In the mortgage world, springtime means homebuying movement! If you’re feeling unsure about the current housing market, tune into this week’s episode of Money, I’m Home as Lynne is joined by Consumers mortgage experts David Pendley and Josh Summerfield to discuss some of the ways available to get you into your next home.

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0:00:07.0 Lynne Jarman-Johnson (LJJ): Honey, I’m home. Welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, we have it all, and right now is the smack dab start almost middle of the spring buying season here in spring in Michigan. And I’ll tell you what, we’ve got our experts here with us, Josh Summerfield and David Pendley with Consumers Credit Union, helping you get that house that you’re looking for. Hey, David, I’m going to start with you because I really… Let’s dig in a little bit about why do people buy a home? What is it about home-buying that becomes either A – very stressful or B – just so exciting?

0:00:48.0 David Pendley (DP): The economic nature of buying a house, you’ll get so much input on financial decisions and so forth, but at the end of the day, it’s about what you want your home to be, do you need the bedrooms? Do you need the location? Are you tired of renting? Do you want to build something, do you want to express yourself creatively in your house? So those are all important things. And so, it’s great to put together the financial piece, but also put together kind of the dream of what your dream house, at least at this stage of your life would be and make it fun, make it a blast. I’ve always been passionate about real estate, which is why I do what I do.

0:01:26.2 LJJ: Josh, when you talk about making it fun, I think the reason people get stressed out is first, you start worrying about whether I can even qualify for what type of house you want, and then you wonder about, well, can I really get into it? The inventory is tight right now. How is it Josh, that a mortgage loan officer can help everyone understand that you can release that stress just by getting answers?

0:01:50.0 DP: The process inherently is stressful, I guess. So how can you make it as stress-free as possible, and that’s really what we pride ourselves in doing, is seeing things two, three steps down the road and walking our borrowers through the process to make sure they’re comfortable and they’re well-educated as they’re going out and trying to find that dream home. So, they’re not stressed about, can I make this payment? Can I make this payment? What are all the other unknown factors that I’m not really thinking of? We try to talk through all those things, what the utility is going to look like? Is there going to be condo fees, is there going to be water bills or is it… Do you not have a water bill because there’s well and septic or whatever. So, all the things we start to talk through and really try to get a good big picture of what that payment is, and so you’re comfortable as you find that house.

0:02:41.6 LJJ: I laugh because my son built a house over the last year, and he called me up one day in a panic because he goes, “You know, I did put a budget in for landscaping, but my goodness, it was not nearly enough.” So, it’s all those surprises, right David?

0:02:58.3 DP: Yeah, those are… That’s where, when I talk to young buyers or any buyers really, I always talk and I use the concept to build a team, have your finance person in there, have your real estate expert and maybe one or two, and the reason it’s good to limit it because many people have gone down this path, you’ll get a lot of noise in your background. But put together a small team and use them as a little mini board of directors while you go through this process, because those are things like landscaping. I don’t know, it’s shocking how much that can cost.

0:03:28.3 LJJ: Let’s talk about cost, because right now, I remember the days when there was double digit interest rates, so the 6%, the 7% is not even anything that really hits my radar, even though rates were so low. And Josh, when people are looking at that interest rate, do you think that’s kind of making people a little bit shy?

0:03:51.2 Josh Summerfield (JS): Yeah, I think we’ve gotten used to the lower interest rates, the threes and the fours and the fives, and now it’s maybe a little bit of a shock to folks. Realistically, they’re not bad. It’s just getting used to the new norm. But the reality is, it’s not going to be your rate forever, there’s going to be shifts in the market and things may come back down and you may have two or three different chances to re-fi over the next couple of years. So, David likes to use the terminology date the rate, marry the house. So, if this is your forever house, it’s not going to be your forever rate, that’s for sure. On average, people don’t typically stay in a mortgage for more than seven years. So, whether they’re moving on to a new home, because they’re moving cities or maybe they’re upgrading because of their family or whatever, they’re not typically going to be in that mortgage with that interest rate forever.

0:04:38.1 LJJ: David, I like the way you say that, focusing on the fact that your home is really where your heart is, so sometimes you want to take your heart and all of a sudden your brain says, oh, this isn’t the right time, or this isn’t a focal point for me. And yet being able to talk to somebody to get your actual, what your dreams are, and can you really do it? Isn’t that really the number one thing you should do first?

0:05:07.7 DP: It is. Especially in a market like this. I remember a young woman we were talking to last year, she finally got her offer accepted and she was one of 10 bids and yay, yay, yay, bought the house and said, “I don’t even like this house,” but she thought the end game was to win a bid, to win this auction. That’s not the end game. Wait, put together your list, have some people on your little mini-board or your little team, and say if it doesn’t have three bedrooms, two baths and with the right view on the right street, if it doesn’t have this, I’m going to wait because it’ll come. Ultimately, it’ll come. You’re trying to spend a lot of money; someone will provide the right house for you at some point. But don’t compromise, put together your list and your team and find the right house for you.

0:05:52.3 LJJ: Josh, we have so many products that are unique to the unique buyer, one of the things we talked about briefly in the last episode was about understanding what you can you do. So there’s actions, if you’re building or you find a house, what’s a bridge loan? That’s been something that all of a sudden I think people are so excited about.

0:06:12.2 JS: Yeah, the bridge loan specifically is an opportunity for you to tap into your current home’s equity to kind of bridge the gap between the existing home and the new house because maybe you don’t want to quite sell your current home yet, but you want to get boots on the ground in the new house and get settled and then go back and sell the other house afterwards. So, the bridge loan allows you to do that. Just one of the great products as we look at structuring the right fit for a certain borrower, so finding the right product for you is super important in the process.

0:06:44.1 LJJ: And that’s what we love to do. David, you have helped bring us something called Lock and Shop, which has also become very popular, especially with the inventories the way they are. Tell us about lock and shop and what does it mean for the buyer?

0:06:58.4 DP: Yeah, it’s kind of tricky when you’re buying a house, something this expensive and you really don’t know what the payment is going to be until you actually find a house, so wouldn’t it be cool if you could cap the rate and say, “Okay, wait, I know worse scenario today it’s going to be 6.9%, for example.” That’s worst case, and I protect it. I can casually look for the next three, four or five months and know that it’s not going to be any worse than that. But if it gets better, I get to win on that, that’s called a Lock and Shop, it costs you nothing. We do ask for a $500 deposit, it’s refunded or applied at closing, but it protects that rate, and guess what, if they go down to 5 7/8 or 6% or lower, you win on that, but you know we’re never going to surprise you and say, “Oh, darn, your rate’s 7.5%?” You can shop comfortably, you know that my payment worst case scenario is going to be x amount.

0:07:47.8 LJJ: And truly Josh, some people really do base their home buying on payments, not even looking at the interest. It might be the length of the term and how much they can afford every month.

0:08:00.9 JS: Yeah, and really that’s what it comes down to, because you’re not going to the mailbox every month and getting your rate, you’re getting your payment, what you actually have to pay. So that’s really where you should start and feel, what is the comfortable payment for me, and then kind of back into where do I need to be price-wise for that comfortable payment? Super important part of the process.

0:08:23.2 LJJ: So, it’s spring. Everybody is getting out there to buy, what do you think are the top two things, David, that people should do as they’re looking to purchase their home?

0:08:34.3 DP: The first thing is to talk to a mortgage loan officer, and I promise you I’m not being self-serving when I say this, it’s just that puts you exactly in a very pragmatic way, financially, can I pull this off? Are there any dings on my credit, anything, an old parking ticket that I don’t know about, that’s going to cost me another $75 a month in because my credit score got dragged down, we could help get that back up. So anyways, first thing, self-serving, it’s not. It’s just whether you go with us or somebody else, talk to a good loan officer and get the framework there. The second thing is put together that plan, maybe a financial planner and somebody who’s really good at real estate. In my little area, my corner of the world, a lot of people are moving up there from Chicago. So, my friends lean on me a lot as far as location, what can I buy for this and lots and land and all that stuff. I try to help them and they know that my opinion is going to be unbiased because I have no vested interest in whether they do it or not. So put together a little team of people and every now and then call a little meeting and say, “Here’s what I found. Any advice?”

0:09:43.7 LJJ: That’s awesome. Hey, Josh, I’m going to ask you the same question, except the opposite side. If you’re thinking of selling a house and it’s springtime, what are the first two things that you should be doing to get that house ready to go?

0:09:56.1 JS: Yeah, number one is you definitely want to talk to a great real estate agent, somebody that you know and can trust and is going to give you honest feedback on the things you actually need to do to the house, because you don’t want to go and put time and money into something that isn’t going to return the value when you’re going to sell. So get some honest feedback from somebody that you can trust on the real estate side, and then of course, if you’re going in to trying to buy the next house, which many people will be, is just to talk to a loan officer and find the right fit and find somebody that’s not afraid to tell you maybe the things you don’t want to hear, because those are the things we actually do need to hear at times in the process.

0:10:37.2 LJJ: You never want to all of a sudden have sleepless nights because you bought a home that was too big that you thought it was going to be great, and then all of a sudden, all the extras come in. That happens when you buy a home. Right David?

0:10:51.6 DP: It does, and I have a personal circumstance going on right now, a friend of mine was walking down that path and I very politely stayed out of it, unless he asked for my advice. I saw some red flags and they’re experiencing that stress right now. It could have been so much easier.

0:11:08.4 LJJ: Yeah, I love what you’re saying. All the time, ask the questions. Don’t be afraid. It’s okay. No one is trying to make you feel good or bad. We’re instead trying to help you get into a house. Right?

0:11:20.3 DP: Absolutely, absolutely.

0:11:22.9 LJJ: Well, you guys, thank you so much for joining us. I know that it has been a topsy-turvy mortgage world, but you know what, we are ready to help anybody no matter what their situation. So, give us a call here at Consumers Credit Union. Thank you, Josh. Thank you, David.

0:11:36.5 DP: Thanks Lynne.

0:11:37.3 JS: Appreciate you having us.

0:11:38.2 LJJ: And thank you, Jake Esselink for your production skills. I hope everybody’s having a wonderful week and again, we’ll get you in that house. I’m Lynne Jarman-Johnson with Consumers Credit Union.