Question 1

DOWN PAYMENT: How much do I need?

Accepted Answer

Hello hello! Josh Thomas mortgage broker here in Utah. How are you today? Hey, I wanted to go ahead and talk to you about down payments today when you're purchasing a home.

There are a lot of misconceptions out there. In fact, 87% of those that don't own a home have the wrong idea, grossly wrong idea, about how much down payment is required!!! According to the National Association of Realtors, a study they did in 2017, 87% of those polled (those that don't own a home) thought that they had to have at least a 10% down payment and 40% of them thought that they had to have 20%+ down!! That is just wrong! It's just not true! That same year, according to Freddie Mac, the average down payment across the board was only 6% (of the purchase price).

What's more is according to Freddie Mac and Fannie Mae who are two large agencies that purchased loans from all the banks and credit unions out there including from me, Fannie Mae and Freddie Mac have on their websites affordable housing loans called Home Ready and Home Possible as well as some first-time home buyer loans that only require 3% down for those eligible! FHA as listed on hud.gov, and they’re another large agency buying loans from banks and credit unions and brokers like me, FHA actually offers as little as 3.5% down. And for those eligible for USDA loans and VA loans (two more agencies that buy loans from the banks and credit unions) those two agencies offer to financing equal to the full amount of the purchase price, assuming the appraisal supports that purchase price, so they both offer 100% financing and so again just go to USDA.gov or va.gov. All of those agencies are offering less than the 6% average down payment and certainly less than what 87% of non-homeowners expected to put for a down payment!

If you have more questions about that, please grab the little chat button now on the bottom right and shoot us a message and let us know what your questions are or if you're ready to go ahead and find out for yourself what you qualify for. Don't hesitate to look around the website and grab all the other videos and look through as many of them as you want. Use them to help you put your ducks in a row. But feel free to reach out to us and use us as a resource as well!!

Josh Thomas in Utah, a mortgage broker. Thank you for your attention.  We'll talk to you another time!

For more info on down payment assistance, you can also watch this:

Question 2

DOWN PAYMENT: What if I don't have enough? Grants and DPA (Down Payment Assistance)

Accepted Answer

What if I want to buy a house, but I don't have enough for. My down payment for FHA or conventional loans?

Hello. Hello. Josh Thomas, mortgage broker here in Utah. And I want to talk to you about down payment assistance. So if you want to buy a home and you don't have enough to pay cash for it, then you're going to need to get a loan. But in many cases, it's hard to save up that down payment. And so in a previous video, if you haven't found it, look for it called down Payment Myth Buster. I go over how much down payment is actually required, what if you don't have that? Don't worry, don't worry. It's not a big deal. We actually have a lot of down payment assistance available. And so I'm actually going to go ahead and show you a couple of websites that you can do some research and learn all about it in the meantime.

And then let us know when you have some questions. Okay, so first and foremost, community Development Corporation of Utah. So cdcutah.org. You come under here under housing services, under down payment assistance, and you'll come to this page here. Now, what you're checking into here would be like municipal grants.

So Salt Lake County, Salt Lake City, Provo City, Layton, and just other areas, city grants or some version of that. They have rules on what they're willing to do. And just so that we're clear, not all of the grants are actually grants, meaning that a lot of them are loans. A lot of them will sit, it depends on the city and the municipality it's offering it, but some of them will sit on title for years without any interest or payments due. But when you want to move or refinance, you have to pay those off fine. Some of them are forgivable after so many years. Most of these ones, none of these ones have any payments due. But what you'll run into is that oftentimes they're out of money, just like you see here. But when you're on this website, click right here, too, where it says DPA programs in Utah, because this is other municipalities that also offer assistance in Utah that CDC does not administer. And so you can kind of scroll down here, see who it is and what some of the contact information is. But there's a fair amount there. Be sure to look into that.

Another form of down payment assistance comes in the form of a loan with payments with interest. And so there's an agency called Utah Housing that's a state agency. And so you can come on here and click all these links and read up all about it. There's actually quite a few different grants these guys offer besides their mainstay. So if you click up here, you're going to find kind of their mainstay stuff and their home loans. But they also have, like, for example, right now, a $20,000 grant for first time home buyers buying new construction under $450,000. They also have grants for veterans. And you don't have to even use Utah housing to get this particular grant. This one you do, and so on and so forth. Lots of great options there.

Then this is 100% financing. They give you a loan for your first and a loan for your second, and they combine. And so in a lot of cases, nobody has to bring any money to closing here. It depends on the market. Sometimes people still do. Another great grant is this one. Actually, let me go back to this one. So before I go away, there are several grants or down payment assistance programs like Chenoa, like NHF, like NADA, that are very comparable to this but have different rules. And so it allows different people to be able to. So that's a great program, or those are other great programs.

And then this one, I'll finish with this. It's just one of many down payment assistance. You just need to look, there's lots and lots and lots of them out there and there's no way that I can keep track of all of them or anybody else. Last I heard, there's something like I think it was like 50,000 different DPAs in the country. I don't know a lot, but this in particular is for those with disabilities. So if there's a disabled member of the household, these guys will lend you up to $70,000, assuming you qualify, $70,000 at only a 1% interest rate. And so that's a good way to save several hundred dollars a month on a monthly payment. So anyway, that's about it. As far as down payment assistance goes.

There's lots, lots, lots more we could share with you, but by all means, reach out with any questions. Again, Josh Thomas and mortgage broker here in Utah. And if you need anything, just go to my website, which is joshthomismortgage.com. In connect with us, message with us, or anything like that. But just joshthomismortgage.com. There's my contact info, team members contact info, there's our address and such. So just reach out as needed as wanted. We are here to help.

For more info on down payment assistance, you can also watch this:

Question 3

DOWN PAYMENT: What's Utah Housing and NADA?

Accepted Answer

We've offered 100% financing for years for first time buyers (and others!). That references the amount of money that you would put down or is financed.  If I'm going to talk about 100% financing we have disclose some stuff so check into our comments below.
100% financing is 100% of the value of the house right? So if you're offering on a $300,000 house and you're doing 100% financing you're getting a $300,000 loan.
So I pulled up Utah Housing's website. We've used this loan many many times. They've got a few programs and so first time home buyers that haven't owned home in 3 years get this program here (First Home), assuming they make a certain income or lower. If you're over that threshold with income or have owned a home before they have this program (Home Again). Both rates are amazing as you can see.
They both require a 660 or higher credit score. If your score is between 620 and 659, they offer the score loan. If you're lower than 620 there is no loan at Utah Housing for you.
Well the NADA loan that Julio's asking about is one of the more exciting new products that I've seen come out recently. Where it is 100% financing again similar to Utah Housing and that they give you an FHA first mortgage. The FHA first mortgage interest rate tends to run a little higher on the NADA loan. I'll come to that in a minute, but they give you a second mortgage equal to the rest of the down of the financing so 3.5% down payment is what's required for FHA loans and that's the second mortgage that that the NADA Loan gives you and so and then that one's at a slightly different interest rate than the first mortgage.
Things that I really really love about this would be the flexibility. Utah Housing has a lot of rigid rules that go with their loans. For example, income limits and if there's non-occupying cosigners. Feel free to click over here on their website and start clicking through and you can see how big list all those rules, https://utahhousingcorp.org/lenders/matrices. Well on the NADA loan, there are no other rules. It's just whatever FHA approves. For example, when Mom and Dad do want to cosign there are no extra restrictions. They can do that. And as long as they qualify, then so does the kid. Another cool one that is super exceptional is fourplexes.  Multifamily homes, duplexes, triplexes, and four plexes the NADA Loan will give you 100% financing!! On a four-plex, if you occupy it of course, assuming you get approved also, you can get a rate in the 3s right now. So I think it's a great great option.

For more info on down payment assistance, you can also watch this:

Question 4

DOWN PAYMENT: Can I use DPA if the appraisal comes in low?

Accepted Answer

Hey so I’ve been working with you for the last couple months and one of the loan programs that caught my eye is the NADA loan. Who can benefit from this loan?
 
The scenario when I know I need it if I have no money for a down payment, but what if I've got $20,000? Julio, I am sad to say that in the last 12 months (2021) that if you had $20,000 to buy a house it is NOT ENOUGH! It's pretty crazy to me that this is the case. For years $500 in their pocket was enough. But this crazy sellers’ market that we're in has gotten so aggressive that even with big money down, sometimes people need to bring $20,000 or more over the asking price to be able to close!
 
Well, if somebody came to me and had $20,000 obviously, we want to use one of the really low-rate conventional loans if they've got great credit or an FHA loan if they have questionable credit and that'll give him a great rate as well.
 
But what if they offer on a house and they have to offer over the asking price? That's pretty normal right now and they offer high, but it only appraises low and there's this gap between the appraisal and price. Well, most learn that they must bring the difference to closing in addition to their down payment, whether $10k, $20k or more!  So suddenly their $20k becomes a very small amount of money and they're like wait what? Well, that's what I love about this loan. It can then become the kind of the rescue plan. Like we can launch this loan, we can do 100% financing we can reduce the closing cost essentially and really have it's where they're bringing in very little money to closing so that they have money to cover that appraisal gap!  So, this is really opening up a lot of opportunities for folks that wouldn't be able to get in otherwise!

For more info on down payment assistance, you can also watch this:

Visit our website for more info:
www.JoshThomasMortgage.com

Question 5

CREDIT: What credit score do I need to buy a house?

Accepted Answer

Hello, Josh Thomas mortgage broker in Utah. I just wanted to try to answer the question what does my credit score need to be?
 
Of course this question depends on if I'm refinancing, if I'm buying, or rental properties or whatever it is I'm doing. Let's make the assumption that you're just asking about purchasing a property. Let me go ahead and just begin to explain what credit scores look like. First off let's take the 30,000 foot view and before I even get into the mortgage credit scores let's identify the fact that a mortgage credit score is different,
 
It used to be, you know 20 years ago at the beginning of my career it used to be that the mortgage score was pretty much the only score anybody ever talked about. But then credit cards started offering access to your credit score and the credit bureaus started offering that access and then credit karma and other companies like it. Nowadays everybody's an expert on credit but none of those credit scores happen to be the same scores that we pull in the mortgage industry. The only way you can get access to a mortgage credit score is by applying for a mortgage and having a bank or credit union give it to you. It's always a try merge with three scores that are pulled from Equifax Experian and Trans Union. And we just take the middle of the three scores. If you have one score that's a 750, another score at 740 and another score that's 500, we're going to go with the 740. If you have one score that's 750 another score is 500 and another score that's 490 we're going to go to 500. So that's the way the banks and agencies work. So whatever that middle score is it's probably different than whatever you think your credit score is.
 
In the mortgage industry 850 tends to be the highest. I don't think I've ever seen that score, but I've seen literally thousands of credit reports. I've seen many scores over 800 but to be clear anything over 780 is as good as it needs to be. Nothing better than that matters and to be honest in most situations anything over 740 is the same and so whether it's 800, 780, 820, or 740 it doesn't matter. It's all the same in most settings. Jumbo loans and a few niche loans care a little bit.
 
Now let's move on. If you're at 740 or above you're basically an A. You know, if we're going to use the alphabet system from schools. If you're like a 720 that might be like an A-. 700 and every 20 points down you basically get further and further away from the best options.
 
Now how low can we go? Well it depends on what you're trying to accomplish! That's a really important thing to recognize. Again if we're going into the purchase market and we're trying to buy a house, remember we have five different main agencies. We've got Fannie Mae Freddie Mac FHA VA and USDA. And all five of them look at credit differently. FHA is probably the lowest. They'll probably go the lowest. We have manual underwrites with down payment assistance down to a 580 credit score for 100% financing. Or at least that's the the package, "100% financing" doesn't always mean that you won't bring any money to closing it just means that 100% of that purchase price is being financed. So if there's closing costs or things like that you'll bring money to closing. We can get you specific scenario quotes if you'd like to look at those but basically 580 is the lowest level for that scenario.
 
Now under 580, FHA continues to offer financing all the way down to 500 if  you can put 10% down. Normal FHA is a 3.5% down payment.  Like I said we actually even have down payment assistance to pay that 3.5% for you. But under that 580 you're going to need to come up with right around 10% down. That's not 100% of the cases. FHA does have some parameters for different scenarios down to about 550 but basically 580 to 500 is kind of the the end of of available financing. Conventional options, depending on the year and the time sometimes will come all the way down to 600. VA typically will go down to 600 sometimes can go lower. USDA will go pretty low but getting an approval with USDA with a low credit score is often times not a reality.
 
So in a nutshell, what credit score do I need? It depends on what you're trying to do. So we need to start with figuring that out. But basically if you've got a 580 or higher there are options, especially if you're refinancing, especially if you have good equity. If you have a 501 credit score and you're just trying to refinance a house maybe you consolidate or something like that and if you have a bunch of home equity you could probably get away with doing that. So it just kind of varies.
 
Also remember the five agencies, Fannie Mae, Freddie Mac, FHA, VA, and USDA are not the only loans that exist. There's a sixth pocket of loans if you will and this is where all the niches are, all portfolios, all the different banks and credit unions across the country. Sometimes they'll offer just one off products that only they offer you know and sometimes we can broker those sometimes we can't but there are literally thousands of banks and credit unions and so who knows what other different options are out there. I say never say never. But always start with us. Give us a call. We can tell you where things are at.
 
Generally speaking as a broker in the state of Utah we're going to be able to offer more options than most lenders because we have access to so many different lenders. And interest rates of course are going to be very very competitive even on those lower credit score options.
 
If you have any further questions please let us know.

Question 6

CREDIT: How long after a Bankruptcy (or other events) must I wait?

Accepted Answer

This is Josh Thomas, mortgage broker LENDING ONLY in Utah. How are you today? I'm going to share some waiting periods with you today for how long you must wait until you're eligible for a mortgage again after a negative event  such as a foreclosure or bankruptcy or other things like that.
 
Conventional loans (FNMA and FHLMC), basically for a bankruptcy you're two or four years after it's discharged depending on if it's a chapter 13 or 7. For Fannie Mae it's 7 years for foreclosure and four years for short sale. But the big news on this one is FHLMC opens that up that if you get an approval through their Automated Underwriting System. You probably won't if it's inside of those periods but sometimes you do. If you get an approval through their AUS (the sophisticated software engine called loan product advisor) then they will override their their rules.
 
For FHA it's 2 years basically but it can be earlier than that if there's extenuating circumstances or it was a chapter 13. Three years for a foreclosure, and potentially only 12 months for a short sale.
 
That whole last column is sort of not applicable right now, but it's a real thing that happens even still but very rarely.
 
A VA is almost 2 years across the board and chapter 13 they're just a single year in. We do have to get permission from the court in order to do that
 
Then USDA is almost 3 years across the board except that they also do have that same 12 month little window like FHA has for short sales. 
 
If you need anything, have any questions about what we've already shared by all means reach out. My website is JoshThomasMortgage.com. Or share this video. If you'd like a PDF of the information just shoot me an email from my website and we'll get you a copy.

Question 7

AFFORDABILITY: How can I save $500+/mo? What’s the 2/1 buydown?

Accepted Answer

How do you lower your monthly payment? $500 or $600 a month, when buying your first house or any house, for that matter? And what's a 2/1 buydown or a temporary buy down anyway?
 
Hi, my name is Josh Thomas. I've been a mortgage lender in Utah for over 20 years. I'm going to go ahead and take a few minutes and explain just what a buy down is, so follow me. So this is a buydown calculator. I'm actually going to come back to this in a second, but I wanted you to see that it's there. And then I want to go ahead and show you this.
 
Now, this is a chart that we use with all of our clients to help them kind of different, see their different loan options side by side. And so I want to make sure you follow the chart or the table before we go on to the details of it. So there's a lot here, and this is a video so you can pause it and do as you need in order to follow along. But this is assuming a $500,000 purchase price. this column, each of these columns represent a new loan amount or new loan program. So FHA 30 year fixed or a conventional 30 year fixed. the FHA has a 6% rate. The conventional has a 6.5% rate. And this is just two scenarios. This isn't an exact rate quote or anything else so of course ask questions for more of that. Both of these assume no lender fees, no buy down points, no discount points or anything like that. And both of these I'm including estimates for taxes and insurance. I have mortgage insurance in here, zero HOA payments. And this gives you a total monthly payment of $3,538 or $3,499 So just $39 apart between the two of them. But then you can jump down here and you can see that the FHA has substantially less money due at closing where the conventional of course has a little bit more because it's a bigger down payment but otherwise very comparable.
 
Now before I get into temporary buy downs and how to lower your monthly payment, $500 or $600 a month, let me start with permanent buydowns. Now, we don't usually call them permanent buy downs. We usually just call them buy downs or discounts. That's what they've been most of my 20 year career. But recently, because home prices and interest rates have gone up the mortgage market has needed to offer better solutions to buyers. And so the 2/1 buydown has come back out. It was there in the beginning of my career, and it's been gone most to it. Now it's back again in vogue, very popular, and it should be. And so I'm going to go ahead and keep explaining why. But before I get into that, let's dive a little deeper on the permanent buy down.
 
A permanent buy down would be if somebody was to pay extra fees up front. Let's just say they paid an extra 1% up front. That's going to cost them more in their closing costs. Right? So 1% of the loan amount. So in this case, the loan amount is $490,000. So they're going to pay an extra $4900 up front, and that's going to give them a potentially lower interest rate if today's rate is 6%, their permanent rate would drop down to 5.75, or maybe even as low as 5.5%. Somewhere in that range is where their permanent rate would go to with that upfront fee of an extra $4,900. And that's permanent buy down.
 
It's potentially a great option. It just depends on the marketplace and the buyer's strategy as to whether or not that's a good idea for them. But that's, generally speaking, that's kind of how it functions. If that makes sense, that's permanent buy down.
 
Now, let's talk about a temporary buy down. So a temporary buy down is where we're actually going to temporarily lower that interest rate. And so let's come over here, and I'm going to start with a 2/1 because that's the most popular. So here's your $500,000 loan amount. There's your 3.5% down payment, and there's that 6% rate that we were just talking about. A 2/1 buy down basically means that your interest rate is lower by 2% for the first year, and then it's lower by just 1% for that second year, and then it goes to your permanent interest rate of 6%. So, first year interest rate is going to be 4%. 2nd year interest rate is going to be 5%. And then from year three on, it's going to be 6%. 4% interest rate is going to save somebody $589 every single month.
 
What you're seeing here on this screen, is just going to be your P&I payment (Principal and Interest only). So it's a little deceiving. So let me jump back to this other screen now and show you in more detail. So, again, total monthly payment, but this includes everything, which, of course, what everybody really cares about. And so let's look at this line right here in this particular scenario that we're illustrating is on the FHA loan. And so that $2,938 is $589 savings from the permanent payment of $3,538. So the total payment that would be due each month for the first year, if somebody was to do this temporary buy down strategy here, the total payment is going to be $2,938 for a year and then the next year is going to be $3,230. And then from year three on, it's going to be $3,538 because again, that includes the taxes and the insurance and the mortgage insurance as well. Does that make sense? Hopefully it does. If not, let me know.
 
Let's go back to these temporary buy downs. So this is the 2/1 buydown. So again, 2% lower first year, 1% lower second year. But there's also a 3/2/1 buy down, which, of course, is cooler because that means it lowers your interest rate 3% the first year, 2% the second year, 1% the third year. Same exact concepts. Your monthly payments just lower by that much. And again, this is what it would look like right here. As you see, your first year house payment would only be $2,664 for a year, then it goes to $2,938 for a year, then it goes to. $3,230 for a year, and then finally to the $3,538 for the rest of the term. But there's also a 1/0 buy down.
 
So all of these are called temporary buy downs. They're all the same thing. It's just temporarily lowering your interest rate. Now, why would somebody want to do one over the other? Well, that's pretty easy. If you're doing a 3/2/1 buy down, which obviously is the best, that's going to be the lower monthly payment. It costs $21,000 to subsidize this mortgage or this buy down. And that $21,000, that's a lot of money. Maybe a seller isn't going to want to contribute that, or maybe they're not willing to or able. And if that's the case, it might be worthwhile still doing the 2/1 buy down. So again, 4.2%, $21,000. If you do a 2/1 buy down, it costs about half of that. Right? So pretty good savings. Still $589 a month savings, and it only costs half as much to set it up. Many sellers are willing to pay for that. Of course, if they're not, you still have the 1/0 buy down. That still gives you a $300 reprieve for a year. And so maybe that's a great option as well. In fact, we can even finance this one when we close. So questions about 3/2/1 buy downs, 2/1s and 1/0s? Again, the cost difference. Why would somebody choose one over the other?
 
A couple of highlights to buy downs, there's probably two big pieces. So as I pointed out before, if you're doing a 2/1 or a 3/2/1 and there's all this money that just got escrowed, if you're to refinance or sell the house right away, that money is actually still yours. It's not the sellers. It doesn't sit and go back to them if you pay off early or something. Why would somebody pay off early? Usually refinancing would be the number one reason.
 
We are in a declining rate environment at the time of recording this. So the chances of refinancing, even after somebody gets one of these, to get their permanent rate lower are pretty high. And so if they have just gone into this, and maybe they're still in the middle of year one, and they've only used maybe $5,000 of that subsidy, well, all the rest of it is just going to get refunded and applied to their payoff. So their payoff comes to them much lower, allowing them to have a lower loan amount that they owe. Okay? So if they did refinance or sell early, this money is applied to their payoff.
 
What if somebody wanted to just pay this themselves? They wanted to buy a house and pay this themselves? You understand that doesn't make sense. The reason it doesn't make sense is because all this money is doing is reducing your monthly payment, right? So if you're saving $858 a month, what you're basically saying is, hey, I want to give the bank $21,000 a month so they only ask me for this monthly payment over here, this reduced amount. Well, why don't you just keep the $21,000 in your account? And then you peel out the $858 extra every time. You can set everything on auto pay, and you just pay that difference to the bank. And then that way you always maintain control of that $21,000. And whatever amounts left over, you can always apply it to the mortgage later on if you did refinance or whatever. It's only if the seller or other third parties fund this account that it ever makes sense for a buyer to use it. Otherwise, they should just keep the money in their own account. And if that didn't make sense, please let me know.
 
Another perk to this that's wildly misunderstood is that you actually still get the full tax savings. So when you buy a house and you start paying mortgage interest each year, you usually get a tax deduction when you itemize what it is. The standard amount is actually pretty big these days. And so a lot of people aren't taking that until really actually buy a house. But when you buy a house, you still should have even more write offs than you would on the standard especially if you're paying to a charity or other expenses like that. But the point is that you may be able to get tax benefits by paying interest each year. That's where some of the tax savings comes from. Well, if you're getting that and you take a lower interest rate of 3% on this 3/2/1 buy down you actually still get the benefits of paying the full 6%. Even though out of your pocket is coming this reduced amount, the subsidy is paying the difference. And so at the end of the year, you've still paid the mortgage company as if you had a 6% interest rate, which means you still get the full tax benefit. Okay, so any questions about 2/1 buy downs?
 
I feel like I've covered most of everything that's in there. If you have any remaining questions, by all means, please reach out. If you are ready to get yourself pre approved or ready to look at a refinance or something like that, or investment property, by all means, please reach out. Otherwise, keep looking for other videos and check us out and see what other information we can share with you that's useful. thank you for all your time and attention. And share this if you found it useful to others. And we'll talk to you later.
 
Josh Thomas
801.916.7716
Mortgage Loan Officer
NMLS# 314438

Question 8

AFFORDABILITY: How do I afford these monthly payments?

Accepted Answer

What if I can't afford these house payments because homes cost so much, and rates are so high?
 
How am I supposed to deal with that?
 
And what if I don't have a down payment either?
 
Hi. My name is Josh Thomas. I'm a mortgage broker in Utah and have been for 20 years.
 
I'm going to give you a couple of life hacks in order to prepare for this. And so, number one, if you can't afford a house payment, mean, meaning not that you don't qualify, you can't stomach a $3,000 or $3,500 house payment. How are you supposed to deal with that?
 
So, I've got a couple of ideas for you. Number one, if you can qualify for the house, your income is sufficient, your credit is sufficient, you have enough down payment and you can buy the house. You just aren't sure how to swallow that. Remember to think about having in house tenants boarding others, we call them boarders.
 
But basically, just having someone live with you. Maybe you're a married couple, a young couple, and maybe you want to split the house almost like a duplex and you take upstairs, they take downstairs. Maybe you're a single individual and you don't mind doing like a bachelor pad or a Bachelorette pad and renting out all the different rooms.
 
Who wants to live alone anyway? And so those are a couple of ideas to help offset the cost of the payments. Another option is if you don't qualify for the house, but you would like to buy still,
 
you truly can't afford or qualify for a $3,000 house payment. What if you co buy with somebody else? If you qualify for two or $250,000 on your own and you have somebody else co buy with you who qualifies for two or $250,000, that's four or $500,000 purchase price now that you qualify for.
 
So those are a couple of life hacks. But what if you can qualify, you just can't stomach the payment. Let's say you're living with mom and dad and your rent is zero and you're going to go from zero to 3000 or $3,500 a month. Whoo. That's going to be a rough transition.
 
So, here's how you can make that transition smoother. If you're getting yourself ready to buy a house, start making rent payments to mom and dad or whoever you're living with or some other trusted person in your life. So, if you're not used to making a $3,000 payment, let's say you're paying $1,000 a month in rent, pay the difference, the $2,000 difference to that trusted party who's not going to need or keep your money.
 
They're just going to hold it for a minute. And after you've made those payments for two or three months, you're starting to feel what it would actually feel like if you went and bought the house. And you can then know if you're going to be able to stomach that.
 
So that's one option. And then at closing or as you get closer. Okay. Now I'm ready. Maybe it's been three months, maybe six months, and you're ready to go and buy because you know you can afford it. Well, then what you can do is actually have them then gift the money back to you.
 
And now you have yourself a sizable portion for a down payment. So go ahead and try out those life hacks again. Josh Thomas, I am a mortgage broker. Let me share my website with you really quick for all the legal stuff that's on it that you need to see so that I can be compliant.
 
You can message us, or you can schedule a meeting to talk with us. Here's more detail on my particular contact information, my phone number and everything. My website is www.JoshThomasMortgage.com.
 
Thank you so much for your attention and we will talk to you later. Have a very great day.

Question 9

PREAPPROVAL: How soon should I get preapproved?

Accepted Answer

Josh Thomas reviews this article in this video. Josh has been helping first time home buyers get financing since 2003. He recommends sharing this video (and webpage) with anyone you know in Utah that doesn’t own a home. If you already own one, then buy another one. Owning a home is a vital part of a solid financial plan.
 
In the article, it states that among people age 25-40 years old (Millennials),
25% underestimated their buying power by $150k+
25% underestimated house prices by at least $100k
And almost half didn’t know what a good interest rate is
All of the above info we cover with every single client we meet with during the preapproval. Getting Preapproved isn’t the last step but the first step each would be buyer should take. We only need about an hour to completely preapprove someone. But because we try to be so thorough during the meeting, preventing you from needing to come back and forth several times over several weeks, we recommend some preparation ahead of time. And we have great availability to preapprove someone that is in a hurry possibly even same day.
 
There are three myths cited in the article. 20% down is a myth. We have many programs requiring much less down, even to requiring $0, 0% down payment. Look into this deeply. Debunk the myths in your mind and get the facts.
 
I have to list this disclaimer since I mention 0% down: Listing a Down Payment % requires by law to disclose other terms. The above down payments align with the following scenarios. All loans are 30 year fixed assuming a $400k price. USDA 0% down would have a 2.25% note rate, $1997/mo PITIMI, with no points or lender fees, 2.656% APR, $404,160 loan amount, $4995 closing costs. The VA loan would have 2.25% note rate, no points or lender fees, PITIMI of $1901/mo, 2.349% APR, and $5034 closing costs for a $409,600 loan amount. The FHA loan would have a 2.25% note rate, no lender fees or points, $2107/mo PITIMI, 3.165% APR, $4913 closing costs, $392,755 loan amount. The conventional 3% down would have 2.875% note rate, $388,000 loan amount, $2131/mo PITIMI, 3.094% APR, $4980 closing costs. The 5% down Conventional would have 3% note rate, $380k loan amount, no lender points or fees, $2083/mo PITIMI, 3.182% APR, and $4941 closing costs.
 
Another myth isn’t as much a myth as a misunderstanding. People usually qualify for more than they expected, but we also maintain that many end up paying more than they initially planned or hoped for. Housing is usually more expensive than they think. But once they get the facts, they’re usually able to figure things out. We have seen very very few of our clients call us up later and tell us they hated it and need to bail. Almost everyone figures it out and only wish they bought sooner.
 
Myth number three, homeownership will become less affordable the longer you wait. This is a dumb myth to list in the article. Most people’s incomes rise as they age. So you’ll likely be able to manage payments in the future better than today. BUT homes have increased in price historically almost every year for the last 80 years. And rates rising or falling impact affordability as well. If you CAN buy, you SHOULD buy now is our stance generally. Josh relates his own story. Buying in 2004, a house in South Jordan Utah cost $170,000 and was above their initial price range. He freaked out but his wife won the debate and not only did it work out, it worked out very very favorably. The same home at the time of this video is about $500,000. That definitely will cost more monthly than originally regardless of rates.
 
Please share this with anyone you know that doesn’t own a home. 25% chance they don’t know these things. :) And contact us. We’re here to help YOU!

Question 10

PREAPPROVAL: Are you a bullet proof buyer?

Accepted Answer

Let's help you make sure that you're a bulletproof buyer! What do I mean by bulletproof buyers? In the mortgage world, there are a lot of different mortgage companies, and different companies will do things in different ways. Two words that are thrown around a lot are pre-qualification and pre-approval. They sound similar, but these two words can mean something completely different to a lot of different lenders out there.

To me, pre-qualification simply means a brief phone call where you tell me how much you're making, what you think your credit score is, maybe a summary of your debts, and I translate that into an idea of what your ideal purchase price is. The main purpose of a pre-qualification is to spitball ideas when people are trying to get their minds wrapped around what they are doing.

A pre-approval is far more valuable, so what is a pre-approval? To start the pre-approval we create an actual application and pull your credit. A lot of lenders do that. For us, a pre-approval goes several steps beyond that. 
 
Step 1 - Gathering documents. We gather all your income documents including bank statements, tax returns, pay stubs, W2’s. Anything that a bank is ever going to ask you for. We are going to get that all upfront in a pre-approval. Essentially we are scrubbing through those documents looking for any drama that will come up. Once we have done that then we take your file and run it through an automated underwriting system and if there is anything else dramatic within your file, we are going to sit down with human underwriters (the people that audit the computer underwriting) and we will go through and hash those out.

This does take up more time, that is why a lot of lenders don’t do it but it’s something we have always wanted to do and it has been well over a decade now. Anybody that is pre-approved with me can close on their home. That's what pre-approval means to us! It's step one to being a bulletproof buyer.

When you present your case to a seller to try to buy their house you are ironclad there's no chance you are not getting financing at that point! When you are completely pre-approved, we can close very quickly! Our average close time is three weeks, but we can close in two weeks easily if someone is fully pre-approved. (Provided they’re not using some funky program that has automatic delays built into it like down payment assistance or USDA financing if their underwriting is backed up.)

Step 2 - Quick close. This is very important to a lot of sellers. When you can close in two weeks it makes you very competitive with cash offers out there.

Step 3 - Sticker shock. Sometimes people go out there, write an offer, get the seller to agree and then they see their future monthly payment and down payment and they back out. We don’t want that to be you! We want to make sure that you know everything before you go into it. One of the things we do with our clients, we show them the different loan options. We will go through and help them see all their different options. We provide them with a payment calculator to have a very good estimate of what they are looking to bring to closing and what their monthly payment will look like, regardless of the price! Every couple of weeks after the pre-approval we are reaching out and making sure we update things if rates have changed much.
 
There are a few other things, such as contingencies when you write a contract - who is in your corner? What agent are you using to help you? That is a very important part. You may very well fail in getting a seller to accept your offer simply because of your agent, or you may succeed. Make sure you have a great agent in your corner.

Other things include the bidding process, when you write that contract there will be your due diligence contingencies, your financing and appraisal contingencies (our clients never need the financing contingencies). Should they waive or shorten the deadline for their appraisal or should they even amend all that and add an appraisal gap contingency. All these things will be very important! This is where your agent becomes critical. To keep this short for now, you will need to have good contingencies that are favorable to the seller. That is potentially even releasing your earnest money very quickly. Some sellers will only take it if you immediately release it. I have seen some very successful buyers where they release maybe $1000 of their earnest money within three days, and another $1000 a week later, and so on. All while they are doing their diligence, checking their financing, and getting that appraisal back while trying to race the clock so that they are not losing any money.

Those are all parts of becoming a bulletproof buyer. I’m trying to keep it short. But if you have any questions or comments, please reach out to us. We will be happy to answer any further questions that you may have. If you haven’t been pre-approved yet or know someone who is wanting to shop, get pre-approved! Let’s make sure that process is fully up to speed, otherwise, you may be wasting your time if you aren’t a bulletproof buyer. I hope you have a great experience and let us help you do that! Share this with anyone else who wants to be a homeowner sometime soon!

Question 11

MISC: Is now a good time to buy?

Accepted Answer

This may come as a surprise to you, but I’ve heard that question the entirety of my career which I started in 2003. People are ALWAYS afraid of buying at the wrong time! Below I’m going to link a couple videos I recorded in 2021 that address some important facts about the housing market and specifically if home prices are going up or down and why. But before you watch those, I want you to think of two things to answer that question above.

First, why are you buying? If it’s only to make money (because you’re an investor) then I imagine you should hyper focus on the facts in the videos. You need to time the market carefully in that case. But many other people are buying because they want their own home. They want their independence. If that’s you, then there’s never a bad time to buy. Make sense? Now you may want that AND to make a smart financial choice. In that case, I will ask how long do you expect to live in this home? If it’s just a couple years or less, then again, hyper-focus on the facts in the videos. But if it’s five or more years, you can relax and rest easy. The Great Recession, the 2nd worst financial crisis in our countries 250 years, saw home prices fall around 50% across the country. That’s severe! That was hard on folks. BUT for those that needed to move at that time, ways were found, and they were able to move. Some folks wrecked their credit doing it and had to wait 2 years to buy again. But most did not and were able to own again right away. In 2011 home prices hit the bottom. But did you know that in 2015, home prices recorded their highest price point ever? In other words, they recovered from the crash and exceeded precrash prices. The crash really began in 2008. That’s when home prices slowed and started reversing course, more in 2009. It took seven years to crash and recover. So if you’re buying today, and you’re afraid of home prices crashing, but you’ll be in the home five or more years, know that home prices will be higher when you sell, historically speaking, even if we have terrible economic times ahead. AND you should know that the Great Recession was much easier on homeowners than it was renters. Even a look at the Pandemic can show you that same reality. More programs and government assistance were provided for homeowners than renters.

Second thing I’d have you focus on is a balance I explain in the videos. In 2022, 2M households were formed https://ycharts.com/indicators/us_household_formation in the USA. But only 1.3M housing units were built (including apartments and rentals). Where are the 700k brand new households living? Not in their own house or apartment. But you know they want to. That’s the greatest disparity we’ve ever seen, but it’s existed since the recovery from the Great Recession. THAT’S the very reason home prices have climbed so dramatically. So until that relationship changes, housing will remain in high demand, even with the higher rates of 2023 and beyond.

Now enjoy these two deep dives into the actual facts and trends driving home prices.

Google reported that that search phrase shot up 2400% recently so yeah, people are wondering! What do you think?
 
It will cool, no question, but unlike the great housing crash a decade ago, mortgage underwriting is very strict now, so most homeowners can afford the homes they’re currently in. But this line below actually alarms me

Investors are quite heavy in the market as well, given the high demand for rentals, and that should serve as a backstop for major price declines.
 
Less homes for sale may be the declined sales and increased price!
https://www.keepingcurrentmatters.com/2021/04/27/will-the-housing-market-maintain-its-momentum/?utm_campaign=Blog_Promo&utm_medium=email&utm_source=email-automated&utm_content=DailyBlogSubscription&utm_term=BlogPost

First article: https://www.housingwire.com/articles/this-isnt-a-housing-bubble-and-thats-the-problem/?utm_campaign=Newsletter+-+HousingWire+Daily&utm_medium=email&_hsmi=123851995&_hsenc=p2ANqtz-8GshJv44M4q21g9kDPZcKVHvVdFXdKM1QDtMYivnBV5fMkPc43mhICkC9BUx88RZ00IYVA8PtlwOS3GbTly9l2382ZSz3IQd2Nov-31pIMO1d8-cs&utm_content=123851995&utm_source=hs_email

2nd article with all the charts: https://www.keepingcurrentmatters.com/2021/03/10/6-simple-graphs-proving-this-is-nothing-like-last-time/?utm_campaign=Blog_Promo&utm_medium=email&utm_source=email-automated&utm_content=DailyBlogSubscription&utm_term=BlogPost

Question 12

MISC: What does Josh recommend for late teens and their parents?

Accepted Answer

Hello hello! Josh Thomas, mortgage broker! I wanted to share something with you. This is an old man reminiscing. I'm 44. I've got a 24-year-old son and 18-year-old daughter and I've been doing loans for 17 years. In that length of time I have learned a lot of things that I think are worth sharing with people. Anybody that's worked with me for any length of time has heard a lot of that perspective as I've always wanted to help my clients best I could.
 
Let's talk about helping our kids. Any of those who are I would say late teens to early 20s this is probably good video for you. Except you're going to have to be attentive to an old guy that talks slow and probably way too much and doesn't have enough flashing lights and stuff on on this video haha. But for all those my age or older if you have kids and grandkids that you would like the very best for, I'm going to do my best to share with you really quick a couple things to that should help.
 
1. Go find a video that I made a few years ago called good better best https://youtu.be/ilFIVdMEnCo. It's probably five six years old, but it's still true! Everything in there is still accurate. Anybody who has no credit or not as good of credit, follow the steps in there to get good credit. So number one if you're 16 years old, it's time go ahead and start.  If you have a 16 year old, go ahead and help them start getting credit. Good credit is the the number one requirement to enter the game. 
 
Once you have credit established, pay attention to that video.  Think of all the stuff that I share in that video as a recipe.  Don't go get a credit card and then borrow a whole bunch of money thinking that gives you more credit. It doesn't work that way.  A $20 balance on a credit card is plenty! Then you need to be a grown up now.  If you've got a credit card you need to be a grown up and recognize that you need to have a pattern in place to be able to always know if you have a bill due and to pay it on time. And also you need that pattern to never ever let somebody steal that credit card without you knowing about it. 
 
So kids listening to this, once you have an account open you need to know that there are people that will try to steal your money. You have to look at your checking accounts your savings accounts your online savings your credit cards, just everything you have, to look at at least every couple weeks at a minimum I would say once a month and you have to know what those charges are.  You have to make sure that somebody didn't swipe your card and send a bunch of charges through.
 
In my lifetime, and I'm 44, I've probably had three instances that I'm aware of  personally and dozens for clients where somebody stole their identity or was swiping money or whatever and nobody even knew it for a time.  So pay attention once you get the credit cards. Make sure you're a grown up and have some kind of organization in place to protect you. Parents help your kids set up that organization. I get paid every two weeks so I sit down every two weeks and I just run through all my finances every time. That's my style. I don't know how everybody else wants to do it. So that's part one. Get the credit. Get it going. Make sure you're responsible and babysit that.  Never ever let it go late.  You never need to borrow more than $20 to establish credit.
 
2. Down Payment. Getting the house. Actually pulling that trigger.  I'm going to walk through my own family scenario to kind of give you some real life stuff that you can kind of chew on. So my oldest daughter is 18 and she is planning on serving a mission and young women can't go until they're 19. She has debated on when to go and made her own decisions as to the timing of that but she also is planning on taking me up on helping her buy a house.  Clearly she's not going to be able to afford a house when she's 18 years old. Nor is she going to be able to qualify at 18 years old. However I can help with both of those two things. Right now I am also a landlord. I've got five rental properties.  I've got some experiences managing a property and I would love to help her have that experience. And so for her personally she said "well I'm going to college and going on a mission" so she's worked out the timing because when you buy a house to live in it you need to live in it for a year in order for it to be owner occupied (best financing options) and so looking at the timing of that she's decided to wait till she returns from her mission.
 
I would love for her to buy a house when she's 18 ASAP in order to be able to gain the appreciation and home equity. But sometimes you can't bite off too much. So her intent is to buy one when she returns, that doesn't matter to you, but I'm sharing this with you transparently so you can kind of map some of your own plans. So she'll buy when she returns. I'm going to help her qualify by cosigning. And then I'm going to help her manage it by simply being almost a silent partner if you will, where she and I will consult regularly and I'll kind of almost force the schedule and how to manage that and pay attention to that. And we've also opened up a credit card for her and help her kind of manage that as well as it's married to our checking account. So that way I can monitor it while I'm in my account, especially important when she's on her mission making sure no one's stealing any of her money.
 
Anyway so I share all that with you and I'll give you one more story to close with as you kind of chew on stuff. We have to play the money game right? We have to pay our bills. We have to earn stuff. When we're young kids it's really really hard sometimes to kind of see that. I have some clients and friends who have shown the whole world a great example. I just started an application for another one of his kids the other day. YOUNG man, I mean just about to graduate from a university and he's got $70,000 in savings! That's abnormal.  Super abnormal. But awesome right? Again, that's not the norm. Most of us aren't quite there, but get there! Right? Push a little bit harder. Try to look ahead. Try to put some money into savings and prepare for that day. But buying a house can be part of the game plan of gaining that money right?
 
Another example. Some clients of mine that are becoming friends who are younger millennials just bought their first house last June. Their purchase price was $345,000 and we are refinancing it now because rates are down a little bit AND they bought with 100% financing. They used some of the 100% financing stuff which I have explained in another video, just look through my videos and you'll see more about down payment assistance and different things like that. Anyway they got into the house for just a couple thousand bucks out of pocket and that was it and it was more than 100% financing. They actually borrowed a little bit more than it was worth. Fast forward a few months later into February and at that time we get an appraisal and that appraisal came in at $395,000 now that's what this crazy market and appreciation is doing to our house prices right now. So $345k to $395k! Terrible if you're not a buyer yet and you're going to go buy that $395,000 house. But awesome if you're the one that bought right?! $50,000 of equity already. That's why buying a house sooner than later makes sense right now!
 
Plus talk about growing yourself up right? It forces you into maturity. My daughter is going to become a landlord barely even knowing what it means to own a home!
 
A little bit longer of a video for you. I hope I didn't go too long for you but at the same time I hope that I went quick enough with you and you could kind of see some of the value to these different points that I'm making. But I would encourage all kids to prepare to buy a house as early as they possibly can. Parents I would prepare to help your kids buy those houses as early as you can.  Yes, you're going to need some low debt to income ratios because you're going to essentially qualify for two mortgages but take the effort and the time to put things together so that you can actually help your kids do that and go ahead and co-buy with them so that they can go ahead and start harnessing some of that home equity and you know kind of start lining things up. And my daughter she's going to be coming home from her mission, buying a house, she's still single, she'll start dating and who knows how long that'll take to finally establish herself a family and all that. Maybe when they get married they're not going to like the house that she has and they'll want to sell and maybe with any luck she'll have $50,000 or more of equity like my client did and now they've got a down payment for their real house right? They're still a young couple. They're still barely married, but already they'll have some options.
 
So look forward to the big picture. Put some things in place early. Call me if you want to strategize about that. I would love to help you guys. I hope you have a great day and hopefully this information was helpful for you.