FAQ w/ Todd Mummert | SURE Sales Group Ep. 45

FAQ w/ Todd Mummert | SURE Sales Group Ep. 45

October 9, 2019 1 By Luis Garrison


Welcome back to the SURE Sales Group
show episode 45 here again with Todd Mummert for the frequently asked
questions show today we’re talking about interest rates here on the show we talk
about real estate sales negotiation marketing entrepreneurship buying
selling renting investing and what it’s taken us to grow from two employees to
twenty from thirty million in sales to a hundred thirty million in sales in the
last few years thanks for watching Todd thanks so much for coming back
appreciate it a question I got a bunch in the last couple weeks since we were
on did the last show was around interest rates everyone knows they’re going up so
thanks for coming on and dropping some knowledge on interest rates for our
audience today so the first question I want to pose and
I answer it differently every time but is like what are interest rates and kind
of how does that this whole system work where do these numbers come from it’s a
great question and probably one of the most popular ones that we get so
interest rates the money that you borrow obviously what determines that it’s a
host of a ton of economical factors but one of the main ones is where the
ten-year bond is over the last six or seven years essentially since the bust
has happened the Fed Reserve has actually stepped in and they’re buying
up they’re the number one purchaser mortgage backed securities which
essentially has helped to artificially keep rates down so in October 2017 they
decided well we’re gonna go ahead and stop buying as much as we have been and
every quarter they’re actually gonna reduce the amount they buy by four
billion dollars so that was October here we are it’s March 2018 we’ve already
seen an increase in rates of about a half a percent due to this change so
half a percent meaning they were hovering around what three and three
point seven five now they’re four and a quarter is that
yeah like high threes you know it depends on what what loan program etc
but yeah about there and now they’re pretty much in the force we we may not
see threes again for quite some time based on what all
the experts are telling us I heard is this true that rates hit a four-year
high like a couple weeks ago I saw that as a headline yeah they actually did and
it looks like based on what the NASA National Association of Realtors
Mortgage Bankers Association and Fannie Mae and Freddie Mac are predicting that
we’re probably gonna see rates somewhere in the high fours mid to high fours by
the end of this year so we might look at another increase of a quarter to a half
a percent is what the experts it’s Todd I’m not gonna lie that scares me a
little bit because when people are going to buy houses the interest rate directly
and just fundamentally impacts exactly what their monthly payments going to be
well not exactly but that’s a major factor right the higher the interest
rate the higher your monthly payments going to be so hopefully it doesn’t go
too high but what that means to me is if you’re thinking about buying now the
this interest rate conversation that people have been talking about for years
just got a lot more real because it is climbing yeah it did um it did get more
real but I mean if we look at rates historically even as close as 2007 rates
were six and a half almost seven percent so we’re not getting in a range that’s
just ridiculous or ludicrous um and to kind of give you an example of that if
you bought a house for 300,000 listen your loan amounts $300,000 a half a
percent increase in your rate it’s about 90 bucks a month we’re talking you know
the cost of one latte per day is the difference in what your payment is so
say that again three hundred thousand loan amount half a percent is how much a
month about all right so to be conservative every half a point is about
a hundred bucks a month and that it’s all back based on the loan amount for
300k but a lot of our buyers here in Baltimore Greater Maryland that that’s
about right you know if you’re buying a house between 250 and 400 which most
people seem to be able to afford that’s a good barometer so that’s a good tip
I’ll use that yeah exactly and it’s it’s not as scary as it as it seems so one
thing that we wanted to talk about today you know we were talking before the show
is obviously where the rates are trending which we just discussed and
affordability but this touches on the last show is what actually affects my
interest rate and there’s a couple different factors probably the most
important is your credit score you know depending on what loan you pick every 20
points higher or lower it’s kind of a bracket that’s gonna affect what your
rate is and also what program you pick what’s the highest credit what is the
brackets roughly just so people know so excellent credit is essentially 740 and
above and then it goes down from there in 20 point 20 point increments in a
sense so that not only affects what rate you get but if you chose a program where
say you have mortgage insurance the mortgage insurance is higher is you’re a
higher risk if you have lower credit score so it’s hugely important one quick
thing before you go this is the visible question everyone hey what impact what’s
my interest rate so that’s what you’re getting into the credit score one thing
coastal lending doesn’t add mummer will do personally because you’ve done it for
multiple clients of mine is people have no idea what their credit score is
sometimes if you give them a call go to their website they can pull your credit
and show you exactly what your credit score is in exactly what things you can
do to get to that 740 level or get to that next tier that’s gonna make you
know your mortgage options much better so that’s important I just want people
to know that your credit score is not fixed that changes and these guys know
how to get it up by maybe paying this off or opening up a new credit card any
kind of there’s like an algorithm to it yeah there is an it to touch on your
point we actually have a simulator that we can kind of go through and make
changes we can pay credit cards down and pay things all from get rid of
collections and that’ll tell us roughly what your simulated score would be so
it’s it doesn’t cost you anything as a consumer it’s something we do on your
behalf when you’re getting ready to buy you know the other thing too that I
wanted to kind of touch on is down payment you know the more you put down
sometimes that can have an effect on the rate to the lower down payment programs
are great the 1% down the 3% down but the rates tend to be a little bit higher
because it’s a higher risk for the investor and then the last thing I will
kind of wanted to touch on with interest rates is
you know if you can’t always contact a professional mortgage professional like
myself where can I find this information right and really people always want to
know I found something that’s free that’s really useful especially if
you’re in the process or you’re out looking if you google daily rate lock
advisory it’s a great resource because it talks about every single sector
that’s gonna have an impact on what interest rates are going to do and it
actually advises you depending on when you’re closing whether or not you should
float your rate or lock your rate it’s been pretty impactful for my clients
over the years and it’s been pretty accurate as well you helped me with that
– you’ve been using this for a while I have yeah what time out just to break it
down what’s flow your rate versus lock your rate explain that to people who
don’t know what that means sure so once you lock your rate in you’re under
contract that’s your rate that’s what you’re
gonna close at it’s not gonna change floating means you haven’t locked it in
yet and you’re subject to daily changes rates can sometimes change multiple
times per day depending on what’s going on in the market so the float is kind of
a gamble versus the lock is a guarantee almost everyone locks and my in my
experience they go I just want to lock my rate and people don’t like the risk
what’s nice the one thing that you guys offer is that float down so not to and
there’s that subject to whatever program it is but imagine this you lock your
rate you feel good about it but one thing the coastal lending can do for you
and why we love working with them is they’ll say look we’ll lock your rate
you can sleep at night everyone’s good but if the rates get lower we’ll float
you down that’s a really cool program and one other thing I heard because
people there’s still this you know misnomer that you have to put 20% down
there’s amazing programs coastal lending in Todd mamar can do 1% down
conventional loan that means not FHA not crazy mortgage insurance 1% down or 3%
down or 5% down or 10 etc so it’s just good to start with someone who has these
resources and that’s why we’re doing these videos so hopefully you can
preempt a lot of these questions and uneasiness around interest rates monthly
payments mortgage Stav credit score just go to the
professional they’ll work for you for free it’s not like he’s charging you
anything and then of course they make money when they’d go ahead and do
mortgage deals just like a realtor makes money when we do a home sale so Todd I
think you really nailed it you talk about what interest rates are you know
the rate you’re borrowing the money I think people get that why they change
and what impacts the rate any final thoughts on you know you hit him with a
daily rate lock I saw you had a couple other things here that they can look at
sure I mean one thing that I actually just thought about since you were
talking was you know we’re seeing rates go up and you know some people were
looking at as a negative thing this is a positive thing right now we’re seeing a
normalization in the market the other thing that that does is it actually
opens up more programs so more people can get qualified your debt versus your
income they’re starting to kind of creep those up higher which means more people
can get loans based on their income levels and their debt levels so it’s
kind of an inverse relationship there so rates are going up with programs and
guidelines aren’t tightening they’re expanding so I think that combination
goes really well for kind of the future of this year and maybe the next few
years as far as where things are trending so I don’t I don’t think you
can necessarily look at all the negatives there’s a lot of positives
that go along with the rate trend that’s a really good point and if you don’t get
it already one thing you need to realize is I talk a lot about how to get a good
deal and how to structure offers and what a good agent does but as much
research that goes into making sure you get a good deal there’s a whole other
kind of vertical on how to get a good mortgage and it starts with having a
really good professional guide you through the ever changing kind of system
that we’re that we use so I appreciate you being that guy for so many of our
clients thanks so much absolutely all right Todd you know the
drill you can’t leave here until you give them the oh by the way so take it
away oh by the way coming soon coastal learning group who is a direct
lender as well as a broker which means we have multiple investors that we can
kind of lend with and get differ programs one of our investors is coming
out the program soon it’s called a to be determined lock what does that mean for
you guys essentially you can lock a rate without even being under contract so
well the talk we had about interest rates going off this is kind of a hedge
you know against you know future increases in interest rates and you can
lock in with where rates are now and if you qualify for a float down program we
can always lower the rate if they in fact go down from the time you go under
contract so phenomenal program coming to you guys soon from coastal lending group
time out time now you’re telling me you can lock the right before they buy the
house presume we’re gonna be able to do that yeah