That time We Talked About Mortgages

This is episode number 47 of The Homeowner Show. Whether you're DIY or looking to hire, we're here to help you find the best information and options for you and your home. I'm Craig Williams, and obviously Kevin's not here because I'm doing the intro, which is not normal. Kevin does the intro. He doesn't do it as good, but he does the intro. So anyway, thank you guys so much for being with us on the show today. Uh, we have a great episode for you guys. Uh, we have Haley Thayer on the show, but before we get to Haley, I need to, uh, to, to get some stuff off my chest with you guys. Uh, 'cause last week

Kevin had the, uh, the horrible nightmare incident of dealing with his homeowner's warranty yet again, which I think has now expired. I saw him dancing in the street, um, proclaiming that the, the tyranny was over. Um, but this week it was my turn. Um, and so I gotta, I gotta tell you guys, one of my favorite things to do is to mow my lawn. And I love to mow my lawn because I have this really cool zero-turn mower that just lets me get the lawn done in like an hour. Um, which sounds like a long time, but for my lawn, that's, that's a short amount of time. Um, but anyway, my, my nieces were over at the house and one of them was standing on my front porch as I'm mowing. And she's just kind of,

she's got this weird, awkward glare. stare going on at my front door. And so I'd stop and I'd turn the mower off and I kind of walk over to her and I was like, what's going on? And she goes, I think there's something wrong with your front door. And I was like, what are you talking about? Because she was looking like she wanted to go in. And I walk over and I've got one of those frosted glass front door things and it is just completely shattered. I mean, the cracks running through it and I can still hear the little ting, ting, ting, ting, ting, ting, ting as the cracks are moving through it.

Wow.

It was just the biggest hellish nightmare on the face of the planet because it's the front door, which means if people open and close it, there's just going to be shattered glass everywhere. So I spent the whole rest of the day, $500 later, new front door. It was lots of fun. I learned a lot about myself in that. Not all of it good, but I learned a lot. But there's a new front door. I learned that my house is not square, which, if you've been listening to the show for any amount of time, not a surprise to you because my house is weird in many, many ways. I learned many other ways in which it was weird. I did not know that you could wrap a

doorframe in metal. For everybody out there, it's not the best choice. It's a choice. You may have to deal with that one someday. I hope you don't. Anyway, we have a great episode for you guys today. We actually have some questions that came in from Facebook and Instagram because we have Haley Thayer, who is a personal mortgage consultant on the show today. How you doing, Haley?

Hey, I'm so good. I'm so excited.

Yes, this is, this is going to be great because I, you know, this is, this is how people get into homes. They work with someone like you.

Yes, exactly. And you have to understand the process. And it's better to understand it before you jump into it. Because then it goes a lot smoother.

Yeah, and like, it's not to say that like there's a lot of people looking to take advantage of people out there, but there are people looking to take advantage of you out there in regards to how you get a mortgage and how you pay for a house and all these kinds of things. And it's helpful to have somebody that knows what they're talking about that's working on your behalf to get you in the right deal.

Right, exactly. And helping you understand what is not a good deal and what you should be looking for when someone's like, oh, I can give you this rate and this lender and this term and whatever that means.

Right.

And to break that down in simpler terms, because when you're going through this process, you're bombarded with so many different things.

Yeah.

And so understanding that is so key.

Absolutely. So I want to, I want to talk about how you got into this, but before that, I want to let everybody know how we kind of connected because I saw some, some content that you were putting up on Instagram, followed that on over to YouTube because you have this really cool YouTube channel where you do these short little episodes informing people about all this kind of stuff. So people can follow you and we'll talk about the links at the end of the show, but it was just really cool that we connected over social media that way.

Yes, and that's actually my whole goal in posting this stuff because I, as we're about to talk about, I come from a background This is my dad's company. And so he, I literally would sit at the dinner table and he would grill me with questions on how do you get a mortgage? What is this payment like? Blah, blah, blah.

Yeah.

And so having that knowledge, I thought I'm in my own little bubble when I'm 15. I thought everyone knew how to save money, how to get a mortgage, how to buy a home. You know, I'm like, hey, this is just normal knowledge.

Yeah.

As I got older, as I got into the industry, I realized it's not common knowledge. And if I have it, why not share it?

Absolutely. I mean, what's, what's wisdom without sharing it?

I mean, holla.

So, so tell, tell us a little bit about— I mean, you mentioned it's your dad's company. It's the company you're still working for?

Yes.

So how did you get into it? What do you guys do? All that stuff.

Yes. So a little backstory on me. I actually studied broadcast journalism at SMU in Dallas.

Okay.

Um, shout out to Texas. And I was, I was a news producer in Knoxville, Tennessee for 2 years.

Okay.

I thought news would be my path forever. I moved to Seattle to work for King 5, which is the NBC affiliate up here. And I loved it. I was doing marketing and I was doing everything that I love in the creative space, shooting, writing, editing videos. I was essentially making commercials for my living in Seattle.

Yeah.

That was awesome 'cause I was meeting the coolest people telling their amazing stories. And I realized a year and a half in that news wasn't going anywhere for me and I would just have to keep moving to keep— growing. And I fell in love with Seattle and the Pacific Northwest. And so I started looking at jobs. I mean, I'm in the mecca of jobs, Amazon, Microsoft, I got, you know, it's in my back pocket. And so I was having conversations with my dad. And he was like, listen, I've been in this business now, it's 40+ years. He started this business when he was my age, 27.

Wow.

And he knows this business inside out. And he was like, hey, I have my pipeline, everything's good on my end. But all these new loan originators that are coming in, they're having a hard time marketing our company and our brand. And can you help us out? So I actually jumped on board as the marketing director of Residential First Capital. And I got to do everything I love still, but now in more of a real estate sense and helping people buy homes. And then A year in, probably actually closer to 6 months in, we were having conversations and he's like, would you want to become a mortgage broker and start a branch in the Washington area? And so that's what happened. So the branch officially opened in November, but I've been doing loans for about

2 years.

Okay.

And so I have this knowledge, I have this background, I have an amazing team behind me. And so I'm the branch manager up here and still the marketing director. And I love it. It's been incredible.

That's fantastic. So you, I mean, you've already, you've already thrown some, some real estate jargon in there that I think some people may— so like loan originator. Help me out there. What is that?

Oh yeah, I got you. Yeah. Sometimes I don't even know. Okay. So let's start with me. So I'm a mortgage broker. So that means that I'm someone that you can come to that will shop for rates and loan terms for you. So I'm not just one entity, I'm a private entity, and I partner up with a lot of different lenders. So I have, you know, like a Bank of America or a Flagstar or Quicken that we partner up with.

Okay.

And then what I do is you come to me with your situation, you're like, I want to buy a primary residence, whatever that looks like. And what we do is we go and shop rates and loan terms for you, find that one that you really want.

Yeah.

So you don't have to go and send all your documentation to a bunch of different people.

Gotcha.

So it's just kind of like a one-stop shop for someone. And then I'm essentially also a loan originator. So that just means that someone is just like a mortgage broker, you bring in the business, and then you originate the loan, meaning you take it from the pre-approval stage into close. So you're with that person through the whole thing.

When you say bring in the business, is that, is that like a home buyer?

Yes, exactly. A home buyer or an investor.

Gotcha.

Yes. Real estate investor. And then, so then there's a loan processor that you'll also work with, and that's someone who's just working solely with the lenders. So let's say in this situation, you came to me and you needed a mortgage on your primary, you wanted to buy a primary residence.

Right.

So you would talk to me, I would get you pre-approved. And then what would happen is you find that primary residence, you get your offer accepted. And then I ask you for more documentation and you work with me. But then on the side, I have a loan processor that works with me, right? And she works with that lender that we choose. So she does like all the, all the maintenance on the file.

Okay. And what is, what is, what is maintenance on a file? I mean, what does that entail?

What that—

is that the stuff that I'm just not paying attention to while I'm sitting in my, my La-Z-Boy?

That's exactly it, honestly, because I, you know, you don't really know what's going on behind the scenes. You just want the loan to close, right? Hey, I want those keys. And we all get that. So the loan processor is literally someone who makes the job and the entire transaction smoother for you.

Okay.

So you're— so they're doing all the behind the scenes work. They're talking to the lenders, they're getting the appraisal, the inspection, and they're working with title and escrow. To make sure that we close on time.

Yeah. Now that, that's a term that I know that you did a specific video on that is a very confusing thing. Escrow, right?

Yes.

What the heck is that?

I know it is so confusing. Okay. So it's, it's honestly just a term that I don't even know why we have a lot of these terms. It makes it so scary for someone to understand the whole process.

It really does seem like it's in It's intentionally difficult to understand. Like, we're just gonna throw gibberish up in the air to define what we're talking about so that no one asks us questions, because then they'll look like an idiot.

Exactly. And, you know, we, you know, we just want to just get the deals in and all of that type of thing. No. So okay, on the escrow side, what happens is escrow starts from the moment that your contract or your offer is accepted on a home through closing. So there's a couple different ways that you can look at escrow. You can look at it as like the company that's helping to get the funds for the close on the home. But the one that you are asking about is simply the process between— it's usually 30 days in a normal home buying experience. So from day 1 of the offer getting accepted to day 30, when you get your keys, that's the escrow process.

Okay. Awesome.

Yes.

So it's much easier to understand than escrow.

Yeah. Yes. So essentially, it's just 30 days of hanging out with me.

So is, is the main book of y'all's business, like residential homebuyers?

It is. So we do everything from conventional and institutional loans, meaning just a normal loan on a property that you're buying to live in, or a secondary home, like a vacation, or an investment property. So that, and then we have programs like an FHA loan, which is for first-time homebuyers.

Right.

Or VA loans for veterans. And then we also have another side of our business that my dad is kind of the creative genius behind all of this. So he started the institutional side of the business, the normal loan side, when he was my age. And he was like, you know what, I can do this better. I'm gonna go out and do this on my own, which is awesome. And so, and then about 5 years in, he saw opportunities on how to get more creative and how to just kind of get around all of the jargon, essentially.

Okay.

And make, make it so we have also a private and a hard money side of our business. So we can do private lending. That's our own lender pool that allows people to do shorter terms. So like a normal term on a loan is about 30 years, 15 to 30 years, right? On a private and a hard money loan, It's between 1 and 3 years and the interest rates are a lot higher. And so that's for more of an investor.

Now, really quick on a hard money loan, like what you're talking about where you say 1 to 3 years, I mean, that could be scary to somebody.

Yes.

But I don't think a lot of people realize the point of that. The reason people are doing that is because they have a plan that They're going to refinance it or move out of that loan at the end of that 3 years.

Exactly.

It's a temporary fix to, like, what I would imagine is a difficult property.

Yes, exactly. So it's either a difficult property or a difficult borrower.

Okay.

Someone who might not have the credit, or maybe the income or something that isn't in line with the institutional and conventional loan limits.

Right.

So then we kind of, we talked to them about a private or hard money loan. It is a little bit scarier because they see a 7 to 10 interest, 10% interest rate, and they're like, no, no, no, I'm not paying that. That's way too high. But if they realize that they can refinance, like what you were just saying, then it can turn into a conventional loan and you can still build equity in that property.

Right. And I want to, I want to get to all that. But before we do that, I kind of want to go, okay, so I've I've found Haley on Instagram, Facebook, YouTube, whatever it is. I found you and I'm going to call. Now I'm calling you. I'm reaching out to you. I'm sending you a message. And I'm like, Haley, I've got this property. I want to buy it. What's the process then once I reach out to you and say, like, help me?

Yes. So what happens is I will get on the phone call. We'll meet for coffee, whatever you're comfortable with. And you will say, listen, I found a property I like, or I want to buy my first home, I want to buy my second home, I'm ready to move up, whatever that is, right? And I essentially just ask you a bunch of questions. So I ask you about your income, your assets, so your 401, any IRAs, anything that you have in the bank, right, would be liquid cash. And then we talk about your liabilities. So Do you have any credit card loans? Do you have any car loans? Do you have any student loans? Anything that hinders your monthly payments that you put out every month, right? That would take away

from your assets.

Yeah.

And then we talk about your credit, where you're at on that, and then talk about down payment, how much you're looking to put down. And so I ask you all these questions and you kind of just give me estimates. and you are like, this is, this is kind of my situation. And I can kind of ballpark based off of your answers what I think that you can qualify for. But the biggest thing that I want people to understand is a prequalification doesn't really mean anything. It just means, okay, I've looked at your estimates, and if you are telling me the full and complete truth of your situation, then Yeah, it's probably close to that. But then what happens is I send you a list of all the documents I need. So I need bank statements, pay stubs. I'm

pretty much going to get to know your finances really, really well. Tax returns, W-2s. And this is all confidential. This is all just between you and me. And we— and I look through all of that over the course of a couple of days. And I then come back to you and I'm like, This is what you are pre-approved for. So everyone that's listening, I strongly suggest only starting to look at homes once you're pre-approved. Okay, because that means that we have fully underwritten all of your information, and we can guide you towards the right mortgage and the term that you'll be able to afford and not overextend yourself.

Okay.

Because yeah, we, we all want the million-dollar home, but if we can only afford a $500 grand home, then that's okay. But we're going to help you find that home that you fall in love with and also not overextend yourself and not feel like you have this huge payment that's weighing you down.

Yeah. So what's, I mean, what's the big, I mean, like you say, don't look at homes until you get pre-approved. So I mean, don't make an offer on a home until you get pre-approved. What, why is that?

Because what happens is we, overinflate ourselves. We think we're better off than what we are. And that's totally normal. And I do that. And I'm someone who comes from a financial background and really understands my finances, where I'm at. But I'm always like, hey, I could, I could do better. I could pay for this. Let's do it. So I get that. But what I really suggest to people is instead of going to homes and looking at the fun part of this business, go through the time period with me where you can fully understand your finances and fully understand what you can afford. And it'll make the process so much better because you don't want to walk into— let's

use the $800 grand home— and be like, this is perfect, this is amazing. And then you come to me and I'm like, I'm sorry, you can only afford $700.

Right.

Um, and that's heartbreaking because you do fall in love with properties. I mean, the moment I walked into this place, it's a townhome. I knew it right away that this was it, but I had already known that I could afford it at that time.

So at this point, I kind of want to go, okay, if I'm going to talk to you, what's the difference between talking to you and walking into Chase, walking into Wells Fargo and just saying, who's your loan officer? Who do I talk to about getting a mortgage? What's the difference?

Right. So on the surface, there is no difference because we're all going to ask you the same questions. We're all going to kind of dig into your finances and really understand your current situation.

Right.

But what I would say is talking to someone like me, a mortgage broker, instead of someone who works for a bigger bank, is you're going to get that personal side. So you're going to always have me on speed dial. You're going to have me on text message and email. And I've gone through the big banks before and for my personal mortgage, and it is not anywhere close to what someone in my position would offer because they don't work Saturdays and Sundays. And for us, a transaction is day 1 through 30, doesn't matter. We're constantly working on your file and we're constantly updating you. And I would just say, whether it's me or someone like me,

go talk to them first and just, you'll, you'll feel it right away. You'll understand why it would be more beneficial to work with someone who's going to be at your beck and call for those 30 days.

Yeah. And I would imagine that, I mean, being, being on the broker end of things that you have access to just more than one pool, right? I mean, like, because Chase is going to do Chase's loans, Wells Fargo is going to do Wells Fargo loans, and then they're probably just going to sell them to some other loan party later on down the line.

Exactly. That's exactly the truth. We partner up with a ton of different lenders. And so it gives us the ability to be creative in your current situation. And we can find the exact terms and rates that you want.

Yeah, I mean, just, just from like my personal experience, I mean, we've been in the house that we have right now for 5 years. And I think our loan has been sold 4 times. It's crazy.

Yes, it happens all the time. Yes.

Yeah. And we, like, the most recent one was like, hey, we're missing this payment for this other portion of your loan. And so like, we start having to talk between these 2 companies like, hey, what, you know, like, why aren't you doing what you're supposed to? And like, well, we sold that and they don't know what they're doing.

Right. Yes.

So, but yeah, so, okay. So So on the other end, so like then you've got people being brought in to buy the home.

Right.

And you have that introduction. But then the other thing that I've seen you talking about is refinancing. And this is something that's pretty big for you right now, right?

Yes, it's huge.

And why is that? And what is that?

Yeah. So, okay. So first, refinance can be one of two things. It can either be You got a mortgage, let's say you got a mortgage 2 years ago and you want to change your interest rate, you want it lower.

Right.

That is one. So it's called a rate and slash term refinance. So that means that you come to me, you're like, I have this mortgage, I have a 4.5%, and can you get me something different? And so that's one. And then because a lot of us obviously want to pay as little, the least amount of interest over the life of the loan, as possible. And so refinancing in that terms is a great option for most people. And then another refinance is a cash-out refinance. So that allows you, if you are trying to invest in other properties, if you are trying to build on your current property and you need extra money from the equity in your

home, then we can do a cash-out refinance. And we just look at your current loan value compared— your loan compared to the value of your home.

Right.

And that will determine how much equity you have, and what we could pull out for you in that term.

Sure.

And so refinances are massive right now. Because if you've been listening to the news at all, or if you just stumble upon an article, you'll see interest rates are lower. And they've been slowly, steadily getting lower every single day. Not every day, not every single day, every single month.

Right.

been really interesting to see because the Federal Reserve, they really dictate how the interest rate is going to go for the rest of that quarter or the next couple of months.

Right.

And so they actually have a meeting next week. And most economists are predicting that they're going to lower interest rates. So that means that, you know, that day that they lower interest rates, it's going to be tumultuous in the market, the market's going to overcorrect, rates are going to be a little bit higher than what we're seeing right now. But in a week after that, rates are going to be even lower than what they are now. And it actually just came out that Freddie Mac, it's at 3.875%.

3.75%. Okay.

Wow. Yes.

So I mean, just for historical posterity, we're at 2019 at the end of July. Okay. And so what were people paying In January of 2019, it was probably like 4.5% or something like that.

Yeah, that's exactly right. So it was, uh, I actually did a couple mortgages, a couple loans back then, and they were closer to like a 4.3%. Yeah. So it is significantly lower and that's a significant amount of savings every single month.

Right. Well, and this is, I mean, like refinancing is also, and help me out here because like it's an opportunity to get out of an ARM loan.

Yes.

I mean, and I know what those are and we should probably talk about what that is, but I've also been curious as to like why people do an ARM.

Yeah, that's a really great question. I actually have an ARM on this property right now. Yeah. And so the reason why—

And what does that stand for, by the way? Because I'm nervous that I have the wrong acronym.

You're like, it's literally an ARM. Yeah. So it's adjustable rate mortgage.

Okay.

And so that means that the term of your rate is going to change over the life of the loan. So what— so let's just use a real-world example. Right now I have a 7-to-1 ARM on my property. And the reason why I have that is because when I was looking at rates and terms compared to like a 30-year fixed rate mortgage, which is another very common term that you hear, right, it was— the rate was significantly lower. And so on the ARM option. And so on an ARM, what you are looking for, it's typically a lower rate, because what happens is in those first 7 years, I'm only going to pay the 3.625% that I have

right now. Okay, once that 7th year is over, then the market, then my interest rate is determined on the market. So it could go higher, it could go lower, just depends on where that market, where the market is at that time.

Right.

And so at that point, if I I'm still in this place, I'm going to refinance because I— if especially if rates are the same level as they are now, which they probably won't be in 7 years. But let's just say for this sake that they are, then I'm going to want to stay at the 3.625% that I have.

Gotcha.

Because they could go up. And so you can refinance out of an ARM loan into another ARM loan, or you can refinance into a 30-year conventional loan if you think that you want to stay in the property for a while, or you just want to have that fixed rate and that security of your same monthly payment every single month.

Okay. Well, and I know like on a, like an FHA or like a traditional home loan, you can go 30 years, you can go 15 years. Is there, is there really like any like tax benefit or financial benefit between a 15 and a 30?

Well, I mean, I wouldn't—

Other than just paying the property off sooner.

Yeah, exactly. I think so your payments are going to be a lot higher on a 15-year mortgage, right? But I think that that just means you get more of a tax benefit upfront based off of the numbers that you are putting into the home.

Okay.

And so either way, though, you are getting substantial tax benefits on owning property compared— I mean, if you just compare it to renting, you're not getting any benefits from that. You're Sure.

Yeah, absolutely.

Yes.

Awesome. Okay. So what is, what is, is the refinance process different from the home loan process?

Yes, it is. It's actually a lot smoother and a lot quicker and everyone loves it.

You get a lot more history. Yeah.

So yeah, exactly. So essentially, I mean, I'm going to ask you the same questions because whether you are a client of mine that we've worked with together for years, or if you're someone that's new and just shopping rates and looking for someone with a lower rate for yourself, Right. I still need that updated information. So I'm still going to ask you for those bank statements, those pay stubs, tax returns, W-2s. Going to ask where your liabilities are at. You know, obviously your mortgage is a liability, but it's a good liability. And so we're going to look over those numbers again. And you're going to sign the same disclosures, and we're going to shop the rates the same exact way. But what

happens is, usually it's just, okay, you sign this paperwork, you're in it through the life of the refinance escrow process. And then we usually only have to do an appraisal, hopefully not depending on like on your property, there would have to be an appraisal, right? But in a city, Probably not, because there's, there are a lot of comparables. Okay. And so what happens is we, if we don't have to do an appraisal, or even if we do, it really just makes the process about 2 to 3 weeks. Okay. And then you close on the refinance, and in 2 months, you start paying that new mortgage payment.

Okay. So is that—

so it's, it's easier.

Okay. Well, so is there, is there a difference between, say, a refinance and a HELOC?

Hmm, good question. So a HELOC, yes. So a refinance is mainly going to change the rate and term, like what I was talking about earlier. And on a HELOC—

And real quick, what is that real quick? I mean, because that's another—

Another big term. I know, it's another jargon. No one likes it.

I know what it is. I just don't know what it stands for. So it's—

Yeah. I've seen it before.

Yeah.

So a HELOC is a home equity line of credit.

There we go.

And so that's very similar to the cash-out refinance.

Okay.

But you still keep the same mortgage on your property. So, okay, let's say, let's just keep using my example.

Is it essentially setting up a whole separate loan then?

Yeah, exactly. Yeah. And so you're gonna have 2 loans on your property. And so you have to understand that also when you are Say you have my current situation, the 7-1 ARM, 3.625%, and you want the— I want to pull out the equity in my home to maybe add another bathroom or whatever, redo the floors. I don't know, whatever you're wanting to do with that money. Even if it's, I want to pay off my credit card debt or my car loan, like I want to get rid of that debt.

It's your money. You can do what you want with it.

100%.

Gotcha.

We— so you are essentially just setting yourself up where you have a HELOC that you can pull from if you want, or you can keep it as kind of like a safety net. And so I've just like cash flow into your pocket if you need it. And so but on a cash-out refinance, you are actually changing the terms of your mortgage. So what that means is, instead of on a HELOC, I kept the 7/1 ARM, And then added HELOC on it.

Right.

What you do is you have the 7/1 ARM and you change those terms. So maybe I turned it into a 30-year fixed rate, but I took out some cash from my equity in my home.

Gotcha. So in, I mean, like just in theory, if you, if you've got your, let's, let's take your scenario. You've got your ARM, but then you, you open a line of credit through your HELOC. Could you then refinance both of those into a new Yes, you can.

And it's really, it's a great option. But what I will tell people is if you do have an equity line of credit, you need to understand that you can't pull anything out of that equity line of credit for an entire year if you want to refinance them together and do a normal refinance, like a rate term refinance.

Okay.

But if you're just doing a cash-out refinance, Then you can pull from the HELOC, but there's a certain limit based off of where your property's at, the value, and your loan terms at that time. So that's a case-by-case situation. Wow.

Well, so there is so much information.

Yeah, I know. Oh my gosh, it just keeps going.

Yeah, no, it's endless for sure. Before we, before we kind of get into like a little bit of a fire round with the questions that we got from Facebook and Instagram, One of the things I'm curious about is what is one of the things that you find most people are the most uninformed about when it comes to mortgages and home loans and the whole home finance realm?

I think they— yeah, I think that they are not informed on their debt-to-income ratio.

Okay.

So that means that's a huge factor in determining how much you can afford. So if you have a mortgage right now, And you want to buy another place, you have to, and you don't want to sell this other place, whether that means you're making it your vacation home or your investment property, whatever that looks like. If you are looking to buy another home, you have to qualify not only on your current principal and interest payment, but also on the taxes and insurance on that payment. So it's the full, we call it another acronym. I love these.

I love them. I love it.

We should just have like a list of I need a flowchart.

I need a good flowchart.

Yeah, exactly. Bubbles. So it's called PITI— principal, interest, taxes, and insurance. Okay. And that's your full monthly payment. You can choose— I'm going off on a little bit of a tangent, but you can choose to take the taxes and insurance out of that monthly payment.

Okay.

And you can pay that like every 6 months or a year, whatever you want to do. Or you can pay that just monthly, every single month down.

Okay.

So, so in terms of that, so when, when I'm qualifying someone for something like that, or approving someone, we have to look at that whole payment, plus your other liabilities, and take that compared to your current income. And so most of the time, Most people cannot be approved for 2 mortgages at once. Because it's— that's a huge strain on your financial situation unless you are going in on it with someone else, like have a partner, spouse, whatever that looks like for you. Or it's an investment property and you have some other people who are coming in on it with you.

Yeah.

Then it kind of loosens the strains a little bit. But if you're just doing it on your own, It's, you would have to make a lot of money to offset that debt.

Okay.

Yes.

Yeah, I would definitely agree that when it comes to like financial education, most people just don't understand the difference between an asset and a liability.

Correct.

Yes. I mean, that's the simplistic way of looking at it and going like, they just don't understand what this is and where to put these things in the category.

Exactly. Yes. And it's hard to understand that though. Like if you don't have that background, if you didn't have either parents or Sibling or teachers that were willing to sit you down and help you understand that, right? It's hard to know that information.

Yeah.

And I think that the key is trying to educate yourself as much as possible and never being afraid to ask questions.

Yeah. I actually enjoy shaming adults with this, um, by introducing them to my 10-year-old daughter. Like, we'll be having a conversation about financial education, like, Ella, get over here. Tell, tell this gentleman what an asset and a liability are.

Yes, I love it.

She loves to show off too, so it's big fun. Yeah.

Yeah.

And you never forget that moment you've been shamed by a 10-year-old girl.

Right. You're like, oh my gosh, I need the dummies book right now.

That's right. All right, so let's, let's get into this, into this— what I'm going to call it a fire round, but it's not really a fire round. We reached out to some real estate agents online to send us some questions specifically for Haley. And these are the questions that these real estate agents get most often from their clients. And so hopefully you can answer them. So here we go. How much do I need to make to qualify for a loan?

Okay, so that is a very broad question.

Yes, it is.

Because it very much Depends. We're going back to the assets and liabilities. Right. So let's—

Well, here, let's, let's, let's put these 2 together then. So how much do I need to make and what does my credit score need to be? Because she kind of— oh, these are 2 different things, I realize. But like, yeah. So, yeah.

It's perfect. So for the credit score, 740 or above is going to get you the best rates and the best terms available at any lender, no matter where you go.

Right.

So rack up that credit. You're gonna— there you go. Yeah, keep doing it. Yeah, exactly. And then so on the income portion, if you can calculate that your debt-to-income ratio, it's called the DTI. Here we go. The way you can be qualified for a mortgage or approved for a mortgage is 43% of that.

Okay, so you just got to learn how to do that calculation.

Exactly.

Yes. I imagine there's like online calculators and things like that that can help you figure that stuff out.

Exactly.

Do you guys have stuff like that on your website or anything like that?

We actually do. Yes. And we're— and so it's really easy. You just type in the numbers and it pops right up. And, you know, that's an estimate based off of things. And then you come to talk to someone like me and we'll look through everything and give you a real Debt-to-income ratio to help you understand that.

Fantastic. Okay, so part B of that question: what is the best way to build credit if you don't have any and really don't want credit cards?

Interesting. Yeah, so I think, um, what I would say in that situation is take out a loan, like a car loan or a student loan, and Show that you can pay it off. And if you don't want to get a credit card, I understand that.

Sure. And a lot of Dave Ramsey fans out there. That's—

Yes, exactly. Yes, I love Dave Ramsey. He's awesome. Yeah. So there are ways like that where you can still build credit and show. The other way also is to create— you could go to your property manager and And say, hey, can we create a credit line based off of my rental history? And that's a really cool way because you're already paying your rent down. You're doing it in full every month because you're an awesome person.

Yes.

And you, and you can build up your credit in that way. And also, there are some programs where it allows you to qualify for a mortgage without credit. But those are going to be really high rates, they're going to be really weird terms. So So I would just suggest taking a loan out, showing that you can pay it down, or talking to your property manager and working with them on creating a credit line for you through your rent.

Right. Yeah, I would add to that. I mean, like, yes, I don't think it's bad to have a credit card.

Not at all.

But I mean, like, even if like you put $50 on it a month and just pay it off at the end of the month, that's going to show a credit history. So I mean, like, that's an easy way to, I mean, like, just go buy a shirt at the Gap, And, you know, call it a day.

So, yes, exactly.

Yeah. All right. Um, how much will I need as a down payment?

Great question. If you're a first-time home buyer, you can do the FHA loan program, um, which is 3.5% down.

Okay.

If you are just a normal home buyer, this is your second home, you can do anywhere from 3% to 20% or even higher, obviously, but that's kind of the normal range. So you can do whatever your comfortable with. I will say that when, if you are in a competitive housing market, it is best to put as much down as you can without overextending yourself because you are going to be, it's going to be more, the seller's going to enjoy that more, obviously.

Yeah.

They're going to get in. So they're going to see that you're really serious about the property. But I think that's the biggest thing that holds people back They're like, well, I have this debt. I have this student loan. I have this car loan. Like, how am I supposed to take on this mortgage? You don't have to have $100 grand in the bank to put down on a property. You can do the 3% and still be able to be approved for a mortgage and jump into a home and start building equity.

Yeah. All right. So this next one's a little interesting and you might have to put your lawyer hat on. Can I buy a house before my divorce is final?

Oh, wow.

Yeah.

I have to be honest, I don't know the answer to that.

Me either.

Yeah, so that's interesting. I'm sorry.

No, no, I think, I think the ability to say I don't know is one of the most confident answers you can ever give.

Yeah, exactly right. Sorry.

No, no, it's fine. I don't know. Um, so here's the next one. Can a family member or friend give me money as a gift for the down payment?

Yes, they can.

Okay.

And so what happens is it's structured as a gift letter. So what happens, we ask for that gift letter from your parents, your siblings, whoever that is.

Right.

It has to be a direct relative to you.

Oh, it can't just be like crazy Uncle Jim or like third cousin, fourth removed?

Yeah, because, because that just gets weird because then everyone's related to that person, you know, like what's going on here?

We're all part of the human experience here, Haley.

Come on. Exactly. Exactly. So, so yes, so it has to be structured. So it's literally just a piece of paper saying, dear lender, XYZ is giving me this amount of money for my down payment, and it's signed by the person that's going to give you that money, and then they wire the funds to escrow. So, you know, those awesome people that we talked about earlier.

Refer back to the beginning of our conversation if you don't remember what that is.

Yes, because I don't.

All right. My loan is already approved. Why can't I go buy a new car or charge new furniture before the loan closes?

Great question, because what happens during the loan process is your file is heavily scrutinized for those 30 days. You think, okay, the inspection came back, the appraisal came back, we're all good to go. Let's, let's close. I'm ready to get those keys. The thing is, is it goes through the initial underwriting, the underwriting in the middle, and then there's a final underwriting at the end.

Right.

So what you want to do is for those 30 days, just keep those credit limits real down. Don't add more debts to what you're doing because It's gonna pop up and we're gonna see it and we're gonna know that, okay, you can't actually afford this home anymore because you took on this other debt. Because you bought a couch. Yeah, I'm so sorry, but take it back.

Yeah, that's okay. So let me also just add on to that. I mean, from just like a mindset perspective is like, if you're fixing to drop $250K on a house, I mean, which around here is pretty normal. I mean, that's an average size house. You know, like spending $2,000 on a couch just doesn't look like that much when you're about to spend $250,000. And so like, you can, you can go a little nuts going like, well, that's not that much. Like, what's an extra $2,000? I mean, what's an extra $5,000? What's, you know, that 30 days is there for your protection.

100%. Yes. And I will, I also will say, That we also make sure that you have reserves in the bank for the first 60 days of your mortgage payment. And so you have to ensure that you can pay off this mortgage right off the bat. And so if all of a sudden your reserves are drained, well, there goes the mortgage. Yeah.

All right. So here's an interesting one. How long do I have to wait after filing bankruptcy before I can buy a house?

So I actually have worked on situations like this before. So it's actually 2 years.

Okay.

And so what happens is you file for bankruptcy, and obviously that's a very hard time to go through. But what you have to show then is that your next payment, whatever that looks like, whether it's renting or paying off your credit cards or whatever that is, you have to show a full 12 months of paying that off every month in full to be able to even start having that conversation. And your credit is going to take a huge hit. That's on your credit for 7 to 10 years. And so, but if you can show a good payment history, it changes a little bit for a lender to be able to recognize, okay, they got back up on their feet, they're doing great. We can lend them money.

Okay. Awesome. All right. So here's another fun real estate acronym. What is PMI? It seems to be like the theme of the show. How many acronyms can we identify?

It's so insane. Sometimes I have to look them up because I'm like, what is this?

I'm just going to make one up before the end of the show just to see. Is Haley making these up? That'd be awesome.

And then everyone starts using it.

Yeah, that's right. We'll start it. We'll start a trend. It'll be great.

Yes. So PMI is private mortgage insurance. Okay. And so that comes on if you do not have 20% or more equity into the home. So what that means is if you do not put 20% down, you have to pay a fee for that. Sure, that is PMI. And so let's say you're a first-time homebuyer, you put 3.5% down, You are going to pay a PMI of anywhere between $50 to $100, I will say, on top of your mortgage payment.

Right.

And I will say that PMI nowadays is so much cheaper than what it used to be. So yes, another $50 to $100 every month seems like a lot, but back then it used to be much, much more. And so they're making it more affordable for people who can't put 20% down.

Right.

So what happens, say you have that 3.5% into the home, you pay that PMI, you get the PMI comes off of your mortgage payment the moment you hit that 20%. And so that allows you to not pay that $50 to $100 more each month anymore once you have 20% equity in the home.

Okay. So here, let me, this is, this is, you know, this is for me. So can a HELOC Great question.

No, it cannot. So, well, you can use the HELOC to pay the PMI or use it to put more equity into the home, right? But you cannot— the PMI will be there on the current loan term up until you have that.

Well, let me, let me, let me flip that then. So let's, let's say I've put enough equity into the home. That I now have more than 20% of equity.

Yes.

So I decide I'm gonna, I'm gonna pull, I'm gonna, I'm gonna do a HELOC. Does that then force me to start paying that PMI again?

No, no. Okay. Now I understand. Yes. So you're, you're good. You put that 20% in, you're good. All right.

All right. That's, I like, I like the gymnastics in that. That's, that's good stuff. All right. Are there any down payment assistance programs?

Okay, so it depends on what lender you go to. Currently, I have not been able to find one that does a full 100%.

Okay.

And caused the crash. And so that's going to be really hard to come across. But what we could do is, if you can put just 1 to 2% down, then we can try to find someone that's your relative, or you get a gift or whatever, to get that extra 1% to get to that 3% threshold.

Okay.

So there are creative ways we can talk about it, uh, but I would— I very strongly suggest not going 100% down payment assistance, right? Because it— that might mean you it probably means you're overextending yourself.

Sure. Yeah. And if I, I think I lost you just for a second there, but just want to make sure I understood. So we had good programs prior to 2008, is that?

Yes.

Okay.

So we had 100% down payment assistance and that's what caused people to not be able to pay off their mortgage.

Right. And if you don't know what we're talking about, just what's, what's that movie with Steve Carell?

Yeah, uh, uh, Wolf of Wall Street.

Well, no, there's the other one, the, uh, the big, um, ah, dead gummit, what is it? I'm gonna think of it before the end of the show.

Yeah.

It's like the, the big risk or the big something or another. It's Steve Carell from The Office was in it. Um, yes, and Ryan Gosling.

I've seen it.

Come on, now I'm blanking. Like, we're, we're hip people, we should know the names of movies.

Okay, we're so Maybe this movie isn't hip enough.

That's right. It wasn't mainstream enough. That was the problem.

No, not at all.

Oh goodness. All right. That was all the questions that we had from— are you okay? I mean, like, that was a lot.

Yeah. I felt good about it. Those were good questions.

Let me tell you guys, I've got Haley on video here and there's not even like a bead of sweat. I mean, like, she was cool as a cucumber. All right.

Wow.

So I think, I think I've taken all I can take for the night.

Wait, you don't want more acronyms?

No, no more acronyms tonight. I mean, like, they, we'll see what happens in the final 4, but no, I'm good. I'm good. Like, I've drank from the fire hydrant. I'm full.

I'm done. I can't do it.

No, but this has been so good. I mean, and I know that we've probably just scratched the surface, so we probably need to— we'll probably need you to come back, Haley. So if nothing else, to like publicly shame Kevin for not being here for this interview. I mean— Right?

Did he miss out or did he mess up?

You would think the man could take no more shame.

Right.

But he deserves every bit of it.

Yeah.

So, as with all our interviews, we've got to do the final 4.

Yes.

So this is, I think this is our guest's favorite part of the program because these are the questions that they don't want to answer. So it's the same 4 questions every time. All right. Are you ready, Haley?

I am.

All right. Question number 1. What is one tool that you will not leave the home without?

That's a great question. So, okay, my initial reaction to this question is my notebook because I always bring a notebook with me because I'm more of a creative-minded person. You're a scribbler. Yeah, yeah, exactly. More words than actual— like, words and stick figures. Really cute. So I always have a notebook with me.

Okay.

And I really enjoy taking notes on anything that comes up in conversation that I have with people that's either inspiring or makes me think a different way. And also, I am a homeowner, so I constantly look at people's yards and I'm like, how did they do that? That looks so cute. Yeah, I want that. So I write down notes on what I like.

Awesome.

Um, but I would say another tool now, it's kind of an inside joke, but I, uh, tape measure.

Okay.

Because I'll tell you in like the next section why I always need a tape measure moving forward in my life. It's the worst.

So, I mean, since you take a tape measure with you, I mean, are you, are you Apple? Are you Samsung? What do you, what kind of phone are you using?

I'm Apple.

You're Apple. Have you used the Measure app?

No, but I need to. I didn't even know that existed.

It's so awesome. I love that.

Really?

Yes. Yes. It's like, and like they say it's like accurate within like 1/16 of an inch.

No way.

It's crazy. And it like, it's 3-dimensional and it remembers stuff. It's insane. Yeah, absolutely try it out.

Okay, this is changing my world.

That's something I need. Yeah, definitely. Like just, I mean, it'll, it'll It'll frustrate you to get it up and running, but it's worth, it's worth the effort. All right. Question number 2. What is a job you walked away from?

Okay. So I'm going to take this more on the homeowner side of things. Uh, it, okay. So currently my, our fridge broke and we had to get a new one. And—

Did you have a home warranty like Kevin?

No. That would be the worst. Oh my gosh. And so we are so excited. 'Cause we're homeowners, all this stuff. And we're in a townhome, so the hallways are really narrow.

Yes.

And they, I swear they built the kitchen around the fridge and we didn't realize it at all.

Yes.

And so what happened is we go to Home Depot, we find this fridge that's just a little bit bigger, but we measured it, you know, in our mind we measured it perfectly.

Yes.

And so that's why I bring a tape measure because our fridge didn't fit. It took 4 and a half hours for the movers to realize that it didn't fit.

Oh no.

I have 2 fridges, and if anyone is looking for a fridge, I have one for you.

Do we have a Craigslist ad that we could link up in the show notes?

I'm going to create one right now because this is getting ridiculous.

We're here for you, Haley.

Thank you. I appreciate it.

I also know how to convert that into a kegerator if you want that done.

Okay, I'm down.

That's good stuff. All right. Remind me to tell you a fun story about my refrigerator The language is not appropriate for the airwaves. Question number 3, how do you wind down at the end of a long day?

I read. I am an avid reader. Absolutely love reading.

Nonfiction? Fiction? What are we doing?

Both, actually. I'm really into understanding real estate investing more for me personally. And so I'm reading a lot of books like that, like David Greene's first strategy book. The ABCs of Real Estate by Kim McElroy. Great book. Those are 2 great, like, very basic books that even I can understand.

Yeah.

Yeah.

Which, I mean, we've actually reached out to David Greene to come on the show to talk about that book. So if anybody has a David Greene connection for that BRRRR book, we would love to have him on.

I actually do.

Oh yeah, really?

We've been talking on Instagram. So I'll say, hey, go on this show.

Let's do that. Yeah.

That'd be awesome. Yes, he's so cool. Yeah.

Well, he's— because he does real estate out in your area, doesn't he?

Down in San Francisco.

Okay. Yeah.

So West Coast, best coast. Sorry.

Well, we have the border crisis. All right. Yeah.

So that's fun.

Yeah.

So I love to read. Honestly, the moment my head hits the pillow and I'm reading a book, I fall asleep within 20 minutes and I sleep better than if I don't read.

Oh, wow. Okay. That's awesome.

Yeah.

So, I mean, do you, Do you always read like, I mean, at nighttime, is it always nonfiction or do you tend to read fiction at night or?

I switch it up. I've learned that, okay, there might be like the new hot book on the New York Times bestselling list and I tend to not always love those books for some reason. And so I used to buy them because I'm like, it's the book that I should be reading. And now I read based off of my mood. So if I'm feeling like I want to learn something, I'll read something that is nonfiction. Um, but I have a lot of fiction books that I really love. I've reread a lot more fiction than I have nonfiction. And so I kind of just go with the flow and how my brain's going. And if I want to chill, fiction. If I want to kind of learn a little bit, nonfiction.

That's awesome. I, I ask because I struggle because nonfiction is my favorite. But it really gets my brain going and then I can't go to sleep.

Yeah, because you get so excited. You're like, ooh, yes, great point.

So I'm like, so like, it's weird. It's like fiction feels like I'm punishing myself. Um, right. All right. Question number 4. What's the best piece of wisdom you've ever received?

It's actually from my dad. So my dad is obviously someone that I look up to in every way. He's, incredible. Not only has he built his own business from scratch, but he is 65 and is still the first person into work. We had to tell him to stop wearing ties to work. He loves it. And now he's starting to understand like, okay, maybe I can go golf when I want to, or whatever that is.

Awesome.

But he has found his passion and he loves it. So what he would do with us when we were kids is he would help us understand money. And so he would always preach live below your means.

Okay.

And he's like, I know that in this world, especially at this point where there is Instagram, there is Facebook, there are these people doing these really cool, awesome vacations, everyone wants to go, all this stuff. But if you can't afford it, you have to be honest with yourself and just say, I can't afford it. But maybe in a year, if I save just 10% of everything I make, Yeah. I can maybe afford it then. So I think living below your means is so key. And I think it's really easy to not do that in this society.

Yeah, it's, it's a, an incredible piece of wisdom that nobody wants to hear.

Exactly. That's exactly— well, wait, I do want that new car. Yes, I'm right there with you.

Yeah. All right, so the, the secret, the secret last question, Haley, is if people want to reach out to you, how can they find you?

Yes, so, um, I am very active on social media. I love to post videos. as you were saying that I do a lot of YouTube and things like that, right? And so, um, the— I, I would probably say the best way is to find me on Instagram. It's Haley Thayer, uh, H-A-L-E-Y.

Okay.

No Y in there, guys. Come on. And then my last name is T-H-A-Y-E-R, and that's the same across all my social media. So if you want to find me on Facebook, if you want to, um, find me On YouTube, it's the same there. And then our company is called residentialfirstcapital.com.

Awesome.

So that's where you can kind of find all of our loan programs and an application online if you are interested, or my contact information there as well.

Awesome. Fantastic. And we'll link all that up in the show notes so people can, can find you real easy.

Perfect.

Awesome. Thank you so much for being on the show. This has been an awesome conversation.

Yes, I absolutely loved it. Thank you so much for having me.

Of course.

It's been wonderful.

Thank you. All right, guys, so if you have not yet, by listening to the amazing things that Haley has told you tonight, go ahead and hit the subscribe button because more knowledge is coming your way and we are happy to bring it to you. You can always find us on Instagram, Twitter, Facebook, and as usual, you can post on Twitter, but we ain't gonna reply. 'Cause we're never over there. But like, if that's just your thing, post away. But thank you guys, we love you guys. Thank you for downloading and listening, and we are here every Tuesday, and we will be back with you next week. Till then, see ya!

See ya!