is going to be the best having a lower rate over a long period of time is the best option this would save you ninety nine thousand dollars in just loan costs if we take a look at uh you know year 10 you're saving forty thousand dollars over ten years over five years uh you're saving twenty thousand dollars almost twenty one thousand dollars um we can take a look at the monthly payment difference as well here um so you obviously don't have to pay this much in points it is an option though um and again if you do want to have us uh do this for you as well um we would be happy to do that and plug this into the tool and show you some of these options um I'm gonna go through the chat here for just a second jivanth CH I think is this how you say uh I appreciate your uh your support um Drew said your One Stop Shop sounds better as you address the risk-based pricing um isn't the average mortgage eight years though the average mortgage is is somewhere around that range eight to ten years actually it's about 10 years that you're in a how in a home and I believe it's probably closer to five to eight years that you have a mortgage which is why I also showed the 5 to 10 to 30 years uh savings as well because yes this is also why APR is not the most informative comparison way to compare loans is because it's only looking at the total loan cost over 30 years or the entire term of the loan when loans actually accelerate or decelerate differently in their costs through different periods where one loan might be better in year five and another loan might be better in year 15 and another might be better in year 30. um Joey said good to see you all collaborating so much um uh y'all will have to come up with a group name when you collab win the rate you love with Dan and Kyle we're gonna have to do that we'd love to start doing this weekly if you guys are up for it just to educate those on just pizzas of the you know pieces of the housing market we're not here to preach you know should you buy or not our goal is just to make sure you're financially sound when you do go for a mortgage and to educate you guys on what programs are out there are there any special programs out there is there down payment assistance programs out there that's where our goal is to educate you guys out there in regards to you know that part of the mortgage business dot com said hello welcome I'm daddy scrote not quite sure this person comments a lot and I'm not really sure what this is uh what is I got a guy that comments on my YouTube channel every day too and his name I won't say his name because it's it's a vulgar word that he uses you know every day and he's like I thought he was just messing with me at first he's like no just go with it because I'm helping your algorithms I'm like okay whatever so I didn't I know however that works I'm not sure but if it works that way uh Bala I said hi I see your question here I'm gonna get to it in just a second um Drew said I got a 2.25 rate never moving a refund I I think this is one of the interesting problems why there's so much stalling happening at this point in the market where yeah if I was a seller and I had a 225 why in the world that's what I'm at my house I have a mortgage on my house and I refinance it about a year and a half ago two two point six two five it you know it's hard to sell and unless I sell that house and take all the cash and damn nearby the next house with 50 down or whatever it's just hard and that's why I think a lot of times is you know people are reluctant to put their houses on the market right now thus you know a lot of that part of the inventory should be probably starting to come down yeah okay I get it does the program show the specific lender or company and yes it's Oregon Oregon um yes it does so uh we we work with Allied First Bank um so even though we are a bank we work and function as a broker so we shop with uh these 80 plus lenders so we would be the ones walking you through the loan we have a fantastic team of super helpful loan officers who are licensed in all 50 states and also uh uh Puerto Rico Puerto Rico thank you I was looking what's the and also the Virgin Islands I think um I think so I feel like it's it's as a bank we don't we're not lending there right now but is as a broker we can lend there right now so that most of our deals are brokered out so as long as the lender we can find the lender that's uh qualified there can do mortgages there we're all in we're licensed um so yes it does show the specific lender just for privacy reasons we're not allowed to show it on the live stream what like what we're showing with lone sifter I don't know that any I'm not familiar with any other mortgage companies or loan officers who are that transparent actually showing the back-end information um so we're kind of we're taking the approach of if we share more information or as much as we're legally allowed to um that just is one more educational uh but it hopefully you understand where we're coming from with when we're talking about this we want you to get the best deal possible especially as interest rates are incredibly High how much does it take to bring the rate down to 5.5 percent although they also said my DTI needs to hit 5.5 I'm assuming you mean the rate needs to hit 5.5 so that your payment can fit inside of your debt to income ratio um Dan could you I think you do you still have that screen pulled up well in that scenario in that scenario we would be I would say 5.5 is going to be rough uh I don't know that it would pass it doesn't even exist yeah you would have to even at for paying four and a half points you'd be at six or five point six two five yeah see it all the way up that's one of those scenarios too that if if I was in that position where I'm saying that my interest rate needs to drop down that significantly um there's probably better strategies to lower your income ratio uh than to need to pay that much in points um you'd really have to have we'd have to like take a closer look at like what debts do you have or is there any other additional income that we could use could you possibly add somebody like a co-borrower onto the loan to add additional income those are different strategies you could use something else that may be interesting is if you are getting a um conventional loan and you are a first-time homebuyer I'm going to come out with a video here on the details in uh probably next week but fhfa has actually reduced interest rates uh that's this change is going to happen with all lenders Across the Nation um December 1st so for some people their rate could be lowered by anywhere from about one to one point two five percent that may help but it also may not be the timeline that you're looking for so I know it's quite a few different options but uh hopefully that that adds a little bit of clarity on some direction you can go with also another answer to that too is you might want to look at a government loan like if you're a veteran God bless you we'd like to look at maybe a VA loan for you or FHA and VA both have higher debt ratio requirements you can go up to you know 55 57 on the government loans on when it comes to debt ratio in many cases so just a program change might help you tremendously absolutely um shed Martinez how to know the lead times on these lenders When comparing um so the lead time primarily is actually going to be it you won't actually have to worry about the lead time on the lenders themselves necessarily um since we broke it the loans we're the ones doing the work on the loans we submit them to different wholesalers they have their own underwriting departments who then basically look to see the quality and the risk of the loan and then give it a final approval so as far as lead time it'd actually be more lead time for us um and I think Dan you might be able to speak to that a little more accurately usually our turn times there's no difference if I if I had my staff on you know all my Underwriters and everybody on staff or we're brokering it out usually we can get everybody done within a three-week time frame and you got to realize too in in this environment we're seeing right now the mortgage business is slow because of housing in general and it's that time of year when the holidays hit a lot of people aren't looking to make a move at this point so yeah we can in most almost every case we can get you closed usually it's about right at three weeks yeah and so uh a pre-approval is going to take about 24 hours total I would say one day turnaround time um and then yeah closing so from being under contract to you closed keys in hand uh somewhere around three three week Mark uh Rose Fisher my two favorite lending guys awesome well thanks for being Heroes we really support it I really appreciate it I appreciate your support I think is what I was trying to say um Joey said wondering how often y'all lots of y'alls in here I have to run numbers on an investment mortgage where it made sense to take a slightly higher rate and getting a credit back to the buyer uh and then Joey said especially if we expect rates to come down in the future well can you go back to the first question I I'd want to read it as well sorry about that I wonder how often y'all have run the numbers on an investment mortgage where it's made sense to make take a slightly higher rate and the tough thing about that is yeah that's we we analyze that as well as you guys so on your end you know you're buying your first investment property you probably have to run the numbers if you haven't you please you should you know go through that before you do anything but I that is a great question but the tough thing is is you know how much money are you wanting to spend so do you really want to buy down that rate or maybe like we saw in the last equation they're spending eleven thousand dollars to save 200 bucks a month you know it doesn't make sense so what we do is we analyze you know the program that we put you into and a bunch of other things I here's what I always tell my clients I'm not going to put you in a loan that I wouldn't personally take so my goal is to basically analyze it and give you I'll be like Dad I guess I'll say and I'll just give you some pointers on what I would do now you're the boss when you're buying your your home you know it's going to be your house so you tell me what to do but use my 30 years of experience to at least give you some guidance because I'm not trying to look you know to put you down a path of you know that you're going to crash into a brick wall you know our goal is you know that's why you're on here now you like what we do people are giving us a thumbs up I have a YouTube channel as well with a lot of the subscribers we do this we're not trying to put you in a worse position we're trying to get the word out because we want more and more people to find us so we can help more and more people so I hope that makes sense there's no reason why we would want to give you bad advice yeah and you definitely can take a credit on the rate I would only do that if you know this would this be an investment mortgage if I was like needed the cash to pay closing costs for an investment I maybe would want to reconsider if getting into an investment at that point would be the right strategy um if I don't have the cash for it up front now you may be having like really strong cash flow on this investment that it makes sense to be able to take a higher interest rate but I would not Bank on interest rates coming down in the future um even if there's a high likelihood of that happening I don't know that's the best like Financial strategy moving forward because I do see a lot of people talking about that where they're or a lot of Realtors or loan officers and they're just like well just refinance when rates come down there's more to the equation than just it's as simple to just refinance there are costs involved you still need to have a certain amount of equity in your home um the numbers still have to make sense so I wouldn't just Bank on the hope that uh rates do come down um Andrew said mortgage rates laid me off can't sell and it's okay so is everyone saying it's or Egon Oregon is that right is that what I'm understanding from this I'm gonna say Oregon Oregon or is it uh Oregon Oregon all right all right now I'm like second guessing myself uh Gustavo thanks for answering my question last night regarding on how you record your videos you are welcome God help um but all of a sudden my lender said at 28 000 uh to bring the interest rate down to 5.5 percent um what's gonna be hard about that okay to be fair they said I locked them when the rate was 6.8 um the hard part about the 28 000 is that your loan to be what's called a qualified mortgage can't have over a certain amount of uh points in fees added up front so when you get to that market depends on how big your loan is um and a couple other factors but twenty thousand dollars likely is not going to pass uh the high cost mortgage test and it probably won't be able to move forward with that loan um I mean am I correct am I thinking correctly on that yeah um I'm reading some of the comments there there's more comments about Oregon than about mortgages Oregon is a city in Illinois you should know that you're in Illinois is there a city in Illinois called that yeah yeah it's way west of where I live I live out the western suburbs it's even further out than me believe it or not I'm about to look up how to pronounce Oregon um Drew highest debt to income ratio for a VA loan for a purchase that du came back was approved eligible at 86 percent just for for those of you who are in the mortgage world basically what Drew's saying is if there was somebody who made six thousand dollars per month gross uh that's their total amount of debt that they have per month including their mortgage and maybe other debts would be fifty one hundred dollars per month so they only had less than 900 remaining their net paychecks wouldn't even cover the costs so I I get it drew I'm with you man I've seen them I've seen them astronomically high in on VA loans it's nuts what we use in in the system when you guys when you apply for a loan if you apply for a VA loan or an FHA loan we use it we use a system that's an automated system we plug in all your data we go through Fannie Mayer and Freddie Mac and they their computer system will review all your data and then it'll come back with an approval or a denial it says refer it doesn't say deny and yes I've had debt ratios up to like I've never seen Drew 86 percent but I've had him in like 60. I wouldn't recommend it exactly I mean your net paycheck is a small pillow pay the bills yeah so I need to get you one of them yeah yeah so um yeah debt race that's why I was saying in the in the previous conversation we had you know a client was saying they needed 599 to get them the debt ratio well if you go to if you're not a veteran we put you into an FHA loan they'll go to 57 debt ratio where the normal uh underwriting is 50 debt ratio let me just explain what a debt ratio is in its simplest terms you take all your debts on your credit report your proposed mortgage payment and everything else not not like your homeowner's insurance not your cell phone bills not all this other stuff you take all your your major debt on your on your credit report in your house divide it by your gross income that's the income before all the taxes and all the stuff are taken out that that equals certain percentage that percentage is what we call your debt ratio in most cases you're okay at fifty percent or below when you get above 50 percent that's when things usually you got to change programs or do something but it can be done um sorry I was distracted and texting people oh I'm a bad I'm a bad livestream host um shevanth I think it's how you say it man I'm so bad with names uh I watch a bunch of videos before I bought a home four months back for a 5.1 percent rate um you are the best in explaining things nice and slow I appreciate it and check out um Dan's uh Channel as well uh let me pull this up here so Dan has a YouTube channel as well all you have to search is Dan Frio right here and so Dan comes out with a video pretty much oh no it's gonna start it's lagging on my end too um pretty much every day at this point uh talking about updates with the market and just new programs that are coming out answers all of your questions as well so check out Dan's Channel here two um get to a couple more questions sure Abe are there advantages of paying more than 20 down in this High interest rate environment you mean take that yeah go for it not really yeah so what what happens is here's how mortgage rates are actually factored okay so there let's say there's a start rate let's say today's rate I never thought I would say this and you know if you asked me 10 years ago would it be there but I never thought I'd be saying seven percent is the rate okay so how mortgage rates work is you have that base rate so let's say it's seven percent and then factors that add to or subtract to that rate are things like your credit score so if you have a a great credit score at 740 or more that's as high as as basically if that's as high or as good as a rate you're going to get is if you have a 740 credit score or higher so if you have a 740 credit score or higher um that's one piece of that element the the down payment amount is is a factor in your rate but it's not as big as you would think so I always tell people if you're going to put 20 you know if you're looking to put 30 down or 25 down or 40 down that's probably because you want to get rid of that debt as fast as you can God bless you but when it comes to interest rates usually there's not a variance there if there's anything it might be like an eighth maybe like 0.125 that that's a good enough reason to do it maybe but you'd have to analyze all the numbers to see does it make Financial sense to do that or is your opportunity cost of putting that much money into it better served somewhere else and you're the only person that can answer really that one yeah well we'll add on to that one one little trick you can do as well let me pull up this loan level price adjustment so uh kind of what we were talking about a little bit earlier that Drew brought up was with loan level price adjustments uh they basically changed your interest rate depending on things like your credit score how much money you put down as well and often if you put 19.9 percent down you'll get a better rate than if you do 20 just by a little bit nothing crazy but I didn't know you knew that trick I do I do know that trick uh and now everybody knows that trick you got to keep something Secret it to us there is so many ways kind of to manipulate things a little bit uh that just one little tweak here could really help save you in another area yeah so for instance um let me see where I'm at here so if we did 20 where am I looking at 20 down which would be 80 LTV loan to value ratio so going with a 19.9 percent down would change Us by about a quarter of a percent now it's not a quarter of a percent in rate it's a quarter of a percent in cost so on a hundred thousand dollars that's 250 in savings on a 200 000 loan that's 500 in savings on a four hundred thousand dollar loan it's a thousand dollars in savings so what you can do is just put 19.9 percent down and your loan officer should be able to understand this or if they don't they'll learn a new trick uh and then you can always take the remainder that you are that point one percent put it onto the principal and reach that 20 Equity um in your home one caveat here is do check with your lender about the minimum mortgage insurance term that you will have some Mi companies will have a minimum term sometimes it's 12 months sometimes just a few months so that's something to be mindful of great idea I got a few tricks no you knew that trick not a lot of people know that one um great question uh Gabriella just want to say hello and thank you for your content it's helped me have a clear approach of what to expect when I do decide to buy I'm really glad to hear that Gabriella I'm glad these videos have helped um Drew said if you have a purchase on a written term on a single family at 60 loan to value uh used to have a credit not sure if it's still there um it's not still there uh at least not that I'm aware of I'm looking at the chart right now and I do not see a credit however uh that is a good point a lot of people think 20 is the way to get the best rate the best rate actually does come at uh 40 down however that's uh I don't know a lot of people putting 40 down on a home yeah yeah the average right now was announced today is six percent the average person down on a house yeah I just heard that today that sounds about right um well thank you all for joining if you have any other questions feel free to throw these in here although we've reached the bottom of the question list if you would like us to shop your loan with 80 plus different lenders just go to this URL here whenhouseyoulove.com compare there's a secure portal for you to upload a quote or a loan estimate that you have what we'll do is we're going to take that shop that around with a bunch of different lenders like we did earlier in this video and see if we can offer you a better rate if we can save you a few thousand dollars if we can save you even more than that we would love to let you know and if you have a better rate with another lender we're going to let you know that as well we want you to get whatever is going to be the best quote whatever is going to be the best loan for you and the strategy that you want some people want to pay money up front to have a low rate that's perfectly fine most people usually prefer to save some money up front so feel free to go there check out Dan's Channel just search Dan Frio on YouTube and as always thank you all for joining I'll have live stream I'll schedule it sometime next week I need to get a little more consistent in there and then Dan when when do you normally post your videos I usually post Every Morning by about 10 10 between 10 and 10 30. and what I've been trying to do is I went down that rabbit hole I hate to say this on the video on live event here but you know everybody's chasing that housing crash thing and everything else my channel is basically just educational I just want my passion is to help those out there that are that have decided they want to buy a house it's not me I'm not telling you to buy a house if you've decided to buy a house and there are still millions of people out there doing so our goal is to just to try to help you pick the right program get the right lenders get the lowest rate get the lowest fees that's our whole goal so that's what I like to say but we'd like to start doing these on a weekly basis if you guys are up for it maybe Kyle you can post that on your comment section on your uh in your YouTube channel to see if people would like to do that maybe what day works what day and time and we'd love to accommodate it I yes I would love to do because I kind of want to start getting into like multiple live streams a week um because I went from not posting any live streams to now I'm like do I do three weeks but I would love to do yeah I have one that's more open question and answer one where we go through and review different um quotes because I think it's helpful to see you know what are other what are other people doing what other rates are people getting what kind of payments like um sometimes it's kind of fun to see like what did everyone else get uh and then is there a way that we can shop that to get something better so thank you all for joining Abe just subbed Dan uh awesome thanks so much Abe um feel free to reach out to us you can go to win thehouselylove.com and get a quote through us it goes in through our team um or if you have any questions feel free to email myself Kyle winthehouseyoulove.com Dan's email is uh Dan at the rateupdate.com yeah my web my YouTube channel is The Raid update uh so it's Dan at the rateupdate.com awesome thank you all for joining and we will see you soon take care thanks for watching bye

Channel: Win The House You Love

Views: 11,950

Keywords:

Id: aKJtjhJ2VyY

Length: 51min 14sec (3074 seconds)

Published: Wed Nov 09 2022