Welcome to the January episode of Learn With A Lender with Joel Schaub of Guaranteed Rate!
In this episode Joel talks about home-sales contingencies for buyers. He provides advice on how buyers do not necessarily need to sell their house first to purchase another property. Joel also talks about lending rates and how he predicts they will be low all through 2021. Last, Joel discusses what happens with the different down-payment programs.
If you’d prefer to watch this interview, click here to view on YouTube!
Joel can be reached at joel@rate.com and 773.654.2049.
Transcript
D.J. Paris 0:00
On this episode of Keeping it real is brought to you by Joel Schaub at guaranteed rate. As a realtor it’s important to partner with only the most trusted name in mortgage lending. Joel has 1000s of satisfied clients and gives $1,500 of his commission. Back to your buyers on every closing. He is known for his ability to close even complex deals start to finish in only 14 days to learn what 1000s of others already know. Make a note to call Joel at 773-654-2049 or email joel@rate.com Guaranteed Rate is an equal housing lender licensed in all 50 States Consumer Access Number 2611 And now on with the show.
Welcome to another episode of Keeping it real the largest podcast made by real estate agents and for real estate agents. My name is DJ Paris. I am your guide and host through the show and today once again is our monthly series learn with a lender with Joel shop from guaranteed rate. Now Joel is the vice president of lending a guaranteed rate he’s been doing loans at a high level since 2003. And his got to that level because of what he does specifically for agents, which is that he gives back a part of his commission to the buyer on every transaction. Last year alone, Joe gave back over $300,000 in closing costs to buyers who worked with them and that puts Joe’s volume in the top 1/10 of 1% of all lenders nationwide. out of 400,000 loan officers in the country Joel is ranked number 137. Last year he had completed over 500. He did 535 closed transactions for 196 million in year to date. He’s already today’s the 14th of January, he has already closed 23 transactions for over 8 million. Now if you are looking for a loan officer, we cannot more highly recommend Joel he’s the very best we’ve ever worked with Joel can be reached at joel@rate.com. Or you can shoot him a text message or call him at 773-654-2049. Let’s say hello to the biggest Cubs fan. I know Joel Schaub welcome Joel,
Joel Schaub 2:22
a DJ, thanks so much for having me. And all the numbers are, are great. And I appreciate all of that. But it’s really good to give back. And I’m glad that I’m on the show again,
D.J. Paris 2:32
we’re glad to have you in every month you come and deliver a tremendous amount of value. So you give back as much as you get. And I know you’re you’re a big fan of that saying but it is absolutely true in your case. So what would you like to talk about today?
Joel Schaub 2:47
I mean, I’m so glad it said that it really is about givers gain. And as agents, the more that you can be out there, touching people’s lives and helping them and truly helping them not just helping yourself by getting a commission, but helping them through their journey, the way that you would want to be helped, you’re gonna get more transactions out of it, you really truly do. And you see that all the time. Absolutely. This week, really what’s coming up for us is talking about contingencies a home sale contingency for a buyer, whether the whether or not they need to sell a home first, and how we can have some kind of conversation here around making sure that buyers if they have to sell a home, or if they don’t have to sell a home are being educated by their mortgage professional.
D.J. Paris 3:34
This has got to be really common right now with obviously, people are there’s so much movement in real estate, there’s low inventory, there’s low rates, so you have buyers who are very motivated to maybe expand or maybe they’re you know, moving to a different part of, of maybe from the city out to the suburbs, we’re seeing that a lot in Chicago. There’s just a lot of movement. And it’s really kind of a perfect storm of low rates for buyers, and also low inventory. So sellers, everyone’s sort of motivated to make transactions happen.
Joel Schaub 4:06
And buyers come to me all the time. And they just simply don’t know what foot to put forward. They know they need to sell a home. They know they want to go out and buy a property, but nine times out of 10 they think I must sell the house first because all of the equities in the home. Okay, that’s a lot of the time when we’re talking with buyers. They might have some money for downpayment, but in their mind may think, well, I’ll never be able to get to when they think in their minds maybe 20% down or maybe they think 10% down, but they think most of the money for my downpayment would come only after I sell the house and there’s no way a bank is going to approve me to go out and get another loan until this property is sold. Right? I found the opposite. Very true recently with a lot of buyers that were told by another bank. You got to sell your house first. We can’t approve you for the next property. And that kind of puts a halt to the entire Your process if you’re a realtor,
D.J. Paris 5:01
right, it becomes like a real balancing act of trying to figure out when do I list my home for sale? When do I start looking for to buy a new home? How do I coordinate all of this and also get approved. So yeah, this is a common a common thing for for buyers.
Joel Schaub 5:17
I had dozens of clients last year in 2020, that really were under the impression that they must sell their home to buy the next one, even half of those people had banks tell them all, we won’t approve you until you actually have the property sold. And then I just did a little bit more work on the file, figured out a way where they could come up with a good amount for a downpayment, but maybe not 20, or 25%, down that they used to need or what they thought they had to do, and the bank would still approve them to buy the next home, then they could be very picky about who they pick to buy their property, so that they’re not forced into just taking any offer quickly. They could go buy the house of their dreams, list the price, list the property with an agent, and really get a good purchase price instead of being on this time crunch.
D.J. Paris 6:07
So do lenders look at the existing home that is needing to be sold and sort of take that into account when approving someone who who still does have that asset? And that and that responsibility to get approved for another purchase? Correct?
Joel Schaub 6:23
Exactly right. I’m glad that you brought that up. It’s not so much do they have enough money to buy the next home? It’s Do they have enough income to support both payments for a couple of months? Right? Right. So a bank will say, if you have a property right now, and you have $2,000 A month going out for principal interest, taxes and insurance, and the next place that you want to buy is a step up. And maybe that one is $2,500 a month for principal interest taxes and insurance. It’s a simple math equation, and it comes back down to that old phrase, what is your debt to income ratio? And are you approved? To carry both mortgages? Okay? And more importantly, are you comfortable enough to carry both mortgages, if it is a month or two, where your listing agent is staging, prepping and getting it on the market? At the same time, you’ve gone under contract, and you’re going to close on the next place? So it’s twofold DJ, it’s, are we approved? And then are we comfortable, because we never want to go forward and do something. If it’s going to even for a little while not feel right, we want to make sure that we’re taking our steps to protect our clients, for sure.
D.J. Paris 7:36
And I imagine there’s oftentimes where the real estate agent is doing both transactions simultaneously, right there helping the prospect The Client List the home and hopefully selling it as quick as possible. And then also helping them find a new home. So it becomes a lot of work for even in an agent to sort of they’re already doing two jobs. And now they’re go, oh gosh, now we have to figure out figure out the lending situation. And this is where somebody like you comes in and says I can I will take care of this side of it. And and work with the agent and the seller and the buyer, of course, to to coordinate everything.
Joel Schaub 8:11
Exactly, right. Okay, and what is the action step here as an agent? What’s the takeaway? Well, how can I use this podcast and do something that’s going to help me get another buyer, close another listing and actually provide value. So we know as an agent, if we’re submitting an offer on a purchase, it’s going to look a lot stronger if we don’t have a home sale contingency, okay? We don’t need to sell the current home to place an offer on the next home. Once you have to have a home sale contingency, obviously, you’re not as strong as an offer. And so often the buyer is told by the bank that they go to, yeah, you need to sell your house first. Right, get a second opinion. It’s not always the case, rates have come down so much. And borrowers that thought that they needed to put a big chunk of change down can still qualify with a five or 10% down, still get rates that are in the TOS and buy that next home, even if they don’t have the large chunk of money that they will have when they sell. Once they do sell, they can take that extra money and apply it back to the mortgage and get rid of any mortgage insurance that might be on the loan and even lower the interest rate because then you’d have a greater equity position.
D.J. Paris 9:29
Yeah, that just makes makes perfect sense. And I suspect there’s that we as real estate professionals probably forget that this idea of somebody who owns a home who’s looking to upsize probably doesn’t know any of this process and is probably thoroughly confused or just ignorant because they haven’t learned about exactly what the steps are and so this is where an agent I think another takeaway you know for our agents is this is a great opportunity to call everybody you know, who a currently owns a home and say Hey, are you looking to upsize, you know, in the next in the foreseeable future? Because I want to talk to you about what that process looks like. And you know what, let’s talk to a lender and figure out how to make it work.
Joel Schaub 10:11
Right? Because as an agent, you have this question a lot, how do I actually go forward and write an offer? If you don’t even have my property listed yet? What does that look like? What are the steps, and so you say, Well, I was just listening to a podcast blew my mind, I got some really good information, and I wanted to share it with you. Because what we can do is go out and get pre approved with your mortgage person, make sure that we are hitting you for the payment on the current home. And that we can go forward and buy the next place and submit an offer even before we have a buyer for your place. And it helps because it means that there’s not that simultaneous day of closing, where you need to box up in the morning and move in the afternoon, it gives you some leeway. And I’m telling you, most people would like a little bit of leeway. And if you do it where it’s just a few weeks apart, you’re not even going to double up on your mortgage payment, which is going to be very beneficial as well. So there’s ways to do it. Okay. You know, there’s ways to do it that make you look good as an agent.
D.J. Paris 11:15
Yeah. And I just think what a great opportunity for agents right now, especially since everyone’s virtual everyone’s working remote or not everyone but a lot of us are, and what a great opportunity to go on Instagram Live or Facebook Live, and bring a lender on do a 10 minute, what happens if you have a home currently and you want to upsize? How do you actually what’s the process for listing and buying? And and how do you get approved and in the middle of that. And I would think boy, that would be such a valuable piece of video that you could easily do it. It may be even get in, you know, an accountant to talk about, you know, if there’s capital gains, how to handle that as well. But that could be a really simple, easy, super informative webinar that can be done really by anybody.
Joel Schaub 12:03
If I’m a realtor, right now, I’m actually grabbing my favorite mortgage person and saying, Hey, next week, can we do this, I want to do a video with you together. So all these mortgage guys that are reaching out to you saying send me your buyers, reach back out to them and say, Will you do something for me? Can we get on a video together so that we can teach and educate, and it will result in additional deals. So that’s what we need to do right now the more that you can give, and the more that you can teach. And the more that you can be a value, the more that you are going to get additional transactions in 2021.
D.J. Paris 12:36
Well, I couldn’t say that better myself. So I won’t try. But I would be remiss of me not to do ask about what is going on with rates right now. This is learning with the lender. So we just learned a whole lot. But let’s learn a little bit more about what’s going on in the overall world of lending rates.
Joel Schaub 12:54
So do you remember last year we kept hearing rates were going down? Right? Do we hear this? Yes. And we heard almost every single week news reports that mortgage rates have never been lower. Yet there were so many mortgage guys that were out there saying Oh, you better hurry up because rates are gonna go up. And they said stuff like you better hurry up and lock in now, because rates are gonna go up after the election. After the election, what happened? rate stayed low. Okay, then they said, You better hurry up and lock in interest rates now because rates are gonna go up after the new year. And here we are after the New Year and where our rates, they’re still below 3%. So I’ll be here that to tell you first that all through 2021 rates are gonna stay low. Do I have a crystal ball? Yes, I do have a crystal ball. The Federal Reserve is keeping rates low, you don’t need a crystal ball to know that the Federal Reserve said this, we are not even thinking about thinking about raising rates. Okay, and that means they literally have until 2023 or 2024 on long term debt. Now, federal mortgage rates on a 30 year loan might go up or down by a quarter or half a percent. But all year long rates are going to be at or below 3%. We will not see rates go up to four or 5% at all this year. We’re not expecting to see any real movement until 2023.
D.J. Paris 14:26
Wow, very, very, very exciting. That is an amazing prediction. And so we will we’ll keep updating, of course, the listeners and viewers of the show every month to see if there are any major fluctuations of course, but What great news for all of our agents again, the action step here is not to memorize where rates are today and what they look like tomorrow and and where they were yesterday. But to realize this is an amazing opportunity that the vast majority of clients are not paying attention to because it’s not part of their daily life. They’re not looking at rates they might be looking at all homes because, you know, we’re we love looking at Zillow. You know, we have hundreds of millions of people a month doing that. But very few people are heading to bank rate.com And some of these other sites just to look at mortgage rates. They’re just thinking about where do they want to live. And they’re thinking about their lives and their job. And they’re not thinking about rates. So so many people that are who are listening right now, your clients are probably not all that aware of what’s going on right now with REITs. Reach out to them have the conversation and it’s not about I can get you the lowest rate. It’s about hey, did you know, here’s where we are, we’re at a historic low. And how’s your living situation do? Are you thinking about making a change,
Joel Schaub 15:39
people that are selling fear are selling the fact that rates are going to go up. And I simply stated this in a way that was a little controversial to say, rates are not going anywhere until 2023. But everybody’s saying the opposite in ways where they’re trying to convince a buyer to buy and I want to lead with education, truth and honesty. And that’s what you should do as an agent. And it’s not about hurrying up and pushing somebody into a sale, you’re gonna get a lot more long term success, if you actually can do the research and help them because everybody wants to buy but nobody wants to be sold. Okay? And that’s true, right? I want to buy a house, I know you do. But you don’t want to be sold some fear that we better hurry up and buy this one, because rates are going up next week. It’s just not the case. So I encourage you if you’re an agent, to partner with mortgage people around your area that think the same way that I do that really want to add value, and help your buyers. And it doesn’t mean that we’re not going to give a little bit of push and motivation. But it’s not going to be to scare them that that never works in the long run. Okay, so where are our rates? Right? That’s a long way to say where are they actually app rates are funny, okay, because there isn’t just one interest rate. When we talk about rates, we’re usually talking about either a 30 year fixed rate or a 15 year fixed rate. The 30 year fixed rates this year, have hovered somewhere between two and a half percent to 2.99%. That’s that average, they’re below 3%. Across the board 15 year fixed rates are even lower than two and a half percent. And so for the long haul, we’re going to see those rates stay at all time lows, where DJ would have lost a bar bet with you thinking that a fixed rate would be anywhere below 3%.
D.J. Paris 17:34
Incredible.
Joel Schaub 17:36
So rates are gonna stay low. We’re going to educate our buyers. And before we go, let’s just talk quickly about with COVID. And all the different changes that happened last year. What’s happening with the different downpayment programs? Okay, sure. Okay, buyers don’t need to have 20% down, I’m sure you’ve heard that. But I’d be, you’d be surprised how many people still think they need 20% down. If you’re a first time homebuyer, one of the best programs that you can do is three and a half percent down on a 30 year fixed through FHA. Those FHA rates are in the mid twos fixed for 30 years. Amazing just need to occupy the property. It is amazing, right? Amazing. And you need to occupy it. And you can really go out and start looking at things that are creative like two to four unit properties, which is what I’m going to discuss next time when I’m on how to go buy a home and have a property where there’s two, three or four units, where the rents completely cover the mortgage, and you’re living in one of the units completely free.
D.J. Paris 18:42
Hashtag house hacking. That’s it.
Joel Schaub 18:46
There’s a lot of opportunities this year. So stay positive, touch your database, and try to find ways to give back and utilize what you learned on today’s program.
D.J. Paris 18:59
I remember back in the early 2000s, back when interest only loans and rates were really popular interest rates were so low. And I remember seeing interest only loans that were based on LIBOR that were in the low twos. And I remember everybody saying we will never ever see this again. And those are for interest only loans. And now we’re seeing those kinds of rates for traditional fixed loans. I mean, it’s absolutely incredible.
Joel Schaub 19:28
The arms are all on the way out, there isn’t a benefit to taking a adjustable rate mortgage at a lower rate because those fixed rates are there. So now’s the time we’re in a really unique situation. I know a lot of the country is hurting. There’s a lot of need for some honest answers some help, and go out there and be that person that’s providing answers and helping and then like you always say, share this, right. There’s a lot of people that could really use some of the help that we’re giving each and every single week on the show.
D.J. Paris 19:58
So if there’s any of our lives listeners and viewers who do not have a great relationship do not have a relationship with a lender who’s providing this kind of value to them. I know that you partner with agents all the time, and provide value to help them grow their business, which of course helps you help more buyers, with with their lending us needs. What is the best way someone listening right now could reach out to you to talk about partnership opportunities.
Joel Schaub 20:24
I actually reply to emails that people pull from this podcast or so many people that reach out and say, I heard you on the show, can I just get five or 10 minutes? And I’ll take the time to answer and schedule calls just for teaching in education. And it’s my email, it’s joel@rate.com. So J OE l@rate.com. Try it out. Test me see if I reply, you’ll actually get me making a reply. And we can help you my companies in all 50 states, I’m licensed in over a quarter of the states personally so we can reach out and make sure that you guys are taken care of whether it’s me or somebody else. Okay.
D.J. Paris 21:06
Yeah. And and the company Joel works for guaranteed rate is just if you if you’re not familiar with them, they are an absolute powerhouse. And here in the Chicago area they are they are the the firm to pay attention to because they handle so much volume and they’re just excellent, an excellent company. So we not only recommend Joel but of course all of guaranteed right. But if it for everyone out there who doesn’t have a solid relationship with a lender reach out to Joel or if you are listening and you’re not an agent and you’re a consumer and you’re a buyer and you’re looking to work with a top loan officer Joel is absolutely the man to talk to you shoot him an email joel@rate.com and he will get back to you and tell you how he can assist. Joel thanks once again for being on the show. Every month you come on you deliver. That’s why we love having you on and everyone listening. You can help support Joel reach out to him talk send your buyers his way. And also reach out to him for opportunities that you guys can partner up and and do some big things in 2021. And also for everyone listening help support our show two ways to do that. Follow us on Facebook go to keep facebook.com forward slash keeping it real pod. So keeping it real pod and hit that like button so you can get notified whenever we do these episodes live. And of some of the other articles that we post there. And then also follow us on Facebook. I’m sorry, follow us on our website and go to keeping it real pod.com. And when you go there for the first time, you’ll see a little thing pop up to say do you want us to notify you? Each time there is a new episode. And if you just have to push Yes. And then every time you publish an episode in your browser, you’ll get notified there’s a new episode to check out. So keeping it real pod.com Joel, thanks once again. We will see you next time.
Joel Schaub 22:52
It was really good. Thanks again.
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