Ever wondered how you could bridge the wealth gap through homeownership without the mythical 20% down payment? This Key Factors Podcast episode, featuring mortgage mavens Yvonne 'YG' Godina and John Hudson, promises to revolutionize your understanding of down payment assistance (DPA) programs and equip you with the knowledge to navigate the home buying journey with confidence. YG and John, with their combined 53 years in the mortgage industry, share heartfelt narratives and expert insights, debunking common myths and laying out the blueprint for building generational wealth through property ownership.
Together, we peel back the layers of mortgage options and lender responsibilities, illuminating the path for first-time buyers and seasoned investors alike. This episode is not just a discussion—it's a masterclass in the practicalities of DPA programs, the importance of accurate income reporting, and the strategies for turning an existing home into a rental property. We'll guide you through the often-misconceived world of DPA, clarifying the types of assistance available, from grants to bonds, and how these can impact your loan terms. John and YG's expertise shines as they explore the nuances of these pivotal financial tools, ensuring you leave armed with the know-how to seek out the best mortgage solutions for your situation.
Wrap up your understanding of the transformative power of homeownership and the critical role of ongoing education in the pursuit of property ownership. This conversation is more than an overview of housing loan rates and programs—it's a call to action to take informed steps towards securing your slice of the American Dream. With YG and John's wisdom at your side, the Key Factors Podcast turns complex financial terrain into approachable, actionable insights. Tune in, get empowered, and mark your first step towards a brighter financial future with us.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Ever wondered how you could bridge the wealth gap through homeownership without the mythical 20% down payment? This Key Factors Podcast episode, featuring mortgage mavens Yvonne 'YG' Godina and John Hudson, promises to revolutionize your understanding of down payment assistance (DPA) programs and equip you with the knowledge to navigate the home buying journey with confidence. YG and John, with their combined 53 years in the mortgage industry, share heartfelt narratives and expert insights, debunking common myths and laying out the blueprint for building generational wealth through property ownership.
Together, we peel back the layers of mortgage options and lender responsibilities, illuminating the path for first-time buyers and seasoned investors alike. This episode is not just a discussion—it's a masterclass in the practicalities of DPA programs, the importance of accurate income reporting, and the strategies for turning an existing home into a rental property. We'll guide you through the often-misconceived world of DPA, clarifying the types of assistance available, from grants to bonds, and how these can impact your loan terms. John and YG's expertise shines as they explore the nuances of these pivotal financial tools, ensuring you leave armed with the know-how to seek out the best mortgage solutions for your situation.
Wrap up your understanding of the transformative power of homeownership and the critical role of ongoing education in the pursuit of property ownership. This conversation is more than an overview of housing loan rates and programs—it's a call to action to take informed steps towards securing your slice of the American Dream. With YG and John's wisdom at your side, the Key Factors Podcast turns complex financial terrain into approachable, actionable insights. Tune in, get empowered, and mark your first step towards a brighter financial future with us.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Welcome back to another episode of Key Factors Podcast. I'm your host, mark Jones, and we are powered by ReviewMyMortgagecom, the largest index of mortgage programs in the nation, and never has that website actually been more valid for an episode like today's. We're actually going to be discussing the ins and outs, the 411, the low down on the down low, and I'm talking down payment assistance. So I've brought along two guests that have an extensive experience in dealing with consumers, down payment assistance, housing programs and things of that nature. So before I introduce my guests, I want to ask you, the listener do you know and I'll also ask our guests at the same time do you know what DPA stands for? Raise your hand, just raise your hand, okay, just making sure. So let's move on to our guests. First, I've got Yvonne Godina, senior loan officer, with, I Think, mortgage.
Speaker 2:How you doing, I'm doing good, I'm doing good, but y'all guys, I'm rebranding myself, so I go by YG.
Speaker 3:YG now a days.
Speaker 1:I love it, Not like the rapper but just YG doing loans. You know, when you told me that I'm like I'm not up to date because I don't even know, there's a rapper named YG yeah.
Speaker 2:Don't get the content.
Speaker 1:Don't get the content.
Speaker 2:Don't get the content because you may not want to do business with me after you listen to some of those songs.
Speaker 1:Absolutely. And my second guest today, who is somebody that I respect very, very highly in our industry and what he does for us other mortgage loan officers, that's John Hudson, vice president of mortgage financial services. How you doing, brother, man. It's great to be back.
Speaker 3:It is always great to have you on here.
Speaker 1:I think every time that you and I come together there's a lot of great information that comes out and a lot of times I don't know, but I know the right questions to ask and that kind of leads the road Just kind of come out.
Speaker 1:Yeah, if you call them hot takes on sports bets. Yeah, hot sports opinions. There you go. So, guys, if you can tell our listeners who you are, how you got in the business or when you started and where you're at, all that good stuff in a brief moment, because a lot of the listeners don't know who you are and some do, but this is a great chance or opportunity for you to elaborate on that.
Speaker 2:Yeah, so I'm Yvonne Gatina, known as YG. I've actually been in the business for almost three decades 27, 28 years, okay, yeah, so John and I were actually talking for a little bit. The down payment systems that's today was way different back when we started, guys. So we've been around the block, but I'm pretty passionate about helping families create wealth and get into homes. I'm also kind of going through a rebranding part. You know you've been in the business for some time. You hit some peaks of where you're. You're just not helping as many families as you are, and so this year has been an amazing year and starting off really good, so I'm excited to do that. I'm also a single mom and I've got four kids, two girls at home, teenagers so you know how expensive that can be guys.
Speaker 2:And then even young adults. They don't want to leave you anymore, you know, and it's because they probably need these down payment assistance programs. They can go buy a house and get out, but yeah, so I'm just really passionate about it and been doing it for a long time, so I'm really excited to be here with you too.
Speaker 1:Absolutely Learn a lot and so here to help. Can I give you some life advice that I hope that I can take when the, when the turns table Say no, kick them out, kick them out.
Speaker 3:That's what my parents did, yeah, just boom, give them the boot.
Speaker 1:I'm here to help any who. So, john, tell us about yourself, yeah no, no, no.
Speaker 3:Executive Vice President, mortgage Financial Services. I run our wholesale and you know help with our retail divisions as well. But I will say that I'm a self certified mortgage geek, boom Been doing this for 26 years and I guess the you know kind of along the same lines with those passions that you described. When I got in the business I was just a junior in college. Sure, I barely knew that. I really didn't know there was a tea in mortgage.
Speaker 1:Wait, there's a tea in mortgage.
Speaker 3:Yeah, apparently so. And so one day I was looking for trying to figure out how am I going to pay for beer during you know summertime, sure, and saw a posting for an internship with North American Mortgage Company. Had no idea what I was getting myself into and went out, interviewed, got the job and went there. I was basically a loan officer assistant. No idea what I was doing, started calling people asking them if they fixed their credit up, et cetera, et cetera, and did that for a little bit until finally, one day I went to my first closing, okay, and the loan officer I worked for took me to a closing and I'll I'll never forget it. It kind of gives me goosebumps thinking about it. I could close my eyes. Picture this woman's. You know her curly blonde hair. She was wearing blue nursing scrubs and at closing this woman started crying. And she started crying because she was a single mom and finally gave her kids a backyard to play in.
Speaker 1:How freaking cool is that?
Speaker 3:And you know, call it a sign from the heavens above. I mean, my mom happened to be a nurse and we were. You know, she was single when we were, when she was raising us. So it was like a little something grabbed me at the, at the string stair, but I started to go wow, there's something really to this home ownership thing. And so, on the way home stopped by the bookstore, bought home buying for dummies and how the bond market works. There you go, and I've literally been a student of the business since then.
Speaker 1:Now, john, let me ask you at that time, your first closing being in the business, were you a homeowner? Were you still renting at the time? I was renting, okay, yeah, no, and most loan officers, when they start in the industry, are renting still. Yeah, because they're starting a new career. Many, many different reasons, but I just wondering.
Speaker 3:Yeah, I was still in college and graduated in 1999. And you know, still live in the, you know, 21 year old, single, sure.
Speaker 2:Lifestyle.
Speaker 3:Absolutely, and bought my first house so in 2000, 2001. Okay, 21 years old, there you go. Put zero down, by the way, same.
Speaker 1:I did USDA. No money down. Yeah, Best thing I ever did 100% financing.
Speaker 3:So you don't need a down payment, which kind of was where we're going here.
Speaker 1:That's where we're at. That's where we're at I went the opposite.
Speaker 2:I did an owner finance and I think, right when I started the business I was at USAA. So let me tell you at that point, this were like the cream of the crop there was no credit issue there was no, super conservative yeah. Super conservative. You either had a loan or you did it, and there was. It was literally black and white. There was no gray, like we look at things now, right, but it was black and white at that point.
Speaker 3:Wow, wow, probably 20% down for 20% down.
Speaker 2:And let me tell you, our title was loan officer, but we were not loan officers. No, we didn't take an application. We didn't know what a 1003 was or how to complete it. If you were interested in a loan, we said let me transfer you over to PHH mortgage. Yeah, and they did the loans initially.
Speaker 1:Now you know YG, those still exist. They just happened to work for banks and credit unions.
Speaker 2:Just so you know they do so eventually USAA switch where they realized I guess we can make some money off of it and then they started originating. So we did get some expertise on that and then I went to the builder world. I was telling John, I went to work at KB homes and let me tell you from going to CREMA, the Crop 800 credit to throw it against the wall and see if it sticks.
Speaker 2:Two, I helped you know family members closing on a 497 FICO score. I mean I was like whoa, what is going on here? Totally different world, yeah, totally different.
Speaker 1:So as we jump into our first topic, I want to make sure that the audience is aware that this is going to be very informative. We may have different debates on opinions and how things are perceived, but the guidelines the principal basis of down payment assistance are clear to the guidelines. Each of the actual bonds or grants or government agencies have their own set of guidelines and some of them may follow the normal Fannie Freddie guides, but they may have nuances. So we're here today to talk about all of that stuff, from the basics and beyond. So our first question or first topic is what does DPA stand for? And I think the obvious is down payment assistance. There is nothing else to it.
Speaker 3:Oh, but there's a little dot dot dot dot, dot dot dot dot and closing cost assistance.
Speaker 1:That's very true. So you know. I wonder why they don't add to that? Because the DPA is how do I say it? I don't want to say misleading, but it's almost short of what it could actually be.
Speaker 3:Sure, I think, because we're lazy and we like acronyms in our industry.
Speaker 2:I mean?
Speaker 3:what would that be? Dpa ACCA?
Speaker 1:Yeah, there you go. And then don't forget to CYA.
Speaker 3:Right and C.
Speaker 2:But I think there's a misconception of down payment assistance and the keyword being assistance right, where I think there's a lot of people, the public, think that it's free Right and it's not. It's assistance.
Speaker 1:Well, let's, let's get into that. So, within the realm of down payment assistance type programs, it's important to know who offers these programs. Where do they come from? And I think the root is you're looking at either grand or grant or bond funds that are distributed through government agencies and I listed quite a few but essentially it's San Antonio Housing Authority, acronym SAHA, or TDHCA, texas Housing Department, department of Housing and Community Affairs, and they go on and on. Seth same thing, but I think a lot of folks believe that they are down payment assistance, when they're, in fact, government agencies that help facilitate the down payment assistance. There's also an investor behind that and an originator also tied to it.
Speaker 1:Most mortgage companies offer these types of programs. Now, john, I'd like to pick your brain on the process of why some mortgage companies don't offer them, matter of fact. Let's let's table that and keep going down the basics road, because with the idea of down payment assistance, like YG said, it's not free money. You're either getting it by way of a grant or you're getting it by way of a bond, and knowing the difference between the two, I think is important for people to know the grant funds itself don't have to be paid back, whereas the bond funds they do have to be paid back in some cases.
Speaker 2:Right and some cases Right.
Speaker 1:Because you do have programs which we'll get into later on on how to read a pricing sheet from these down payment assistance, but there are different options within those type programs offered by different government agencies. Did I kind of nail?
Speaker 3:that I think you did, and I believe that it also kind of starts too in the home buying journey of working with a mortgage professional that knows of these different options that are out there, and not every borrower is even aware of how much money that they need to bring into closing, whether it's down payment or closing cost or a mixture of both.
Speaker 3:And so from there you take the borrower's profile and you really just kind of funnel it through a matrix and see which programs can they actually qualify for, and then that loan originator should go through and figure out, okay, which program is best for this customer and then present them with door number one, door number two, door number three. There's a lot of folks out there that perhaps even just assume that they need down payment assistance when in fact they don't, and if they don't, then perhaps they can get a better mortgage term for themselves. And so it kind of goes back to that very first beginning of the mortgage journey for a consumer and that is working with a mortgage professional that knows of all the options that are out there available.
Speaker 1:Absolutely no. You are exactly correct, and consumers these days want to know what their options are before actually speaking to one of us, which is why I'm going to toot my horn for just a moment. This is essentially guys you hear me often referring to review my mortgage, which is the sponsor of this show but also the largest index of programs. And when we say largest index, we're talking bond loans, grant loans, mcc participants, things of that nature, based on the county. You can plug in exactly where you're trying to purchase your credit score, how much you have or how much you don't have to put down, and it will literally tell you exactly what bond programs, grant programs, are available in your area at that time. So I toot my horn because that's what the future holds. I mean, you've got lenders all over the place that truly don't know all the nuances that we're going to go over today, but will speak it into existence, and then the crowd starts to believe it when it's not the actual, or there are many nuances to this type of situation.
Speaker 3:Right, and it gets into. I think there's a Facebook post that I really, really wanted to chime in, but I'm trying to hold back on certain things.
Speaker 3:But I think of some of your posts that I love, which are always your prove me wrong, post right. And there were some illusions to down payment assistance not being great, and it's like whoa, whoa, whoa. First of all, every consumer out there has a different journey from each other, correct? I mean, I've literally seen tens of thousands of loan scenarios in my career and they're like snowflakes. No two are alive, that's right.
Speaker 2:Right.
Speaker 3:And what's good for one family may not be what the other one, so it's. I hate when I see things getting painted with a broad brush Correct, and then also in today's environment. It's a rough economy out there, absolutely, and people are scared about going into the future and maybe they have money saved up for down payment but they're nervous about losing it.
Speaker 2:Yeah Right, but I think you hit on so many things where we're giving them option, and that's really what a good loan officer is. Yes, is that if I'm giving you options, I'm not making a decision for you, or I'm not trying to put you into a loan that maybe our bank is going to make more money on trying to find out what's important for you and your family?
Speaker 1:Right.
Speaker 2:So if I give you those options so that you and your family can make a decision, then I've done my job.
Speaker 3:Absolutely Right.
Speaker 2:Door number one door number two.
Speaker 3:door number three choose your own adventure. Correct, correct.
Speaker 1:And I think that the I guess the concept of having all of the options available. We as loan officers should know how to properly educate the consumer on those things the consumer and our realtor referral partners.
Speaker 3:Oh, absolutely.
Speaker 1:Absolutely so, because you do see quite a bit of real tours marketing or using those as marketing tactics when they don't know the full gamut of it. I have no issues with it as long as they do it the right way. But if you're expecting to use that to gain business, just know what type of business you're going to gain by doing that. You know that's not a problem. Make sure that your lender knows what the heck they're doing when it starts, when the spigot turns on.
Speaker 2:Or that your lender is even on these websites, because sometimes they'll advertise right and they're talking about down payment and they're not even listed on some of these agency's websites that they're eligible or their company's eligible to do these loans, that's true, so I guess we can get into that.
Speaker 1:I mean, what does it take for a lender to participate in these type programs? Because I know, when we made the transition from directions over to, I think, which is a DBA underman mortgage, we were two weeks in and already ready to go with our down payment assistance, with our text, that loan participation with Gateway. I mean it was pretty quick. I don't know what happened behind the scenes, I'm sure you do, though. Yeah.
Speaker 3:So from a lending standpoint right and just for everybody out there there's two channels for which a consumer can get a mortgage either through the mortgage broker channel or through the retail channel. And what that really means for the consumers out there is from a retail channel, the money is coming directly from that retail lender. For the mortgage broker out there, they're essentially finding the investor that's going to provide the money for that loan. And in each channel I mean both has pros and cons. I mean it's really ultimately too like how comfortable are you with your loan originator? But I think one of the myths that is out there is that only a certain segment or origination channel has ability to offer these programs, and that's not true at all. So from a retail standpoint, I would definitely say that, yes, a retail originator probably has more down payment assistance options out there throughout the country because there are some state HFA housing finance agencies that don't want to do third party originated business. But here in Texas, both T-Shack, texas State Affordable Housing Corporation, and TDHCA, texas Department of Housing and Community Affairs, are both open to third party originated loans which is
Speaker 3:great. So now it boils down to a manner for that consumer of are they working with a loan officer that's been certified, taken the class to even be educated and offer the product or not? Right, and you nailed it. You led it into a question of there. Some people don't want to offer these programs, which is truly, truly unfortunate, and there's some people on both channels that don't want to offer these programs. So again I go back to, from the consumer standpoint, first of all, find an originator that is certified, originated on the product or programs and whether they're offering it to you or not, because that's going to be a better loan officer in the long run?
Speaker 1:Oh, absolutely, I agree.
Speaker 3:Than somebody that's not. But yeah, so long story short. From the retail channel, it's staying in-house, so to speak, to do the underwriting and closing and funding of that loan. And on the broker channel, that mortgage broker is simply going to outsource the underwriting to say me and I'm going to underwrite it and just determine, okay, this loan works right, we're good to go, and then we do the closing and funding. On the mortgage brokers back.
Speaker 1:Gotcha, gotcha. Okay, so that's great information regarding whether or not you as a consumer, if you're out there, should you go with a mortgage banker or mortgage broker, doesn't matter, you're in Texas, we all offer that type of program have the ability to offer that.
Speaker 2:Have the ability to offer that.
Speaker 1:Thank you. But it doesn't mean that just because we both offer it, that we both know what we're doing, the nuances, which program is the best for you, because there are plenty of them when folks lead out with, oh I've got bond program funds, or I've got this, yeah, but which one? Which one? What rate? How much are you offering? And we'll get into that a little bit down the road on this episode. But I have a question, or a statement, so to speak. Misconception that goes around, which is and I've heard it many times is I can get you a better rate on the bond loan that they're offering you. And for me my first thought is we're using the same bond. There is no difference. We all have access to the rate sheet. Those rates are changed by them. We have no hand in that. We simply ask how much funds do you want? Which category in the bucket or the matrix do you fall within? And that's the program. So for other lenders to say, well, I can do that lower, it doesn't jive, and I've heard it quite a bit.
Speaker 3:I would think right out of the gate that it's actually irresponsible to throw out to somebody that I can get you a lower rate with my bond program Without even talking to the consumer or know anything about it, Because and there's non-bond DPA and there's bond DPA, right, I mean there's two different ones and the bond programs. What that means is it's a mortgage revenue bond, right? So the state gathered a bunch of money, packaged it up and there's only a limited supply and traditionally these funds are also typically for a certain median income level. So to put out a blanket statement that I could get you a lower rate with my program without knowing an income level or if the consumer is even going to qualify, is just irresponsible and it goes into setting up somebody for a bad home buying journey, Absolutely.
Speaker 1:Absolutely, especially with the additional requirements that one would not think are involved, such as and you mentioned it income requirements. Some even have purchase price requirements. Some have eligibility requirements on credit score. If you don't know the nuances to that, how can you even throw out a blanket statement like that? It doesn't jive. But not enough for being called out about it until the CFPB comes in and says hey, you know, this social media post that you put out last year we got you, you know.
Speaker 3:Yeah, I wasn't sure if it was Marcus Aurelius or my mother that just said there's a reason why you have two ears and one mouth.
Speaker 1:That's so funny Two episodes in a row. That has been said, oh there you go. Marcus asked me that two episodes ago and I told him flat out. I said so we can shut the fuck up and listen.
Speaker 2:Yeah.
Speaker 3:So yeah, so those blanket statements, they just they irritate me because then you know, and the bad thing about social media too, I mean I love it but I also hate it because it goes down. But you've got an episode coming up on that by the way, I can't wait to listen to you.
Speaker 1:Yes, sir.
Speaker 3:Right. So just kind of coming back to the down payment assistance again, it's just, it's irresponsible to put blanket statements out there without knowing that borrower Right. You know, and that goes back to, we have this available. It just may not be for everybody, but let's see if you qualify for it Absolutely, but the consumer has access to see it immediately. Absolutely.
Speaker 2:So if they want to go and log on to TDHCA or Tshak or Seth, whatever the rates are there public. So if someone is advising you, that and you don't see it, then you need to probably ask questions.
Speaker 1:And I think that's one thing that is missing, that I continue to beat on this horse and it's not dead yet but the concept of the loan officer taking that high value trust interview up front so that they can educate the consumer, ask the right questions, get what it takes in order to advise them or provide any kind of options in a way of, if you're going to go down payment assistance, let me bring up my screen, show you the rates, show you how they work, which you guys are going to see that here in just a bit when we talk about types of programs that are offered. But before we get into types of program, I want to talk about the why, the why behind someone actually going with a bond program. I mean, there's many whys and I want to kind of wrap about that with you guys.
Speaker 2:So I think for me we have several clients that are looking at different right, because there's so many with the agency that you can go with. So whether you're getting free money that you don't have to pay back and there are, of course, some caveats that you do that may be an option if they qualify for income. There's also a new program with one of the agencies that has a lower interest rate, so that may help somebody qualify for more of a home at that point. So it's just going to depend on what are they looking for. And right now I think especially for San Antonio or for Texas right, our income is lower, our homes have gone up a little bit more, so there are a lot of people in cases that may need this assistance. Not everybody, because it's not. This program is not for everyone, but if it is that it could help you become a homeowner, why not?
Speaker 1:Oh you're, you hit it on the head. I mean, and there are additional. I'm sure John's going to get into that, but while you were talking about that, I actually threw up on the screen here what the average household income in San Antonio, and it's under 60,000. So I mean, that is the demographic that we live around. That is the demographic that is in need of these type programs. While John's talking, I'm probably going to look up what the average savings month of savings that San Antonioites have. San Antonio, San Antonio, San Antonio, and the essays.
Speaker 2:Yeah, and so, although I love these programs right, I think that there's also the easiest way to know how to explain it is it's not free, and I think that there's a misconception of that right. So sometimes you are getting maybe a slightly higher interest rate than what the market is oh, we're going to go over that, so don't get ahead of yourself.
Speaker 1:Absolutely yeah, we're pulling rate sheet up. We're going to go through it and it was funny.
Speaker 3:When we were doing this and I saw the topic, I was like ooh, ooh, ooh, ooh, ooh, and it just started jutting away because what was rattling off my head? First of all, I want one of your prove me wrong signs.
Speaker 1:I love it. It's right in that box right there yeah.
Speaker 3:Or it says you know, renting is better than owning.
Speaker 1:Yeah, and it's you know this is 2019 data.
Speaker 3:I mean it came out a few months ago. That's come from the government, right.
Speaker 1:Normal it takes that long.
Speaker 3:This is 2019 data from the survey of consumer finance from the Federal Reserve Board and the median net wealth in this country, broken out by demographic 188,000 for white families, 36,000 for Hispanic families and 24,000 for black families. Median net wealth Wow, now not to. I mean, we could save a whole other show on. You know, getting into the political side of things, it's not what I want to do, but you think about all the issues that we have in this country.
Speaker 3:a lot of them boiled down to one thing the gap between the haves and the have nots. Yes, sir. You know, regardless of political affiliation. And so, when you drill down into the data on here, the key driver for these gaps is one thing home equity homeownership.
Speaker 3:And so that's why I'm such a huge proponent. Like it gives me chills just thinking about that. I mean because it really is. You know, there are a lot of things that happened in this country a long, long time ago that maybe led to you know this headstart, I suppose for white families versus minorities.
Speaker 1:Sure, that's what I'll call it.
Speaker 3:But let's fix it going forward. We can't go back, but we could fix it going forward and we could do this by educating people on the value of homeownership over time, Not get rich quick not flip this house, but long-term generational wealth creation. If you take demographics out of the measures here, the gap between homeowners versus renters, are you ready for this one? Yes, 396,000 versus 10,000. Wow, wow, almost 40X, wow.
Speaker 1:And the 10,000 that they're accounting for is probably their belief that they have equity in their vehicle. I would agree with that, or their Jordan collection or something else I mean it's median net wealth Correct.
Speaker 3:So there's financial and then non-financial assets. This is an interesting one too. So from the same data, narap National Association of Hispanic Real Estate Professionals recently kind of took their own dive into the data and they pulled this out, obviously geared towards the Hispanic demographic. But look at this homeownership was a 27X net worth multiplier. Wow For the Hispanic community. Wow, that's a big difference. And then this is interesting too. So 70% of Hispanic's wealth is in non-financial assets, such as home equity. So again, mom, dad, live in a house paid off, pass away, they leave an asset to their heirs. That's how we fix up future generations versus paying waste and money on rent every month. Yeah, so of those 70% of net wealth non-financial assets, 77% of that was real estate.
Speaker 2:Wow.
Speaker 3:So it's crazy from that component. So I just look at, okay, the. Why do we offer these down payment assistance programs so that way we could get people into a house today? Absolutely, it's hard to save money in this environment.
Speaker 1:It is, in fact, we don't even go as far as to say that there are many that would say I don't want to offer down payment assistance to someone if they've got enough money in the bank for their down payment. I disagree with that simply because what about the what if moments? I call them oh shit moments when the stuff hits the fan. Where's the money? I love to see two to three months of reserves and still go. Hey, you probably need a down payment assistance, and here is why you're going to end up getting a higher rate, etc. But at least if day one you move into the home and, God forbid, something breaks that's not covered under warranty, you're not belly up on your mortgage. And this goes array when this is actually going to be building you wealth for the long term.
Speaker 3:Or life happens.
Speaker 1:Absolutely.
Speaker 3:We saw a loan and this is actually interesting because we do our company. We do a lot of down payment assistance loans. I need to actually pull this on the real data, but anecdotally I can tell you that we're seeing more borrowers, in the grand scheme of things, that actually do have financial reserves, money left over, and I think that's just again. The consumer sentiment out there is that, oh shit, what if life happens to?
Speaker 2:me.
Speaker 3:I mean, I worked so hard to save up the $16,000 I'm going to get in this house, but then I'll have a thousand left over. Absolutely that doesn't leave a whole lot for room for emergency, absolutely. That's a big one there. So also going into the why we talked about the demographic kind of renter versus homeowner, but this is an interesting thing too. So NAR tells the NAR, I suppose the National Association Realtors tells us that the average age of a first time home buyer is 36.
Speaker 1:And that used to be like 20 something A long time ago. It's crazy.
Speaker 3:The economy is forcing people to delay everything. They're going to babies later, they're buying homes later, but we still have a demographic wave coming, absolutely. And I don't hear a whole lot of people talking about the 4.7 million 33 year olds that are out there or the 4.5 34 year olds that are out there. So there, I mean, if you look at the graphs and the charts, there's a big wave of people coming, which only tells me what there's more demand coming.
Speaker 1:Absolutely.
Speaker 3:What's the number one killer of deals? Of course, time.
Speaker 3:Time is the number one killer of deals. So the longer that we put off our home buying purchase, our home buying journey, when this huge demographic wave is coming, then the greater the likelihood that I'm going to get into this multiple offer situation. That's right, or home prices are only going to continue to rise. We're still, overall, putting people into homes faster than we are making them. So you know what? There does need to be that little ins of urgency Now with that too, I've told you, I've brought facts.
Speaker 1:Please, please, I'm soaking it in.
Speaker 3:So this one too. So this is interesting. This goes to the education piece, and I blame Dave Ramsey.
Speaker 2:Love him, but I hate it when he talks about buying a house. I love Dave. I know let's all get all docked and get alone, right?
Speaker 3:But it's not just him, it's also I think the talking heads on TV whenever they say oh the average rate today is XYZ, based on 20% down. Or even just people that are asking their mom and dad and grandparents about getting a mortgage. They just think 20% down. So one out of five Americans believes that you need 20% to put down.
Speaker 1:Still to this day, still to this day, and that's from social media, that's with the news, that's with blogs, et cetera, et cetera. And for the past, however, who knows how long we, as mortgage professionals, have been singing the song of technically, you don't need much down, you need earnest money, you need inspection money, et cetera. I'd love to see reserves, but you don't need anywhere near 20%, right.
Speaker 2:Now we're near and they don't understand that for every thousand dollars it's only going to change your payment like eight or nine dollars. So 10 grand you're saving $90. That's not going to break you. You probably spend that in a dinner in one night.
Speaker 1:Unfortunately, but you are correct. Yes, let's go through some bank statements Very, very true.
Speaker 3:And this was crazy too right, 21%, I think. Believe that you need more than 20% to put down in a house. So, yeah, we're still, as an industry, originators, as real estate professionals, anyone really just educating consumers on?
Speaker 2:what it?
Speaker 3:takes to buy a house. I'm still I believe in the noble potential of American humans in general.
Speaker 2:That's right.
Speaker 3:Every man wants his castle every mother wants her nest, but we got to get them there. Okay, renters should be of no surprise are three times more likely to view saving for the down payment as the most difficult part of the home buying journey. Wow, wow. And then, to follow that right up, get this, and this is from Redfin, and it was two out of five millennials, slash Jinziers, I mean this is the millennial podcast.
Speaker 1:Absolutely. And with that being said, I oh and I heard this on PBD podcast and I agree Read with it wholeheartedly and was like shouting at the TV like baby, look at this, see, he gets it. Millennials and Gen Z are very different, and by that I mean we're talking about millennials that are now hitting 40. Guys put it in perspective for you. So. So lumping the millennials in in certain situations is not always the right way to look at it, but I can see how the correlation because we are one of the biggest yet to come generations that it's going to be buying- Period Right, and not all of them, because I will say, like me growing up, I bought my house when I was 20, right, so back then I spent $45,000 for a home and the income.
Speaker 2:you know these new millennials and Jinzi are not making crazy amount of income where the house prices have gone, so for some of them it is a little difficult.
Speaker 3:I'm not saying all of them.
Speaker 2:It's a good point, but I think that, not that things weren't hard for us at that point, but things were a little bit we're going to go off topic a little bit, but I love it.
Speaker 1:For me, I believe, the only thing that has changed is perception and what I mean by that, and perception and expectations, and what I mean by that is my first house apples to apples, probably 20 years after you had purchased. Yours was 130,000. We use USDA loan. I wasn't making bank, I mean I think I was making 60 grand at the time and Kristen was going through nursing school and then income 60 grand tops right. We qualified for what was in our means. We understood the concept of I'm going to stop paying rent because I'm tired of throwing my money away and I will sacrifice in living in, trust me. My apartment had a pool table in it and I was looking over the pool.
Speaker 3:We had the dining room.
Speaker 1:Yeah, we had deep plays. But understanding that I'm going to sacrifice that to start building some equity is something that I don't think that the next generation understands yet. It hasn't been taught.
Speaker 2:They're good point Right, because they're about lifestyle, correct Lifestyle of, because there's times that I've pulled credits and I've seen some car payments that are higher than a mortgage payment, and I'm like whoa, you can definitely be, because I am also to kind of go against your.
Speaker 1:I'm seeing some, some Gen Zers that are making some good money and I'm going okay, what are you doing with it? Why are you not telling your friends what you're about to do, which is buying a home? Anywho, keep going.
Speaker 3:John, sorry, well, no, no, no. No, I mean, it's a perfect little segway. It's not really a tangent, so get this, I mean. So. According to a redfin survey, two out of five Gen Zers slash millennials, so I guess it would be like under 40. Correct, there you go. Excuse me, are currently working a side hustle to save money for down payment.
Speaker 3:Yep, so, and this goes back to that, that whole thing of, okay, they don't understand the whole process because, again, time kills all deals. Yes, sir, so if you have this arbitrary number that you were imagining in your head, that, oh, I have to have X amount of dollars saved up before I could buy my house Well, if you have an apartment renewal, at least come for renewal during that time while you're building that you might be stuck in that apartment for a whole another year. So true, versus, hey, we have these down payment assistance programs that we need to look at and explore and see if that's something that you could do today, absolutely, yeah, so you know, and this kind of goes along that point too. So we just hit in this country a record ooh, 8.56 million people with working multiple jobs. Wow.
Speaker 2:Wow.
Speaker 3:That's the highest it's ever been, wow.
Speaker 2:So again, and caveat so that's why they have the job. Employment is working really well. Yeah, I mean no, why it still?
Speaker 1:is. I mean, that's not a but a caveat to what John said just because you're doing it doesn't mean we can always count them both.
Speaker 3:Right, well, right right. I mean they're still for qualifying cash.
Speaker 1:Absolutely.
Speaker 3:You still have to make sure that you know we could document it for qualifying, but there's still 8.5 million people working two jobs. I think it's also just a sign of you know inflation sucks Absolutely. Yeah, absolutely, it hurts us all, it hurts everybody, and then making people aware that you don't have to work two jobs for two years to get into a house for your family. So your kid's going to have a backyard to plan Right.
Speaker 2:But the inflation comes into supply and demand. So when we don't have homes to sell and we don't have stuff, we're going to start having higher interest rates, stuff of that nature.
Speaker 1:It's just to bring it back down.
Speaker 2:To bring it back down. We've got to.
Speaker 1:Right I mean we can't do anything about the corporate greed. Right, I mean at the end of the day, you could stop eating the water burger tacos I have.
Speaker 1:I have stopped eating the water burger tacos. The day that I went to that drive through and it was literally the day after I had just gone through the drive through and the price went up from one day to the other and I asked them, number one, how much did it change to why? And three, do you get any of that? And they said no, what the hell am I doing here?
Speaker 3:My daughter likes Chick-fil-A, so yeah, I need to get a second job, yeah.
Speaker 1:I don't blame you. Yeah, I'm trying to turn this into a second job, it is, I'm just kidding, nobody wants to pay you. Yeah, I'll keep my daily.
Speaker 3:But I think that those kind of come back to is the why, and it kind of boils down to home ownership in general being, you know, really the best responsible home ownership being the best path for a family for long term generation of wealth creation.
Speaker 2:I think that should be like a class in school.
Speaker 2:Like how to handle their finances and so forth. I will say I've got a 16 year old right, and in past we've done great with money, we've done bad with money. We learned from it. And so I've got a 16 year old and I told her hey, you've got a job. But here's what we're doing. We're going to do 50-50. It's going to go into the same thing. You can't touch it and she's done phenomenal on it. So I can only imagine what's going to happen when she becomes of age.
Speaker 1:So here's my take on that YG she's winning because you taught her, and I don't agree with the concept of this should be taught in schools simply because they'd be learning it from somebody that actually may or may not know.
Speaker 1:I'm not saying that teachers do or don't. It's just why leave it up to them to give their opinion on something that should come from within the house. I think parents should be a little bit more transparent with their kids younger, just so that they understand what money is finances, instead of shielding them, thinking that everything is always okay. Then they grow up to 18 and now you're able to cuss in front of your parents and basically the truth comes out and you're like, well, shit, I'm working from behind. I would have had a better understanding of this, and that I do have to kind of applaud my parents for doing is educating my brother and myself young on what the financial situation was, how they got there, how to get out of it, how to bake it better and what we can do as men to move the needle forward ourselves for our families.
Speaker 3:That great point brought up. I do agree with YG here. I mean I think there should be some sense of basic homec how to create your own personal budget. I mean yeah, no, the family needs to ultimately be the driver of that. But again, maybe we start with the young.
Speaker 2:Yeah, absolutely yeah, I remember.
Speaker 3:Just get the little foundation in there Homec for us.
Speaker 2:growing up, we were learning how to take care of babies and hold you know, like I was responsible for a kid and I was like what I? Can't even take care of a dog. I had a baby for a whole two weeks I was like my baby was cracked, was damaged. And so I'm like but if we would have learned finances and said we were learning how to be parents, or good point, good point.
Speaker 1:They teach you how to take care of the kid instead of having the kid itself. So, so let's, we've talked about the why, and I think one of the biggest why, summing up what you guys discussed here was there's a need for it.
Speaker 1:Yeah, at the end of the day, there is a need that needs to be fulfilled and fulfilled, and we are able to provide that void filler, so to speak, san Antonio being among the top that actually need it, based on the average income, household wise, the credit scores and the lack of savings that we have, unfortunately, because lack of discretionary income.
Speaker 2:And they're even I think it's TDHCA and T-SHAC. They're also looking at like surrounding counties and there are some counties that are getting a lot more money because of certain, you know certain counties I think Harris County is like one of them and well, they do it based on population density, average incomes, things of that nature, which is why there are income limits to most, if not all, of these programs.
Speaker 1:Now you've got companies like, I think, mortgage, where we created our own that we're funding through a third party and it doesn't have income requirements. It doesn't have certain things, but it's going to be different in way of what they're offering. Will it be a higher rate? Possibly, but you're also asking for down payment assistance, even though you make over the average income that the other programs allow. Hundred grand asking for down payment assistance. We're not going to say no, but you are going to get taxed for it. So, yeah, I'd like to now jump into kind of the basic requirements for down payment assistance, because we've talked about why it's needed, kind of what, the difference between the two and we'll get deeper into the differences when we go over the types of programs. I'll be able to pull it up on screen and folks can see those but basic requirements. What does it take for somebody off the streets to qualify for most of these bond programs? What do we see out there?
Speaker 3:guys. Well, I think this is a perfect little segue into my other section on myth busting.
Speaker 1:Oh no, If you're ever on the show, be prepared like this, please.
Speaker 3:Myth number one that I threw out here was that you have to be a first time home buyer. Myth or fact?
Speaker 1:That's a myth. As a matter of fact, YG and I were just talking about this before we started the show, where she was asking which one was it that requires the three years tax return, and I said you know why they asked that? She said yeah, absolutely, it's because they need to be first time home buyers. That's exactly right. So there are programs that do allow it and don't allow it. Go ahead.
Speaker 3:John. So in that and this goes back to again number one working with the mortgage professional that knows all these different programs and not all DPAs are created equal.
Speaker 3:I mean that's the other thing there too, right? So if you have options, texas Department of Housing and Community Affairs, they tend to have more bond issuance products, so they tend to geared towards specifically for first time home buyers. But they also have, you know, on the other side of the fence, tshack, texas State Affordable Housing Corporation. They have zero requirement to whether you're a first time home buyer or not, but then they're rolling out a bond program next month or next week, which I guess is technically next month. Yeah, which it?
Speaker 3:will In the new year, which will be a bond issuance. That will be, for first time, home buyers only. But just because you know if you've owned a home before in the last three years, that doesn't mean you can't get down payment assistance Right, that's right or be considered a first time home buyer again. And for our realtor friends out there, this is a good one because I saw this scenario. This was up at Austin, because why? What's missing from the marketplace right now? Inventory, move around, move up buyers or buyers buying another home right.
Speaker 3:Why are they missing? Because they got into a 3% rate a couple of years ago. So, in this situation, borrowers did want to move, did want to buy another house. Of course, they didn't want to give up their 3% rate. All their cash, or their you know which would go towards a down payment, was tied up in equity in that house, correct? And so what we've helped them do was structure the deal to where they converted their existing home into a rental property and use the down payment assistance to buy another house.
Speaker 1:What's wrong with that? There's nothing wrong with that. Nothing in my opinion.
Speaker 3:The funds are out there. They're available. You meet all the other boxes. Let's make it work.
Speaker 1:That's right.
Speaker 3:And I say that tidbit for our realtor friends out there, because I'm sure when they're doing their prospecting they're talking to people like I mean, I got a 3% rate. I don't really don't even want to think about buying another house. Well, guess what?
Speaker 1:You can, that's right. That's called utilizing the system that was put in place, kind of like Donald Trump in tax returns I had to, I had to. He didn't make the rules, nope, he's just following them. Right, that's right.
Speaker 3:So I think that's myth number one you don't, ultimately have to be a first time home buyer. Myth number two you have to be poor. Do you have to be poor to get down payment assistance? Not at all, not at all.
Speaker 1:Those are as a matter of fact. First you got to define what poor is. But once you do that, then you go. So today you still have to qualify debt-income ratio-wise.
Speaker 3:You still have to be able to get a. You still have to be able to qualify for the mortgage. But where I'm going with that is you don't have to be. These aren't programs for just low-income people. Correct, and I think there's.
Speaker 2:Yeah, well then Mark had mentioned earlier on your chat GPT that the average income was like 59, almost 60,000. And some of these are almost double that in certain areas 80, some odd thousand. That's exactly right Meaning if you have a greater household. It's going to be different if you've got more than two and so forth. So there's a perfect opportunity that people who can make over 100,000 and they maybe have four in their family might be able to qualify for this.
Speaker 3:Yeah, so I pulled this up and I just had the T-Shack stuff right. So income limit for Bear County, san Antonio, msa so that's Bear, guadalupe, comal 120,000 per loan application, wow, and per household per loan application, 120,000. And if the property happens to fall into a targeted area, that income limit jumps up to 135,000. Hmm, meaning a borrower can make $135,000 a year and still get down payment assistance. And then our friends right up I-10, and this one was pretty interesting to me at least.
Speaker 1:So fun fact you talking about Kindle, kindle County has the highest income limit for down payment assistance.
Speaker 2:And USDA and USDA yeah.
Speaker 3:So it's $50,000 per household or per loan application. I should say and then if you've got properties that are even out there in the sticks, right, you're looking at 112,000 for the floor max income, correct? So these aren't down payment doesn't mean that you don't make any money, right? But it's out there for literally everybody, right? And that leads me to another myth in that, again, these are only for small loans, right.
Speaker 2:Not the case at all.
Speaker 3:I mean. We closed one a couple of weeks ago. It was $400,000 loan amount. It was a new build, new construction and that's how you got it done Absolutely.
Speaker 3:It was the only way the bars were able to were going to be able to get into their house, so they used down payment. Assistance made it work. They could manage the payment, but, like everyone else in the economy, it's hard to save today. Right, so you don't have to worry about. Oh, these are only going to be small loans. Not the case at all. Right, myth you have to have perfect credit.
Speaker 1:No, no, you do not. I like that. Bringing that to the forefront. You're exactly correct.
Speaker 3:So the qualifying guidelines for families on this minimum 620 credit score which, as y'all know, is by no means perfect credit, but we still follow FHA.
Speaker 1:VA.
Speaker 3:USDA. Fannie Mae, Freddie Mac, conventional guidelines. That's right, so you don't have to be perfect, and 620 is far from that.
Speaker 2:Right.
Speaker 3:And then even I'd even go as far as saying you technically don't even have to have a credit score to get down payment assistance. True, now it would be a manual underwrite, so there's going to be some other.
Speaker 1:Alternative credit requirements.
Speaker 3:Right, that you need to do, but you don't need to have a score per se.
Speaker 1:So, and I think that's great that you mentioned that, because most do not know that at all. Right, so I mean we've YG, we've done more manuals in the last 12 months than I've ever done in my career. Why? Because for some odd reason, the automated underwriting system didn't like their credit, didn't like their scenario, whatever it was. But we were wise enough and experienced enough to go. You know what it meets the manual guide, they've got the reserves, the housing income, they've got residual down pack, they've got additional compensating factors, et cetera. Whereas new to the business maybe that had not experienced that veterans that never thought to go this route or are still scared of going manual underwrite wouldn't even go down that road.
Speaker 2:Right so yeah. And there's other programs or other agencies other than TDHCA and so forth. Like the city of San Antonio, they have a program. There's no FICO score.
Speaker 1:Yeah.
Speaker 2:And they can get anywhere from 10 to 30, 35,000 depending on what you know, what their funds are available, and we've closed on some of those and helped. So many people were just like, okay, you've getting out 30,000? We're going to put the manual.
Speaker 1:You've also got the I don't know what it's called. Is it clout that the kids are calling it? Or something like that, where, where somebody doesn't want to go down payment assistance because they they believe, oh, they're going to think that I needed the money. Guys, they're normal loans, FHA, conventional, Technically. The seller doesn't even have to know it's payment assistance.
Speaker 3:Right, and it's. Yeah, it's NUNIA. There's a big old NUNIA for the third party financing. That's correct. It's exactly correct. Nobody's business.
Speaker 2:And then I think, if they understand which program they're actually getting, because if it's a true grant, mind you, you don't have to pay this back. Correct, it's free. Now I think there are some caveats, like if you sell your home, you turn it into a rental property within you know within X amount of times it's going to do that.
Speaker 2:But you have this opportunity not not to have to pay this back. That's correct. And then, even on the ones that you do, you don't have to pay back until you sell your home. So if you stay in this bad boy, for 30, 40 years. You don't have to pay back until then.
Speaker 1:I mean historically. There's been many. I've been doing this 13 years and originating heavily, the first three, four of it that have come back. We've been able to refinance it, pay that lien off with their equity and they're still trucking down the road with a lower payment equity in their, their piggy bank, so to speak, for the future generation or to leverage on another property or whatever the case may be. But it opens the doors to being able to make bigger decisions for your life, utilizing your home as the driver to be. Yeah.
Speaker 3:I mean, that's it, that's why you're building equity, that's the whole nine, use it. Yeah, myth, these are only for single family properties.
Speaker 1:Ooh incorrect, incorrect, yeah.
Speaker 3:No, that's perfect, because my first home was a single family property. If my daughter's first home will be a foreplex, Smart yeah, absolutely.
Speaker 3:It's, it's, it's one of those things too right it's. You know there's there's so much much opportunity for for folks out there and and you see, it's, I don't know, you know, like the term house hacking, because I don't even think it, that just sounds weird. But but no, I mean if, if somebody wanted to buy a house, they could buy a foreplex, live in one unit and use the rental income from the other three units to help them qualify for that or just for extra cash.
Speaker 1:And to supplement that's right yeah.
Speaker 3:Supplement, and then on top of that too, they're getting down payment assistance to help get them in it. That's right, that's right, so, absolutely so that's that it's for all properties.
Speaker 2:And nowadays you find more of those properties than before in the past. Like we, we didn't find a whole lot of duplicates back in the past. Duplex of four.
Speaker 1:Well, I think the reason why is back in the past they weren't letting them go. Once they built them, the owners would sell them as a portfolio to bigger investors, etc. But now the wave has begun of people like us buying them and reselling them, etc. So it's it's going to continue that way If us, as loan officers, continue to educate the consumer that that's even an option on the table Right.
Speaker 3:And in some cases it may be the only affordable option for them to get into a house today, that's right, because essentially the rental income from the other units or unit or units is helping to offset their payment.
Speaker 1:That's exactly correct. So example guys if you've got a borrower in their situation they, let's say, max qualify for $220,000 home and that is single family. Well, if you move that over to a duplex, quadruplex etc. And they're occupying that unit now, utilizing that rental income that comes from the rent schedule of the appraisal will allow them to maybe qualify for $250,000, sometimes $300,000. You don't know until you ask the right questions or give the right information. Be honest with your loan officer about what your threshold or tolerance is for going down that type of road. So yeah, it's good stuff. It's good stuff. Oh, absolutely Got some more myths.
Speaker 3:I do I love it. Myth these things take too long to close.
Speaker 1:There's a myth that depends what loan officer you're working with. That's the right answer, right there.
Speaker 3:I say that because I think there are some misperceptions. Not all DPAs are created equal and the T-Shack TDHA product today is way different from how it was 20 years ago. But we see on average. These things are closing in three weeks. Standard 30-day real estate contract applies.
Speaker 1:And I'm glad that you mentioned that closing timeframe because I have one of my loan officers that reached out to me the day before yesterday and they were working to save a deal for a builder. The builder was saying we're not going to allow you to go USDA because they take 45 days to close. I said that is absolutely incorrect. I said it is normal for us to request 45 days to set proper expectations, but that does not mean that it takes that long. If you've got the file set up correctly, now, once we're done underwriting it, we do have to send it to them to get our certificate and then signed off, etc. But who says that that has to take 45 days? I said you reach back out to them, let them know that you've got the documents, you're ready to roll and we can get it into underwriting pretty quickly. We just need to order that appraisal. Okay, let's go.
Speaker 3:It all boils down to the originator and the process and the work that was done up front. And do we have borrowers that are cooperating? Absolutely Our record, the record I've seen come through on a down payment assistance loan, was 11 calendar days, I believe that.
Speaker 3:So you get a weekend in there. But it was a well-packaged file, had all the credit documents in it. I mean there was nothing else to do, it just fit the box and it was done well. So Nick goes back to working with a good loan originator that knows what they're doing and sets proper expectations up front.
Speaker 1:Now that you mentioned that super off topic, but I'd like to ask so that others can kind of hear this what do you think, John, is the biggest delay of loans closing and or having issues throughout the process?
Speaker 3:Thank you for speaking in your time. That's a good question because, I see it again, everybody's different, but I would think the number one thing that I've seen delay.
Speaker 1:In my opinion, a couple of parts to the mortgage process the upfront, the middle, the closing, et cetera. Right.
Speaker 3:And oh boy, that's a great segue to my last myth actually which is well myth. I need to find the house before I apply for mortgage or down payment assistance.
Speaker 1:Incorrect.
Speaker 3:Incorrect.
Speaker 2:That is incorrect.
Speaker 3:Absolutely so. Yes, this is crazy Two-thirds of renters think they need to find the house first before they go talk to a mortgage professional.
Speaker 1:Wow, Right, but the cool part is it probably used to be bigger and now, who knows? They're getting educated. They understand that they need to get qualified, get their options before they go off looking for property, right.
Speaker 2:I would say, for me, answering that question would be we don't have all the information or the facts, and so I would tell anyone who's listening to consumer is that if you are not providing the documentation that your loan officer is asking for, then you're doing yourself a disservice, right? Because we have to look at everything and sometimes you'll be surprised where you get one pay stub and it's for January and it looks great, but hey, 2023, by the time I got it, that's not what your income was, or you made a lot more you did this.
Speaker 2:Right, and so you know what's going on.
Speaker 3:and now we don't qualify for a down payment program that you were looking at, or any loan or any loan Right, and that's what I was going to say. I mean, the biggest delay is probably the hardest part on any loan. I mean a down payment or regular loan to the day. That I see in talking to our underwriters and just what I see, too, is income calculations.
Speaker 1:Very good.
Speaker 3:And I say that because 10 years ago, I mean, everybody just had a salary or hourly wage. Now you've got eight different categories of pay on your pay stub.
Speaker 2:They're all variable hours.
Speaker 3:Nobody's working just as flat 40 hour a week.
Speaker 1:And also ever since COVID. We look at income a little differently too.
Speaker 3:Right, and now I need to get a hold of your HR department to get a verification of employment, so I could really know what your income is. Oh, but your employer uses this automated system that doesn't give us all the information or fill out all the boxes, and so I think income calculation is probably the biggest cause for stress and delay. Appraisals are easy today for the most part Absolutely, unless it's a bad property. It's a bad property.
Speaker 1:It is that's right.
Speaker 3:But so that's why I say working with a mortgage professional upfront, getting a real TBD loan approval that means to be determined. And the sentence just oh, look to your credit report, Yep, you can go shopping for X amount. No, I'm talking giving Mark and YG here your bank statements, your paystubs, your W2s, your tax returns, correct, let them fully underwrite the sucker before you go find the house.
Speaker 2:Absolutely.
Speaker 3:And to me there's not much worse than somebody having their hopes up. They find the $400,000 house on Zillow hey, this is our dream home. And then they can only qualify for 300. Correct Versus hey, we got you fully approved. 300 is your max. Well, now they have the proper expectations.
Speaker 2:Right.
Speaker 3:So we're not going to be as fun and we're not let down because we can't get what we want. Yeah.
Speaker 1:And I'm the type of loan officer, I'm the type of leader that believes it falls back on the loan officer In many cases I'm not going to say all, but many cases, because we do have the ability to set those expectations, to set the ground rules for how this process is going to go, to demonstrate and illustrate how important it is that you give the correct answers to these things and you do provide the documentation that reflects what we already spoke about. But it has to do with that upfront conversation, that interview, that high trust interview that loan officers have and try to streamline or fast track or skip over when you know what. If that first call took you an hour, I'm sure there was a reason behind it. It's not a race to get off the phone and get to the next loan. It's let me gather as much as I possibly can to structure a loan.
Speaker 1:Because the idea of TBD Underright. Do we do it? Absolutely, because everybody else does it as well. But do I think it's a waste of resources? Absolutely? It's basically taking the loan officer I'm sorry, the underwriter away from what she's supposed to be doing to help validate a loan officer that should know these things after being experienced or should have enough resources to go to before you have to go to the underwriter.
Speaker 3:And I could see that You're right. It's with income being the trickiest thing out there. You're so new on it, or maybe not a full TBD underwriter.
Speaker 2:Sure, no, no, no, we do it.
Speaker 3:But at least having somebody that's going to make that underwriting authority.
Speaker 1:Look at the income component and say okay, yeah, here's the income you can use, because us, as loan officers, we're going to push the boundaries regardless, absolutely as you should.
Speaker 2:Yeah, I love when you brought up the high trust, because I have to say over the last three decades I've changed stuff, so instead of asking somebody hey, where do you work at and how do you get paid? Okay, just 40 hours. What do you get? Now I go a little bit more extensive. Oh yeah, okay. So tell me, have you taken any time off Unpacking?
Speaker 2:you have to have you had any gap or anything of that nature, when I try to set the expectations upfront, saying hey, feel free, like this is a safe place, you can tell me anything Because my job is to help you. But if I find something later, it's easier for me to deal with it now and come up with options as opposed to later.
Speaker 2:So I try to set that like in the beginning of the call because you just I want you to feel comfortable to tell me everything and most of them will then start opening. That's right. And then you'll have like a real estate agent will say man, I took them three other lenders and they all declined them. Nobody really asked the question.
Speaker 3:Yeah, garbage in, garbage out, that's correct.
Speaker 1:That's correct.
Speaker 3:It's a costume. We just closed on a loan for a broker on Monday, and this goes back to the income thing, right? The co-borrower was a nurse practitioner, w2, but she recently took a new gig that was paying her 10.99. It's paying her more money, but guess what?
Speaker 2:You're now 10.99. You have it You're self-employed.
Speaker 3:Any of that.
Speaker 1:That's right, that's right.
Speaker 3:So it made the loan a lot more challenging than we had. To help them structure and pay off some debt to get their ratios to work.
Speaker 1:Maybe we have to go non-QM bank statement, et cetera.
Speaker 3:Well, we actually got it done with down payment assistance.
Speaker 3:Okay, we were able to make it work. But it took a lot. And again that goes back to in that case the borrower just didn't know that she shouldn't be switching jobs while they're in the whole bike journey. But again it was challenging and the income component came into it and that made what would have been a very easy loan into a little bit of a tougher deal. So I think the income piece is probably the biggest delay that I see out there. But it's the borrowers. They definitely play a hand in that.
Speaker 1:And we have to be detectives as loan officers, absolutely, and therapists and everything else yeah.
Speaker 2:Because I know when you're talking about the automated systems for income for most people we have to go and if your company uses an automated system, well, they only have like four blocks, right? You're either going to have your base income, overtime, commission and other, and some people see other and they think yeah. I can use this right and so when they use it, then they don't match it to anything and they go look at their pay sub and they're like hey, this was, this was unimp.
Speaker 1:And that happens so often.
Speaker 3:And I go.
Speaker 1:Shame on you loan officer for looking that and not asking what it was and have additional explanation for it and then just totally counting it right Because this customer is basing their next biggest decision on that.
Speaker 3:We should literally do another podcast just on. I trust a loan application, I love it, I love it. That's why loan block came into play.
Speaker 1:I'm nerding out on stuff like that Absolutely Because, being in the position in the seat of the bus that I am, I get to see from birds eye view what happens with all of these situations with other loan officers, not just in our branch but across the industry. And that's the one thing that has deteriorated, which is the high value trust conversations that the loan officer needs to ask proper questions, listen and find some way to retain so that you can advise based on what they provide.
Speaker 3:Right and then help make the bar inform decisions.
Speaker 1:Absolutely.
Speaker 3:Let's say that, okay, today Tshak's rate is well here we could use. It's going to be our next segue, so go ahead. No, no, no, we're segueing in.
Speaker 1:Okay, so we're segueing in to what programs, what types of programs are out there? And I'm just using TDHCA, which stands for Texas Housing, texas Department of Housing and Community Affairs. They are a government agency that offers these programs to consumers. They have to go through certain lenders, whether it be broker or banker. But I wanted to show you on screen to be able to, I guess, let you know, have you aware on notice that this is public information. Yes, you guys can go and find these rates and determine what's offering what and for how much, etc. So that there are no smoke and mirrors that you see online and you start believing other things. So these rates were published as of today. So we're messing with real stuff and notice there are multiple programs within all of these housing offerings. And we'll run through this real quick so that you guys don't think that DPA is only for government loans or only for FHA, etc.
Speaker 1:In this case scenario, you can see up here at the top that FHA, usda, va are all offered within these types of actual rate selections. Then over here you can see that some are discontinued and this changes on a daily, sometimes weekly, basis. You've got loans that are affected by the average median income limits in the area. But, for example, let's say that you wanted to offer a first time home buyer a program that has a repayable option, and you go with repayable so that you can have a lower interest rate for the amount of funds that you're requesting.
Speaker 1:You'd look, let's say, we're doing an FHA loan, going by FHA guidelines, in addition to the guidelines that this institution or this agency puts on top of them, typically considered an overlay. But you can see here that the bond loan meaning I've got to repay this if I capture 3% of down payment assistance, so 3% of the actual loan amount, and that does include the upfront mortgage insurance, you'd be getting a rate of 6.87%. In my opinion, that's a damn good option this day and age, competing with normal loans. To be honest, no discount points, guys, correct. So you've got different programs, such as this one where it is a first lien. So you're basically selling this loan, go ahead.
Speaker 3:I was going to say. What is that saying no DPA.
Speaker 1:So strange it's stuck up on them. So this here is not down payment assistance, but they become the investor for this loan at a lower rate. In my opinion, this is allotted to the consumers that have saved enough for down payment, that are able to take advantage of this low rate, meet the income requirements, et cetera, and this is basically the housing agency hedging against all of this other stuff.
Speaker 3:In my opinion, they're subsidizing the rate.
Speaker 1:There you go.
Speaker 3:And what I would say about this and we use this quite a bit, believe it or not every loan is different. Every family is different. No-transcript. But sometimes $20 a month difference in calculating income can make the difference between that family buying a house or not. That's right. So perhaps a 6.875 rate puts them over the threshold for being able to qualify, but if they could get a subsidized rate at 5.75, maybe that's just enough to put them under the threshold, which?
Speaker 1:means they get the loan Absolutely. Now, John, with that 5.75, do you get down payment assistance?
Speaker 3:No, no, dpa there. No, they're nettles. Right here, I want to make sure that we have a big circle.
Speaker 1:Matter of fact, I think I can do that.
Speaker 2:I think Mark is trying to prove a point guys.
Speaker 1:No point, just educating. Look, this goes back to originators.
Speaker 3:If you're going to sell something, you better know what you're selling.
Speaker 1:That's exactly correct. So I think we've gotten a lot in YG. You were like how the heck are we going to fill an hour? We're past that. No, we're just like that.
Speaker 3:Well, just scroll down just a minute too. So up there you notice it says 30 year deferred repayable second rate. I mean that means that, however much assistance, that 3%, right? So we'll just say 300,000 dollar loan amount, that's 3% of that, that's $9,000. That means the borrower will have to pay that $9,000 back. However, they don't have to pay it back today.
Speaker 2:They don't have to pay it back tomorrow, just whenever that loan pays off. That's right.
Speaker 3:So they could pay off the mortgage or they could sell it in five years and do it that way, or they could refinance it and roll it into their new loan up to maximum loan, to values. And then below that you see the three year forgivable second lien which means that however much assistance the borrower gets right. So you see there's a 4% available today at 8% rate. That would mean that 300,000 dollar loan amount the borrower is going to get 4% assistance, that's $12,000. That means that borrower does not have to pay it back as long as they're in that house for three years. That's right. And then poof, it disappears. And obviously, you see, the downside would be they're going to pay a little bit more in interest rate versus the other one. But you know what? What gets you in the house today?
Speaker 2:That's right, and what are you?
Speaker 3:comfortable with.
Speaker 2:But I can't charge a lower interest rate than John guys, because we got the same rate sheet, not unless you want less money.
Speaker 3:That's right. The state sets these Tshak same thing.
Speaker 2:I mean they set those rates daily, they change daily and now I will say too, looking at this rate sheet, we have a couple on the top that are just not available, right? So I will say, every day, we've got to look at these, because sometimes they do replenish funds, sometimes there's more, and then if you're looking at a program like this, you have to keep in mind that it could go away. We can only lock into this once you have a contract. That's right. So I had one client that was looking at the no down payment and was stuck on that interest rate and when it was gone, it was gone. It's right. And you've got to make sure that it's available. And as loan officers, if you get one, you need to register that loan immediately, absolutely, immediately, absolutely.
Speaker 3:So just to put this in perspective too, and this kind of goes along the same lines is. These do change every day. But I also tie this in with getting pre-approved first, right, you know, knowing what you are, because at least if you're pre-approved then you're working with a good realtor partner. Then guess what? As a home buyer, you've got some strength when you're negotiating because you don't have to max out and take the maximum of the DPA?
Speaker 1:Not at all.
Speaker 3:Not at all. So Tshack today, 5% assistance they have available at 8.125 for the note rate.
Speaker 1:Gotcha.
Speaker 3:If you can get other seller concessions, maybe I don't need 5%. So they have a 3% available. That's forgivable for three years with the 7.375. So again, this just boils down to. Comes back to door number one. Door number two door number three work with somebody that could provide you options, that knows the programs.
Speaker 1:I mean, and in some cases you've got borrowers that have their own down payment, with maybe a lower credit score, that are paying higher rates without the down payment. So I think there was plenty for realtors, for lenders, for consumers, to peak the interest of actually wanting to know more about this, to know that it is not a one size fit all or a one way or the highway type concept. I think that we were able to articulate the offering of lenders and their ability to do so with the participation and that it's not strictly for one or the other and it is not something that should be overlooked, especially the time in the market that it is the location and our demographics that we have here in San Antonio and the demand for what it is the American dream. How do we accomplish that? Here's a solution to that in many cases.
Speaker 2:And one thing we didn't talk about, and I would love to hear the way you describe it, is the mortgage credit certificate, and I know that there's like other programs that combine it with it. So I always kind of say it's more of like a government coupon that you get for your deduction and get credits. I would love to kind of hear how you explain that.
Speaker 3:So the mortgage credit certificate, if and when it's available, every borrower should absolutely see if they qualify for it and what it is.
Speaker 3:It is a dollar for dollar tax credit equal to a certain percentage of the mortgage interest they pay back, and T-Shack was the last one that really had the MCC. They ran out because, well, they just ran out of funds for it, and it was great to be able to show what it did for consumers, because it was a 20% of the mortgage interest to borrow or pay. So we're going to get back. And so what does that mean? So if they paid $20,000 in mortgage interest in a year, they were going to get a $4,000 tax credit, not a refund, but an actual credit.
Speaker 1:On their tax return, which then lowers their total tax amount and could move you to a different bracket.
Speaker 3:So yeah, it just takes out your removes your liability, but then, more importantly, from the qualifying standpoint, we would get to use that, say, $4,000, as income to help you qualify for the mortgage.
Speaker 1:That's right, it used to be $166.00. Now it's gone up to a little bit more. It's almost 20%.
Speaker 3:No, max, no max there was no maximum amount and I like to put it in terms of the what does it do to the effective interest rate for a borrower? So if you were looking at, oh gosh, let's just say okay, let's say the note rate was 8%. I'm just using that as a random number. So if I were to multiply 8% note rate times 80%, that gives me what? 6.6, right, so my effective interest rate as a consumer then I'm not really paying 8%, I'm paying 6.6.
Speaker 3:That's right, because I'm taking 20% off the top with that government tax credit, that government coupon. That's right, yes, and the MCC is unavailable today, it will be back. According to Tshack, they're looking at mid-April. It will be back out there and it'll be in conjunction with DPA which is Get ready for the posts announcing it. Yes, oh, oh, man Okay.
Speaker 1:That was a fantastic discussion regarding all the down payment assistance. Go ahead.
Speaker 3:John. No, that was great and I just thank you for having me on here. Of course, man, I love sharing my hot sports takes. But I come back to just the why, and you look at again that wealth gap by demographic 188,000 for white families, 36 for Hispanics, 24,000 for black families.
Speaker 3:Let's bridge the gap Absolutely, and we can do that with responsible home ownership, taking advantage of these programs that are out there and available, and working together to have an honest discussion with consumers about what their expectations need to be. Absolutely, and let's get you in a house to set you off for the betterment of your future generations. Absolutely.
Speaker 2:And I'm not running for. Congress Too much dirt, too much dirt. Now I bet on you, you'd have my vote, mine too. Well, guys listening.
Speaker 1:First, thank you, yg, for joining on this. John, thank you again for joining on this. Guys out there, gals out there, I think I'm totally with them too. Regarding the bridging the gap of the wealth, I mean, there's only one real way to do it that has stood the testament of time, which is home ownership. I think education is a huge part of this.
Speaker 1:If you are not knowing where to look, if you're not getting the right information and maybe have questions, jump online, but be sure that you are looking in the right places. Again, drop and reviewmymortgagecom. Go there, educate yourself on the different bond and grant programs that you may be able to qualify for as a consumer. And then the second piece to this, which, in my opinion, may actually be bigger than the first piece, which is taking action. If you don't take action, you can stare at a jar that is full of potential all day long, but until you un-cap the jar, the potential stays in the bottle and it goes nowhere, guys. So again I want to thank you guys again one more time. Really good information, really great insight to the topic at hand and hopefully that gave you a little bit of 411 on DPAs. So until the next one, we'll catch you later. Right now, on our next topic, we have access to 18这样's Business. It always brings a lot of impact. Yes, neavercom, create your business. Let me know which one you would like the most in governor.