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Good morning to all of you around the country on IHEART radio and good morning to you, Memphis! You’re on the Real Estate Mortgage Shoppe program with me, Jo Garner, mortgage officer with Evolve Bank and Trust.
For our co-hosts today—we have Don and Holly Swogger, experienced real estate investors and franchise owners of Homevestors. We’re talking about “Building Long-Lasting, Income-Generating Wealth Using Real Estate & Mortgages”
Don and Holly, you guys can certainly offer some wisdom on the topic today. Tell us a little about yourself and Homevestors.
Even though we are generally talking about “Building Long-Lasting, Income-Generating Wealth Using Real Estate & Mortgages,” we want to talk with YOU about whatever real estate or financing topic is on your mind. Pour yourself a cup of coffee and sit down with us at the coffee table this morning by calling (901) 535 –WREC. That number again is (901) 535 9732.
Here’s what has been happening over the last few weeks in the real estate market: Home prices are UP—mortgage rates are staying DOWN. Right now it looks like a GREAT time to buy a home or build your wealth by buying several. If you are known for being a bargain finder at the mall—I would say, “Real Estate is still offering Doorbuster pricing but prices are going up.” If you are a farmer I would say, “ Better get your hay cut and put up before the rains hit.” The surf’s up, why don’t you jump on board and ride the real estate wave while its here?
- Mortgage rates this week were a little sluggish—like some of the rest of us—after a long holiday last week. The 30 year fixed rate on conventional loans stayed around 3.375% and on FHA loans even lower than that. The 15 year loans hung around 2.875% to 2.75%. The 5-1 Adjustable rates came in around 2.625% to 3.25% (that’s the loans where the rate stays fixed the first 5 years and then becomes an adjustable rate.) Next Friday may be a different story after the Employment Situation report comes out. This is one of the few reports capable of significantly moving the bond markets.
Word To The Wise: “The journey of a thousand miles begins with a single step.” If you are one of the thousands of people who are sitting on a mortgage rate over 5% and have not at least checked into refinancing or purchasing a home, contact your mortgage officer today and start comparing the numbers. If you want to look into a home purchase, contact your realtor. Holly, you are an experienced realtor as well as an experienced investor. How can our listeners contact you?
My very capable assistant, Susan Belew and I would like to talk with you too. Tell us what you want to achieve from your mortgage refinance or home purchase. We can put some scenarios together to compare. It’s a lot of fun helping people save several hundred dollars a month on a refinance or tens of thousands of dollars overall when we can eliminate several years from the mortgage. Its fun too when we present financing scenarios to people who didn’t realize there was down payment assistance out there to minimize there out of pocket money. Please call me and if you want to talk OFF the air personally you can reach Susan and me by calling (901) 482-0354. That number again is (901) 482-0354.
Every week we talk about the awesome Home Affordable Refinance Program otherwise known as HARP. This program is especially good for people who owe more on their home than the house is currently worth because the HARP program does not require an appraisal value. Its good even if you’re NOT underwater too. So many of our listeners have called to tell me that they were working with another company who would not allow them to use the HARP program for one reason or another. Call ME. It is very possible that the company you talked to had over-restrictive versions of the HARP program they were offering. At Evolve we loan to you if your loan is backed by Fannie Mae OR Freddie Mac. We offer the HARP program to you if its on your primary residence, a second home OR INVESTMENT PROPERTY. Let’s talk about how much money the HARP program can save YOU. To talk directly with me OFF the air the number is 901 482 0354.
Don and Holley: the next most popular REFINANCE program is the FHA streamline refinance with no appraisal. If you have an FHA loan and would like to switch it out for another FHA loan with a much lower rate, call me. There’s no appraisal needed. If you have already talked to a different mortgage company who told you there is no way to refinance your FHA loan without you having to pay closing costs out of pocket, then you need to call Susan and me. We may be able to help you or someone you know.
Susan and I would like to hear what you and your family want—not JUST for today but over the next few years too. Like one of our customers this week –the refinance is saving her over $400 per month that she can enjoy right away. Other families want to enjoy a positive cash flow each month by buying a few rental properties and have those properties increase their retirement income now and for years to come. Whatever you think your stumbling blocks are, I believe I have some solutions for you. Let’s talk.
Holly and Don, its always a pleasure to have you around the coffee table. We’re talking about “Building Long-Lasting, Income-Generating Wealth Using Real Estate & Mortgages.” You both have been active real estate investors right here in Memphis for almost 10 years. Through your Homevestors franchise you have received a lot of wise counsel and resources for your profit-building journey. What advice can you offer our listeners who want to get started building their own wealth?
Questions to be answered by Don and Holley Swogger:
1. How can Homevestors help someone who needs to sell a home quickly?
2. How can you, Don and Holley, help someone who wants to take the first step in buying real estate? How can you help someone who wants to go to the next level with their real estate investing?
3. Tell us about the other project you are working on for U.S. Veterans.
Questions to be answered by Jo Garner:
1. What kind of financing can you offer investors? For people buying property to rent out for investment, on a single-family home, if the investor owns less than 4 financed properties, they can purchase with 20% down payment or they can refinance up to 75% loan-to-value. If they cash out mortgage companies usually stipulate a max loan-to-value of no more than 65%.
The lending rules are different for real estate investors owning over 4 financed properties. If they own between 5 and 10 financed properties, not many companies will offer a cash out refinance, but the investor should be able to refinance their existing loan for at least 70% of the value of the home. They can purchase another rental property too as long as they do not exceed 10 financed properties in their name. Borrowers who own more between 5 and 10 financed properties are also required to show a lot more money left in reserve for emergencies than if they owned 4 financed properties or less.
If the borrower is trying to buy or refinance their primary residence there is no limit on the number of other financed properties.
2 Where can people find money for the down payment? Gift From Family: Gifts can come from family members or employers. The amount of the donation varies according to different loan programs. The donor will be required to document the source of his funds and that the money is a gift to the donee not requiring repayment. If the family member giving the money does not want to cash in a certificate of deposit or stock fund, he can borrow against the asset to give to the donee.
Borrower’s Forgotten Assets: Whole life insurance policies or annuities may have a cash value that can be borrowed. Many times the borrower does not realize the insurance she purchased years ago has a cash value that can be borrowed to pay the move-in costs.
Loans secured on certificates of deposit, stocks and bonds, and durable assets such as cars can be used as acceptable sources of funds to close as long as the loan is secured on an asset owned by the borrower. The payment must be added into the debt-to-income ratios for qualifying purposes
IRAs, 401(k)s and Retirement Funds. There can be heavy financial penalties for pulling money from these sources. However, many companies allow the homebuyer to borrow against these assets with no penalty. The repayment terms may be calculated in the borrower’s debt-to-income ratio.
Sale or Cash Out Refinance of Existing Real Estate Property can generate needed funds to close on another property. Lenders will require the HUD 1 Settlement Statement or sufficient proof of the source of funds.
Tax Refunds can provide a surprising source of closing funds.
Move-In Costs Paid By Third Parties: Sellers are as motivated to sell a house as the buyer is to purchase. Sellers can pay up to 3% of the sales price toward the buyer’s costs if the borrower is getting a conventional loan above 90% loan-to-value. If the loan-to-value is 90%, the seller is allowed to pay costs up to 6% of the sales price or value whichever is less.
On certain loans, the sellers are allowed to pay more and even loan the borrower the equity on a second mortgage. Investor loans allow the sellers to pay no more than 2% no matter how much money the investor pays down.
Lenders are motivated to close the transaction and sometimes can bump up the interest rate slightly in order to use “premium pricing” to pay the borrower’s prepaid taxes and insurance or some of the closing costs. In most cases the rate is increased .25% and the difference in the monthly payment is minimal.
Government agencies such as Tennessee Housing Development Agency have programs that provide down payment assistance to borrowers. Some of the well known programs are City of Memphis Down Payment Assistance, Shelby County Down Payment Assistance, United Housing, Inc, H.E.L.P., Rural Housing, Shelby County Neighborhood Stabilization etc For the down payment assistance grants and loans, the borrower is required to meet a minimum or maximum annual income guideline and sometimes are required to be first time homebuyers. First time homebuyers are defined as buyers who have not owned real estate in the last 2 to 3 years.
3. We’re talking about building wealth with your real estate and your mortgage. How do you build wealth with your mortgage? Let me share with you some numbers from two of my customers who are closing their refinances this week:The first one owes over $320 thousand dollars on his mortgage and has 22 years left on it. This lady wanted to save money each month AND she wanted to eliminate some years off the term. By lowering her mortgage rate and giving her a 20 yr loan, she saved $306/mo which she will enjoy over the next 240 months of her loan. Let’s see, $306 per month times 240 months of the loan that comes out to about $73, 440 in savings per month for this loan. Oh and don’t forget – we knocked off 2 years from the loan term where they where paying $2,211 in principal and interest—that’s another $53,064 in savings. That is some SERIOUS MONEY! If they choose they can use that money to go buy more real estate and continue building wealth—or they can invest it somewhere else—or just enjoy it.
Another gentleman is refinancing a $340 thousand dollar loan to a lower rate from a 30 year loan where he has 22 years left. We are saving him $512/mo which he can enjoy for the next 20 years – that’s $122,880 dollars in savings. PLUS we eliminated 24 months from his original loan where he was paying almost $3,000 dollars in principal and interest per month saving him another $69,336.
Even if you have a lower loan amount, you can still save some SERIOUS MONEY! I know when I refinanced a couple my own mortgages, I felt like I wanted to go out to my favorite restaurant to eat just to celebrate my fortune. It’s a great opportunity—it’s a great feeling!
4. Real Estate Tip of the Week: Your revolving credit (or credit cards) affect your credit scores by about 30%. That’s huge. Assuming you are making your payments on time on your other bills you can increase your credit scores by maintaining your credit balances on the revolving accounts at less than 30% of the total credit limit on your card. If you need to jumpstart your credit scores quickly—well, call me at 901 482 0354. Susan and I use a computerized credit simulator to determine the QUICKEST possible way to increase your credit scores the HIGHEST in the LEAST AMOUNT OF TIME. Here’s another tip: If you or someone you know is in the process of getting a mortgage loan, do not open new accounts or move money around without checking with your mortgage officer. Mortgage companies these days check your credit, AND your income sources at the beginning of the loan AND at the end.
Jo has two announcments:
1. If you have Money on your mind lately, you will like the topic being covered at Talk Shoppe this Wednesday 9A to 10A at the Better Business Bureau. Mark Ruleman, wealth advisor with United Capital will be presenting “Improve The Way You Make Financial Decisions: Find Your Money Mind.” For more information go to www.TalkShoppe.BIZ
2. Next week right here on the Real Estate Mortgage Shoppe program, Tom King, property tax appeal expert with King and Vaughan Consulting, will be here and we will have a surprise guest. For this podcasts and past podcasts of our program, go to www.mortgageloansblog.com
Transition songs: “Stand” R.E.M./ “King of the Road” Roger Miller/ “You Make My Dreams Come True” Hall & Oates
Jo Garner, Mortgage Officer with Evolve Bank and Trust 6070 Poplar Ave Ste 250 Memphis, TN. 38120 (901) 482 0354 www.MoneyShoppe.NET.
Don and Holly Swogger, franchise owner Homevestors. For more information on how to open a Homevestors franchise, contact the Swoggers at (901)757-9883
If you want to get solutions to your real estate or real estate financing challenges, check out our podcasts or contact Jo Garner, loan officer with Evolve Bank and Trust. For more information on the services Homevestors offer, contact Don and Holly Swogger of Homevestors. 901 757-9883