Welcome to the October episode of Learn With A Lender with Joel Schaub of Guaranteed Rate!
In this episode Joel explains what are the new conforming loan limits for next year. Joel emphasizes the importance of meticulously building your brand which will represent you in the future. Last, Joel talks extensively about the pre-payment requirements for a second home loan and how families can benefit from this program.
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.
This episode is brought to you by Follow Up Boss. Get your 30 day trial by clicking here.
Transcript
D.J. Paris 0:00
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 Parris, I am your guide and host through the show. And today once again is our monthly series learn with a lender with Joel Schaub from guaranteed rate. Now, Joel is the vice president of lending a guaranteed rate and he’s been doing loans at a high level since 2003. And has gotten to that level because of what he does specifically for agents, which is he gives back part of his commission to the buyer on every transaction. And last year alone, Joel gave back over $291,000 in closing costs to buyers who worked with him and that put Joe’s volume in the top 1/10 of 1% of all lenders nationwide. In fact, out of 400,000 loan officers in the country Joel is currently ranked number one 137. Last year, he closed 535 transactions for 195 million already this year. He’s closed 511 track transactions for 204 million already eclipsing his best year last year. So amazing job there, Joel but if you’re 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 sorry, His email address is joel@rate.com. Again, 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 shop Joel, welcome once again. Hey,
Joel Schaub 2:30
thanks so much for having me and all those Appalachians and the numbers. It’s wonderful to hear. But I really like being on because we give back. And we really teach and educate people that are tuning in. And this is always the best time of the month when I’m here with you, DJ.
D.J. Paris 2:48
Well, thanks. It’s it’s a real honor for us to because this is a part of the business that I feel oftentimes agents don’t know much about, you know, yes, they work with loan officers hopefully have great relationships with one if they don’t, they should reach out to you and your team. But it’s just something that agents are focused on the real estate side and aren’t always up to date. And I know we don’t only talk about what’s going on with lending, but but we do provide a lot of great news that’s going on with lending, in addition to, you know, sort of just the strategies and tactics you’ve used personally, and you’ve seen other successful agencies, but we’re really grateful to have you and you know, we always get great feedback on these episodes.
Joel Schaub 3:26
Usually when we’re on we’re talking about strategies that I’ve been, you know, invoked to help me grow to the level where we’re doing 50 and 60 closings month in and month out, and we come up with strategies. And that’s all great. But this time, we’re really going to focus and get down to some business on mortgage numbers, what’s happening in the industry, and some big changes that if you tune in all the way through the show, you’ll actually be able to pick up an additional buyer or pick up additional seller based on what we’re going to review today. Right?
D.J. Paris 3:59
Let’s talk about it. Let’s jump
Joel Schaub 4:01
right in, right let’s do it. Let’s talk some mortgage stuff because I’m a nerd for this type of thing. Okay, when it comes to reading guidelines and being up to date on the most recent changes, this is where we talk about educate and elevate. Okay, and the big thing that just came out last week is the announcement from both Fannie Mae and Freddie Mac about the new conforming loan limits that are going to be in place for next year. And before we get into all this, what what is the conforming loan limit? Why does that matter to me, and and what was the change and so the change was going forward. The base loan amount for a conforming loan limit just went up DJ to $625,000. And that is the largest year over year increase to that conforming loan limit that we’ve ever seen. It’s up $77,000
D.J. Paris 4:56
And this means that in the past those low those loans at that level would likely be a jumbo loan. And now they are not considered Jumbo. Is that correct?
Joel Schaub 5:08
It’s exactly right. That means now that if you’re at 625 or below, you’re not with the extra criteria that it takes to get a jumbo underwrite to have the larger downpayment requirements, and to have the higher credit scores needed to get approved for a jumbo. So really, you’re able to go out and buy a home, that’s a really a jumbo sized house, but not have a jumbo mortgage, which really has three big takeaways. Okay. So if you’re taking notes here, what does this mean? Because I was telling this to an agent two days ago, and the story said, Well, why does this matter to me, borrowers have always been able to borrow over 625 Joel. So why do I care? Here’s why as an agent, you care up to 625. Now, the big thing is that a borrower could buy with 5% down. Okay, before, if you’re at 625, you weren’t getting many jumbo lenders allowing you to put just 5% down. So that’s TAKEAWAY NUMBER ONE. Takeaway number two is that you could literally go up to 625, and have a credit score as low as 620. Wow, a major difference, okay, the conforming loan limit before was 548,000. That means we can go up an additional almost $77,000. And if you were above it before, good luck getting a loan approval with your bank, if you didn’t have a 700 credit score, or a 720, or a 740. So this really lowers the bar to entry. Now, you still have to have good income, you still do need that downpayment. But it allows for a lot of first time buyers to get in at a higher price point.
D.J. Paris 6:52
Wow, it’s really incredible. I mean, I’m just thinking from an agent perspective, there’s so much you can do with this and look to really start your clients thinking about their next their next move.
Joel Schaub 7:07
You’re exactly right. So I named two of the three. And the last one that’s really important here is that now that it’s a conforming loan size, all of the downpayment could be a gift from a family member, okay, whereas a jumbo loan, you had to have your own money, okay, so this is all about ease of homeownership and how you can go out. And if you’re in a market where clients are spending really high money in rent, three to $4,000, a month is not uncommon here in Chicago for a place downtown. A lot of buyers can afford the monthly payment DJ, but they don’t have 100 or 200 grand to put down. Right, right. So now this allows them to buy a home in that 600,000 range, which is 5% down, which means if you had $30,000, you’re now in versus before you have have to have $120,000 Just to get into the same transaction.
D.J. Paris 8:03
That’s incredible. I mean, that is a major, major shift. And and I have to admit, embarrassingly, I was unfamiliar with this. And so I am grateful, because we have lots of agents here at our firm that I need to make sure that they know about this as well. Because if I were a practicing agent, the very first thing I would do, and again, this is just one idea. I’m sure you would have even other ideas, but I would call everyone who, who maybe has a property that is lower price than that already own owning and say, Hey, are you thinking of upgrading? Are you working from home these days? Do you need more space? Do you are you moving to a different area? And you know, now you might be able to do some things you couldn’t do a year before? And you’re going to look like a hero to these people? Because I don’t know about Joel, you know, I you probably do this, but I would assume most loan officers are just so busy. They don’t, which is I don’t know if loan officers are calling people to tell them about this as much. I mean, obviously, you’re talking about it right now. But I don’t know that everyone’s going to know about this. So what a great opportunity for agents to reach out and be this knowledge source.
Joel Schaub 9:09
You want to be the knowledge source, you literally want to lead with education, okay, especially right now, when everybody can get into the business. The barrier of entry is really low. Right? And so how are you going to differentiate yourself and build a brand and build a business? The number one thing that I’ve seen successful agents do is educate. You gotta do got,
D.J. Paris 9:34
I would think to I mean, just get yourself familiar with this, find some resources online that explain it. And then if it was me, and I wanted if I was trying to promote myself on social media, I think the best way to create content that people care about is to make it as Joel said, educational valuable. I turn my phone around, I’d hit that record button and I do a one or two minute video on just like Joel said, What is this? Why should you care and what can you do about it? This is an amazing opportunity for all realtors to think about, you know, providing this kind of level instead of just, hey, here’s me at the gym, which is fine. And here’s me at a closing. And all of that is fine. How about posting some some comments or some some content like this, it’s great for
Joel Schaub 10:16
you at the gym is fine me at the gym would not be good. You look good every day. I see. That’s not even just blowing smoke, but No, literally no, do this. If you’re an agent right now. It’s so funny. But if you’re an agent, right now reach out to that mortgage professional that you’ve built the relationship with, and ask them will you do a quick video with me on social media to talk about it, any mortgage professional right now knows what’s going on. Okay, they would love to do just a two or three minute video where you’re both side by side. And it doesn’t have to be perfect, it has to just go out. Okay, so this hesitation to post on social media or to wait until it’s perfect. You’re never going to have it perfect. But half of the stuff that I do is far from perfect. But our social media is out every single day with educational pieces mixed in with fun lifestyle pieces. And the big mistake people make is, well, I need it to be perfect or I don’t know, exactly. Bring somebody in, bring in a mortgage professional that you work with and just say, Hey, I heard about the increase in loan limits do want to shoot a quick video with me. It’d be great.
D.J. Paris 11:27
Yeah, and yeah, leverage, leverage the people in your professional network. And you know, you could do you could do this, if I was an agent, this would be something where like, we have Joel on our show every single month, you can have some version of this for social media, with your lending professional. To help you with some of this content, you can also do it with an attorney, you could do it with, you know, a contractor, you could do it with all sorts of people where you don’t have to, just like me, I don’t know about a lot of this stuff Joel does. And I just asked him questions, and he is great. You know, we’re honored that he’s willing to share his information with our audience. So guys, think about that, from a branding perspective is you don’t have to know everything. But you just have to connect with people find people like Joel, who want to who want or Joel himself. I mean, Joel is everywhere. He’s constantly educating people. And, you know, he will tell you, Hey, does he always have the lowest possible rate? Well, of course, not just like a bank does a bank you work out always, or that you put your money and always have the best interest rate, probably not, there’s always a better rate or a cheaper price or, but what what I think people care about more than anything is, is education and just getting things done and knowing that I’ve got somebody who knows what they’re doing. And so you know, Joel, talk a little bit about your team, because your team has grown substantially. And we never really talked about you and your business, because you’re too humble too. But I really I want to, I want to sort of just make sure everybody knows how how large you guys have become because it is really truly impressive. And I just want our audience to get a sense of because our audience really likes you. And I just want them to know what’s going on. And you’ve you’ve added a lot of new team members.
Joel Schaub 13:05
Well, the team is really great. But it literally all still stems from the job brand. So I the big fallacy is everyone thinks that since I’m closing 20 or $30 million every month that I must have a lot of loan officers underneath me getting business and that it all rolls up to me. And that’s simply not the case, I literally am speaking to almost every single one of the clients, I have a processing staff that’s second to none, that allows us to get deals done in under 10 days. So agents can be benefited by having one of our pre approval letters because in our market at least and you know, it happens to be Chicago where we’re at. agents on the listing side know that a letter from us means it’s as almost as good as cash because I don’t put my name on the letter, unless we’ve actually verified all the documents up front. Because it’s really easy just to get a bank to give you a letter, but is it really worth the paper it’s written on. So the education piece is helping agents know that when the Joel team takes on a file, that I do have 17 staff members from start to finish that can get deals done in a way that most banks just can’t do. But that’s not the point. It’s not about me, I want to give you guys one more thing, okay. I want to talk about the different downpayment requirements so that you know what it takes to do a primary residence, a second home, an investment property, etc. Do you think that would be educational for those that are listening
D.J. Paris 14:37
100% And is that for for right now or for 2022?
Joel Schaub 14:41
So right now, the conforming loan limit DJ, I’m glad you asked went up for 2022. But our company as well as most of the big lenders out there, have already adopted it. So if you’re calling today to write a loan, that new loan limit in our eyes is already set because by the time I’m we close. And we sell and securitize it to Fannie Mae and Freddie Mac, it will be 2022. So for the purpose of this conversation, we’re using six, it’s already in place, okay? $625,000. For a conforming loan limit, if you’re buying a primary residence, you can put down 5%. So that means you could go all the way up to 657, or $658,000 for a purchase price. And just put down 5%, which is about 33,000 bucks. Amazing. And not that $33,000 isn’t a small amount of money. That’s a very sizable downpayment. But before for a jumbo loan, in that case, you’d be hard pressed to get the rates that you would get unless you had 10 or 20%. Down, okay? Second homes, if you’re buying a home, that’s just going to be for your purposes that you’re not going to live in, don’t have the bank tell you, you need to have 20% down, because the real guidelines for Fannie Mae and Freddie Mac are 10% for a second home. Let’s say you go buy a home in Florida, California, up in Michigan, or Wisconsin, wherever it would be a true second home for you. That’s not a vacation rental sort of situation, sort
D.J. Paris 16:18
of not an investment property where you’re renting out units, this would be just to live in, got
Joel Schaub 16:23
it, yeah, it’d be a second home, it’d be a true second home for you to get away to, you don’t need 20% down, you could still get rates in the low threes with just 10% down investment properties, there’s a fallacy that you need 20% down, but you only need 20% down on investment properties when you’re buying multifamily. So if you’re buying a single family home, you can finance up to 85% of an on a conventional mortgage. If you’re buying a two to four unit building that you don’t live in, that’s when you need to step it up to 20 and 25%. Down. So basic things, okay, here’s the big opportunity. If you’re buying a home for a son or daughter who’s in an undergraduate program, or a secondary degree, you could buy that home with 5% down. So let me repeat that this is an opportunity for you guys to go out and educate buyers that you could buy technically an investment property, right, instead of paying
D.J. Paris 17:19
anyone who’s listening any one of your clients who has children in college, this is Hey, and I know where I went to school, I didn’t know of one person whose father did this. And in fact, I was in a relationship with somebody after college, whose whose father did this as well. So I think we all know somebody whose parents did this. And what a great opportunity to educate. I’m sorry, Joe, go right ahead.
Joel Schaub 17:44
Well, you’ve nailed it here in Chicago, you know how much it costs for dorms at those schools. And so the idea here is that condos and that neighborhoods around college that are expensive to okay. But if you can buy a property with 5% down, that’s a lot better than having to come in and put 20% down because you’re not going to live in it. It’s called The Family opportunity loan. And it allows for Fannie Mae and Freddie Mac, allow you to put a property under contract and get 95% financing, as long as the person living in the property is going to school, and that you qualify without collecting rents. That’s important. You need to be able to afford the payments and most of the borrowers is a big niche for me with agents here in my market, to educate them on this specific program.
D.J. Paris 18:35
Yeah, it’s a great opportunity. And again, it’s something that most parents as they’re sending their children off to school, you know, maybe freshman year they live in a dorm or they’re required to but once they get beyond that freshman year, most schools say hey, live wherever you want, and you know, you’re either paying rent to someone else, or you can purchase something that might you know, increase in value or just you know, give you some tax benefit for your for you know, your investment. But yeah, I think that’s a that’s great to know, again, everyone listening, think about how you can introduce this. Another great video opportunity right now. Oh, hey, everyone’s back in school. Let’s talk about something you probably haven’t thought about. And that’s, that’s a good another great one.
Joel Schaub 19:18
I had one last year where a son and daughter they were both going to undergrad together. They literally live together and they rented out the other two rooms. So the parents were actually literally paying for this property in the children didn’t have to pay any dorm fees. And now they have an asset that’s going to go up in value. Okay, so that’s the family opportunity loan for parents buying for children. That the big caveat which we’re seeing a lot more of DJ before I go is children buying for an elderly parent. Okay, the exact same program you can put 5% down and we literally treat this as another primary residence and this is different than a second home or an end estimate property, you technically it’s true, you can buy a second primary residence as long as you’re putting a mother or father in who could not otherwise afford the payment. And a lot of people are doing this because they want childcare a lot closer to home.
D.J. Paris 20:16
Wow, that’s really interesting. So you have, and that boy, gosh, that is so interesting. I’m just thinking about people in my own life, who I want to tell this to who, you know, support their their parents through their living situation and trying to figure out, you know, where to place the parent at this point, this is a great opportunity to have, you know, put them in in an asset that they quote that that you qualify for, and that you get some some tax benefit. And some, you know, obviously, all the benefits of homeownership, I had no idea you could buy a secondary property as a primary for an elderly parent, you get
Joel Schaub 20:57
the same rates as a primary residence, you only need to put down 5%, you could put down more if you want. But the big, big benefit here is that a lot of people are already paying for housing either for their children or for their parents, okay, they’re paying rent someplace. The idea is, I can afford that payment. But I don’t want to go buy a place for 400,000 and put down 80 or 100. Grand, right, but I could buy a place DJ for $400,000 and put down 20 grand and cover the payments. This is the opportunity. This is what you can go out and effectively advertise it as we have the ability to do an investment property with 5% down, because that’s really what it is you’re investing in yourself, but it’s not investment in terms of collecting rents. So it’s a really great opportunity. If anybody has questions on this, just email me, Joel app rate.com, you’ll be surprised that you actually get a real reply from me test me. I do it a lot.
D.J. Paris 21:57
Yeah, it is amazing Joel with his team. And he has a large team. But ultimately, he’s still the guy who responds to just about everything. And it’s incredible. But again, I just love this idea of educating customers and your clients. Because we all know of people that do first time homebuyer seminars and webinars, and those are great. But certainly they are they have been done, they are being done. There’s lots of agents doing them. I don’t know of any agent that’s having the conversation about where to place family members, kids in college, or elderly parents, this is a really a huge way to separate yourself from the pack, give your your clients some additional value. And boy, Joel, that you just gave us, you gave us so much value on this show by providing this, I hope everyone’s you know, wheels are spinning with opportunity here. So Joel, I will also want to tell everyone, if you do not have a relationship with a lending or with a loan officer, we would always encourage you to reach out to Joel’s team, truly an amazing team. Joel himself is is incredible. Obviously, he’s been on our show for years now and provides this kind of value. This is exactly who he is outside of this show as well. I’ve used him personally with my own loan. And he’s exactly the same way. He’s all about education. And he also he and his team will partner with agents to help them grow their business. So if there are any agents out there that are looking to work, and by the way, we should mention that guaranteed rate is licensed in all 50 states. So Joel and I are here locally in Chicago, but guaranteed rate can assist all over the place. So if there’s any agents out there listeners who do want to connect with you, what is the best way they should reach out and you mentioned your your, let’s give your your email and phone one more time.
Joel Schaub 23:50
Well, they have the email, but the best thing to do is literally pick up the phone and you can call just like the billboard say just call Joel You can 773-654-2049 is the direct line. And we answer Friday, Saturdays all around the weekends, nights evenings. And for buyers that come over as a referral source. I do give a $1,500 commission credit right on the Closing Disclosure. So I’ve been able to give back last year over $200,000 of commissions to help buyers just get over the edge. And what we realized is we can’t always control rates, but we can absolutely as professionals control the costs and the fees. So I try to help out on each of those transactions. And we’re happy to partner with you guys and we’re happy to be on the show. Because this is what you’ve done for so long and you have multiple guests and you have sponsors and you guys continue to do it in a really great way.
D.J. Paris 24:52
Speaking of sponsors very quickly before we go I almost forgot to talk about our one of our sponsors, which is follow up boss So real quickly. Let’s after after I’ve been interviewed now I’ve interviewed rather over 300 Top realtors in the country and the most common response to Hey, what CRM do you guys use is follow up boss, and so we’re so honored to have them as one of our sponsors. Let’s face it. Following up is the key to taking your business to the next level. Follow up boss will help you drive more leads in less time and with less effort, don’t take my word for it. Robert slack, who runs the number one team in the United States uses follow up boss and he’s built a one and a half billion dollar business. Within six years. Follow up boss integrates with over 250 different systems so you can keep your current lead sources. Also, they have seven day a week support so you’ll get the help that you need and get this follow up boss is so sure that you’re going to love their CRM for a limited time they’re offering keeping it real listeners a 30 day free trial. Now that’s twice as much time as they give everyone else. And oh yeah, no credit card required, but only if you use this special link. So visit, follow up boss.com forward slash real. Once again, that’s follow up boss.com forward slash real for your free 30 day trial. Follow up like a boss with a follow up boss. Joel, thank you so much. We love guaranteed rate. We love you, you come on every month. You’re just amazing. And every one of our listeners, I want you to reach out to Joel if you don’t have a great relationship with a loan officer or you just want to see what other loan officers can do to help you grow your business. Reach out to Joel give him a phone call shoot him an email. He and his team are incredible I use I’ve used them I’ve referred many friends and everybody loves Joel. So just call Joel. And please send this show to every other realtor that you know that isn’t already a listener of ours, or at least just one person that could benefit from all this great information that Joel shared, send them a link to our website, which is keeping it real pod.com You can actually scroll all the way down and you can listen to all the Joel episodes, we have them categorized out so you can actually see them there. Or just have them pull up a podcast app search for keeping it real and hit that subscribe button. Joel thanks once again, for being on the show. On behalf of our listeners. We’re so grateful to have you. And on behalf of Joel and myself. We want to thank the listeners and for continuing to be a part of the show and support us and our sponsors. So Joel, thanks so much. We’ll see you next time.
Joel Schaub 27:26
Thanks so much for having me on DJ we covered a lot today. It was really great. And remember, educate and elevate. This is what we’re doing. If we’re agents out there, go spread the word. continue to grow, and I’ll see you next month.
D.J. Paris 27:39
Awesome. Thank you Joe.
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