Home Ownership Options, Bridge Loans and
The housing market is hot, hot, hot! To discuss ways that Consumers can help members achieve their homeownership dreams and more, Lynne is joined by Vice President of Mortgage and Lending David Pendley on this week’s edition of Money, I’m Home.
0:00:06.0 Lynne Jarman-Johnson (LJJ): Money I’m home. Hi, I’m Lynne Jarman-Johnson with Consumers Credit Union. Welcome on in. We have everything for you from finance to fitness. And today we’re focusing on ooh, those hot home sales. Joining us today is David Pendley. He is our vice president of Mortgage and Lending. Oh, my goodness, David, it has been a rocky fun ride, hasn’t it?
0:00:30.0 David Pendley (DP): It has been an absolute whirlwind, but just an absolute blast, too.
0:00:36.4 LJJ: Well, David has been with us now for, you know what, you’re almost a veteran, David, and you’re helping lead us and really providing the best services for people to get into that home. You know, I have a quick question for you, though, it seems to me like there’s kind of this fear, you know the housing market is so hot, and people really want to sell their houses because they’re getting top dollar. But then where do they go?
0:01:01.7 DP: That has been the question for about the last 12 to 18 months. In varying degrees, depending on where you are in the country. There’s plenty of sellers out there to match the buyer demand. The problem is the sellers are afraid to put the house on the market because they know it’s probably going to sell in 12 hours, and then they’re going to have a place… Need a place to go and do they really want to jump in a bidding war, or an inflated situation where they’re paying more for their house than it’s worth just so I have a place to live. So, what they’re doing is they’re sitting back and they’re saying, “I’m just going to wait this out, because I don’t want to jump into this frenetic real estate market right now.”
0:01:42.2 LJJ: This is where you have really taught me the importance of working with an MLO and a realtor to try to figure out what your next best steps. How important is that teamwork?
0:01:54.9 DP: It’s super important. You want to be very well prepared when your dream house comes on the market. You want to have a well-defined strategy so you’re not making decisions in a panic state. And you want to work with an amazing team who’s seen all this before in varying degrees. So, I think it’s great to have a really good realtor, possibly an attorney or a trusted adviser in this and hold yourself accountable so you don’t let your own emotions get caught up in the intensity of 2021.
0:02:26.6 LJJ: You know, that’s the key isn’t it, the emotions, because it’s your home. You know?
0:02:33.5 DP: Mm-hmm.
0:02:34.6 LJJ: You get so involved in it. And I’ve heard such stories about what people are offering. It blows my mind to think that someone would like skip an inspection. I just don’t understand that’s happening.
0:02:46.9 DP: It’s a great time to sell a horrible house because people are waiving their home inspections. They’re waiving all these hedges that were to protect you. There’s a great article in the Wall Street Journal about a young woman who had missed out on three houses and she finally was… Got her offer accepted. And she bought a house and she realized three weeks after closing, she doesn’t like this house. But she thought the end goal was finding a house and getting her offer accepted. The key is to be patient and to buy your house and to be prepared for when your house comes on that you can really present the strongest offer in this type of market.
0:03:24.7 LJJ: You know, one of the things that just recently happened, you walked into my office and you said to me, “Hey, Lynne, let’s talk bridge loans.” And I looked at you like a deer in headlights and said, “What’s a bridge loan? Are we selling bridges now, David?” No, what’s going on in the market?
0:03:43.8 DP: Yeah, bridge loan is a… If you think of the concept of a bridge, bridging the equity from your current house to the new house you’re trying to buy. So, what would happen if you said, “Okay, I do want to participate in this market. I want to find a house, it’s a great time to reset. I can go sell my house at a very fair price.” So, what we do here at consumers is we have a program where we will literally lend you 85% of the equity in your current house. So, let’s just say your house is worth $100,000, we’ll give you a full $85,000 of that. We’ll pay off your first mortgage. And we allow you to use that equity without your house having to be sold to place it down as your down payment on your new house.
0:04:29.5 DP: Now obviously the trick there you got to be well qualified because you’re qualifying for two payments, really three if you think of my old mortgage, my new mortgage, and the bridge loan. But we’re doing a fair amount of them, it allows you to go out there and find your new house and say, “I’m not selling my house until I find my new house.” You find your new house and then you activate the bridge loan. What’s interesting about these is once you get approved for the bridge loan, and you make an offer on your new house and it’s accepted, then you say, “Okay, I got my new house in process, we’re closing September 1st,” let’s say, “I’m going to put my old house on the market. Boom, it sells right away, I get my dream price on the sale. Thank you, Consumers Credit Union, I don’t need the bridge loan anymore. I’m going to go ahead and proceed with the end mortgage on my new house. But the bridge loan just was a tool that to give me peace of mind to know that I’m not going to be homeless. It was a great tool, but I don’t need it, my house is sold.” And we’re thankful, we’re like, great, glad you don’t need it.
0:05:28.2 LJJ: Well, and that really does help people sleep at night, you know, especially in what the market is like right now.
0:05:35.4 DP: Yeah, it really does. It’s a great tool to open up the market. If you are looking to do a reset right now in your housing.
0:05:42.7 LJJ: You mentioned great tools. And I think one of the things that we’re most proud of is the credit union as a whole and the industry and making sure that we look at individuals who may not be able to get a home. They have an ITIN, it’s called, an individual tax ID number. There might be stumbling blocks and in other financial institutions, but David, you really are stalwart on saying, “Look, we can help individuals with ITINs to get in the home that they want.”
0:06:11.9 DP: Yeah, and ITIN is an individual tax ID number. Maybe you’ve been in the country for six, seven, eight years, 10 years, 12 years, 15 years, and you’re in that in-between status where you don’t have a full social security number, but the federal government has recognized you as a legal taxpayer of this country. Most lenders won’t even talk to an ITIN borrower. Where at Consumers Credit Union what we’ve done is we’ve opened up our lending portfolio. These are portfolio loans from our own assets that we’re lending to allow people to become homeowners here in America. And I think it’s kind of a champion by the credit unions throughout America, that these are actually very strong borrowers and with 10 or 20% down, and we have our own way of checking their credit and checking the solid elements of the loan. We found that these loans here at Consumers, they’ve performed amazingly well. And these borrowers have been tremendously appreciative of this opportunity to finally participate in the American dream, which is owning a home here in America.
0:07:25.8 LJJ: It sounds like that trust factor we mentioned earlier, David, it’s listening, learning, understanding. How does a person who is interested in finding out about the different types of loans? I know we have our zero down, which a lot of people call on, but what ends up happening sometimes is that they find out, hey, there might be a better option even than zero down depending what goals are.
0:07:45.6 DP: Yeah, there are. They’re called sometimes in the zero downer, another program or a variety of programs. What’s so great about Consumer’s, with our portfolio lending ability, we do have flexibility. And I look at my loan officers, while they are called mortgage loan officers, I look at them more as somebody who is a financial assistant on somebody’s debt side of their comprehensive financial plan. How do we get you where you want to be some day is what’s the best mortgage for you? And I think the best thing to do is to reach out to one of our loan officers and then tell them or ask them, “Are you willing to help me as far as reach my financial objectives and my housing objectives?” And tell them what you’re looking to achieve. And they’ll set you up with the right program and the right strategy, and a lot of times we refer out really strong real estate agents, or financial planners, or accountants to help answer some questions more down the professional realm of what you’re looking to achieve.
0:08:47.7 LJJ: Well, David, it just sounds like there are so many options, and we sure appreciate you taking time today to help us understand them more.
0:08:54.4 DP: You bet. It’s a pleasure, Lynne. Thank you.
0:08:57.0 LJJ: Money, I’m Home. From Finance to Fitness. Thanks for joining us today. Thank you, Jake Esselink, for your production skills. We hope everybody has a great week, and if you do me a favor and you have a great subject you want, just send it our way. We’d love to have you on our podcast, Money, I’m Home, with Consumers Credit Union.