For most people, a home is the biggest investment they will make in their lifetime. Tune in to this week’s episode of Money, I’m Home as Lynne is joined by Consumers mortgage experts David Pendley and Josh Summerfield to discuss the current state of the housing market and how to prepared for when you find your dream home.

 

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0:00:06.7 Lynne Jarman-Johnson (LJJ): Money, I’m home. Welcome in, I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, we have it all. And we love our featured products about getting you into that house. And when I say products, what I mean is, you know something, you might be in the stage of life that you’re looking at your house as an investment. Perhaps you’re looking at getting into a new home, maybe you’re looking at downsizing. There are so many things, that you can do, even in a tight market to really make sure that you are getting the best use of your house and also making your life just exactly the way you want it to be. Josh Summerfield and David Pendley are joining us today. They are our gurus here at Consumers Credit Union. And Josh and David, I’ve had just a blast lately talking with many of my colleagues and friends who are out there starting to feel like, you know what? They have hope they’re seeing a market that’s a little bit more inventory. Josh, am I right in that?

0:01:06.0 Josh Summerfield (JS): Yeah, I think we’re starting to see some positive signs, fingers crossed that continues, right? The warmer weather kind of is peeking out here and there, and we get a little glimpse of spring and people start thinking about the yard cleanup and what are we going to do? Are we going to move? Are we going to list our house? Are we going to find that next one this spring and summer? So yeah, some positive things in the inventory side of things.

0:01:26.9 LJJ: Thank you, Josh. David, when you’re looking at your home, and many people see it as the biggest investment that they have, what is it that you have seen that people are doing maybe a little bit differently in the sense of trying to make sure they have, A, the property that they’d like, but also keeping it up to date so that they can do a pretty quick sell if the investment is time is right?

0:01:49.1 David Pendley (DP): Yeah, it’s interesting because it’s probably a phenomenon in the last, let’s say, 30 years where your home is part of your overall comprehensive financial plan. What happened? Well, pensions went away in the ’80s for most of us. And so now your retirement is on you, so your home became super important to set up a strong plan for that. Right now it’s just kind of a unique time, the consumer has gotten used to a 6% or a 6.5% mortgage interest rate, and we weren’t getting a lot of sellers, but just recently they’re kind of seeing that with this reduced inventory, they can get a premium for their house that they otherwise have not seen in years. And so it is bringing out a lot more sellers, which is encouraging for our market.

0:02:40.9 LJJ: What happens though then, David, with the fear of, you don’t have a new place to go? What are people doing?

0:02:47.8 DP: Yeah, that’s so important because you may all sell your house in a day, but you got to have a place to go. So, a lot of people do come to Consumers Credit Union because we’re one of the few places that offer a bridge loan. What’s a bridge loan? It allows you, I would get pre-approved for your bridge loan, so you can have that in place first, and it’s not a fire drill. But get a bridge loan in place first, at least get approved for it, find your dream home, write the contract and then you can close on it, simultaneously, you can sell your house and not have to close on your house until after the closing on your new house. We basically bridge the equity out of your old house into the new house.

0:03:32.1 LJJ: Josh, how important is that equity and what does that mean for the listener?

0:03:36.3 JS: Yeah, equity is important on a few things, right? As you’re looking into selling your house and how much you’re going to be able to walk away with and possibly take into the new purchase. We want to know what kind of cash you’re going to have on hand after you sell that house. Whether you choose to sell it before you buy the new one or after. As David was talking about the bridge loan, maybe tap into the equity a little bit earlier. And then we want to know, what are we going to be looking at on the new side of things, on the new house? What kind of equity position are you walking in with to be able to set yourself up for investment for the future?

0:04:13.4 LJJ: Right now, we’ve talked so much about how tight the market is, but truly it’s still the point in time where you can sell your home at a premium rate. And David, what is it that you’re suggesting, are you seeing, David, that the realtors are still seeing those really quick where they’re almost doing what, I don’t want to say the word auction, but it’s almost by this time at 6:00 o’clock you have to put your bid in and then they open them all up, which was unheard of?

0:04:44.6 DP: Yeah, Lynne, it is nothing less than an auction. If you see a very nice house on the market and it seems very modestly priced, the strategy the realtors are using are to get multiple bids and then within 24 hours they realize that we are in an auction format. And then usually set a day in a time. And they say all bids need to be in by Wednesday at 6:00 PM and they often, for a nice home that maybe doesn’t need a ton of work or is in a great street or location or whatever the attributes of the house are. We see a lot of overlisted homes right now still in this market.

0:05:27.3 LJJ: And Josh, is that stressing out the market a little bit still? Or are you seeing a little bit of sunlight peering in through those shades that are so nice in your new home?

0:05:38.3 JS: [chuckle] Yeah, it’s interesting. You’ve got buyers that have been looking for a while, and it could cause some stress, right? When you’re going into home after home, after home, falling in love with them maybe, and just to find out there’s 10 or 15 other offers on the same property, so that can cause some stress on the buyer a little bit. And that’s going back to being prepared and making your offer look as good as possible, working with a lender to get prepared and have a fully vetted pre-approval, sometimes that’s going to look a lot better than maybe 50-75% of the other offers that are on that house, that might help you get into that. But yeah, I would say it’s just as we turn into this spring market, we’re still seeing a lot of that auction style houses going up and it can cause a little bit of extra stress, that’s for sure.

0:06:28.5 LJJ: And David, how important, in all of this, we talked last month about the realtor and the mortgage loan officer partnership, that communication has got to be so important, especially if the stress level is high and the inventory is so tight. It seems… Like, I know that our teams work 24/7 to make sure that we’re communicating and trying to get that information not only from the buyers and or sellers, but also to them.

0:07:02.3 DP: Yeah, it’s super important to work very closely with your team. And your, one of your major team members is that mortgage loan officer. All of our mortgage loan officers are available after hours and weekends, and often we’ll find a buyer who writes an offer and maybe waits a day or two to talk to the loan officers, only to find rates are higher than what they thought, or maybe even they’re not approved for that because the taxes on that house were higher. So, if you find a house that you’re very excited about, call your loan officer immediately and say, “Will you work the numbers on this house, on these taxes with this association fee and today’s mortgage rates, and tell me exactly what the payment is, and yes, do I still qualify for that house?” And we’ll do it right over the phone on the weekends or whatever.

0:07:48.7 LJJ: And the interesting thing about that is you really do have to know where that house is, what line is it on in the sense of taxes, Josh. And that’s where the expertise comes in, that’s so important.

0:08:03.0 JS: It’s super important. Going into being prepared ahead of time and running those numbers on really every house you go look at, it can get a little bit cumbersome going through in every single one of them and running them, but it is really that important just so you feel comfortable as you’re getting ready to make that offer that you’re not getting in and over your head.

0:08:22.3 LJJ: Yeah. No surprises, right?

0:08:24.5 JS: Yep. Don’t want any of those.

0:08:26.7 LJJ: So next month, you guys, I had a great conversation over the weekend and it was about the fact that, there was somebody that was kind of disappointed because they didn’t get the best rate that they thought, but what ended up happening was the way that the mortgage was created was very appetizing for this buyer. Let’s, next month talk about all of the different ways that you can structure your mortgage so that you’re comfortable with it, and sometimes it’s not about rate.

0:08:58.1 DP: Sounds great. Looks forward to it.

0:09:00.5 LJJ: David and Josh, thank you so much for being with us. Thank you for listening. Hey, Jake Esselink, we thank you for your production skills. And listen, if you have a topic, I just want to chat a little bit here on Money, I’m Home. You are so welcome. Just send me a note. Lynne Jarman-Johnson at Consumers Credit Union; Money, I’m home.

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