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Stay Modern With Murray
Welcome to the Stay Modern with Murray Podcast, your go-to source for the latest trends and insider tips in the homebuilding industry. Each episode, we delve into the dynamic realms of design and construction, providing valuable insights that can elevate your understanding and approach to building and renovating homes.
But we don’t stop there! We go beyond mere construction topics to engage with influential figures such as business owners, CEOs, entrepreneurs, and community leaders. These conversations highlight the experiences and expertise of those who are making significant impacts in their respective fields. Here, you will discover not only innovative ideas and practices within homebuilding but also inspirational stories that showcase leadership and creativity in action.
Whether you're a homeowner, a potential builder, or simply interested in the housing industry, our podcast will offer a wealth of knowledge and inspiration. Join us as we explore the intersection of home construction and the vibrant discussions that can help shape the future of your projects. Tune in to enrich your understanding and spark new ideas in homebuilding, design, and business leadership!
Please tune in to hear from industry experts, non-profits, and local business leaders shaping our world. Visit our website at www.murraycustomhomes.com/podcast for more information and to catch the latest episodes. Subscribe today and stay modern with Murray!
Stay Modern With Murray
Navigating Financial Seas: Jessica Thomas on Mortgages, COVID-19, and the Real Estate Industry
Get ready for an eye-opening conversation with Jessica Thomas, a seasoned Loan Officer at Charter West Bank. Proceeding further into the labyrinth of finance, we tackle the mortgage process head-on. Hear Jessica's take on the unique challenges and opportunities of being a loan officer in an industry that thrives on relationships. She also throws light on the vital aspects of transparency and effective communication and provides indispensable consumer tips for securing a mortgage in today's market.
Lastly, we can't ignore the elephant in the room - COVID-19 and its implications on the real estate industry. Jessica opens up about how the pandemic affected her production and sales, compelling her to think outside the box. We also discuss the tricky balancing act of interest rates, recent rate hikes, and strategies for surviving in a competitive market. Above all, we underline the importance of strategic planning for both short and long-term goals. Tune in for a fresh perspective on navigating the financial seas in these challenging times.
Welcome to another episode of Stay Modern with Murray, brought to you by Murray Custom Pollers, where we build your dream home together. Now sit back, buckle up and enjoy the ride with your host.
Speaker 2:Matt Murray. Good afternoon everyone, and thank you for joining us on this episode of Stay Modern with Murray. Today, we were actually talking to a senior loan officer, jessica Thomas of Charter West Bank. Thank you so much for being here.
Speaker 3:Thanks so much for having me.
Speaker 2:Thank you, I was actually reading up on you a little bit. Question before we get going is I saw on your I think you're LinkedIn or on your bio that you do IT, yeah.
Speaker 3:So in my past life I worked for IBM and FISERV, both financial software companies One was HR, one was financial software. So coming into this world was completely different.
Speaker 2:Right, We'll get into the weeds. Yeah, the other reason I asked is my brother is a senior network engineer. Oh, very cool, For MWI Direct used to be Midwest Web, Dean Hart and them. So when I saw IT I was like how in the heck did you transition from IT to?
Speaker 3:I know the funny thing is, prior to that I was in annuities and back in the financial world and my daughter and I relocated back here after being gone for about seven years and did like support work. And then I went into programming, quickly realized programming is not my jam and then moved over into a business analyst role with IBM when they acquired Cannexa.
Speaker 2:Gotcha? Yeah Well, let's start from the beginning. So you're born and raised here, right?
Speaker 3:Yep. I am originally from Lincoln, Born and raised. Graduated from Southeast.
Speaker 2:Southeast awesome.
Speaker 3:Yeah, my early 20s I moved down to Scottsdale Arizona.
Speaker 2:Oh.
Speaker 3:Yeah, that was fun, that was fun.
Speaker 2:What would you make the move there for?
Speaker 3:Just something different. I actually worked for Wells Fargo at the time and they were consolidating roles that really wanted to put me someplace else, but somewhere else in the company, yep, and it's like we have a position down here in Arizona and I'm like I'm on it. That's awesome yeah because I'd always wanted to move down there, and so that was a pretty solid transition and spent a few years down there and loved every minute of it. Every winter I wish I was there, not here, because I'm really about warm person.
Speaker 2:I totally agree yeah.
Speaker 3:So yeah, so I went down there and then moved up to Des Moines. My husband at the time got a job up there and we were closer to family.
Speaker 2:And then about you live from Arizona to Des Moines. Yeah, how'd that work out for you?
Speaker 3:It was okay.
Speaker 2:The weather transition though.
Speaker 3:Yeah, well, you know used to it. I had gotten blood thinned out a little bit down there with the heat.
Speaker 2:Yeah.
Speaker 3:So I mean it was good, it was solid. I mean it's actually a great community, but wanted to be even closer to home. Didn't make sense to come back every weekend, so her and I moved back here about 13 years ago.
Speaker 2:Oh, wow, Okay, so been back for quite a while. So where's she go? How would you say she's 15?
Speaker 3:She's 15. She'll be 16 here in about a month.
Speaker 2:Did she go to your alma mater?
Speaker 3:No, she doesn't. She actually goes to a private school called Acton Academy. Oh okay, yeah, she opted not to do the traditional high school route and felt that Acton was going to be a better fit for her.
Speaker 2:She made the decision, huh.
Speaker 3:Yeah, wow. She is light years beyond her age Not your typical 15, 16-year-old but she just felt like that was going to serve her better. She's very ambitious and driven and they have a very entrepreneurial mindset. That's awesome. It's more of an individualized learning curriculum and felt that that was going to give her the tools and resources to be an adult.
Speaker 2:How does a, however old she was when she started trying to make this decision 13, 14, how did she even stumble upon the fact that this was an idea?
Speaker 3:Well, she went to a Montessori school, preschool and stuff like that, so she understood the concept and her brother had gone to fundamentals, which was right next door, and so we kind of seen it and explored a little bit more and then toured and did that they actually got to go and do a day at the school to kind of really see what it was like.
Speaker 1:Yeah, and she was like yeah, this is it.
Speaker 3:And I'm like but what about prom and homecoming and all those things? And she's like I do not care about that.
Speaker 2:You know it's crazy. I'll have to talk to you more about it later. I love where our son goes, goes to Clefcorn, and I have had basically zero complaints. But I hear a lot of horror stories of high school and middle school and just the new stuff that's going on in the world and furries and all that stuff you can get into the weeds. But I've had a lot of people come up to me and actually I just did a meeting with a banker slash realtor last weekend. They were like you really have your kids in public school. You're crazy. And it got me and my wife talking. And then somebody else asked why do you have your kids in public schools? You need to have them in private schools. I just never really thought about it but it kind of opened the door for the conversation.
Speaker 3:Yeah, I've been around for about three years and it is very opposite of the traditional mindset of schooling. Like the students are actually in charge of their own learning and kind of where they want to go, and that's great, because not every kid learns the same. My nine-year-old learns very differently than what my 15-year-old does and in granted, there's the age difference. But watching them grow and how they learn, and it's great that we have a facility or a school that accommodates that.
Speaker 2:Yeah, that's awesome.
Speaker 3:And they meet the same criteria as they would from a state school perspective. So they're not missing out on anything. They're actually getting, in my opinion, more to be able to be functioning adults when they get into that realm. Yep.
Speaker 2:And so where did you get your? Did you go to college here?
Speaker 3:Actually don't have a college degree. I went to SCC for a little bit and that's right when I was with Wells Fargo and then I relocated down to Arizona and none of my credits would transfer Got you. I was like I'm not even trying to start this shit all over again. I was like close to the finish line and on the Dean's list and so I ended up just getting into like life insurance and annuities and I did some processing back then from the lending side of things and just worked my way through and in my opinion, I think you gain way more knowledge and real life experience than you do sitting there reading a textbook.
Speaker 2:Agreed. You know, what's crazy is I have my math degree, which I don't use, but my brother, like I said, senior network engineer, brilliant, a genius and he started just learning computers in his basement when he was a senior in high school. And right when he graduated high school he took all the senior network engineer tests whatever they're called Microsoft certified engineer and he passed all of them. And then he applied for colleges after he passed those and all the professors told him that the professors are professors because they couldn't pass that test. So they went into teaching and so he would be smarter than them, and so he didn't go to college either, he just went right into his field. Yeah.
Speaker 3:I think as we progress as a society, I think that will become more prevalent that there's different avenues to still get to the same end goal, type of a thing.
Speaker 2:Yep, completely agree. Well, how long? So I know you've kind of bounced around a little bit, kind of talk a little bit about that transition, how you got into the mortgage industry.
Speaker 3:Yeah, so I was again working for IBM and loved what I did. I was more of an analyst role there, and especially with the acquisition of what's working, what's not working and how can we make this more efficient and efficiency type of stuff. But it wasn't really filling my cup. I bought my first house when I was 19. Holy, cow. In the early 2000s and was with Wells Fargo.
Speaker 2:Here in Lincoln.
Speaker 3:Yep, I was in Indian Village. It was a $60,000 house back in 2000, 2001.
Speaker 2:That's a lot when you're 19.
Speaker 3:Yeah, but the banker was like I can make this happen, but you got to get XYZ. He's like I really don't think that you're going to be able to do that in a 30-day timeframe.
Speaker 3:I'm like watch you clearly don't know my ambition and, sure as shit, I did everything that they told me I needed to do and signed the final paperwork. And they was like wow, and I'm like yeah, and I really think home ownership is doable for everybody. It's just a matter of when and how we get there. And so I recognized about six years ago by now, actually, today was my last day at IBM. Six years ago.
Speaker 2:Really.
Speaker 3:I resigned and took a couple months off before I got into this world and I'm just passionate about helping people achieve that and I want to take more of an advisory role with that, rather than this isn't just a transaction. For me, this is one of the biggest financial investments somebody is going to make in their life and from a real estate perspective, I actually was going to lean more that way, but I had two small kids. I had a three-year-old and a seven-year-old or no 10-year-old. At the time I didn't want to be showing houses on nights and weekends and in the financial world I had the ability to do that, but from my home I still work nights, I still work weekends, but I can do it with my kids run around in the background, type of the thing. So it really was just a kind of this epiphany of like life's too short and I want to do something that makes me happy. And then I'm passionate about Yep.
Speaker 3:So that's how I kind of transitioned into this world.
Speaker 2:So do you have a desk job in the office?
Speaker 3:Yeah, go to the office every single day Nine to five. Yeah, yeah.
Speaker 2:So you have a standard job. It's just your off hours or you can do it at home and stuff.
Speaker 3:Yeah, I mean I can work anywhere. I work on vacation like in others' world.
Speaker 3:we don't really get a vacation, especially when you're commissioned only so you gotta work when people need you. So I mean, if they were working on vacation or I'll work in the office during the day, I'll work at home at night or on the weekends. It's nice that I have that flexibility, which is one of the things that I really wanted to be able to have transitioning to this to be able to serve people but also be able to keep that family balance intact as well.
Speaker 2:No, I don't know how much you can share on this, but you just said something that made me realize that I think I knew this, but maybe I didn't. You guys are commissioned only Like strictly commissioned. No base pay, correct, holy shit.
Speaker 3:Not every lender is that way. Some lenders get a base plus a small commission, but at us at Trader West, we are 100% commissioned only. So if I'm not closing loans, I don't know what page I can.
Speaker 2:Now I understand why you're saying you work on the weekends and nights.
Speaker 3:But that's the nice thing, Like I could work from the morning on vacation or work from my home in the morning and go do things with my family in the afternoon, or whatever that looks like. So we are constantly building those relationships with our clients and with our referral partners, because it's a team. Again, it's one of the biggest financial decisions you're gonna make, and so we have to work together as a team, both from referral partner, client perspective, me, to be able to get to that end goal of helping somebody obtain that home ownership.
Speaker 2:That's awesome. So are you guys. It brings up a lot more questions now that.
Speaker 3:I know you're commissioned.
Speaker 2:only Now I'm starting to think of all the.
Speaker 1:Yeah, ask away.
Speaker 2:Are you guys in charge of lead acquisition and stuff?
Speaker 3:We don't get anything given to us.
Speaker 2:Wow.
Speaker 3:It is all about cultivating the relationships with everybody, holy cow, so which it can be hard some days, but what challenges us helps us grow, in my opinion, and so I'm basically like self-employed, but I hang my hat with the bank and I have tremendous support from Charter West Side and even the other LOs that I work with.
Speaker 3:We have about 35 LOs spread across all of Nebraska. I mean our furthest office is McCook. We even have some folks up in Sioux City Council Bluffs area and we really work together collectively. It's not a competition thing internally, like if I have questions or if I run across something on a file and I need to pick somebody else's brain. We are always accommodating to do that which is great because there's a lot of different challenges in this industry and no file is cookie cutter.
Speaker 2:So there's a lot of commonalities between what you do in a realtor Hang your hat with somebody and kind of off, you go on your own.
Speaker 3:Yeah, and again, not every lender is that way. There's some lenders that get lead generation in and stuff like that, so but we're not, you know, so being actively involved in the realtor community and CPAs and accountants and you know, divorce attorneys and stuff like that, it's really kind of building a pool For me personally. I don't want 20 plus different realtors that I'm working with.
Speaker 3:I want a handful and a half or so of folks that have the same business mindset as I do and that honest and transparent and we're good at communicating and really working collectively to get to the end goal.
Speaker 2:Yeah, so with our company, Murray Custom Homes, obviously, and me being a realtor, I'm assuming our ebbs and flows and ups and downs are very similar, so we'll get into the elephant in the room in a second. But do you have any consumer tips on obtaining a mortgage loan or anything like that in this market without having to talk too much about what we're about to get into Details?
Speaker 3:Just trust your gut. Work with somebody that you're, work with a team that you jive well with. You know again, not everybody works the same type of a thing, but communication and transparency are probably the two biggest key factors and ensuring that we get to the end goal smoothly.
Speaker 2:I guess I should say or as smooth as possible For people that are listening, that don't know that haven't done it before. Walk us through just a typical lending process with you.
Speaker 3:Yeah, so I normally. You know I have an online app, I have a mobile app that people can download and fill out an application, but I personally like to have a phone call with my clients or potential clients, because for me that's our consultation. You know I'm taking a bunch of information down but I wanna know what your short term and your long term goals are, because that helps me then identify how do we need to structure this to both meet those short and long term goals. So you know, picking up the phone, if you start with a realtor, they're gonna say go talk to a lender first, because that's, honestly, the first step you know what we can afford, know, kind of, what's a comfortable monthly payment for you.
Speaker 3:You know, there's a lot of the conversations that we have. You know, if you've got X amount of assets, we don't wanna deplete all of those. Life happens, emergencies come up, so those are important things to know. But we'll have a consultation kind of. Get those, we build the rapport, you know, build the relationship type of a thing, and then I structure the loan, you know, kind of to meet those goals.
Speaker 3:And there's quite a few different loan products. You know first time home buyer products, but there's so many other ones, and so I'll structure the loan, send the information out. You know they kind of recap it, look it over. We'll so go back around, go over any questions that they have, and then it's house hunting and finding that perfect one and knowing what your must haves are and what the things are that you kind of do without. And then, once we're under contract, we're working on collecting any updated information, getting the file prepped and ready. I've got a team, I've got a processor and an assistant Awesome and she goes out and you know, collects any updated documentation. We get the file packaged and ready to go. It goes to underwriting, they review it. They could come back and ask additional question for more documentation. And then, once we get that back to them, they're putting their final stamp of approval on it and we're getting to the closing table. And that's about a 30 day process. I recently closed a loan in 14 days.
Speaker 3:Whole week out, I had to initiate a bridge loan on top of that which our bank side does, bridge loans. So for somebody who wants to transition from their current home into another home but doesn't want to have to sell before they get into this one, luckily we work very closely with our bank side that can accommodate, you know, bridge loans and helots and things like that, to pull that equity out to be able to put down on that new house and then, once that house gets sold, that bridge loan gets paid off. So Awesome, yeah, tons of different ways.
Speaker 2:Yeah, so before we get into where we are today, what was your process like in the middle of COVID and the pandemic?
Speaker 3:That was fun, it was so fun, you know. From a process standpoint it was the same. I've got a very boom, boom, boom streamline process because you have to be able to meet deadlines and timelines, because people are transitioning from one to the other. So that process, you know, has pretty much stayed the same. I've tweaked a few things to ensure efficiency. I'm very efficient I try to be at least and I have an amazing team behind me that we work so well together that we are able to get to that end goal. When COVID hit and rates dropped, we were all drinking from a firehouse. Yeah, you know, when I first started, you know I was able to go out and network and hang out with, you know, referral partners and stuff like that. When COVID hit, nope, I was able to volunteer. I was working probably 13, 14-hour days on top of that trying to remodel a house.
Speaker 3:Oh wow, Personally, to be able to get it sold type of a thing. So it was exhausting. It was At least, but you know it's very interesting too because of the limited inventory aspect of it.
Speaker 1:Right.
Speaker 3:You had to get creative in ways to be able to win deals. I had some clients that were like I can't justify going $70,000 over asking price. I was just going to bow out and I'm like that's cool, we are on your time, not on my time, and it does not make sense to overpay for something.
Speaker 2:So many people did though, so many people did yeah. Yeah.
Speaker 3:You know there's a little bit of justification to it if this is maybe more of a forever home Right, because that value is going to always increase and you're going to be able to recoup that. But if this is a first time home buyer who's maybe going to be in their home four to five years because statistically that's the average timeframe it does not make sense. I'm not going to recoup that overpayment?
Speaker 2:Yeah, for sure. Yeah, I'm assuming you guys have slowed down now. Yeah, a little bit when, about how long ago, if you could put a number on it. About how many months ago, what was it that you started noticing the slowdown?
Speaker 3:Probably about a year ago. So January of last year we were still about 3.5%. That just steadily increased. July-july we were hitting 8%. That dramatically changes somebody's buying power when you go from the 3.5% to 7%. 8% that increases the payment 4, 5, 600 bucks, which changes purchase price. So it's like this constant balancing act rate. So it has slowed down. People are kind of getting used to more of these higher interest rates. And the problem with 2020 and 2021, those were historical lows. That's not normal but everybody psychologically has in their mindset I'm not giving up my 2.5% interest rate. Well, I totally get that. But market is cyclical, it's always going to go up, it's always going to come down. We had a really great year where rates were down and now we're trying to economically and financially balance that back out, type of a thing. So it was a little bit slower last year, slower a little bit this year, but from a production standpoint I'm still doing close to about the same.
Speaker 2:Are you?
Speaker 3:really, yeah, I mean, it's good to hear. Yeah, I mean, but it's. I always describe it as an emotional roller coaster, because you don't know what the next day is going to bring you can start out really high and everything's going great in the morning and by the middle of the afternoon, late afternoon shit hit the fan. You know it doesn't really help that I get alerts at 8 o'clock in the morning on what the bond market is. It really sets the tone for the day.
Speaker 2:I just try to tune it out right now. And then the war. Now it's like, well, yeah, we're in the same world. Obviously we were hot and then it kind of started to slow down. Luckily we had some large acreages and farm people and had farm money and we kind of had a niche market there and we had some backlog from houses that we weren't able to get to or get the blueprint stun in time. So we're still production wise, we're still busy, but sales have curtailed and slowed down tremendously, especially over the last three or four months. So we've kind of supplemented it with some flip houses and remodels and stuff like that.
Speaker 2:But yeah, exactly what you say. I think if you went back and listened to the podcasts, I put it on record, just so we could know where our train of thought was and what everybody's train of thought was, not to prove who was right or wrong, but just to get it on record of what we thought was going to happen six months ago, a year ago, a year and a half ago. It's been a hell of a lot longer than what I thought it was going to. And Jesus now, I mean, if you look now I don't know what you're hearing, but it seems like we might see another rate increase before the end of the year.
Speaker 3:Yeah, so we thought we were going to start seeing a shift in the market from a rate perspective back in May. May 10th was this magical day, because the Fed was going to be looking at the historical year-over-year data on where inflation was and, quite honestly, his bond market historically follows where inflation's at, and so we thought that that forecast was going to be more favorable. Well, how the Fed was reading it is that inflation was still way too high and that freaked the bond market out in a not awesome way. They continued to still do that. We Powell just spoke yesterday, actually, where inflation is still reading high.
Speaker 3:But what the problem with the Fed and what they're doing is that they're driving forward but they keep looking in the rearview mirror. If you look at the real-time data from an inflation perspective, we're a lot closer to where they want to be than what the numbers are saying we're at. But you've got half the Fed members who are reading it one way and half the new that are reading it the other way, and you have a bunch of attorneys no offense to attorneys in the Fed and you have nobody that has an economic background.
Speaker 3:So I think we're going to continue to see this, probably for the first half of next year. It's an election year, so hopefully we'll start seeing those come down the closer we get to that. But that's at least what's being forecasted Like. We thought we'd be in a much better position than where we're at we're not because of XYZ. What's being forecasted is it's going to be rough to the end of the year. It's going to be rough the beginning of next year, but hopefully we'll probably start seeing some of that light at the end of the tunnel at Q2, q3 next year.
Speaker 2:So a lot of people keep asking me and I know the whole were insulated, a little bit more than the east or west coast, and we still have a housing shortage. What's your answer as to how or where we are now with interest rates as opposed to where we were before? But you still say that your production is almost just as high. Now who get asked is like who or what are those people? How are they able to afford the higher rates? Are they adjusting their outlook and their expectations on the price of house? Because I'm assuming that person that could afford a 500 back when it was 2.5% can now only afford a 400 to 450.
Speaker 3:Yeah, I mean it does play a big factor. But we have those conversations of, okay, like can we make this happen? Like is this comfortable for you, type of thing. We know that this isn't going to be a forever thing, like we're going to have an opportunity to refinance here down the road because, again, market cyclical, so it is making some adjustments from a price point perspective, but we honestly have a ton of first time home buyers still. Wow.
Speaker 2:That's awesome.
Speaker 3:Well, you have to think about it too. Like rents dramatically increased and people are like, well, if I'm paying 1800 to 2000 for rent, what can I afford from a mortgage perspective? And so you can afford that. The problem is again like the inventory and that point that's going to get you there and it's just being able to work with a team that's going to be able to get those offers accepted. Being creative you know we're in 2020 and 2021, people were waiving inspections and going over asking price. We're not seeing that Right. We're still motivated to sell, but willing to do inspections and not go over asking as much or at all because properties are sitting on the market. So it's again kind of like this, balanced out to where we're still seeing people first time home buyers and people that are either relocating or is a 7% interest rate ideal.
Speaker 3:No but it's not 13. I mean, we could be there. Exactly, it's all about perspective, right? Yeah, getting things into perspective form. If this is a longer term home for you, yeah, it's going to stink to have that 7%, but if we have our game plan in place to be able to meet the short and long term goals, it's going to be fine 12, 18, 24 months down the road. So again, it's really kind of like perspective.
Speaker 2:Right, and what sucks in our world I'm assuming a lot of home voters are dealing with this is you know we had drafted a blueprint for a lot of these people where they have an expectation on a price per square foot base, what they can afford on a new construction.
Speaker 2:Let's just say that they can afford an 1,800 square foot house with all these bells and whistles. Well then they go in there and they meet with their banker after the interest rates went up four or five points and they come back to us and they say, okay, now I only have this amount of money and it's $60,000, $70,000 less, and so you have to start making cuts. You know, you just took the house down 100 to 200 square foot or took off all these bells and whistles, and so what they say is they'll just wait. You know everybody just says they'll wait it out. I don't want to build, you know, our forever home and have it not be exactly what we want it to be. So we have all these people right now for about the last six to eight months that are just on the fence, you know. So sales have really hurt in the last six to eight months for us.
Speaker 3:So, in that regards, what solutions are those bankers not finding to be able to meet in the middle, Like there's a lot of different loan programs that we've started trickling back in because the market has shifted. You have two, one buy downs. You have arms everyone's like arms. I don't want to do that. That's so risky. Anything in life is risky, right.
Speaker 3:But again, if you're working with an advisor or somebody that's just slinging a transaction, we're going to know what those options look like. On a two one buy down, it's basically like a temporary buy down where you can. That interest rate gets reduced by 2%, two basis points the first year. That goes only one the second year and then reverts back to the original note rate in years three through 30. Well, again, if we kind of know what's being forecasted in the market, let's look at that two, one buy down option. Maybe make that payment more affordable so you have more room in your debt to income ratio, so that you can still get all the bells and whistles that you want at an affordable monthly price within the guidelines of the programs. And then we know we're going to be able to refinance in the next year or two.
Speaker 2:So you know I have that question. Not speaking about anybody in particular, I don't offend anybody, but if you look at the average American and how much they consume on credit cards that are 20 30% interest rate, it amazes me that there aren't more people or more lenders that are willing to discuss the arms or the buy downs or anything. To me it feels like taboo to suggest a two-one buy down because they're like what's going to happen after year three? That's so short-sighted, you're not looking to the future. It's like well, you just made a purchase with a 20% to 30% interest credit card, or you have a full credit card at 20%, right? So you know what I mean.
Speaker 3:Well, and to that point too, it's like you got these buyers that are transitioning from, like, their first or second home, maybe into the forever home, maybe doing the build, and like I don't want to give up my 2.5% interest rate, right? Well, how? So many Americans have maxed out their credit cards, like credit card debt is up an insane amount. Yep, so you've got yeah, you got a 2.5% interest rate on your home loan, but you got how many credit cards that are maxed out at 20%? You got an auto loan at 8%, 9%. So when you actually look at a blended rate calculation on all of your monthly debt obligations, you don't have a 2.5% interest rate on your home. You're closer to like 7%, right? So why not sell your house? Take portion of the equity, pay all that debt off, use the portion of it to get in from a minimum perspective on a new property, and then we're going to refinance down the road into a normal interest rate of around 5.5% or whatever you know where it is.
Speaker 3:It's those types of conversations that people aren't having because I don't know why. Yeah, maybe not their mindset.
Speaker 2:And you know talking to a few workers of mine and patent pass workers particularly, not understanding the equity in their home.
Speaker 2:I think I have a lot of One in particular that he owned a $350,000 house and he'd been paying on it. He has it down to like $80,000. He didn't even realize this until I started talking to him about it. He wanted to buy something and I'm like you know what's the value of your home? What is it to praise that? What is your equity in the home? He didn't even think about that at all, right.
Speaker 3:The biggest problem is lack of education. I am huge on education and, again, just being analytical with it, and maybe that's my nerdy numbers brain, but it's like, okay, where's the problem, where's the solution, what's going to make the most financial sense? But a lot of realtors, too, don't have that knowledge. They know those tools and resources and people aren't having those conversations. We're actually hosting a class here November 15th on really where is our market from a Blinken perspective as a whole, like it's not as bad as people think it is or what the media likes to make it be. And then what tools and resources do we have to be able to help those agents have those conversations, educational conversations with their sellers and buyers to really put things into perspective for them. This is doable, let's just do it smart.
Speaker 2:Right. Well, that's a good perspective. I've known it but never really talked about it in that perspective of taking your equity in your house and buying down your credit cards and get into a new house Because, like you said, I mean bar in any World War III or anything like that you have to look at the future of the economics and the economics, like you said, it's cyclical. So we're up here now and eventually we're going to go back down. I don't think five, 10 years ago we ever thought we would have saw 2.5%, but we did you, did, you know, it went up and then we came back down.
Speaker 3:It's funny to say that because I was at a mastermind conference in June of 19 and Barry Habib is an economist that we follow very closely in our world and I remember being at that conference and he's like rates are going to go to 2, 2.5% and we're like, oh shit, Not sure shit, that's where they were.
Speaker 2:When we were in the middle of it I think I just got used to it and my financial advisor called me. Actually, he told me and I didn't listen. So then he told my worker, kevin, my senior PM, kevin, and Kevin came in and he's like Mason's telling you that you need to get all the money you can from the bank. And I've always been a big believer in no debt. Right, so no debt. Why have debt if you don't need it? Obviously, I leveraged debt to buy lots and stuff like that. But if there's building, if you have money, pay it off, don't just leave money sitting in the account.
Speaker 2:I didn't understand until we started trying to buy flip houses right now. Why should have done what he said? Because I could have been. I'm looking at these flip houses or turning the house into a rental when you're buying money, when you're borrowing money at 8.5%, 9% interest only loans, jesus, to carry these houses for six, seven months, versus if I had the money at 2.5%. And then also the idea of taking the money at 2.5%, putting it in the market and you're making six or 7% historically 8% and you're making 6%, 5% for nothing. Take all the money you can get, pay 2.5%, make six in a market and live off of it, so I feel like an idiot.
Speaker 3:We live and learn that, but I think a home is one of the most underutilized investments.
Speaker 3:I had a close friend of mine before rates went whack-a-doodle-y abnormal. She had just graduated from nursing school and she had about $90,000 worth of student loan debt and her and her husband had owned their home for a little over a decade or whatever, so we had a crap ton of equity in it. We did a cash out refinance, paid off 80,000 worth of her debt and even with a slight increase in the monthly payment it was still saving them $400 to $500 a month.
Speaker 3:That's awesome, yeah, I mean just, people don't think of those things. They don't know what they don't know, and so they're looking to you as a not a financial advisor, but you're an advisory role, in my opinion to figure out what those solutions are to those to make the most sense.
Speaker 2:Yeah, that's awesome. You know what I compare it to is. It draws a similarity at some health issues that I've spoke about, I think, on here a little bit. It draws a similarity to we're almost getting into that medical world philosophy is there's a different lane for each profession but there's not one person that combines all of them to help you in advisory position on what you should do. You go here for this and if it's not that, they just kick you out. And then you go to another doctor and they say it's not that and you're just left kind of like well, what the hell is wrong with me? Nobody advises you on where to go, what to do, and in this it's very similar. There's so many people that look at their home loan or their interest rates is in a sec and a you know a small section rather than in a whole picture of I think we've psychologically been ingrained about rate, rate, rate.
Speaker 3:Right, Like I want the lowest interest rate. I just had somebody call the other day. Why want the lowest interest rate? Well, everybody does. But are you going to be in the house for four to five years, or are you going to be in the house for 20, 30 years?
Speaker 1:Right.
Speaker 3:Rate plays a different factor if you're in your house for four to five years, in my opinion, than it does 20 to 30 years. So let's focus on what the now is and what the and then like changes. Right Like, I thought my last house was going to be my forever home and that did not end up being the case. But you, just you have to adjust. You know to the best you can. You know where you're at now, you know where the market's at, we know what we've got to work with. Let's strategize a plan. We got that in place and we'll adjust along the way if we need to.
Speaker 2:Yep, I have a hard time playing that we're in those multiple hats. When I was in on the meetings with drafting and worrying about their budget and wanting to give them their forever home and making the house, I always wanted to make the house beautiful. Still do any additions that they put in. I didn't necessarily have to make money on it. I just love the fact they're making the house awesome so I could show it off.
Speaker 2:But it's hard when you go to a meeting with a 30-some-year-old couple or a 20-some-year-old couple and they're busting the bank because this is their forever home Throughout my years. I can't even tell you how many times that you know. Politely, I'll let them know that life happens. You know Shit happens. Make sure you're planning for the what ifs. But they're building their forever home and they do it. And then a year or two later I see it, for example, on Facebook or on the marketplace and it's like holy shit. I wish that we would have done a few things different, like what you said. I think there's. You've got to be cognizant of what if this isn't my forever home, you got to make sure you buy it right and make the investments when you build the house to make sure there's a return on investment if you ever do have to sell Right.
Speaker 3:Well and that's a thing too, a lot of times, especially with new construction, I have that, I'm very direct and I don't sugarcoat shit, because that's not going to serve anybody any purpose, right, myself or the clients. But when we're dealing with new construction it's like, okay, this is your price point that you have in mind. You will have overages. We have to be aware of those and we have to factor that in type of the thing, because it is inevitable.
Speaker 2:Yep, it's inevitable. So I'm on this real estate mastermind group on Facebook. I joined it for not the right reason, but then I ended up becoming a realtor and now I'm part of it. It's like when I scroll through my Facebook, it's every other one. I just can't not read them. But there's a lot of heated conversations in there right now, but one of the ones that seems to get the most traction is the whole date, your rate, marry your house. What is your take on that? So we can have people either love you or hate you after this podcast.
Speaker 3:Right. Well, we advertise that a lot. Marry your house at the rate, because, again, you know where you're at now. Right, if you fall in love with something, because so often is it the right time to buy, when is there ever going to be a right time for anything? You're never going to move forward with anything in life if you're waiting for the right time, right. So, if it's something that you fall in love with, home values are always going to increase. We are never going to see an 0809, like we did, and so you're going to wait for that interest rate to drop to get into your magical unicorn of a house that you absolutely love, but you're going to still pay more for it. So you're not doing yourself any justice on waiting for rates to come down to get into the new house that you absolutely love, because by the time you do that, it's going to be appreciated.
Speaker 3:Appreciate it 4, 5, 6% I mean on target right now for 2023,. As of August, we're on track, from a national average, to appreciate 6%. So you keep waiting a year or two and that's just going to keep getting more and more and then you're going to be paying more for the house. Yeah, you got a lower interest rate, but you're still back in the same boat.
Speaker 2:Right yeah, On the surface. I would never implore somebody to go from a 2.5% to an 8% rate. Right On the surface, Right. But then when you get into the weeds with it, appreciation and limited availability.
Speaker 3:and we actually have cost of waiting calculators.
Speaker 2:That's awesome.
Speaker 3:That we have through a program that says, okay, if I wait to buy, and it projects it out in like a four or five year time frame, you're losing out on 20, 30,000 plus in equity and again you're going to be able to refinance down the road Like again, it's cyclical, it's this up and down industry.
Speaker 2:Right, so it's. The worst thing that I hated was we had a few clients. It was an emotional time, not blaming anybody, not pointing fingers, but when the rates started going up, we had everybody that, whether they had just started the house or six months away, they were like I need to finish. Now rates are going up and it's like well, we just got your blueprint done, so it's going to be much, you know. Like well, you're costing me this amount of money, but their emails would be over the 30 year life of the loan. You are going to cost me $180,000, I remember specifically. So, unless Murray's going to pay me $180,000, you need to have my house done in three months. And it's like it angered me because, like what you're saying, we know you're not going to stick at this interest rate for the third year loan. But I mean our contracts states that we have 240 days to build the house.
Speaker 3:We can't just magically, you know build the house in three months, especially like materials, perspective delay in those. But again that kind of brings me back to why are those lenders not having conversations on extended rate options? Because that was a big thing too. Like okay, we're in, we went from three and a half to 5%. It's going to take my build, you know, six, eight, 10, whatever months. Look at extended rate options Again, it's hard too, because everybody looks for us, for this crystal ball to be able to predict. I get constantly. Well, what do you think I should do? Well, I can tell you from my perspective and my knowledge and what I follow on the industry on a daily basis, of where it's forecasted to go. I can't guarantee you I thought we'd be down in the fives by now, but unfortunately that's not where we're at. So there's a lot to kind of answer that question. There's a lot of different products or things in the industry where, if you're having those educational conversations, you can avoid those types of things.
Speaker 2:So once we get off, we'll have you email me and Shannon some of your ideas, because I love it. We're needing that right now with a lot of people of, like you said, not wanting them to make a bad decision, but giving them options for proceeding forward Because, like you're saying, we have so many people right now that they're probably 20 to 30,000 off of where they wanted to be with their build and they were supposed to start six months ago, but we're six months later and they're still waiting for the interest rates to come down, so they have an extra $20,000 on their loan. I think, coming from a different perspective, from a different person, I would feel bad just calling you saying, hey, I think you should do it now, let's go. It seems so one-sided skin in the game Right.
Speaker 3:But if you give them the materials or the reports or things like that and saying, okay, and again, like very honest and transparent, and if I think something's not a great idea, I will point blank tell you I can make this happen, but I don't think it's in your best financial interest. But if you can collectively work together and say, okay, here's your concerns that I'm hearing and here's the tools that we've put everything through from a financial aspect of it to show you that, okay, if we make this decision from a long-term perspective, this is what it's going to look like Because, again, it comes down to education. Giving them every single aspect of the situation so that they can make an educated decision on what's best for them is crucial in this volatile economy and industry that we're in.
Speaker 2:Absolutely Well, that's awesome. I appreciate it. Any final thoughts? You have comments plugs.
Speaker 3:It's going to be a rocky, probably, say, eight to 12 months. But if you're looking at home ownership, whether you're first time home buyer or somebody that's transitioning to the next home, work with somebody that is going to educate you on what's truly going on in the industry, because the media is going to portray the skies falling.
Speaker 1:Every day.
Speaker 3:Right every day. That's why I don't watch it. I can't, it's too much. But work with somebody who can really be more of that advisory role and have a team behind you, because this again is one of the biggest financial purchases you're going to make and it has to make sense for them and provide them with the education to be able to make those educated decisions.
Speaker 2:That's awesome. I appreciate it. You gave me a couple of new perspectives that I like.
Speaker 2:That's great, but no, we need help. We got, like I said, we have a couple of people. What we've run into, on top of what I've already discussed, is you have people get preapproved and you don't look at the date on the letter. So then you take them through the drafting process, the land purchase, et cetera, et cetera, and then it's three months later and then I go to get my loan to build their house and my banker, marlin's asking me for an updated approval letter and then when they go back and get their updated approval letter, they can't get approved for that amount. So that has happened.
Speaker 2:So, yes, trying to get creative with these people and talk through the options, I don't know. I can't say that these bankers haven't. I don't know what has happened. I just know that we just have a lot of people right now that are just saying they can't do it right now. So we do have a couple of them, including my employee, tom, our VP, tom, that you know that had to get some creative with this financing and it seems like they always make it. You know, it's always that the customer is saying no, we can't do it, and then we say you got to get creative, and they get creative and they get it figured out. So I'm excited to kind of get into the weeds of what that looks like and how we know people.
Speaker 3:Yeah, and starting with that and then in constant communication, you know, like if we pre-clawed somebody, our pre-claws are only good for four months, right in 20 days. So somebody should be having conversations in the meantime and just touching base. No news is still no news, but at least you're connecting and having those conversations, especially when we are seeing shifts in the market. Like we'll see a downtick a little bit eight to quarter basis point but then we'll go back up and it's just. It's constantly being out in front of people and working together is key.
Speaker 2:Well, it's going to be. It's going to be a fun, volatile, not fun time. I don't even know what to say.
Speaker 3:I'm really excited about it, yeah.
Speaker 2:One of the things I can say is I keep telling my workers so I'm like, you know, I put you through three or four years of hell. Really it was so. We all knew at some point it would slow down and our production team still, you know, overworked and underpaid. And so I keep telling them hey, man, we'll do flip houses, we'll do remodels, we'll do the inspection thing, we'll keep everybody fed and alive and enjoy it a little bit. Like, let me deal with the stress, let me deal with the slow down, waking up every day wondering what the economy's going to do with the interest rates. You guys just recoup, recover and be ready and be ready for the next drop in interest rates when we're going to be busy again.
Speaker 3:So yeah, and I'm not upset about it being a little bit slower these last couple of years because again we were all drinking from a fire hose.
Speaker 2:We needed it.
Speaker 3:I mean, it was burnt out city and so I've really kind of just taken this time to decompress and just keep my head down and focus and advise and drown out the noise, and we'll get through this, just like we get through anything.
Speaker 2:Absolutely. Yeah, well, I appreciate you coming. Yeah, I appreciate you. Thank you so much, but thank you everyone for joining us on this episode of Stay Modern with Murray. Stay tuned for our next episode with former Husker volleyball player, tara Mueller.
Speaker 1:If you have questions or topics you'd like us to discuss, you can email them to infoatmurraycustomhomescom. If you liked this episode, be sure to subscribe to Stay Modern with Murray on Apple and Spotify, or check back on our website and social media regularly for the latest episodes.
