Episode 9: Market update and why it's a good time to buy

On today's episode we discuss todays market and interest rates.  We discuss why it's a great time for buyers to purchase even in a high rate market.  We discuss strategies  to help buyers overcome higher mortgage payments dues to higher rates.

Jeff Cunningham is a Realtor (license # 301547) with United Realty Group (Broker license C34827) serving the Triad NC area.

Jeff can be reached at

Email -  jeff.cunninghamrealtor@gmail.com,

website, jeffcunningham.mysalecore.com,

Facebook,- https://www.facebook.com/jeffcunninghambroker/

Gina Milloway is the Mortgage Loan originator NMLS #1676070 & CEO of Triad Mortgage LLC, NMLS # 2385260,   

Gina can be reached at,

Email:  gmilloway@traidmortgagellc.com

Web: https:  https://www.ginamillowayloans.com/

Facebook - https://www.facebook.com/mortgageswithgina/

Office -336-290-1891

NMLS Consumer Access:  https://nmlsconsumeraccess.org/

Privacy Policy:  https://www.ginamillowayloans.com/privacy-policy

Triad Mortgage is an equal housing lender 
All loans are subject to credit approval. This is not a commitment to lend. Guidelines subject to change without prior notice. 

Transcript

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Hello and welcome to the podcast. Let's get moving with Jeff and Gina. This is Gina Millway, your local mortgage advisor. And this is, I am Jeff Cunningham. I am your local real estate agent here, uh, in the triad of North Carolina. And we are covering Greensboro, uh, Winston Salem. We reach over as far as Burlington and we go down as far as even Silo City in Asbo. Um, but anyways, welcome, welcome, welcome. Welcome to the show. All right. Today we have, um, we're gonna kind of do a, like a little market update today and talk about is it a seller's market? Is it a buyer's market? What's going on with these interest rates and what can buyers do about that? So water cooler talk, water cooler, quad. Right? Right. What do we talk about behind the scenes? What does that look like? You know, to kind of help everybody ease, ease their fears around, uh, you know, the market and what's going on. There's a lot of negative talk. And, you know, if you're listening to this, today is November 2nd, so that we're going on current information and. With it being it's Wednesday, so it's fed's, Fed's meeting Wednesday today, so the minutes will come out today, about two 30, which we all know what that means. Oh, we're all waiting for some great news. We're all waiting for it. Yes, we're all waiting for it. And what are we expecting? Well, um, you know, it's, it's interesting, it's, you know, if I had a crystal ball, I could make a lot of money in this, in this market, but I don't, So what is being expected is, A lot of it is gonna depend on the inflation report and then how aggressive the Fed is going to be with continuing to attack inflation. With rising interest rates. With rising interest rates. Yes. So, you know, every. You know, every quarter when they come out for their, with their meetings, their, or their minutes, they're, they're telling us what they're gonna do to help find inflation, to get that back under control, which is, is needed. You know, thats, it's, you know, a, a valued, um, effort that needs to be done. However, how they're going about it, I feel like is maybe a little aggressive, and that is really what's driving the mortgage interest rates, right. So you know, the talk is that they've really being over aggressive with it. Um, they should raise the rates and let's, let's let things happen and play out before you instantly run into raising the rates again. And they're not doing that. They're being very, very aggressive with raising the rates. And again, let, let's go back and clarify. The Fed doesn't raise mortgage interest rates. They raise. The dollar amount that funds can be purchased, which raises mortgage rates because it costs more to get that money. Kind of a two step process. Right. Exactly. Now a lot of things have already been priced into the market. You know, we, we price ahead of time because it takes a little while to get that loan sold and off to where it's gonna be packaged and, and sold on the secondary market and off to its investors. So things are priced ahead of time. So for today's. what we're expecting is we're expecting a 50 basis point hike today, so we're expecting them to come off of that 75 basis points that they've been hitting, hitting us with the last few meetings and, and come back to the 50 mm-hmm. which is a good, it's a good indication that they're going to ease off of, of the hikes, and that's the thought that they're gonna ease off of it and stop the hikes. Um, over the next year. Hopefully it, it's sooner than. But a lot of it just really depends on the inflation data. Um, inflation is, I think is a little bit better. It's not a lot better, but is a little better. Mm-hmm. uh, they're also looking at, you know, jobless claims and the unemployment rate. They want the unemployment rate to move up to go up. Mm-hmm. it's too low. I think we're sitting this week at about 3.6 and they want it to be over four. So the Feds, the Fed wants things to be unfortunately a little painful. Mm. But there are other things, but that makes sense. But yes, it doesn't make sense. But that's how they, that's the tool that they have to fight inflation. Mm-hmm. So what's gonna happen with rates, you know, today moving forward over the next few months really depends on how aggressive, It's not that 50 basis point hike that's gonna move them. I mean, that moves them. that may already be built in to the rate. Mm-hmm. it's going to be how aggressive their comments are towards fighting inflation and what they're gonna do. Mm-hmm. So if they tell us they're still moving, headstrong rates will, you know, continue to rise. Mm-hmm. most likely, if they tell us that they're seeing some indication or they're liking what's happening, then rates hopefully will stable, stabilize. They're probably not gonna move lower. Very quickly, but stabilize, if they can just stabilize, that would be great. Well, yes. That, that would, that would be fantastic because yeah, we're, you know, we, we are hearing some positive impacts here on the economy front. Um, which again, it's still counterintuitive to, to. Um, what we were talking about before we, before we hit the record button, you know, uh, it, it, a lot of the stuff just here doesn't seem to be making sense based on the fact that we're dealing with, you know, historical events. The pandemic mm-hmm. you know, things that, uh, that have just occurred in the last year, maybe even six months, or, you know, six months to the last two years. Um, you know, things have changed where, where the economy's just not the same as it was and. 1998, you know, 1981. Mm-hmm. And these are the references that we keep hearing. We're going back to, you know, these periods in time. And again, those, those are apples in orange discussions. Mm-hmm. in my opinion. You know, again, just reason being, we have a lot more people than we did in 1981, so it's hard to compare. You know, the need for the inflation, um, repair, uh, guidelines or, or, or methods that we're putting in place right now from the Fed, um, to, to counteract things that, uh, again, in 2022, you know, are a little bit different. Um, You know, than they were like, you know, like I said, 30, 40 years ago. Right. But it's still, you know, again, difficult to, uh, let's say ingest or, or deal with on, on the consumer or their standard, uh, you know, being a, a, a, how do you wanna say, uh, a resident here in mm-hmm. in grand old usa. Um, because yeah, our prices of everything just seem to be, you know, going up. Um, And like I said, even though we're having our GDP numbers that are improving a little bit, um, as we mentioned, unemployment is kind of hanging right where it should be. Um, yet we're, we're looking for indicators that are, you know, gonna tell us, uh, a little bit of a different story, um, for us to act in a different manner. Is, is that accurate? Mm-hmm. Yeah, Ab a absolutely. And, and there are so many things that are going on right now. Are opposing each other, I mean mm-hmm. the, the war on, on Ukraine. And I haven't watched, I'm trying not to watch the news. I'm not sure what's going on. There's true. Yeah. That, you know, it, it's still going on. There's a, it, it's gone. The difference for me, or where I see it right now is the difference between. We're not just dealing with the US economy. Mm-hmm. it's, it's a global economy right now. Mm-hmm. we're having a global effect. Um, everything that's happened with the pandemic, the energy crisis, the, the war on Ukraine, um, With everything with Russia, that's all trickling down and affecting everybody right now. Mm-hmm. Mm-hmm. unfortunately. Right. So, not only is it we're dealing with our economy but we're having to deal with the, the global economy and how it's affecting us, and, you know, and, and the dollar is still strong, um, from what my, my understanding and what I'm hearing and that's affecting. Other countries. Mm-hmm. because they need our dollar to not be as strong for them to recover. So. Correct. It's really a balancing act, and I think when we get into all this, I think the takeaway message for me would be, come back local, come back to your local market. Perfect. Mm-hmm. and, and, and, and pay it. Focus on that. You know, a lot of times when we watch the news, we're seeing headlines from. Uh, these big metropolitan cities that kind of have their own their own economy and do their own things. Yes. You know, you know, LA may have a housing bubble and it might, and it might have a housing crash and a burst, but that doesn't mean we're going to have one in, in Greensboro, we have a really strong housing market here. A lot of people moving here, a lot of people wanna buy here. A lot of people wanna purchase here. Mm-hmm. We don't see the appreciation and the rise in housing that those places do. Yes. So I think paying attention to what's going on in your local market and kind of not shield yourself, but be aware that that's not your. Market your micro economy. Absolutely. Absolutely. And, and, and, and, and that gets us back to the old adage, you know, uh, stuff that, uh, you know, my parents would tell me and, and, and I tell my kids, you know, we gotta control what we can control. Um, right. There are definitely factors that are outside of our control that, uh, that are impacting what we do every single day. Um, but you know, it's best if we try and focus on what it is that we can. Um, we spoke last episode, you know, uh, for folks that, um, are preparing to buy, you know, stay vigilant, you know, stay in control of what it is. Mm-hmm. you have control over your finances, your credit, um, you know, all of those, all of those pertinent, um, Things, um, that we need to again, just focus on, on a day to day basis, and most especially on what we're talking about. You know, again, um, staying in, um, ready mm-hmm. and be ready to purchase. Yeah. Um, when, when time comes about. Um, Which is what we really, really, really need to focus on. And again, that's gonna lead us into our next topic, which is, you know, interest rates. Mm-hmm. Um, so again, as a consumer, I don't necessarily have the control over an interest rate, but that will, uh, direct me on what I can afford and what I can afford will again, potentially move me again in my. If I'm looking at buying a$300,000 house at a 5% interest rate, well that might work down to a$285,000 home. Mm-hmm. and a 7% interest rate and vice versa. Um, so again, great, uh, great opportunity and great time too. Visit your local realtor, your local broker, um, you know, and again, discuss what is going on in your local. Yeah, absolutely. And you know, the thing that's going on in the local markets is, is the rents, you know? Yeah. Insane. And it just continues, it seems like to, to rise. And we don't have enough rental, you know, units in the area for people who need to rent. And, you know, that's when we come back to, you know, buying, Is it, is it really a good option? And I think right now, yes, interest rates are. and that may keep some people from being able to buy. Mm-hmm. Let's, let's be honest, it may, if you are pushing that budget, you know, to, to get into a home, this may not be your market. Mm-hmm. you may have to wait, but if you're not, you know, if you're not one of those people who are, are pushing the budget to get into a home, it's still a great time to. if you're renting, you're paying somebody else's mortgage. I know you guys have heard that you're paying a hundred percent interest rate if you're renting. So, Yeah. Um, you know, the pain comes into, I think for buyers is, is where that puts your mortgage. You know, we are coming off a market where interest rates were in the twos and the threes. That's a big difference from where we are right now. Where rates being in, you know, the, the seven, so to speak. Mm-hmm. Mm. Um, you know, give or take. So it's a huge difference. It's a huge difference in your monthly payment. Mm-hmm. But there are a lot of advantages to being a buyer right now in this market. Mm-hmm. a lot of advantages now. Absolutely. Housing prices have, I would say that it's slowed in appreciation. Would you agree? We're not seeing them rise quite as sharp. Correct, Correct. We are, we are seeing some corrections and, and I don't wanna, uh, stand or jump on that standard correction in the market, you know, crashing, blah, blah, blah, blah, blah. No, we're not seeing that. Uh, what I am seeing is the homes that are priced appropriately, and the homes that are priced correctly, again, key word, correct correction. Yeah. If they are being, or if they're being put on the market priced appropriately mm-hmm. then we are not seeing any real slow down in the market ranges that we standard, that we look at standard wise. Um, meaning, you know, a lot of the homes in in Greensboro for a three or four bedroom home are now priced anywhere from the, say, one 50 up to three. Um, and these are, these are the standard neighborhood homes. Mm-hmm. um, you know, this isn't downtown Greensboro per se. This isn't downtown Winston-Salem per se. Uh, but this is your, you know, again, standard three bedroom, two bath, quarter acre home. Um, you know, and we're seeing folks out there right now. Um, that are dealing, um, with, with, again, ideal markets, they're dealing with less competition. Um, meaning yes, there are less buyers out there. Um, and, and, and the reason being, you know, a couple of reasons. Number one is yeah, the interest rates may have gone up where that pushed them out of that price range for a moment, but, We do have other options that are available out there to keep us in play. Um, and we'll talk a little bit more about that as far as what we see for new products that are out there today. Um, but you know, again, what we're seeing as far as the seller's market versus buyer's market, again, buyers are. getting a little more control here. Mm-hmm. because sellers are trying to hold onto that purchase price that they want. Okay. And, and in doing so, sellers are gonna have to deal with a little more concessions. Mm-hmm. and preparation. Now again, we've been talking a lot of preparation on the buyer's side in the last couple of weeks. Well, sellers also now need to prepare a little bit. Because just putting a sign in front of your house isn't gonna do the job as it did six months ago. Right, exactly. Look, if you sold your house in the last two years during Covid, if you were one of those lucky sellers who, who got that, good congratulations, Celebrate, take your prize and move on. We are not there anymore. We are not in that market. So, you know, buyers are going to have a little. advantage here. You're not, you're not having to compete with 20, 25 contracts Yep. On a price. Yep. I, I haven't seen any offers. I'm not, and maybe you're different, you're more on that side of it, but I'm not seeing contracts that are over, you know, 15, 25,$30,000. Right. Correct. You know, asking price. I'm seeing our deposits coming down to a more reasonable, which is a big deal for me. The deposit coming down is, It's something that I feel like we really, really, really need right now. Because, you know, if you have somebody putting down a$10,000 deposit on a home mm-hmm. and there's something wrong with that home. Yeah. And they can't, they really can't buy the home for, for whatever reason. It may be. They don't, they can't afford to do the repairs on it. Correct. They've lost that money and that may be all the money they have. Mm-hmm. that may be all the money that they've. To buy that home. So I feel like that honestly, that was really needed. Our, our due diligence deposits coming down in North Carolina is a huge deal for me. Yes. I feel like a huge advantage for our buyers. So sellers, you know, we're, we're not in covid market anymore. Um, you're gonna have to negotiate a little bit, um, give some seller concessions. And, and I think that's, we're gonna talk about how those seller concessions can actually help. Buyers have a lower, theoretically, a lower interest rate. Mm-hmm. um, or mortgage based on a lower interest rate, so they're not having to deal with that higher interest rate for a short period of time. Absolutely. Absolutely. Yeah. Well, um, so, so again, we we always stay positive here on our show and, and we try to do that. Um, and, and, and we also want to be, you know, again, the voice of reason and trust. Um, so if there are things out there, uh, you know, again, we're, we're here to again, make sure that folks are aware, um mm-hmm. this in the Gloom and Doom radio. Radio show. This isn't a Globe podcast Um, you know, but we wanna make sure that folks, again, are prepared and ready to act when they can, and that they do have the. Uh, products, uh, material, whether it be, uh, again, something to read, something to educate themselves on, uh, whether it be in their local market, whether it be something that's national, we might need to be prepared for, or something like that. Mm-hmm. Um, but regardless, um, you know, we wanna make sure that you guys are talking to your local agents, uh, both your lenders and your real estate agents, get an idea of what's going on, what's coming down the road. You know, again, in. Local environment right there in your, your Greensboro, your triad area mm-hmm. wherever that might be for you. And again, having someone to bounce that information off on or even just ask a simple question, you know? Mm-hmm. Hey, what do you think the interest rates are gonna do next week? Well, again, that's a little bit of a difficult question. We can give you reasons why we think what, you know, what may happen. Um, But again, you know, uh, a lot of that information is outside of our control. But we do have a couple of new programs that have been coming on hot and heavy for the last week, maybe even two weeks, that, um, that we're gonna bring to your attention as well. This should help out both the, uh, buyers, um mm-hmm. Cause again, it gives them a little bit of different avenue. They negotiate as well as on the opposite side of things, the sellers with this new product will be able to keep their home prices, uh, their sell price up a little bit. But again, you are also gonna have to deal with some of the, uh, concessions that we had mentioned a few times earlier. Um, Right. And, and with that, Gina, let's, let's just get right into what the, you know, two one and 3 21, um, programs are that are out there that, that are really exciting. Again, keeps people in the market, keeps people on both sides, sellers and buyers. Um, you know, again, talking right at the. Yeah, absolutely. So I'm gonna focus specifically on the, the two one. And there are, I've seen both, both of them out there. There's a 3, 2, 1, and then there's a one as well. So there's a 3, 2, 1, A two, one and a one. There may be others out there, but this, this is what I'm familiar with. Now, the 3, 2, 1, I'm not gonna chat about that one. I feel like, um, you reach a certain point where you have to make a decision is that, you know, is that worth it? It may be more expensive. To not be worth it. So we're kind of looking at, uh, the two one today and what is a two one? A two one. Um, Is this a mortgage rate? Yeah. So a two, one is a, it, it's referred to as a temporary buy down. Mm-hmm. So basically what it's doing is temporarily buying down the rate for a set amount of time. And on a two one it's a two year period. Gotcha. So it's a temporary buy down of the rate. And you know, people have asked, Well, why don't we just pay points and fees and buy the rate down? Well, the difference here is that this is a temporary buy down. Mm-hmm. And so it's, it's a buy down covering a two year period. Yeah. It's a not a buy down covering a 30 year period of your mortgage. Mm-hmm. So on this scenario, the, the difference is, and I'm gonna go into the cost, um, what it would cost you to do this in a minute, but as a comparison, we're gonna talk about getting your rate down to a 5% in this scenario. Mm-hmm. in today's market, if you were to get your rate down to a 5%, Um, on the scenario that I've done, it's based on a$200,000 purchase price. It would cost you about 19 grand. Wow. To buy your debt rate down for 30 years. For 30 years. And you're saying I'm buying down. So if I wanted to buy down on that percentage rate, So you're saying going from like a, a seven to a five Right. Cost me. So that's two percentage points. It cost me about$19,000. Upfront. Upfront, paid. Okay. Yeah. Yeah. So let's talk about how. So basically what this two, one buy down is doing is it's giving buyers an opportunity or an option for two years to have a lower mortgage payment as if their loan were based on a lower interest rate. Mm-hmm. So the scenario that we're gonna look at all this is based on, um, a$200,000 purchase. 10% down with$180,000 loan amount. And I, um, this can be used. Let me just back up. This can be used on several products. It can be used on conventional, can be used on FHA and VA cannot be used on U S D A. Oh, so this is a conventional product. It's not a non QM product. It's just a, it's a regular Oh loan. Um, it is not an arm. This is not an ARM product. This is a temporary buy down. It is a fixed. Product. Mm-hmm. for those of you that are new to the market adjustable rate, mortgage arm, Yes. Adjustable rate. This, this mortgage It is, It's not adjusting at all. Mm-hmm. There's no adjusting. It's just how the calculation is done. And this is gonna be on a set timeframe. This is gonna be on a set timeframe. So we're talking about the two one. So essentially what this loan is doing is for the. Let me back up and say this is a seller. So how we get here is it's a seller concession. Mm-hmm. And this is where, where you're saying before that sellers are using this as a tool. Yeah. Some sellers are offering this, I think I've even seen it on some listings in the mls, where there sellers are offering this, the two one buy down. And so it has to be paid by seller concessions. The borrower can't pay for it. And so what that means is, like we've all heard about sellers, you know, paying closing costs, um, seller concession, seller pay, closing costs. This is kind of the same thing. So it's a seller pay closing cost. Your contract is written the same, You're just gonna ask for seller paid concessions. Mm-hmm. So what happens is it's a two one. So in the first year, your mortgage payment is going to be based. 2% lower than your base rate. So that's where that two comes in. So let's say your base interest rate is 7%. Just to use round numbers on the two. One. In your first year of your mortgage, your payment is going to feel like it's a 5% interest rate. Mm. Now do I need, excuse me, Do I need to qualify for that as 5% or 7%? 7%. You do have to qualify at the higher rate. Yes. Mm-hmm. you do have to qualify. Okay. Regardless of what's offered. So, even though, and again, uh, speaking from a realtor side of things, so if I offer. You know, this two, one buy down for any buyer that's out there, other than U S D A, uh, at least for these specific programs. Then I need to put that in my, you know, remarks, or at least I'm advertising my property to be sold that way. But I don't necessarily have to buy that way. Um, you know, again, it just because it's being offered as a two, one, you know, again, cash buyers are certainly welcome to come in and again, buyer now might have a little bit more of an opportunity to negotiate. Now that they're using their own fund cash versus, uh, this, uh, this new program, the two one buy downs. Um, and you know, again, we, we, we, we are still in a negotiating table and just gives us a different option, okay? Right. So yeah, so there's lots of different options, you know, as far as the sellers if they come in with a different program. But, so essentially how this has work, so that first year you have your, your 2% below your, your set rate, which is 7%. Mm-hmm. So your mortgage payment is that you are paying, is based on five. Now your loan is still a 7% interest rate, right? But the payment that the, the buyer is paying is based on 5%. Mm-hmm. So how that works is, let's say that your, I'm gonna use, I got some numbers in front of me, but they're odd numbers. I'm gonna use round numbers, so it makes sense. So let's say that, That your mortgage payment is a thousand dollars a month. Mm-hmm. and that 5% interest rate makes your mortgage payment$800 a month. Mm-hmm. there's a$200 difference between the 800 and a thousand. Mm-hmm. we've got$200 difference. Your payment on this program is still actually that thousand dollars. Mm-hmm. But because you have those seller concessions to. to pay your payment to buy down that rate. Mm-hmm. you're actually making your payment at 800 and you're pulling 200 out of your escrow to make the payment. Mm-hmm. so the seller concessions go to escrow and every month the difference between your 7% mortgage payment and your 5% mortgage payment is coming out of escrow. So you don't have to make it. It's being paid every month for you. Fantastic. So again, the seller is not necessarily making a$200 payment for the buyers. Uh, again, on a monthly basis when we get into the closing, uh, that amount of money that's agreed upon mm-hmm. whether it be a two, one or a 3 21 or just a one, um, again, that money. is, is taken outta the closing or off the closing table. Mm-hmm. put into an escrow account. So yes, it is now under, again, it, that money is placed in escrow and, and again, it's not the responsibility of the seller anymore to do anything with that. Right. That is basically a concession and it's, and it's done with at the closing. Right. Yeah. No, the seller is no longer involved once we close, So they're not actually like writing you a check every month. Um, it goes into escrow, goes into a savings account, so to speak, and it's paid every month, just like your taxes and insurance are paid every month. Mm-hmm. So every month the difference between your 5% interest rate and your, your regular or your 5% mortgage and your 7% mortgage is paid out of your escrow. Nice for you, essentially. And that's done. throughout the process. And the same thing happens in year two. So we have the two one buy down, right? So in year two it, it changes to the 1% difference. So if your interest rate, mm-hmm was 7%, now you're making a mortgage payment based on 6%. Got it. And let's say that new mortgage payment is$900 a month, then a thousand dollars comes out to make up the a thousand dollars mortgage payment based on seven. So it, it's a lot of math and it sounds confusing and it's a lot to go through just talking about it without having like charts and graphs and everything. But essentially what's happening is you're having a temporary reduction in your monthly mortgage payment. Mm-hmm. that is being paid outta escrow from those sellers concessions. Yes. Well, hey, what, uh, so what happens after year two, Gina? So the goal of this loan is really, To kind of get people through a couple years and to let interest rates settle and come back down. Now, keep in mind we don't have a crystal ball. We don't know for a fact that they're coming back down, but that is the hope. So one, you need to be okay with the full payment. Mm-hmm. just in case some, you know, you can't refinance or something changes. You need to be okay with that. You still have to qualify on the full payment, on the full 7% interest rate or whatever your interest rate. So you need to be comfortable with that payment. But people going into this type of loan are, for whatever reason, wanting a lower payment for the first couple years and hopes that they can refinance and maybe maintain that payment Sure. For the remainder of that refi. Sure. So that's, that's really what the product is used for. And you know, it could be used for other things too, not just the interest rate. It could be that, you know, maybe some ideas just out of school. And they're going to be moving into a career that's going to pay them more and they'll be able to afford mm-hmm. You know, the, the higher mortgage payment once they go into that job. So there's lots of reasons to use it, but that's kind of the gist of it. Sure, Sure. That's, that's perfect. And, and, and again, that's, that, that just sets up another opportunity again for buyers, Right. Um, you know, again, qualifying, like you said, on the higher rate is, is required. Um, but for the, for, for the, for the duration of that period, whether it be two or three years or one year, you know, again, buyers are able to, uh, enjoy the savings, if you want to call it that. Um, and, and, and, you know, again, maybe bank a little extra. So if you're saving two or$300 a month in year one and then one to$200 a month in year two, you know, again, it's not a bad idea to go ahead and put that money, uh, again, into a savings account or even buy down, I don't wanna say buy down again, even make an additional, uh, principal payment. Yes. Um, again, reducing, reducing your loan amount. Yeah, absolutely. And that would be a smart thing to do is, you know, make up the difference and, and pay that money towards your principal so that way you are reducing, you're, you are reducing your interest rate, that you're paying even more. You're paying off that mortgage and that principal even faster. Mm-hmm. And, you know, if you do refi, the good thing about this loan is that it's an escrow account, so you're not gonna lose that money if you refi, you don't get it back. But it is applied as like a principal reduction. Okay. Um, so principal reduction, if I'm gonna refinance, let's just say in a year from now. Mm-hmm. Um, my interest rate drops from, or I should say the national interest rates, drops, drops from say 7.25 down. 6.25. Mm-hmm. I can refinance. Mm-hmm. with that money again, that's still in escrow. Mm-hmm. reducing my principle, which is gonna again, in essence reduce my loan amount. Yes. Um, and, and, and then I can go ahead and refinance, I don't wanna say fee free, but certainly with some sort of an advantage where I've got some money left over in my escrow account and that can be applied to. Yeah, so it, it, you don't lose the money. So if you refinancing that, that year, the money is, you know, the loan balance or the principal is reduced. So your new loan is gonna be at a lower amount based on what was left in the escrow and what you've paid off to it so far. So, yeah, that's pretty cool. So, I mean, yeah, so there's some ways to use it. It's not part, is it perfect for everybody to know? Um, and the downside is going to be, this is a seller concession. Mm-hmm. And it comes out, Now it's gonna be different based on the loan amount, but it's about 2% of the purchase price. Mm-hmm. So 2% of the purchase price. Let's say somebody needed seller concessions to help with closing costs already. Mm-hmm. Before they thought about doing this program mm-hmm. Well, we're limited by our programs on how much seller concession we can actually get. Mm-hmm. So on a conventional loan and a conventional loan depends on how much you have to put down or how much seller concessions you can get. But, uh, it starts around 3%. So, Let's say that you needed those seller concessions to help you pay your closing cost. Mm-hmm. Well, if you do the 2 0 1 buy down and you get 2% in seller concessions, that only leaves you 1% to go towards closing costs, which is about two grand, which might not be enough. Mm-hmm. so. There, there are some things to take in consideration. If you were planning on getting those seller concessions or those seller paid closing costs already. Mm-hmm. then this might not be the best option for you unless you want to come out of pocket for your closing cost. Um, Gotcha. As it is because it, it, it is taking that money essentially. Okay. Gotcha. So, so, uh, and again, I know this is relatively new, uh, to both of us. Um, I have not processed, uh, one of these loans. But in doing so, um, again, the math required, is this something that, um, uh, that you as a broker now would be mm-hmm. more, uh, say, involved with as far as part of the negotiations? Yeah. Yeah, absolutely. So, I mean, it's not a lot different for the realtor side of it. Mm-hmm. when you're, when you're making an offer on a contract, You're just gonna ask for those seller concessions. Mm-hmm. And you know, you know, if you call me up and say, Hey, we're looking at this house, we're looking at a purchase price of 200,000. What, what do we need to ask for? We can give you that number. Mm-hmm. now it's not gonna be a hundred percent exact because we gotta lock in that loan for it to be exact, so. Mm-hmm. the interest. It's based off of the interest. Where you lock it out, where your interest rate is going to be. But we can get really, really close, you know, and if we go over, so we could maybe ask for two and a half or that full 3% in seller our concessions, and then we can use, you know, the 2% for the buy down and then 1% for other closing costs. So it's not gonna go to waste. Um, Sure. But as far as you're concerned in making an offer, you really just have to ask for those seller concessions on the contact. Right, And as we've mentioned earlier, we are seeing those being mentioned. Mm-hmm. in the mls, or at least in the advertising, which is something that's being offered from the buyer side. I'm sorry, Right. From the Stellar's side, which again is giving you the direct indication that Okay, 2%, you know, of again, of the, uh, the purchase price. Could be or will be, you know, again, based on math, you know, go back into those, uh, sellers concessions, uh, once we go ahead and put the, uh, contract together. Yeah, absolutely. Cool. And you know, and it goes back to, you know, just being aware of your options. And like I said earlier, buying down the rate on this scenario would cost somebody, you know, close to 19 grand. Yeah. And that's money that's not going anywhere. You're, that's a fee. You're paying the, the lender to get that rate, it's a fee. You're not getting any benefit from that other than just lowering your interest rate. That's a closing cost. Yes. Whereas this, you can do this as a seller paid, and it's about 4,200 on this scenario that I, that I plugged in and seller patient sessions, which is not unreasonable. No, no. And that's, so that's 4,200 based on 200,000. So let's just jump that up. So, Basically double that rate if we're going to 400,000, correct? Yeah, I mean, I can flip that in real quick. So yeah, I'll do a 400. So, so I mean, if, if we're doing just, you know, again, simple math, I mean, you know, instead of going with a$19,000, you know, closing cost, buy down, you know, you're looking at something less than half. Again, if you're going up to that$400,000 mark, guessing 84, 80$500 a mo. Uh, you know, again, as far as the total concession. Yeah. So that would end, that would put you at, um, about, yeah, about 83 90 in seller pays about, and it's still about at that two, 2.098%. So, you know, you could ask for two, two and a half percent, or you could go ahead and ask for, you know, 3%, four, you could ask for whatever. Yeah. Um, but we just need to know, I need to know going into the loan setup. I, I need to know be while before, once you go under contract. I need to know from the buyer if that they wanna use this program cuz they can use the seller concessions for other things. Sure. They don't have to use it for this. Sure. But when I structure the loan, I need to know how to structure it because it needs to go out on the loan estimate and it needs to be structured around that Yes. And, and, and, and I would imagine that this is also gonna involve realtor discussions, uh, both on the buyers and the seller side. Um, for the reason being, um, if, if, if a seller is advertising that they're, you know, again, uh, willing to, you know, use the two, one. Program for their sell price, then, you know, again, that gives us generally a number to start with as far as what we can negotiate with. Mm-hmm. Um, and, you know, and again, if, if, if, depending on what the buyer's needs are, um, you know, whether or not they need additional closing cost assistance. Right. Um, and on the other side of things, um, you know, for the sellers, how motivated are they? Right. Um, and, and whether or not they're talking about again, moving, um, or selling their property. On a need to basis versus again, selling their property on, uh, on a want to basis to go ahead and, uh, you know, again, get as much equity outta the home as they can. Again, that's the name of the game for buying property and selling property. Um, but again, folks do have some needs. Uh, it might just be that there is a transfer in place for someone's employment and you know, again, someone. Capitalizing on all of the money left on the table, of course, would be the best scenario. But again, at least we have options and, and, and power to negotiate on both sides. Yeah, so I mean, there are options out there and I think the whole point, you know, of, of us doing this and going through it in the podcast is, is to keep buyers, you know, keep you in a positive mindset. Mm-hmm. There are options out there to help ease the pain or the higher interest rates. Um, sure. It's a great time to negotiate. Yep. I mean, you know, if you could, if you can buy a house and get, you know, 10, 15 grand off of the list price mm-hmm. well, you can change your interest rate as the market fluctuate, you can change your interest rate. You can't change what you paid for the. Correct. You can't absolutely correct. Paid for it. Mm-hmm. and people who bought during covid and paid 25,$30,000 over, they can't change that. That's the purchase price. That's they're in it, they're in it for that amount. Yep. Yep. You know, unless they sell the house and you can't change what you bought it for, but you can change your interest rate. You, you most certainly can absolutely go back into that, uh, that statement we made earlier. You know, we can control what we can control and those that we can't control, again, we gotta lead by the. Yeah, absolutely. You know, in buying a house, it protects you from the, the, in. It, it, it protects you from the inflation of the rental market. Mm-hmm. it protects you from dealing with a crazy landlord. Yeah. you know, you know, you're not paying a hundred percent interest rate in rent and Right. And there are, there's some negotiating power right now and buying so, it is not a bad time to purchase a home. It's just No, no, no, no, no. And again, you know, again, just to reiterate here, what, what we are seeing here in our, in our market, um, you know, again, property values are still on the, on the rise. We're not seeing the, you know, the, the, the, the weekly bumps that we were. But, you know, again, we're still seeing that, uh, you know, we're, we're increasing now. Uh, again, sales, uh, purchase price, um, on a regular basis here. Um, and they're holding strong. And in our market, you know, we do have industry that's still moving in. We've got plenty of building that's still going on. Um, and, and we are still in somewhat of a housing shortage based on our inventory levels, right. Again, I think we spoke earlier at the beginning of the show. Uh, we're at 1.8. We're a little less, I'm sorry, a little more than, uh, one and a half months of inventory, which standard inventory, uh, nationally, um, as well as regionally should be somewhere between three and six months. Right's, A balance. What, what they consider a balance. Absolutely. At least Vermont. Yeah. Yeah. So, so we are still short and then until that inventory actually catches up, which, you know, uh, uh, the buyers, I'm sorry, the builders, um, are, you know, they have their own concerns out there with, you know, still standard supply chain issues that are going on. Um, We mentioned earlier the things that are outside of our control, um, uh, the world economy, um, and, and how things are progressing with with the war and, and the uk. And, and again, things that really just don't, uh, don't impact our day to day lives. Um, you know, eventually do work their way into, uh, you know, um, Our wallets, which, which is Yeah, it's our wallets. A little bit of, a little bit of a, you know, troubling fact. But, but, uh, again, welcome to the global economy, right, Yeah, exactly. So keep it, keep it focused. Keep it lo local. You guys, keep it positive. If you have questions about what you can do in this market or what you can't do, should you buy, should you sell, um, should you look at a mortgage? Should, should you refinance? I do have refinances that are still happening for one reason or another. You know, it, it's not the, it's not the end of the world. There's still a lot of positive things going on, and let's focus on our area and mm-hmm. um, the good things that are going on here, and if you have any questions about any of those, you know, always feel free to reach out and, you know, ask somebody who can guide you in the right direction. Absolutely. Absolutely. Of course, we're always here. Uh, and you can get our contact information down below. And, um, and, and I think everything's updated there as well, Gina. Yes. And, um, and yeah, uh, again, folks, um, It is always a good time to investigate and into and buy property. Um, again, like Gina was saying, you know, um, we, we, we can't cry over spilled milk or like I said, the opportunities that we had actually missed out on. Um, everybody would love a 3% interest rate. Um, But those days aren't coming back anytime soon. Um, so what we need to do is, uh, is make the best of what we have. And, um, and again, dealing with your local, uh, mortgage professionals and dealing with your local agents, uh, again, is gonna be the best guide to get you the best deal, um, in the near future right now. Yeah, absolutely. All right, guys, well, I think that about sums it up. Are we good? I think so, I, I, I don't think I've got anything else to add here. You know, it, other than the fact there's gonna be, what, 68, 69 degrees here, um, being November, um, here in the triad, which, uh, you know, I love giving everybody the, the, the standard weather update. But, uh, man, I love fall here in North Carolina. Really, really do It is a great day to get outside. You guys, go and get outside. Enjoy the weather in North Carolina and we'll see you on the next. Talk soon. All right, thanks.