8.14.22

Ep. 184: Gen Y Can Buy a House!

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Consumers' podcast graphic with image of guest David Pendley. Title "Gen Y Can Buy a House!"

 

 

Many millennials are fearful that they will ever be able to own their own home. Consumers mortgage expert David Pendley is here to tell you that they can! Tune into this episode of Money, I’m Home to learn how Consumers is here to help you achieve your homeownership dreams!

 

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0:00:06.6 Lynne Jarman-Johnson (LJJ): Money, I’m Home! Welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, and how about your own house? Today, we’re really focusing in on getting your home. Especially are you the ages of 26 and 41? Do you know that nearly half of millennials who do not yet own a home are pessimistic that they will ever be able to. That’s a recent study on this generation by Open Door. David Pendley is our vice president of mortgages here at Consumers Credit Union. David, have you been watching and do you see during age groups that there might be this pause, this feeling like, “I just can’t get into my own home.”

0:00:51.1 David Pendley (DP): Yeah, it’s been frustrating the last 24 months as the inventory has just not allowed maybe a 5% down buyer or an FHA buyer or a first-time home buyer to compete with somebody paying cash or putting 50% down or whatever. Or the other thing is do they really want to jump in this rat race when things are selling for 5-10% over the asking price? So, you look at a house, and maybe 300,000, is it really 300,000? Nobody knows till it actually trades at that. So, there’s some good things on the horizon, we can talk about that.

0:01:22.8 LJJ: That’s what I think people still are a little bit hesitant about, right? They’re like, “Okay, wait, is it true that the values are going to come to where… ” I guess you’d call that word, “realistic?” The high values that started creeping up, and people just can’t afford to get in that home. But you have told us before, think about re-pricing long-term, don’t fear this.

0:01:45.7 DP: It’s interesting, I literally just talked to a high-producing agent today, and I said, “Tell me about the market.” And she was talking about the Michigan market, specifically the West Michigan market. And she said inventory is still trickling on, but probably the unique dynamic right now is a house is coming at 300,000, and it’s selling for 295 or 299 or maybe 301, it’s not selling for 331. And it’s sitting on the market for a good seven, eight, nine, 10 days. Which is nice, because it allows you to kind of think [chuckle] about it, maybe have some trusted advisors look at the house, it’s not this frenetic bidding war. So, there’s getting some stability back into the market, which is very encouraging. Some good friends of ours moved to Holland, and they were young, first-time home buyers. They got edged out on three or four. They finally got their house, and it was better than they ever could have thought. And then they paid what a fair price for the house, it wasn’t some escalated price because of this euphoric market. So, things are normalizing right now as we speak.

0:02:45.5 LJJ: Oh, I like the word normalizing, that’s great. One of the things that is, I think, hesitant, when we say that the Gen Y is hesitant, it is that down payment. It’s the fact that they perhaps don’t have the highest credit score, maybe they have student debt or debt from credit cards. And they just are frustrated because they can’t get that down payment. What are the products that are available to say, “Look, if we can make this happen, if you’re spending this much on rent, there’s got to be a way to try to help you get into your home.”

0:03:15.2 DP: Yeah, there really is. And so for us at Consumers, we have a couple free products for that first-time home buyer with minimal down payment. Obviously, we have the FHA, that’s your Federal Housing Administration monies insured by the federal government, 3% down. And so we’ve got that, and we’ve got some conventional products that are also 3% down. And what we do a lot of is our zero percent down loan. It’s got to be a good loan, but we do a lot of them. People who have good credit, good jobs, things align really well, we’ll literally do a loan for zero percent down. One of the most exciting things about that is it has no PMI, no Private Mortgage Insurance. Private Mortgage Insurance does not help you, it helps the lender feel good about that loan [chuckle] and it insures in case something goes south. So, it does not help you, but you pay for it. And our zero down has no PMI, so it’s really cool. One other thing I wanted to touch on as far as you see this, the recent creep-up in the rates. We’ve seen that. And that, we had some young home buyers that were discouraged by that, and I’m like, “Man, don’t be discouraged.”

0:04:19.7 DP: Here’s why, because that $300,000 house back in February was selling for 330. And the rates? Yeah, the rates were three-and-a-half percent. But now that $300,000 house is selling for 300,000, and your rate is… Yeah, it’s slightly higher, it’s five-and-a-half percent. But you’re married to your house, you’re only dating your rate. What that means is you can change your rate as they go down. And they’ve actually gone down about a full percent in the last 30 days. So, while you might have closed at a 6% rate, we had a 5% rate last week. So, we can always improve on that. But the good news is you’re not over-paying for this house.

0:04:58.3 LJJ: Well, one of the things that I like about your focus, David, is you really are looking nationally and then bringing this close to home. You’ve been in the mortgage industry for years. How are you feeling right now about the fact that all of a sudden it feels… Okay, it’s normalizing, but actually is that making it more difficult for those who are in the mortgage industry?

0:05:21.7 DP: Yeah, it’s no secret, all you got to do is Google, “mortgage layoffs,” and you’ll get a lot of stories of literally thousands of people losing their jobs. And as somebody who’s worked more on a national platform, I’m getting calls from old friends and so forth and that. But thankfully, it’s a good job market, they may have to reinvent themselves in another industry. But we are… As an industry, the housing market, the mortgage industry, we are in the midst of flux. Otherwise, we’re right in the midst of this change, and we don’t know it’s going to look like the next six months to a year. We know it’s going to be harder, we know we’re going to do less mortgages, things like that. But that bodes well for the consumer, because we are putting our best foot forward as are other lenders on every single loan to fight to compete to get the absolute best pricing out there. There’s what’s called margin compression, people are working for very, very [chuckle] cheap to get your mortgage, which will help the homeowner. So, it’s all going to line up well for the new home buyer.

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0:06:21.1 LJJ: Well, David, thank you so much always for your input. It’s always so refreshing and always spot-on.

0:06:28.2 DP: Well, thanks. It’s great to be here.

0:06:30.2 LJJ: Hey, listen, if you have a topic that you’d like to share, just to send them our way, we’d love to hear from you. And I’d like to give a little shoutout to Jake Esselink and his production skills. Hey, everybody have a great week. Money, I’m Home! With Consumers Credit Union.

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