THE Cambridge Connection - Episode 57

I was Gene Simmons. I had somebody paint my face as Gene Simmons. That’s not boring, though. Okay. But what is boring, I don’t want to be negative.

We’re not doom and gloom on the show. What is annoying, have you ever seen Falling Down when Michael Douglas goes bananas and he’s in like the food place and he orders food, first of all, he can’t get breakfast because it’s too late. Then he looks up at the pictures and then this sloppy crap comes on a tray and he’s like, why can’t I get the picture like that? It’s just like the Halloween costumes. All the makeup, like you get the teeth and they make it look like you can make it look like what that picture is.

Well, that’s because that’s a picture, Gordon. Yeah, but it makes me think that vision, that’s what I’m going to look like with the props. You didn’t look like that? No. Oh, I bet you did.

Even the fake blood. It looks so much better when people are doing all the makeup behind it. When you put it on yourself, it kind of looks like a half-baked attempt. Yeah, you need a professional makeup artist and if you don’t have one, you’re on your own. Wing it.

That’s the truth. But that’s what I’m talking about. I bet you it was great. All these made up, you buy the costume, buy the wig. No.

No, do it yourself. Yeah, do it yourself. All right. Well, with Pinterest, obviously you can go on anywhere now and try to find ideas that other people will share. More important topic than ever right now, I think, is dealing with mortgages.

Setting up the mortgage discussion

Whether to, if you’re a first-time home buyer or if you’re someone that’s getting ready to consider buying a home, there’s a lot of uncertainty out there. For real estate agents, there’s a lack of inventory to be able to have choices for borrowers. So, Deb, we’re really glad to have you on the show and again, I feel like we get into a lot of things that are about financial wellness and financial wisdom on this show and I’m so grateful to have you because everyone’s uncertain with the economy. There’s one headline after another and it’s going to be great to dig in some real good advice that we can talk to our consumers and the listeners of this show about, especially if they’re dealing in mortgages, thinking about refinancing. It’s an incredibly important investment no matter what the economy looks like.

So to have you here to help us unpack that is really, I’m grateful that you’re on the show. So we’re going to take a quick break and when we get back, we’re going to unpack everything about mortgages with Deb Jordan, loan officer with Shamrock Home Loans. This is Gordon Oliver with The Cambridge Connection. We’ll be right back. This January, payments on student loans start up again.

If your budget or other bills are making things tight, Cambridge is a nonprofit agency that helps people regain control of their debt. Call us at 1-800-CAMBRIDGE. Welcome back, everyone, to The Cambridge Connection. I’m your host, Gordon Oliver, here with my co-pilot, Tina Marie, and our special guest, Deb Jordan, loan officer with Shamrock Home Loans, NMLS number 522540. Deb, again, so grateful to have you here on the show.

Loan officer background and rate history

We’ve got a lot to talk about. We certainly do. Talked to my co-pilot all the time about how we run out of time for that 28 minutes, so let’s get right to it. Never enough time. Let’s get into this.

So tell our listeners, our audience, about your experience, about your journey of where you are today as a loan officer. My journey as a loan officer, well, first of all, I truly believe in home ownership. I love being a homeowner. I’ve owned my own home for over 25 years. And many people don’t realize that that is the single most best way of wealth appreciation is home ownership.

So I’d really like to help buyers fulfill their dream of home ownership. And how long have you been doing this? I’ve been doing this specifically since 2006. I’ve been in banking since, well, infancy. That’s a long time.

I think we all have. I think infancy with banking, right? Although it does feel like it’s been 52 million lifetimes that the banks have been involved with everything. So this is an important transaction for a consumer. So before we get into some tips and tricks and things that people would want to know as they’re looking into this, we’re seeing just some real uncertainty.

I just saw a headline just thinking about us talking today. 4% by late 2023. And all the news has been about them rising and the Fed raising rates because of inflation and the potential of a recession. So in the mortgage industry, being in the business as long as you have been, I’m sure you’ve seen these up and downs. 2008 was obviously a tremendous disaster.

So in you advising people and counseling people, you’ve been through these swings. Oh, absolutely. I mean, when I bought my house, I had fantastic credit and I got it at a 9% interest rate and that was a 5-1 arm, adjustable rate mortgage. So the rates have been all over the place. Granted, we’ve had a really good run of really low interest rates.

We’re probably not going to see that to that degree again. However, they do anticipate by the end of next year, we should be seeing it trickle back down. It’s all about, well, it’s about inflation right now and they’re trying to control inflation by raising the Fed rate, which impacts our mortgage rates. So as they eventually begin to decrease spending and lower inflation, then this will stabilize some and we should be seeing at least a slight reduction next year. This is why I’m not an advocate.

I look at the news, I look at headlines, but I also understand that beast. It all depends on messaging and to speak to an expert like you that’s actually in the trenches doing what you’ve done best for such a long time. I’m helping people, you obviously have to keep track and do the best you can with resources that you research and that your company researches to be able to give the best advice that you can. Exactly, and you see all of these little snippets of headlines out there. Some of my not so favorites, marry the house and date the rate.

It’s a really great flippant way of talking about, I mean, they’re not wrong. The idea is to find the house that you want to stay in and as long as the payment is comfortable, that’s the main thing. Are you comfortable with the payment as it is? And then if you can get it lower over time, fantastic, but that’s- Be prepared. Be prepared, yeah.

But you got a lot of people out there that are just being flippant that, well, this is the rate and this is the way it is and it used to be high before and now it’s just back and get over it. But they got to understand too that, all right, back when I bought in 96, yeah, I bought at a 9% rate, but I also bought at 100,000, not 300 or 400 or 500,000. But it’s all relative. It depends on what you can afford for a monthly payment. So focus on that and then we can take it from there.

I think you just hit the nail on the head because where we’re at right now is pretty much, you said the last couple of years the rates have been so low and now because of that, the values during COVID kind of were insane, like the amount of people bidding off of lists, five, six, seven times over list, just incredible time of people either taking cash out or figuring out a way to how to take advantage of such low rates. Now, as a result, it’s my understanding that inventory is low and the rates are high. So that has to pretty much speak to a stagnant market, I would guess. Is that what you’re seeing? No, there’s still people out there and houses are still moving.

The number one reason we have a low inventory is they have really not been building to the capacity of what the need is for so long. And when they are building, they’re building mega mansions. They’re not building first-time home buyer. Affordable. Affordable homes.

So that’s one of the main concerns. So the fact that less people are out there looking just means that instead of there being 20 offers on a home, maybe there’s 10 offers on a home. It’s still crazy, but not to the extent that it was crazy earlier this year. Again, not my line of work or things that I pay much attention to other than it being like coexisting in some of the consulting and business development that I do. But if I’m not mistaken, materials during COVID, like wood, the costs would just, which I would have to believe would make builders either steer away from building because now their margins, if they’re already in deals, like I’m sure that caused problems too somehow.

Oh, I’m sure for new construction financing, that’s not a loan that I specifically specialize in. But I think I’ve heard of cases where they started a build and then their quotes end up revising because of the rising cost of the materials. And that could impact whether or not the client can still afford that house. Sure, and that’s what it comes down to too. I think, and I’m part of the work that Tina does at Cambridge Credit Counseling as a counselor.

Obviously, one of the most important things that people can do is number one, have a budget in place. Number two, it’s deciding out of that budget how much of the income that you bring in, do you expect or is it good to spend on a mortgage payment? Do you have a number that you usually speak to consumers about on that? Well, depending on the loan product, that number can vary. And that’s the thing.

I mean, it used to be that you would want no more than 36% of your income going towards your bills. Towards your home, correct, when you say bills? Your home costs. Your home as well as your other debts. You wanted 28% to be just towards the house and 36% being the mortgage plus the other debts.

These days, we’re going up to over 50% of your income going towards bills, which means we can qualify you, but it’s going to be uncomfortable if that’s truly just your income and that’s truly your debt. Then it gets a little uncomfortable if you’re over 50% of your income going towards your bills. So, that said, depending on the time, depending, like consumers are dealing with the fact that income hasn’t really gone up much, but expenses have gone up extraordinarily. And for people that are searching, you had mentioned something that the MBS Highway, Barry Habib said, while we’re expecting housing prices to stabilize and may see a little less craziness going way over asking price, waiving inspections, and even appraised value. So, they’re working with consumers on different ways to help them come to the things that they have to get solved to be able to get the mortgage completed?

So, it’s not about a matter of revising that, it’s because the inventory is stabilizing just a little bit, it means that, like I said, instead of 20 offers, there might be only 10 offers on a property. They might not have to go 50,000 over asking price, but they might be going 20,000 over asking price. They are less likely to waive home inspections, and granted, they can’t technically waive an appraisal if they’re getting a mortgage, but they could say, look, if the appraised value doesn’t come in at my purchase price, I’m willing to kick in the difference. So, there’s still a lot of that going on, but maybe not to the craziness that there was. I mean, God, I had a guy going 100,000 over asking and not getting the offer accepted.

Wow. Yeah. That’s, see, that’s frightening to me. I mean, that’s just insane. I think what we’re going to do is we’re up against a hard break.

Transition toward first time homebuyers

When we get back, you deal with first-time homebuyers a lot, and those programs change, so it’s important for people, and Tina, obviously, Cambridge Credit Counseling does first-time homebuyer courses, so let’s get into that a little bit for people that are thinking about going down the road of going from rent to mortgage. This is Gordon Oliver with The Cambridge Connection. We’ll be right back. If you’ve lost income during the pandemic and have fallen behind on your rent or mortgage payments, Cambridge Credit Counseling can help. Talk to one of our HUD-certified counselors at...

♪ 1-800-CAMBRIDGE ♪ Welcome back, everyone, to The Cambridge Connection. I’m here, your host, Gordon Oliver, with my co-pilot, Tina Marie, and our special guest, Deb Jordan. So, Deb, this, again, mortgage times, this information’s so valuable. Grateful to have you on the show. We’re going to unpack some things about first-time homebuyers.

Rate locks and mortgage points explained

Yeah, Deb, I’m curious, how about interest rates? What are the rates today? That’s the most common question I get, and it all depends. Okay. So, interest rates depend on your credit score.

It depends on how much you’re putting down. It depends on your debt ratio, the ratio between the debts you have and the income that you have coming in. So, without me knowing all of those things, I can’t identify the rate specifically, but I’m glad you brought it up, though, because people get so focused, laser-focused on the interest rates, and they’re comparing three, four, five different banks. But the problem is, these days, the rates are changing daily, sometimes several times a day. So, if you’re calling this bank, and then the next day calling that bank, you’re comparing apples and oranges, because now the first bank’s rate has changed.

Yeah, you know, that’s. That’s ironic you should say that, because I was going to ask, is it important to lock in a rate? Or what are points? What does all that mean? So typically, you cannot lock the interest rate until you have an accepted offer on a property and you’re putting the loan in process.

Because when we’re locking it, we’re locking it with our company as well. So we’re solidifying that. So the actual property has to be known. Right. Just to impact that, so pre-approval, you can’t lock a rate in when you’re pre-approved.

Typically not. And so as you’re submitting the rate lock, once it’s locked, that means it’s locked. It means if the rates go down, well, you’re locked at that. But if the rates go up, you are secure with that. So when I’m talking to clients, I’ll ask them, are you comfortable with the payment as it is?

Because that’s the most important thing. If you’re comfortable with that payment, great. We lock it in. And then just don’t look back. You know, you’re comfortable with that rate.

You’re comfortable with that payment. There you go. Because the flip side is people that, as the rates went up, they said, oh, no, no, I don’t like that rate. Let’s just wait. And then it went higher and higher and higher.

And now people are freaking out. I always say, I’m not a gambler. It’s up to the individual if they want to lock or not. But I’m going to advise them, look, I’m not a gambler. And there’s no guarantees that that rate’s going to come down.

In fact, in this environment, in all likelihood, it may increase. Right, right. We’re not expecting it to come down anytime soon. The feds are talking about another rate hike. So it could impact us further before it starts leveling off.

21, they can take advantage of the floor. But the ceiling stays. 54. No, once they’re locked, they’re locked at that. If you’ve locked it, yeah.

So it’s not like you get advantage if it goes down. It is lock, lock, that’s it. Typically, when it’s locked, it’s locked. And then you had asked about points. So in the past, we were pretty much quoting par rates.

We were quoting, OK, based on zero points, here’s the rate today. But because, and honestly, I believe it’s because the industry believes that eventually it’s going to come back down. That means we’re going to be doing a lot of refinances maybe a year and a half, two years from now. So you’re not finding a lot of par rates. You’re not finding a lot of zero point rates.

It’s coming with one or two points, or more, depending. If you’re buying an investment property, it’s even more. So one point is 1% of the loan amount. So if you’re buying a $200,000, not the purchase price, but if your loan amount is $200,000, then that’s one point is $2,000. Two points is $4,000 extra added to closing costs.

Credit scores and first time homebuyer programs

So all of that said, if a person’s a first time home buyer, a couple of things. Cambridge Credit Counseling, the sponsor of this show, has a complete housing department that does reverse mortgage counseling, housing counseling, foreclosure intervention. First time home buyer courses is something that people can take so that they can put the plan together and be educated. And I know, knowing you and how you operate, this is how you lead to educating the consumer, helping them make a decision. So as a first time home buyer, do you have some huge points that you want to point out that they should be looking into as they’re making a plan to be a first time homeowner?

So the very first thing they should be doing is coming to a lender such as myself, having us take a look at the credit and see what steps need to be taken in order to qualify. If you’re there, great. But 9 out of 10 times, there’s going to be a path I’m going to need to outline for the client to let them know, all right, well, we need to work on the credit a bit. Here’s some of the things that I would advise. Lowering the usage of credit lines is a huge thing.

I mean, people think, oh, I’m paying my bills on time. But if your credit card is maxed out, that’s impacting your credit score. Deb, if I can just interrupt and ask a quick question. So it’s my understanding, and again, I could be wrong. It’s up to the lender, correct?

So if an individual comes to you with a certain credit score, you might be looking for something a little bit different than a next lender? Or is it pretty much an industry standard? That depends. So a lot of the local banks are going to only have your regular vanilla conventional loans that they might want a 660 credit score, where some of us direct lenders can work with more of the government programs that we might be able to work with a 580 or 590. So it depends on the loan program.

Now, I have some programs that have down payment assistance that I need at least a 640. So if they’re in need of those down payment assistance funds, then I’m going to work with them to try and get that 580 credit score up to a 640. I mean, ultimately, you want to loan them the money. You want them to get in the home. Right.

Yeah. And those lower credit scores come with higher interest rates. So people have to understand that building their credit up is going to help them afford things, not only just a mortgage, but everything. Even when they’re getting their insurance, they’re going to look at their credit score and it’s going to impact what the payment is going to be. We had Elizabeth Sedoukos on the show from CredEvolve.

And obviously, speaking with Christopher Viale, CEO of Cambridge, they partnered with this FinTech company now to take consumers that are not mortgage-ready through software, through training, through coaching to get them mortgage-ready. First-time homebuyer courses. I know Deb leads with that education. Cambridge Credit Counseling does as well. Important for consumers listening, or if you have family members or friends that are getting involved, this is a transaction of a lifetime.

You set it in the onset. It’s an investment. And you are pro-mortgage versus rent. And there’s pros and cons to both. But I understand it’s an investment, probably one of the best ones you can get into for family, for even family investments down the line.

Direct lenders and Shamrock Home Loans

Real estate, property, great investment. So you’ve got to be educated. You’ve got to know what you’re getting yourself into. And before we run out of time here, you had mentioned Shamrock Home Loans as a direct lender. Yes, we have.

Can you say what the benefit and advantage of a direct lender is, and maybe even a plug about Shamrock and why you work for that company? Sure, so when you’re looking, you have banks. So banks, mortgages are one of many avenues they have to make money. Direct lender, that means that we are underwriting our own files, and not myself personally. Within Shamrock, we have underwriters working onsite, and we’re loaning Shamrock’s money.

And then there’s brokers that facilitate the transaction, but their underwriting’s done ultimately by the lender that’s going to lend that money. So what I like about working, I’ve worked for the big banks. What I like about working as a direct lender is it’s all we do. If we don’t close the mortgage, none of us are getting paid. So we’re gonna do what, instead of just getting an email saying, nope, Deb, this doesn’t work, I get a phone call from the underwriter saying, well, this isn’t working like this, but here’s what I think we should do.

Going back to what I said, you want to loan the money, you want to help the consumer. Right. So we talk about bringing great experts on this show all the time, and knowing you and knowing how much you care about helping the consumer with this transaction, it’s really tremendous to have you on here, especially at such uncertain times and dealing with such a transaction. So before we let you go, where can people find you if they are looking for a mortgage? So if you Google Shamrock Home Loans, and then you can look under Loan Officer, and it’s Deb Jordan.

Awesome. All right, Tina, we’re gonna take a quick break. We’ll be right back to do what we do, close the show. This is Gordon Oliver with The Cambridge Connection. Buying or refining- Financing a home can be stressful.

That’s why your next mortgage should be a Shamrock Home Loans, where we will ask the right questions up front in order to avoid the pitfalls later in the loan process. I’m Deb Jordan, loan officer, NMLS, 522-540, and these days, while it’s easy to find a mortgage company, there’s lots of competition, which is good for you, the consumer. At Shamrock Home Loans, we have been an exclusive mortgage company since 1989. That’s all we do, just mortgages. At Shamrock Home Loans, everyone, including the president and CEO, is involved and attainable to their clients, referral partners, staff, and, of course, their communities.

com and look for Deb Jordan. Welcome back, everyone, to the Cambridge Connection. I’m your host, Gordon Oliver, here with my co-pilot, Tina Marie. This is a big transaction in someone’s life, mortgages. Oh, my gosh.

Homeownership costs and closing thoughts

Absolutely. It’s a lifetime, unless you’re just investing, but even so, just investing, if it’s still something that you have to take into consideration, everything. I bought a home as a single mother almost 20 years ago now, and I’m scared to death going into it, but there are things you have to take into consideration. Obviously, interest isn’t just one of them. No.

No. So, I brought up Creditvalve, right? Yes. So, if you are not ready and there’s reasons why, let’s say credit score, the amount that you can pay in interest over a mortgage with a lower credit score versus a higher credit score can be a couple hundred thousand dollars. Significant.

Very significant. So, then the question becomes, for the consumer, what’s palatable for you? Exactly. Is that okay with you to spend an extra $200,000, or is it okay with you to get on a plan, have a budget, get your debts down, get your credit score to the area where you’re going to get a much more competitive rate, which means savings, and again, we talk about this as an investment, you own nothing until you own it outright. Right.

The bank owns the home. Right. And also, keep in mind property taxes, homeowner’s insurance, all of these things, whether they’re escrowed into the loan or not, they fluctuate. So, if you can afford the payment at that point, great, but always think about the future. Property value goes up, there goes your property taxes.

Another keep in mind for me would be, don’t forget, as a homeowner, you own it. The boiler goes out, you’re done. You have to pay for it. Gordon, my goodness. The roof needs to be replaced.

So, there’s some additional homework that you can do, and that’s why bringing on Deb as an example, I know how she operates, and she represents how mortgage brokers should operate. She cares about the consumer. She talked about her own story about she got into homeownership, and then she believes in it, and she also believes in getting people into homes in the right position. And that’s very important. Sometimes, though, for consumers, when everybody thinks that that’s the American dream, it can be the American dream.

It’s just how you set that dream up, right? It can also be the American nightmare. Wasn’t there a movie about this, The Money Pit, where everything in the home, once they bought it, was going wrong? Yes. Oh, my God.

I’ll never forget the first time I had a flood in my basement. My daughter was about seven or eight at the time, and she yelled, Mom, call maintenance. And I said, We are maintenance. Yeah. So, you were Schneider from one day at a time.

You had the tool belt. Oh, I’ve learned a lot. Yeah. Well, look, I’m grateful to be with you here again. This is such important information in very difficult economic times.

And of course, I have a quote to leave us with that I prepare each week to share our motivation. I look forward to your quotes. Here we go. Even though there are days I wish I could change some things that happened in the past, there’s a reason the rearview mirror is so small and the windshield is so big. Where you’re headed is much more important than what you’ve left behind.

Join us every week on this show. Great experts like Deb Jordan on the horizon. com, click on podcasts and listen to any shows of the past. We want you to be part of the conversation just like this important one today. org or feel free to call 1-800-CAMBRIDGE.