What No One Tells You About Mortgages (w/ Loan Officer Taryn Schwartz) I UCTB I Ep#7

What would you say are the top three

things every buyer should do before

calling a lender?

>> So, what goes into that number that

someone is qualified for? How do you

determine what that number is?

>> If somebody is an authorized signer on a

credit card, so mom and dad's card that

is reported on their credit report. I

think the biggest oh crap moment for

most people is that the four things that

go into your cash to close credit score

has a huge impact. It can cut your fees

in half.

We're going off-roading with real

estate, taking it out of the Tahoe and

bringing in backup. Welcome to Under

Contract, taking backup.

>> Here we are Monday morning. We're going

to do some drawing

>> with our backup guest.

>> Yes, Tim Schwarz.

>> Thanks for having me.

>> Thanks.

>> Thanks for agreeing to come on.

>> The viewers want to know a little bit

more about you.

>> I know you're not originally from the

area.

>> No. as we were just talking about the

Seahawks because that's your your team

because you are originally from

>> Seattle. I started in banking when I was

18 in Seattle and then moved into

commercial lending and then when I moved

to New York in 2012 I started in

residential. So I went from teller

teller trainer commercial and then to

residential.

>> So how long have you been in banking

now?

>> Well I'm 21. So,

>> I was going to say you moved up really

fast.

>> You kind of did what Chelsea did. You

started at the

>> bottom. Now you're at the top.

>> Bottom. I didn't want to say bottom. You

started in You got your foot in the door

and then you're now you're all the way

at the top.

>> I would say bottom.

>> You would say bottom. Yeah. Okay.

>> Yeah. Started in the back processing

closing and then I was supporting two

people and they left quickly and my boss

basically said, "Are you ready? Sink or

swim?"

Then he came back and said, "I'll give

you a raise if you want to stay in your

position now." And I was like, "Oh, so

is it that bad on either side um and

then decided to go for it?" And here we

are.

>> So, a lot of people might not understand

how the process works or or what that

means. So, when you say you were in the

back end, you were in processing and

underwriting,

um what does that mean?

>> Processing and closing. So, basically,

the originator pre-qualls people.

They're the ones with the relationships

with the realators, the attorneys, um

the community members. Once the file

goes to a complete application, so once

people are under contract, they've

turned in all their documents, then it

goes to the processor who kind of does

all the behind the scenes type of stuff.

Um the closer prepares the closing

documents for the buyers to sign and

really not a lot of contact with the

buyers

or the realers or, you know, whatnot.

So, more back office stuff, learning how

it works behind the scenes.

>> So, like your support staff sort of.

>> Support staff. Yep.

>> And because you're you just you're so

smart, you moved up so quickly. I

remember meeting you when you were the

processor, I believe. Yeah. So, you

started out at when you moved here

>> from the West Coast.

>> What bank did you start at?

>> Almyra Savings. So,

>> that's right. Sorry.

>> I was with Elmyra Savings Bank up until

they got bought out. So, just shy of 10

years. So, I started with Elmmyra

Savings Bank and that's where I met you.

Yep.

>> And then you went to Community Bank

because Community Bank bought Yep.

>> Elmyra Savings Bank.

>> And now you are at Tomkins.

>> I am at Tomkins Community Bank, formerly

Tomkins Trust Company.

>> See, it's breaking my heart that they

changed their name because Tomkins Trust

aliteration.

>> It's breaking my It's breaking my heart.

So, so besides lending and being at the

at Tomkins doing residential mortgages,

what else do you do in the area? Tell us

a little bit about yourself, Taran, that

people want to know.

>> Um, I'm a mom.

>> She's a hockey mom.

>> I'm a hockey mom. I have two kiddos that

are eight and play hockey.

Fun fact, husband who's a first

responder, so he works a lot

>> and

camping and hiking and watching

Seahawks.

>> So camping, hockey, hiking. You're just

>> Yeah.

>> out there. Fun fact, our sons have the

same name.

>> They do.

>> They share a name.

>> Yep.

>> I remember you were afraid to tell me

that that's where you were.

>> I know. Yeah. I think I might have

texted you from the hospital, actually.

>> Did you? I think I did, didn't I?

>> Well, how many years has it been now?

>> Uh, probably about eight.

>> That's what I was asking. How many They

just had a birthday.

>> Yes,

>> that's right.

>> Well, we just had Black Friday. Let's

Let's bring up Chelsea's topic here.

>> Yeah. What's your biggest fear with

Black Friday and buyers?

>> Uh, opening up the new credit cards,

trying to save that, you know, 10 15%

putting balances on those credit cards.

Not only does that increase their

monthly debt, but also can drop credit

scores, which can impact qualification,

but also pricing, which would be your

rate or your closing costs.

>> And that can affect someone who's

already under contract.

>> Yes.

>> So, not only is it going to potentially

affect someone who's looking to get that

pre-approval and buy the house, but even

if they are under contract, everything's

moving right along

>> if they open that credit card cuz they

the bank does that final check.

>> Yep. Yeah. So, not every bank does a

final check. Some do, but a credit

report in general is good for 120 days.

So, if somebody takes out another credit

card, so even if they don't put a

balance on it, but their credit is

checked, that's going to drop their

score. If they take out that card and

they put a balance on it, that's going

to drop their score. So, if their credit

report expires and now the bank has to

repole, even if they're in application

and they are approved, that could

potentially impact their approval, but

also the rate and closing cost that they

can get. This is great because everybody

thinks that they know how mortgages

work. Oh, everybody. Cuz their uncle

bought a house 25 years ago and it's the

exact same

like fact by application over.

>> Sorry.

>> Facts. Sure. Not carrier pigeon. Just

facts. Okay. Oh, maybe carrier. Okay.

So um there's a lot of misinformation or

confusion sometimes about how mortgages

work especially now in in this era

postco let's say.

>> So part of that I think you just

answered part of that. So um

if

say I came to you and I'm like I want to

buy a house. I know nothing. What if I

think that I don't I can't buy a house.

What if I'm like I have I don't have a

down payment or I you know I I'm self

diagnosing myself that I don't have good

credit or I don't have a good down

payment or anything. What would you tell

me? I think the first thing is you don't

know what you don't know. So if you

aren't trying to get pre-qualified and

having somebody look at your credit, if

you're not exploring grant options for

first-time home buyers or low down

payment options, then you have no idea

what's out there. Um, don't talk to your

friend or your family member that bought

10 years ago or even three years ago

because things have changed so much.

There's so many new things out there or

things that maybe not out there anymore.

Um, you have to start somewhere. So, I

think starting with a pre-qualification

where somebody looks at your debt or

your income and says, "Maybe you don't

qualify right now, but here's what you

need to do and here's what you would

qualify for." Or based on your income,

here's what you could qualify for if we

can do this with your credit score. Um,

and then down payment options, you know,

there's as little as 3% down for

non-irst-time home buyers. There's 100%

financing options for first-time home

buyers. So buyers who have no idea

what's out there, they have to start

somewhere. And so that would be my

biggest piece of advice is to call a

lender or even INHS does um credit

counseling at Thick Neighborhood

Housing. So start somewhere and just

start doing the research. Um I think

first-time home buyers either come in

with no knowledge or knowledge overload

where they've done so much research

they're like in paralysis because they

think they have to know all the things.

Um but yeah, just starting with calling

somebody. Now, if somebody knows what

they want to spend monthly, they're

like, "This is what I can afford

monthly."

>> Would you say it would be a good idea to

then go to a lender and say, "Here's the

payment that I want to be in and work it

backwards. How do I get to that point?"

>> Yes. So, a couple of the questions I ask

up front is um what is your target

monthly payment with taxes and

insurance? So, I think figuring out your

budget is really important before you

meet with a lender. um how much can you

afford for cash out of pocket. So

besides just your down payment, there's

also the closing costs, the prorations

of taxes, and then your escro deposit if

escros are required. And then um you

know, what does long-term financial

goals look like for them? And that could

include the housing, but that can also

include like maybe they have a high

credit card they need to pay off. And

those are all things that a lender can

take into consideration when they're

figuring out the best mortgage product,

the best mortgage um payment. And even

if somebody says, you know, I want my

monthly payment to be $1,500, I'm going

to get them to that point. But if they

qualify for a little bit more, I'm also

going to tell them that price point as

well.

>> So, what goes into that number that

someone is qualified for? How do you

determine what that number is?

>> Um, the biggest factor is going to be

debt to income ratio first. So, first

I'm taking their gross income, looking

at what their other monthly debts are,

and figuring out how much they have left

in their debt to income ratio uh to

qualify for, and then I back into the

purchase price as far as what they have

for down payment, what type of products

they're looking for. Um, so it's kind of

like fitting everything into a puzzle

piece. Um, from there, if their credit

score isn't great and maybe we need to

increase the rate a little bit to absorb

some closing costs or vice versa, it's

just kind of piecing the puzzle pieces

together. Um, and then second is going

to be the credit score itself. And

certain products require a higher credit

score or certain products allow for a

lower credit score. So then those

products will also have different debt

to income ratio requirements. So USDA,

for example, is a governmentbacked 100%

financing. um it has a little bit

stricter requirements on debt to income

ratio. So, if somebody's trying to go

for that product, they're going to

qualify for a little bit less. So, it

all just depends on what their goal is

and what products they're going to be

going for. Speaking of credit credit

scores, everybody thinks that's the

number one thing. So, say you have two

people applying for a mortgage and one

has a really good credit score, one

doesn't have the greatest credit score.

How does that work? So the pricing which

is the closing cost and the interest

rate is going to be based on the lower

of the two borrowers score. But the

stronger borrower is going to impact the

qualification. What is the FICO score?

Like what actually goes into it? Because

we always talk about credit score and

>> I mean you could really nobody

>> what actually goes into what makes up

the credit score.

>> So the biggest thing is late payments

and I think that's what most people

think about. So, a late payment on a

mortgage, of course, is going to have a

huge impact. Um, a repossession of an

automobile or um anything huge due to

late payments is going to have a major

impact on your credit score. But another

thing that a lot of people don't think

about on their credit reports is how

they use the revolving debt. So, if you

have five credit cards and they're all

maxed out, when you go to apply for a

mortgage, in our eyes, you know, we're

like, whoa, you're maxing out your

credit cards here. Why do we think you

can qualify for a house? That also

impacts your credit score. So, anytime

your revolving debt balance is 30% or

higher of the limit, it's going to be

negatively impacting your credit score.

Anytime it's 30% or lower, it's going to

be positively impacting your credit

score. So, if somebody has not great

credit and they are trying to improve it

and they have maxed out credit cards, my

first advice is going to be to pay those

down to 30% or lower. So, start with

one, pay it down to 30, go to the next

one, pay it down. And I'm not a credit

um counselor like certified by any

means, but this is just from experience

in classes and helping clients do that.

Um, if your credit card is over the

limit, so sometimes you buy and you have

it at the limit, but then there's a fee

assessed to it and it's over, that

really hurts your credit as well.

>> And then, of course, bankruptcy and

foreclosures and those things are whole

another ball game. So, one thing that I

hear a lot, and I don't know if you do

too, Chelse, is that this I don't know

if it's a myth or not, is that folks,

they don't want to come in and get

pre-qualified or they don't want to talk

to a lender because they think talking

to you or someone means that they have

to get their credit pulled and then that

hurts their credit.

>> So, talking to someone does not have to

involve a credit pull. We can't do a

full pre-qualification without that. But

talking to somebody about your goals and

I just did this actually for a client of

somebody in your office where she told

me what exactly what her income was, all

of her debts. Um, just very honestly,

you know, listed everything out and I

told her based on that what I thought

she needed to do, what she could pay off

to qualify for where she needed to go

and she's going to come back in 12

months. So, it doesn't always involve a

credit pull. Um, if we do pull your

credit because you want, you know, an

exact answer, that's going to be a more

concrete solution. It typically drops

your point your score between two and

seven points and it's going to vary

depending on the borrower and their

credit history and what that looks like.

Um, typic and then after 120 days, it

usually starts to go back up again.

>> It does take forever to get that back

up.

>> But man, does it drop quick.

>> I know, right? Like it takes forever to

go up, but boy, that second like we're

drop it. We're going to drop it. it

seems a bit arbitrary too. Um,

>> so that's something that buyers should

also be aware of is even if you have a

game plan in place to pay this off and

it's going to take time to get to that

point. You can pay it off the very next

day, but it's not going to skyrocket a

week later. It's going to take time and

you kind of have to wait.

>> Mhm. So another thing that this just

came up, so this is what made me think

of it is if somebody is an authorized

signer on a credit card, so mom and

dad's card that is reported on their

credit report. So if that person's

credit card is maxed out, I don't I

don't know that it has like such a huge

impact as if it was their own, but it is

showing up on their credit report as

well. So potentially impacting their

credit score. So, if you're a co-signer,

>> no, just an authorized user. You're not

even responsible for the debt, but you

have a credit card to that account, it

is showing up still on your credit

report.

>> I see. So, if you're an authorized user

on a card

>> Mhm.

>> and the person that is in the driver's

seat,

>> they max it out and don't aren't very

responsible, that could affect the

authorized user because it shows up.

>> Interesting. Interesting. So, one of the

things that I hear a lot is people or I

see a lot or I read a lot is people that

don't have credit. What about people

that don't have any credit history? It's

so weird because in other countries, no

credit is a good thing, but in our

country, like if you don't have any

debt, that's negative.

>> Um, so there's options for alternative

credit where people can document that

they've paid rent or they've paid a

phone bill that wouldn't normally show

up on credit. Um or you know anything

that they've paid for the last 12 months

like Netflix doesn't count but insurance

counts. Um things like that.

>> TV subscriptions.

>> No.

>> Apple subscriptions that stuff doesn't

count.

>> No. But insurance um rent payment would

be the best one honestly. And for every

lender is going to have different

requirements but typically we'd want to

see at least two for 12 months. But I

have funny story. So, I had this guy who

paid off his mortgage in full, like zero

balance, owned his home free and clear 6

months before coming to me, pull his

credit, and he doesn't have a credit

score already. In 6 months, he lost his

credit score cuz that was his only debt.

So, it it happens like it's weird.

>> That is bizarre. You would think that

that's a good thing. In that case, it

just comes up. It's not a zero because a

zero would be terrible. You want a zero.

She says any like like you don't exist.

I'm sorry. you don't exist in our

financial world.

>> So, I could see his credit history, he

just didn't have a score. So, I could

see that he paid off his mortgage.

>> This is fascinating. So, how important

in if you were to line it up from one to

five?

>> Mhm.

>> One being the most important, five being

not important, how important is the

credit score or the FICO score, what we

call the FICO score when getting a

mortgage? I would say very important

because it's going to impact what

programs you can qualify for. It's going

to impact pricing. Um, you know, there's

certain pricing that

every bank prices differently, but I'm

going to just speak right now on Freddy

and Fanny have this certain fee called

the loan level price adjustment. Some

banks charge it, some banks don't. if

they're selling to Fanny or Freddy, they

are either adding it into the interest

rate or they're absorbing it, which is

probably not a lot. But if you have a

credit score of a $740, which is a great

credit score, your um your closing cost

on a $200,000 loan is going to be

$1,750.

But if your credit score goes up to

$780, that fee is cut in half at 750.

>> So 40 points cuts your fee in half. And

a 740 in my opinion as just a normal

person is not a bad credit score.

>> So credit score has a huge impact. It

can cut your fees in half.

>> Mhm.

>> Wow.

We've had this discussion before because

you've come to some of our team

meetings. What what's going on in the

world of credit scores right now?

Because I think you you had given us

some information at one point. Mhm.

>> So, what is there an update on what's

going on in the world of credit scores

right now? And if there's is it trending

that they're going to go away? Is

>> not go away, but it's it's supposedly

going to be easier to get a credit

score. So, shorter credit history

requirements, a little bit more lenient.

Um, and right now, most banks are

pulling a try merge, which is three

credit scores. Potentially next year, a

lot of banks could go to a two score

model.

Um the transition though, I'm not sure

how long it's going to take because you

know that involves banks updating all of

their systems, their requirements and

that sort of thing. But it is there's

there's two new models coming out,

credit score models coming out next year

and that should both say should make it

easier for clients to get and build

credit.

>> So in 2026

>> Mhm.

>> there's new Okay.

>> at some point in 2020.

>> At some point

>> some point. Okay. Wow. So, I'm curious

now, what did you do with this guy that

had no credit score? Had an NA. So, he

his wife added him as an authorized user

on her credit card and a couple like two

weeks later, 3 weeks later, we rupulled

credit and boom, we're good to go.

>> So, that's one way to fix history if you

don't have any credit history. So, you

could add you could have somebody add

you as an authorized user.

>> Yes. But with him, I I don't know about

anybody without any credit history. With

him, because he did have a credit

history, he had just paid off his

mortgage 6 months ago. Um, with him, it

was really easy and I think his credit

score came back at like a 780 or

something.

>> Okay. So, what about folks that don't

have a history? What would you recommend

that they do?

>> Um, open a small credit card, anything.

Just start building for 12ish months. I

mean, we can always do the alternative

credit route I mentioned, but better

pricing, better credit or better

interest rate, better closing cost is

going to come with a higher credit

score. So, you know, $500 credit card

that you just put your gas on. And then

make sure you're not paying it off

before the bill cuts, though, because

that's what's going to the credit

bureau. So, if if your bill every month

is showing zero, then nothing's

reporting. But, right, just slowly start

building credit. Maybe take out a small

personal loan. Not too much, too fast,

but

>> something to just start building your

credit.

>> Wow.

>> So, kind of talking about like down

payments and what you would need for

your closing costs.

>> So, I've I know you and I have worked

number of times with uh gifted funds.

So, how does that

kind of play into So, gifted funds are

allowed from a family member. So, it can

be by marriage, blood, or adoption. Um,

and it has to be documented that it's

coming out of the donor's account. So,

this is he pretty heavily regulated

because they don't want illegal funds.

They don't want to basically clean money

with buying a house. So, dirty funds

cannot be used to purchase a house.

>> So, like so like Ozark, you don't want

>> Yes. It's like Ozark.

>> That makes sense.

>> So, we have to document the funds coming

out of the donor's account by the

easiest way honestly is a canceled

personal check because when the check is

canceled, meaning it has cleared their

account, there's a bar on the back of

the check saying that it's cleared their

account. So, we're assuming that it was

in their account first. They're saying

those were their funds and we're

documenting the buyer depositing those

funds into their account. Um, the donor

cannot go to the bank with $1,000 in

cash and buy a certified check. We if

they use a certified check, we have to

get a bank statement from the donor

showing the funds coming out of their

account. So, we have to show that they

had the money in their account.

>> Gotcha. So, you can't just pull a watt

of cash from underneath the mattress.

>> No. No. I did have somebody pull a lot

of cash out of their glove box once and

he said that um and I said, "Well, what

is this money from?" And he goes, "Well,

it's my glove box money." And I said,

"Your glove box money." He goes,

"Doesn't everybody have a watt of cash

as glove box money?" And I said, "No,

they don't actually." He's like, "Yeah,

every paycheck I just put 20 bucks in

there and that's my glove box money."

Yeah, that doesn't work. I also had

somebody take a picture of $100 bills

laid out on the table and they're like,

"Here's my documentation.

>> And I'm like,

Told you doesn't work. Can't copy."

Yeah. So funds have to be documented

from acceptable sources. Um, so gifted

from family members, loans from

retirement, we don't count the monthly

payment against the buyer. So, if you

take a loan from a retirement or

withdraw from your retirement, that's

good. Um, secured personal loans are

fine. We do have to include that monthly

payment in the debt. Unsecured loans are

not fine. So, if you go take out an

unsecured $10,000 loan, I can't use that

as funds to close.

>> What do you mean unsecured?

>> So, some banks will do an unsecured

loan. They'll just like like a credit

card advance or like take out a $10,000

installment loan with no collateral.

There has to be something securing it.

>> Okay. Um,

>> so I can't just go start a GoFundMe page

to raise money for a down payment for a

house.

>> GoFundMe is not allowed.

>> No, darn it.

>> Somebody can gift them some money for

down payment, but there's very strict

rules that apply

>> like no GoFundMes. It has to be a family

member.

>> I actually had this question. I think we

talked about this um when we had a guest

on the previous episode. They we had

said a um a friend, but you can't it has

to be a relative.

>> The the regulations say that it has to

be a relative. So each bank though could

make an exception

>> um on what they will allow. We recently

allowed a person's

partner's mother who so technically not

a family member, but we felt like they

had the partner had been, you know,

they'd been partners for long enough

that that felt valid to us. So

>> every scenario is going to be different

>> um the family members just the general

requirement but of course there's case

by case scenarios that

>> get it looked at

>> and if one tip that you know anybody

who's looking to gift that funds to say

their child or something

>> um

>> I always recommend talking to their tax

consultant because there is a specific

amount that you are allowed to gift

taxfree but we're not tax consultants

we're not So, but I always say call them

up because they can walk you through it

and there is those tax-free funds that

>> can just be handed over.

>> And I say the same thing. Call your

accountant.

>> Yes, that is me.

>> Yes, we know just enough to be

dangerous. But again, it's not going to

hurt just like you said, it's not going

to hurt anything to talk to somebody to

get the information.

>> And honestly, what people are doing is

building their team. They're building

their realer, their financing, their

attorney, their accountant. Like you're

building a team of people that you can

call on who is they're experts in things

that you are not. So you're not hurting

anything. You're helping yourself.

>> Exactly. What is the most creative but

legitimate way someone has come up with

their down payment? What have you seen?

>> Um this is an interesting question

because now nothing surprises me. It's

not I don't think things are creative

anymore because I feel like I've seen so

many things. But

>> multiple um multiple secured personal

loans, um multiple gifts from family.

One person just said she started with

her grandma and worked her way down the

list of her family members for gifts. I

mean, she was getting like a thousand

here, 500 here. Um people who own

multiple properties tend to take equity

out of one property to buy the next

property and continue to do that. If

you're looking for a house,

you might want to try a duplex because

here's another way. Correct me if I'm

wrong, that

if you want more money to qualify.

>> Yes.

>> Towards purchasing towards your income,

your debt to income, like you'd said,

>> find a duplex.

>> Yep. And the requirements on that are

going to be different as far as what can

be used and if money can be used

depending on the product. So if people

don't have a uh landlord history, some

products might not allow it. Um but yes,

in general, a duplex is a great option.

Oftent times requires 5% down instead of

the 3%. Um and if it's an income

restrictive product, the rental income

also is going to go come into play with

that. So, if you're a first-time home

buyer, you could try to find a duplex

that's rented at least on one side and

owner occupy the other because the rent

from that other side can help you

qualify for the loan. Yep. Right. Yes.

You just have to be able to move in

within 60 days of closing. If there is a

lease agreement in place, the um

appraiser is going to do a a market

analysis to confirm that it is a legit

market rent. Um if it's lower then we

will use the lower of either the market

analysis on the appraisal or what is

being currently charged but the

appraiser is going to confirm you know

what what is the market rents for that

unit.

>> So if someone needs a little bit of a

boost to show that they have more income

in order to purchase or qualify for more

>> in a purchase they could be looking at

duplexes.

>> Yes.

>> And and then use that history of rent

>> from one side to help them qualify

because that will be income in their

pocket. They can be like, "Look, I have

this extra stream of income now."

>> Yep.

>> So, that means I can afford more.

>> Yep. If there's not a renter in the

other unit, we will use 75% of whatever

the appraiser says the market rents are.

Um, right off the bat, we take 25% off

for vacancies, repairs, and that sort of

thing.

>> Yeah. So, that when we say house hack,

that's what we mean.

>> Yes. That's a great way to get into a

house

>> if you, you know, are feeling priced out

of a market or if your debt to income,

which is one of the things they use to

qualify,

>> y

>> is not as high as you would like it

would would like it to be. That's a

great way to do it. Now, you have to be

prepared to be a landlord.

>> Yeah. Right. I actually I think we just

worked one a couple years back where uh

the clients they already had a house

that they bought 10 plus years ago and

they bought it with a loan and they had

a very small mortgage left

>> and their interest rate was fantastic

and they wanted to buy another house but

they didn't really want to sell the

house that they currently owned.

>> So I think they worked with you. They

got a lease agreement in place and then

you use that to basically pre-approve

them for the new purchase

>> and now they're

>> it's another house hack.

>> Another house hack.

>> Yep.

>> So if you know that's always an option

too if you don't want to sell your house

and it's not contingent you know that

sale

>> getting a lease agreement in place 12

months.

>> Mhm.

>> So I would say I am seeing more gifts

than before. Um,

gosh, probably half of the first-time

home buyers, which is a lot more than

>> Wow.

>> And sometimes it's smaller. Sometimes

it's $5,000 or a,000. Sometimes it's

50,000. So, it really just depends on

the buyers, obviously. But, yeah, I

would definitely say I'm seeing it more.

>> Wow.

>> Have you seen an increase in concessions

back from the seller to buy down rates?

No, I have not seen concessions come

back since CO when everything got crazy.

And in fact, buyers who need concessions

to get their cash to close down are

being told by not you guys obviously,

but by by realers basically like we're

not going to get a house if you have to

have concessions. So, it has been

struggle for people that might need it.

>> I've heard that. No, I've heard that.

I've come across um some buyers who have

actually said, "Yeah, I'm switching

realtors because this is what my realtor

said to me." And I've seen a lot of

stuff online as well on in forums and

stuff. Speaking of concessions, cuz not

everybody understands what concessions

are. Do you want to tell people what

concessions are?

>> Yeah. So, concessions is basically a an

amount back off of the purchase price.

So, um, now would you consider buying

down the interest rate the same as

seller concessions for closing costs?

>> Yes. So, it's the buy down is a closing

cost. So, the concession would be the

seller contributing a portion of their

proceeds towards the buyer's closing

costs. A rate buy down is a closing

cost. So, that would be a a concession.

>> So, you just get to choose what those

concessions are for. Can can they be

specific and say I am choosing this

$6,000 to go towards this closing cost?

>> So they can say, you know, how much does

it cost to buy down? That's what I'm

going to contribute. But in the bank

size, all of the closing cost, the cash

to closer, the cost of the house is

lumped together. So your purchase price,

your closing costs, your prorations of

taxes, and your escro deposit is all a a

cost to the buyer. And then from there,

we're crediting the loan amount and

whatever other credits are coming. So,

it's not specific like to one thing. Um,

but the buyer or the seller could say,

"Well, the cost to buy down the rate is

$2,000, so that's how much we're going

to give towards closing cost."

>> Now, would that cuz with seller

concessions for a buyer to qualify,

>> each buyer could qualify for something

different amount-wise. Um, what is it

like 6%?

>> Depends on the max down payment. So, 9%

is the max. So, someone puts 25% down,

they can get 9% seller concession.

>> Okay. But what if

>> So, here's a question because I thought

it depended on the mortgage product.

>> It does.

>> And and the person and what they qualify

for.

>> It does.

>> But most people doing concessions don't

have a down payment. That's why they're

doing concessions.

>> So, at 25% down, somebody doing

concessions is probably because there's

a repair or something, which the bank

doesn't want to know about. Nope.

Um, so normally it's 3%. Government, so

FHA, VA, and USDA is 6%.

>> Okay. So is that something that a seller

can offer

>> like upfront um

>> and they wouldn't have to worry about so

say instead of a price drop,

>> a seller could say, I'm offering a 3%

seller concession back to be put towards

buying down the rate. They do that.

>> Yep. Absolutely. And the biggest thing

to remember is that the appraised value

has to come in at the gross purchase

price. So if it's 200,000 with seller

concession, so the seller's walking away

with a net just say 194,

>> um it has to appraise at the 200, not

194. So basically, and what I tell

people, and correct me if I'm wrong, is

concessions are just a way for buyers to

mortgage their closing costs.

>> It I'm super simplifying it right now.

>> Yes. It gets confusing for buyers though

because when if they haven't talked to a

realer yet about negotiating that into

the contract, they're like, "Well, why

can't we just add it to our loan?" And

then it's like, "Okay, so you've been

talking to your uncle again 25 years

ago." Um, but it has to be negotiated in

and actually has to be coming back from

the seller, so to speak. But yes, in

short, it is essentially financing a

portion of those. And the only reason I

say that is because it can be confusing.

So for round numbers, when somebody

says, "I'm going to seller. I'm going to

give you $100,000, but of that $100,000,

you're going to take $6,000 of it and

give it to my bank to cover this portion

of my closing cost. So, in reality, the

seller is only getting

>> Did I say 6,000?

>> 1994.

>> They're only getting I didn't know if I

said four or six. They're getting

94,000. In reality, the seller is only

getting 94,000. However, the buyer is

still on the hook for the $100,000

mortgage. Am I right? for the purchase

price would be 100,000. If they're

financing 100% then yes, they're still

>> if they're Right. Right. Right. If

they're financing, I'm I'm going

>> But they're still on the hook for the

full purchase price.

>> They're on the hook for the full

purchase price. I'm super simplifying

it. Okay.

>> Yes. If they have zero money down.

>> Yes.

>> And the consumptions are their only

money down. Okay. Yes. In addition to

gifts, I know especially with first-time

home buyer programs and you have other

programs and I know specifically Tomkins

has a grant program. Um INHS has grants

you can use as secondary financing.

>> What about buyers using grants?

>> So there's there's quite a well I

shouldn't say quite a few but there's a

few grant options in our area. Um so you

said INHS their grant programs change

every year. So, I'm hesitant to speak

exactly to their terms, but they have

ones that are basically free money that

go away after 5 years. They have ones

that you pay back when you sell the

house. And as far as restrictions on

those, um, I think it's different

depending on where the funds are coming

from that they're getting. Um, there's

another grant called the Home Buyer

Dream Grant that's funded by the Federal

Home Loan Bank of New York. Um, the

restrictions on those ones are you're

supposed to keep it for 5 years and then

it's forgiven. If you sell within those

five years or you no longer own or

occupy, you do have to repay the grant

back at a pr-rated basis and it's on an

application. So, if you're going to pay

off the loan, we have to submit to

Federal Home Loan Bank and then they

tell us what you have to pay back on

that loan. So, that would be kind of the

downside to the free money, so to speak.

Um, but I think for most first-time home

buyers, if you're buying a house,

hopefully you're going to plan to stay

in it for 5ish years, and then that's

money that's just in your pocket. The

grant programs are all income restricted

um at different levels for different

counties. So Tomkins County has some of

the highest income limits um and then

the surrounding counties are going to be

a little bit lower. And it looks at

household size as well. So if you have a

bigger family, they're going to be a

little bit more flexible. Um even if

you're expecting that is counted as your

family size as well. Um, so those

programs that change on a regular basis

and the income limits change on a

regular basis is a good reason why

anybody who think they thinks they might

be close needs to reach out and check

the community housing trust homes from

INHS. That is another way to get into

housing affordably if somebody needs to.

>> Absolutely.

>> So, and I love working with INHS.

They're great to work with and I think

benefit buyers that couldn't purchase

anywhere else or a house, you know, one

of the buyers that I have that's

purchasing them is a young family that

was looking at like not great shape

houses out in like New Field and just

not houses you want to bring a new baby

into or start a family in. And now they

get a brand new house in Trumanburg and

I think it's fantastic. Yeah, cuz these

are brand new homes that they build. And

the way they keep it affordable is that

they it's like a land lease. So, you own

the home

>> and everything in the home and you have

to get qualified just like you would

with any other property,

>> except that they're income limited.

>> And they used to only be for first-time

home buyers, but for these Trumansburg

town homes, they opened them up to non

first-time home buyers. It's a way for

for for buyers to build equity

>> because they keep the um prices below

the median. I would say here they keep

the prices below the median. Not only

that, the taxes

>> Yes.

>> are low as well because

property taxes also play into what you

can afford.

>> And these housing trust homes keep the

taxes lower as well.

>> Yes. But then you're in them for a

couple of years and you build your

equity so that then you can move up to

your next home and then you're capped at

what you can sell these homes at so that

it stays affordable for the next buyer.

>> Yep.

>> But they do this because of grants

>> and that's how they're able to do it.

>> Yep. And a and some of the buyers or I

would say probably a lot of them are

also getting assistance from INHS. So

they're getting down payment assistance

as well as the lower purchase price.

Mhm. And even if you're not buying one

of the INHS homes, you can get down

payment assistance from INHS. Yes.

>> Yes. In any county that touches Tomkins.

So, a lot of people think that um it's

only for Tomkins, Ithaca neighborhood

housing, but it's not.

>> All the surrounding.

>> Yes.

>> Yeah. It's Tommpkins, Kiyuga, Senica,

Skyler, Tyogga,

Courtland.

I think so. I think I don't really work

for INHS, but I believe it's

>> I've done enough work. But yes, I is

their grant program similar to like the

American home buyer dream.

>> Yes.

>> So INHS's is different because theirs

can change depending on where their

funds are coming from.

>> Um so whoever is funding their grants

can put certain requirements on it.

>> Uh the home buyer dream grant is

basically

money just for the people who make 80%

of the median income. And they also have

a few grants, not a ton, of people who

make 120%. So they have a little bit

higher grant option as well.

>> So So INHS is is hard to talk about

because it changes

>> right now. I know we had talked about

kind of in the past how you know the

start of the new year that's when new

grants come out or the new money comes

out and then once it's out it's out for

that year. Yes. Are both of them very

similar where it's kind of capped at

that amount that's that they can give

out or

>> I believe INHS

like applies and gets different funding

throughout the year.

>> Um the home buyer dream grant so in 2026

is going to start on February 9th. Um

first come first serve. You have to be

under contract to make a reservation and

then once that money is out it's gone

that like they set a certain amount and

then it's over when it's over. But INHS,

I believe, continues to apply and get

additional money.

>> So, if someone thinks that they could

possibly qualify for that grant, they

should probably reach out to their

lender.

>> Now's a great time.

>> Get get their pre-approval, start

looking, and then they can apply once

they go under contract, they can apply

for that grant. Yes. And kind of

>> and because it moves really fast and it

is first come, first serve, I am telling

my buyers right now to get everything

turned in that we are going to need. So,

that does include a first-time home

buyer course which can be taken online

or through the um INHS first-time home

buyer course.

>> Speaking of getting everything turned

in, we just we were just having this

conversation. I'm going to skip ahead to

this because

for folks looking to buy a house

>> Mhm.

>> they have to be an active participant in

buying a house

>> and you just talked about getting things

in on time.

>> Mhm. There are a ton of documents that

people have to fill out. The days of no

doc loans are gone.

>> See, I don't think that it's that much.

>> Well, and everything is electronic for

now, too.

>> Yes.

>> But you do it every day. That's why

>> two payubs, two W2s, and maybe two to

four bank statements.

>> So, this is all the stuff that people

have to get to you. I mean, there's

probably there's might be certain

circumstances where there's more, but in

in some first-time home buyer, W2

employee, I don't need a ton of

documents.

>> Let me put it this way. I have sent

clients to Taran very very last minute

kind of on the clock. Like,

>> it's your favorite person.

>> It's 7 o'clock on a Sunday.

>> What are you doing?

>> I never as long as the Seahawks aren't

playing, right?

and I send this person to them or to her

and they get all of the documents in

very quickly and next thing I know I my

email is buzzing with the pre-quall

letter. This is a timely process cuz we

hear this all the time. When am I

closing? What's going on with closing?

Well, if you don't get the documents to

your lender that they need in time, then

there's nothing they can do.

>> Yes.

>> So,

we have to turn everything in. One thing

that I think realators and also buyers

don't understand is when when we have an

address, technically the mortgage goes

to a live application, we have 3 days to

send numbers, an official loan estimate

to the borrower. Um, we have to decision

a loan within 30 days. So, we have to

say, "Yep, you're approved." And this is

a formal application, not pre-qual. Yes,

you're approved, or no, you're declined.

>> Buyers have to get their stuff turned

in. Otherwise, we're decisioning on what

we have. if they're not turning in any

of their documentation, we can also

decision it as an incomplete

application.

So once they go under contract, not only

does the time start ticking for attorney

review, fin or um structural

contingency, but now the banking who's

probably a lot more I don't want to say

a lot more regulated, but heavily

regulated um also starts we have to

follow certain and satisfy certain

regulations like the ability to repay.

So, we're not asking for W TWS or tax

returns cuz we think it's fun. Like, we

have to prove that you have the ability

to repay this mortgage,

>> right?

>> So, that would technically fall under

the financing contingency, which we

typically give about 35 days for. I'm

going to pivot away from grants real

quick because

>> Thank you.

>> Sorry.

>> Because not only have I sent you last

minute pre-approvals that are, you know,

on a time crunch.

>> Yes. But I've also uh worked some deals

with you where we had to be very

creative

>> specifically for LLC's.

>> Yes.

>> So I know we actually did one a couple

years back where

>> Tell me about how that works with like

an LLC

mortgage.

>> So we don't do them residential at

Tomkins. Uh-huh.

>> So, really all I can speak to it is that

um not every bank does residential

financing with LLC's. I know there is

one lender in Ithaca that will do them.

The difference is going to be the

closing cost and the interest rate are

going to be significantly higher.

>> Um the last I heard you still have to

have your personal name on everything.

So, your LLC could be on the title,

>> but your personal names have to be on

everything else. Um, so depending on the

purpose of having the LLC, I think a lot

of people are opting to just go

commercial. Um, but most residential

bankers or most residential lenders are

going to require you to go commercial

and they're not going to finance an LLC.

There's a difference between residential

and commercial. The reason why somebody

purchasing a home as an LLC would want

residential is because you get

>> me that number one. Absolutely. hands

down number one. I can attest to that.

Uh number one, you get um a lower down

payment. You don't have to put 20% down.

With a commercial loan, I understand you

have to put 20% down. And um uh fixed

rate versus adjustable. Some commercial

only has adjustable. Some commercial

only allows for 20 or a 30. So, there

are benefits.

Um it's just not very typical.

>> Yeah. Because not everybody is a

first-time home buyer, right? That's

what we've been talking about mostly.

But

>> yeah, so if you wanted to purchase in an

LLC,

that's different.

>> So, we were talking about like down

payments and the barriers to entry into

into housing. There are some and you

were talking about closing costs.

>> Yes.

>> But there are more costs to buying a

home than just the down payment. And I

know we touched upon them a little bit.

Some of them being closing costs. And I

know we explain this a lot all the time

is when we say closing costs, people

like, "Oh, yeah, here's my down

payment." It goes beyond that.

>> Yeah. There's four things, well, I say

four things that go into your total cash

to close. So, the down payment is what

everybody thinks about. Your closing

cost, which is the actual cost of doing

the loan, and then the um escro deposit.

So, if your lender is requiring an

escrow account, which is a bank control

account that you're going to pay into

for taxes and insurance, you have to

actually deposit into that account to

get it started so that when those bills

come due, we have money in there to pay

them. Like, if you closed right now and

town and county's taxes are due in

January without a deposit, there's

nothing in there to make that payment.

So, we have to have an escro deposit.

And then the main one that some bankers

don't even disclose to buyers is the

prorations of taxes. So, this is

something that you pay whether you

finance or pay cash. Um, and it is the

amount you have to reimburse the seller

for taxes that they have paid, but now

you are going to own the home. And what

I've been seeing with some non-local

lenders, some big lenders, is they don't

show that fee on their loan estimate.

So, one scenario I had, the buyer sent

me the loan estimate and he was like,

"Well, the interest rate is it was like

01% lower, but my cash to close was

lower." Well, when I looked at it, he

was actually paying almost $9,000 for

that interest rate and the prorations of

taxes weren't even listed. So, he his

total cash to close was listed as lower

because they weren't even adding in this

additional like it was a large purchase.

I want to say it was like $7,000 of

prorations of taxes. Um, and he didn't

know because he was a first-time home

buyer. So, that fee is something that

people don't think about if they've

never bought a house they don't know

about. And I think that that is like a

sneaky

hidden fee if your lender is not

disclosing it because so when somebody

goes online and they're like let me type

in and rather than going to a local

person and they're like just shoot me

out some numbers

>> that big online national lender

is not going to have all these nuanced

numbers.

>> Yeah. So this big bank actually does

have a local person. they just also

didn't know how to calculate the taxes.

So I see with you know your your online

bankers and your large bankers, they

aren't disclosing everything correctly

like feewise, but they're also not

calculating taxes correctly. So I want

to say in this scenario, the taxes are

like $300 a month lower than what they

actually actual current taxes are not

proposed on the purchase price current

actual taxes. Um so those I think to me

are the biggest hidden fees. And then,

you know, I can't speak to other lenders

and what they're charging, but when

people are shopping around and they say,

"Well, I found a better pricing

elsewhere." My my response is always

like, "Let me take a look at it. I'm

going to tell you if it's better. I'll

try to match it if I can or I'll tell

you if it's better and, you know, I'll

see you in the grocery store next week."

Yep. Like, I'm never going to try and,

you know,

>> put another lender down, but also like

let me look at it and see what's going

on. One of the questions I ask up front

is, you know, is there a specific area

you want to be? Because the village of

Trimmensburg versus the town of Ulisses

is going to have different taxes just

like the city of Ithaca versus the town

of Ithaca and so on.

>> So, I want to put numbers together for

any of the areas that people are

potentially interested in. And then um

at the p purchase price points that they

might be interested in so they can see

what that looks like. And then the cash

to close worksheet or the the loan

estimate um unofficial loan estimate is

going to break down and itemize those

closing costs as well as the prations of

taxes that I'm estimating. A big thing

that I found with buyers, you know,

first-time home buyers, they're going to

a house that hasn't been on the market

in a very long time, the assessed value

is much, much lower than the market

value. And

>> two years down the road after they

purchase it, the assessed value and the

tax rate, everything bumps up. So now,

you know, say they were paying $1,500 in

taxes based off of that one assessed

value and now

>> their taxes are $4,000. Are you taking

into consideration that tax jump for the

assessed value in your numbers?

>> So, when somebody goes under contract

and I'm calculating their taxes, what we

collect at closing is going to be a

conversation with the buyer and myself.

And it's going to depend a lot on what

the difference is between the purchase

price and the tax assessed value. Also,

what county it is in because Senica and

Skyler County are a lot different than

Tomkins County.

>> Um, if it's minor, like say it's just

$20,000. You know, the buyer, I really

am leaving it kind of up to them. Do you

want to start with your current assessed

value knowing you're going to have to

make a deposit and your payment's going

to adjust. Would you rather start with

your purchase price? Anything larger

than that, I'm going to be strongly

encouraging them. I can't require them

to, but I'm going to be strongly

encouraging them to base it on the

purchase price. Um, just knowing that

that jump is going to come. We can only

keep so much money in the escrow account

at one time. And so, every year they're

doing an escro analysis of the escrow

account. If we have too much money in

there, because say we calculated on the

purchase price, we're giving that money

back to the buyer or the borrower. Um, I

would then encourage them to deposit it

back because they can turn around and

put it back, but we have to show we gave

it back to them.

>> Um, until that that assessed value

adjusts accordingly. But that's a really

a big conversation that we have before

preparing disclosures and, you know,

establishing the mortgage is making sure

they're prepared what they right

>> think that the taxes could go up to. Um,

and when I'm providing those numbers,

I'm saying here's what taxes are now,

but here's when they could potentially

go up to,

>> right? Yes. That's unfortunately that's

a conversation that we have every time

we we show a property that they're

really specific like they're they're

interested in.

>> Yeah.

>> Th this is the assessed value.

>> This is the purchase price or the the

list price

>> and there's a huge gap. Like there is

always the chance that that tax assessor

is going to just look at what

>> yes

>> you paid for it and that's the new

assessed value and then that's what your

your taxes are going to be.

>> I always prepare people

>> Yep. to be like just expect your taxes

to go up.

>> Yep.

>> Yeah. I don't say there's a chance. I

usually say it's probably gonna happen.

>> It's gonna happen in Tomkins County.

>> Yeah. Not right away though. So I get

the question a lot are like okay but

isn't this going to go up immediately?

I'm like no that's called spot

reassessment and that's illegal. You

can't do that but there is a process

every year where at least Tomkins County

I know of I can't speak to any other

county. Tomkins County assesses every

year.

>> It's not spot reassessment. They don't

do it right right then and there when

when you close. It's every year. And

there is a grievance process.

>> Mhm.

>> We'll have to talk about that at some

point. But was there ever like the

biggest, oh crap, moment that somebody

had that they were like, I can't believe

this. This was a total shock to me. Why

didn't you tell me this? And you're

like, I have been all along. Like what

have you had that?

>> Not that intense because I feel like I'm

pretty upfront with most of my buyers

from the very beginning. But I think the

biggest oh crap moment for most people

is that the four things that go into

your cash to close. It's not just your

down payment. It's not just your down

payment and closing cost. There's two

more buckets of

>> funds that we have to collect at

closing. Um and then also people moving

here from other states, it's the taxes

and how high the taxes are.

>> We've been through the pandemic. We've

been through how things have changed on

our end in terms of purchasing. I've

been in it since 2005. So, I saw the

2008 market. I saw the 2011 market.

>> What are you seeing or what can you

speak to has changed every market? So, I

didn't see the 2008 market in

residential. I was in commercial. Um, as

far as changing with the pandemic, so I

think the biggest thing is a lot of a

lot of the process has become

digitalized. Um, I have clients I don't

even talk to on the phone through the

entire process. Like they just want to

text or email. Um, that's not my choice,

by the way. I would prefer to talk or

meet in person. Uh, meeting in person is

like not even a thing anymore. It's one

out of every 25 clients I would say now

want to meet in person. Um, so I think

that's like the biggest thing.

Underwriting requirements have changed

quite a bit. So, um, for example,

verification of employment, you know, we

used to have to call 10 days before

closing and talk to somebody and say,

does this person still work here? You

know, is everything the same? Uh, we can

now get the most recent payub closest to

closing date. Um, I don't know that this

is a factor of the pandemic, but

appraisal waiverss is like a huge thing

now. It's

>> happening more and more.

>> Um, working remote is a another change.

I think employers are seeing that people

can do their job anywhere. So, people

are employments in California and

they're working here. Now, we do require

that their employer have provide

something that states that they can work

here and there's not like a time limit

on it, but still an option. Um,

I think that, you know, in 2020 we saw

the rates go to the lowest they've been

and then they basically almost doubled

up into, well, they did double, they

went up to almost 7% at one point. And

so, I think that for people who didn't

buy, you know, now their

pre-qualification has changed

drastically. So,

>> just a lot of changes in that aspect.

Um, I think AI is going to change a lot

of things with financing.

>> Interesting. M so I think that we went

from a time where they tightened

everything up and mortgages came almost

unattainable like buyers were more

protected because you had to qualify but

they became kind of unattainable for

certain people to a time now where we're

starting to see them loosen up the

reigns a little bit. You know certain

investors are saying we're no longer

going to have a minimum credit score um

which was a 620 and certain people are

reducing the minimum down payment. So,

you know, as I mentioned, every lender

has different products, but Freddy Mack,

for example, used to require um 15 to

20% down on a multif family owner

occupied, and they just reduced that to

5%.

>> So, or I shouldn't say justice was a few

months ago, but things like that we're

starting to see loosen the reins. Um,

and I think that as we move into an AI

world where

financial statements, tax returns, bank

statements, everything's digitally

reviewed and probably more accurately, I

don't know, maybe more accurately than a

an eyeball can. Um, I think it's going

to start to even loosen up a little bit

more. And that's just my own opinion. I

think we're going to see more and more I

mean the credit report that we talked

about earlier allowing people to I think

one of the models people had to have a

two-month credit history or a payment

history that's that alone is loosening

things up

>> misconception okay that I hear a lot

from buyers okay

>> when I suggest a buyer reach out to a

local bank

>> and I hear time after time after time

well there's got to be some sort of

kickback there's got to something

that you know why are you encouraging us

to work with local banks and I give them

thousand reasons why you know I tell

them you can go to the big box mortgage

companies you can go to the big banks

you can do a local you can go to anybody

have you ever come across that where

you've heard something very similar

>> I have and I actually just had a very

negative um experience where somebody

was working with an online lender and

she was mad at her realer because the

listing agent wasn't going to accept the

pre-qualification letter. And this

honestly is I don't want to say a pet

peeve, but it's it is frustrating to me

because somebody has been pre-qualified

and now the seller won't accept that

pre-qualification letter. So, now I on a

Sunday night or, you know, Sunday

morning am working hard to pre-qualify

them and they are like mad at me. Like,

it's not like it's my fault that the

seller's not accepting their

pre-qualification letter from somebody

who's sitting in Minnesota who probably

doesn't know what the taxes look like.

>> Um, so I do hear that as well. And I

think the biggest thing is just you have

a relationship with local lenders and

you trust them. I know there's some

online banks that you could get a

different person every single time you

call. And how do you trust somebody that

you've never worked with before? Um, I

love being a lender in my community

because I am financing or providing

mortgages for people that I see on a

regular basis. Our kids play sports

together. I see them at Wegman's. Um,

and to back that up, I also don't want

to screw up because I have to see you at

WGM and I have to see you at my kids

sporting events. And so, you know, I'm

going to try harder because I am in this

community and I care about the community

and somebody who sits at an online bank

in Minnesota doesn't care about Ithaca

New York and what's happening in our

community. What would you say are the

top three things every buyer should do

before calling a lender?

>> Um, the first thing I think is they need

to figure out what their goals are. So,

what do they want their monthly payment

to be? What are they comfortable with?

uh their cash to close amount, how much

can they come up with, whether it's a

gift or whatever that scenario may look

like taken from retirement. Um, and then

what kind of

area and what kind of house are they

looking for? So, if they want the duplex

or whatnot, all of those come into play

when we pre-qualify a buyer. Um, so just

because I say you qualify for $1,500 a

month, that doesn't mean that that's

what you're comfortable with. And I want

to help buyers get comfortable with

their purchase. So, they need to know

what they're comfortable with first. So,

the other thing is unfreeze your credit

if you haven't already done so and pull

your free annual credit report if you

haven't. See if there's anything on

there that doesn't look right, doesn't

look good. Um, and then stop taking out

any new debt. So, I don't come qualify

for a mortgage and just have purchased a

car last month. Or if you have, make

sure that you can afford both at the

same time. So maybe talk to a lender and

then purchase the new car to make sure

you can afford both. Awesome.

>> So we talked about the three things a

buyer should do. What are the three

biggest red flags? Don't do this.

>> The biggest thing is don't take out any

new debt. So whether you are thinking

about buying a house, you're

pre-qualified or you're under contract

until you are closed on that house, do

not take out any new debt unless you've

talked to your lender. Like obviously

things happen, your car breaks down or

something. Um, but that's going to

impact what you qualify for because now

you have another monthly payment or the

monthly payment is changing. Um, so

don't take out any new debt without

talking to them. Do not deposit large

lumps of cash.

>> What? No glove box money.

>> No glove box money into your account

without documentation because all large

deposits and a large deposit is

considered to be anything that's 50% of

your gross income. Um, anything that's

not documented, we can't use. Don't

deposit large lumps of cash. And I think

the third thing would be not to quit

your job.

>> That's a good one.

>> Yeah. Or if you're going to change

employment, then also maybe before you

make that leap, reach out to your lender

to see what might change. If you're

going from a W2 employee to a 1099,

that's going to be an issue. Um,

>> that's a question.

>> So, thank you for prompting. Now

sometimes like we said life happens and

sometimes you may be let go during the

process.

>> Is there what would you suggest the

person do?

>> Uh reach out as soon as possible. If you

can get another job quickly, we could

potentially save the deal. Um but if you

don't have anything lined up and there's

not a cobbar or there's no way to afford

it, then unfortunately the mortgage is

going to be declined.

>> But basically come back to you. Yes,

>> we have a lot of first responders in our

area.

>> Do you or local lenders that you know

of? Are there programs specific for

those first responders that they can

>> There are going to be programs that are

going to have certain discounts. It's

going to be different for every lender

um as far as discounts to either private

mortgage insurance or closing costs or

whatnot. So, they'll just want to reach

out to whoever they're Yep.

>> But it is an option.

>> It is an option. And I hear that there's

some programs or mortgages for teachers

as well as doctors or physicians.

>> Yep.

>> Yeah.

>> Yes. Every lender will have different

options if they have any.

>> We gave a lot of information today.

>> What is the one thing that you want a

listener to take away from today?

>> Don't be afraid to try and get started.

I think that people are embarrassed of

their credit history or they just don't

know where to start and reaching out to

a local realtor or a local lender um is

a good starting point and if you're not

where you need to be, we will get you

there. I have people that I have started

with and they don't buy for 12 or 24

months and it's a process.

>> Um and don't ever be ashamed if you

don't have a down payment or if your

credit's not perfect because life

happens and we know that. Um, but you

have to start somewhere and like just

just start.

>> I love that. I love that. Thank you so

much for joining us today.

>> Thanks for having me. Can't wait to come

back.

>> Thank you, Taran Schwarz.

>> Seriously, thanks.

>> Welcome.

>> I know that you love doing these.

>> Thanks for being our backup guest today.

Yeah, you're welcome. Thanks for having

me.