This is a podcast of our KLIF morning show program from February 15, 2014. In it we discuss mortgage rates, lending for first time homeowners, and the housing market in general.
TexasLending.com Podcast from 02/15/2014: The Truth About Junk Fees, Closing Costs, and How to Get Accurate Quotes and the Best Rates
Kevin: And a happy good afternoons to everybody.
Jeff: Good afternoons?
Kevin: That’s right, this is good afternoons for everybody.
Kevin: And this is the TexasLending.com mortgage show. And I am Kevin Miller and I am here joined by—oh, my goodness! Did everyone hear that? I am joined by Jeff Collins. We here to talk about your home loan this afternoon, we want to make sure we are helping out making your decisions regarding buying and refinancing, getting a home equity loan. How about that, reverse mortgage, or a Jumbo loan, the UFC and VA, FHGA we do them all here at TexasLending.com. We’ve got ’em, as they say, and we want to help you too today. All of yous out there with your home loan, do give us a call up here, we are here to take your phone call, not just here at the station, but also at our office today.
Jeff: Yeah, absolutely. 972-387-4600, and as Kevin always likes to say, the hardest working people in the mortgage world, well, you can find them on Saturday.
Kevin: Working on Saturday here at Texaslending.com, the people that work that extra day of the week, they are here getting that extra business done for you, getting your paperwork, shuffle it toward where it needs to be shuffled to, so then when the week comes, and by the way this week we got President’s day on Monday, so it’s probably a good time to call today, because a lot of the banks would be closed on Monday. Call us now so we can start working on your paperwork. Our loan consultants will be here on Monday, and they would be taking your phone calls, but we also, we can get your stuff going now, so that by Monday, we can get your loan in processing.
Now today, we’re going to be talking about some special things. I dug deep this week. And I said Jeff, back about seven years ago, you know, back in the old, good days. When was it? Maybe 8 years ago, when loan products were plenty, and all the kind of things were available, —we used to do a lot of education because we want to make sure that people knew about the products, what was available to them and things like this. And, we also talked about some other very important things for you, the consumer. I’ve thought about some of our best content. And I think today is a good day to get back to some of that content.
Jeff: Ok, like what?
Kevin: Well, one of these we are going to talk about, because no one understands it, and, you know—the world does funny things. When there are complicated things that they don’t understand, they dismiss them. They throw them to the curb, by making fun of them, and/or ad hominem attacks on them. You know? Closing costs are stupid, they’re junk fees. Because they don’t understand them.
Kevin: So by saying that, you dismiss them, and you make them less important, and therefore you can ridicule them and whatever you want to do with them. So what I want to do today is explain to people when you are buying a home, the cost associated with buying a home. That you’ll see. So when we are going to buy a home, you’re going to put this 5% down payment, or 3.5% down for FHA, or something like this. You are also going to have closing costs. And I can say, ok your $300,000 house is still 3.5% down payment or $3,500. But your closing costs are $4,000. Ok, why is the closing cost—why are the closing costs higher than the down payment? I don’t understand that.
So what I want to do, I want to explain this to people today, so you have a better understanding of what you are getting into. Because, once you understand it, it all makes sense. And there are people in this industry who don’t understand it. And it’s just there, it’s on a piece of paper, it’s a charge. Ok, so I am looking at your closing costs and there are all these lumps of fees, and we are going to charge it to you. Why is it? What is that? I can tell you, most loan officers don’t know what it is. Most people in the mortgage business probably don’t know what it is. Now people who have been in this industry three years or more, probably have had to explain it, understand it, have been to many closings, talked a lot to the title companies, they understand what these things are.
So I want to explain what these things are to you because they add up, and then you have companies who say: “We don’t believe in closing costs.”
Well that’s just nonsense, they’re treating you like you are stupid. If someone is going to say that, they’re just saying: “We either don’t want to explain them to you, or we going to brush them under a rug and probably use them to take advantage of you by overcharging on your interest rate.” So if you know what the costs are, you can pay the cost outright, and you know what they are, because here is the good thing about closing costs; it’s not legal in the mortgage industry for mortgage companies to overcharge you for a third party cost like appraisals, title fees, right? Surveys… but if they roll them all into the back of the loan, the back being your interest rate, where you don’t see them, you might be charged more for to pay them off, than what they actually cost. Does that make sense?
Jeff: Oh, yeah. So if basically something costs me $500 and I have the choice to be able to pay for it right here right now, or they going to say: “That’s not going to cost you anything at all” but really add it to the back on the loan.
Kevin: Yeah, so they’re going to charge you $600 in the way of the interest rates. So when the—so let’s say your rate right now on the 30 year fix was—let’s just say you can get 4.25. 4.25%. And let’s say your closing costs were, I am just going to say, $2,000. Well, on your $200,000 loan, your $2,000, it would cost 1% of that loan amount to buy of those closing costs. Now, in the mortgage industry, 1% of the loan amount would probably cost you about 0.25 in interest rate. So, what does that mean to you? You’re rate would go from 4.25 to 4.5, to pay of those closing costs.
So if you are driving around and you are listening, I am really giving you a lot of deep information here that no one wants to explain to you and they’re going to try to use it against you. So, most of the time they are. So here is what they would do. So a mortgage company would say: “None of our loans have any closing costs.” And instead of them sort of charging you 4.25 plus closing costs, instead of charging you 4.5 to pay of those closing costs, they come to you and say: “Our loans have no closing costs, we’re going to charge you 5%”
“Oh, the other companies have 4.25!” “Well, yeah, but they have closing costs.”
Kevin: Now, the first company who charged your closing costs, could also quote you 4.5, without closing costs, but some of you don’t give them a chance. You just say to the back of your mind: “Well, I don’t believe in closing costs, and those stupid companies out there trying to charge me closing costs” you should get—if someone is going to charge you a loan with no closing costs, I highly recommend that you get quotes of a loan with closing costs, at the lowest rate you can. And here is what I am going to get everyone, I am going to get everyone the idea for how to shop for mortgage right now. Here is how you do it. Because no one does it right.
Kein: When you are shopping for a mortgage, when you going to call a mortgage company, you don’t just say: “Quote me!” Ok? Because now they are in charge. You are going to get taken advantage of. And you think you’re smart, but you don’t really know the way to do it. If you know the way to do it, you’ll ask them correctly. Here is the way you do it correctly:
You kind of get an idea, on the Internet, of what the rates are out there, right? And if you want to call people, so that you can compare, you need to do it in about hours’ time. So you need to call some mortgage companies, and you need to say: “I want you to quote me at 10:00 am, on Thursday.” You need, let’s say, for Wednesday afternoon. “Can you quote me tomorrow morning at 10:00am your best 30 year mortgage with $3,000 of closing costs,” say your loan amounts to $200,000, you give them all your information, your loan is $200,000, you say: “I want for this $200,000 loan, I want you to quote me the best rate with $3,000 of closing costs. And I also want you to quote me the best rate with no closing costs.”
Now, this is why you want to say it at 10 o’clock. Because at 10 o’clock the rates—if you call someone at 10 and 5 and 5, you are not getting the true measure of who’s got the best deals.
Jeff: Apples to apples, right?
Kevin: You got to compare apples to apples.
Kevin: So you’ve got to call and say: “10 am, get me the quote.” And if at 10:00 am you get the emails in, someone says I am at 4.25 at $3000 closing cost. Someone says I am 4.5 with $3,000 closing cost. And someone says we are at 5% at $3,000 closing costs. Now you kind of know who has the best rate with a closing cost. Then you can also see who’s got the best rates without—ok, what we’ll be without closing costs. Now you can see what you are qualified for as a human being. You know your range of rate, you know your rate with closing costs, and you know your rates without closing costs. And you know what that range is. And if you get them from 3 different companies that you trust, I mean trust because they’ve been around, and some just might have some higher costs associated with some of the products and services they are providing to you. Some just might be at a higher rent area, they gotta pay the rent, you know? Someone might be—you might be talking with someone out in California when they got to pay bazillion dollars for the rent.
Jeff: A bazillion!
Kevin: And if they’re paying bazillion dollars, and you’ve got to pay for their rent! And you might have higher rates. So, some people own basketball teams. They got to pay the NBA stars, so they have higher rates. So you need to make sure that you compare, and find out what your range is.
Jeff: Now why do you think Kevin—that is not most people, but a lot of people will take those closing costs and roll them into the loan? I mean, there is benefit to that, is there not? Or is that really something that you just simply don’t want to do?
Kevin: Well, first thing I want to do is say, if you got interest, and you’re getting lined up to getting quote on your own loan, call us at 972-387-4600. Call us today and find out what we have to offer. Talk to your loan consultant, the people who are the hardest working people, who work on the weekends. 972-387-4600, all lines are open here, at the station, if you want to ask us a question. 888-787-5543. 888-787-KLIF.
Ok, so, the question you asked me was… ask it again, please.
Jeff: It’s ok, I understand. You have a closing cost, and then you don’t have closing costs. Why would a person want to take those closing costs and roll it into the loan itself?
Kevin: Let’s say you want to buy a house. And you’re going to buy yourself a $200,000 home, and you have $10,000. That’s all the money you got. And, you go to buy the house, and you need 5% down, and that’s $10,000. Well, what if in addition to that $10,000 you need to pay $5,000 for taxes, insurance, and closing costs? You don’t have that $5,000. You’ve got maybe a bonus coming in next month, maybe your spouse or your significant other is going to get a job, and you know that’s coming but you don’t have it now. But you know there is a great deal out there on a home that you want to get and you want to get it now!
Then, you might not want to get your closing costs, you might want to roll them into the interest rate. Have your mortgage company quote you a loan with no closing cost. The smaller loan amounts that’s very difficult to do. Because there is just not enough money there, by increasing the interest rate for them to pay off the closing costs. So, that’s why some people don’t want to pay closing costs. Other people want the lower rate for the lower period of time, because over a period of time, usually after 5 years, you are going to start making your money back by paying the closing costs.
In your loan, you start making that money back with the savings you going to have on your mortgage over a period of time. So there is a time cost of money, right? So it’s either you don’t have the money now, or, you want to save more money over time. So you need to make those decisions, but let’s talk about what closing costs are. Ok? Let’s talk about what they are. Because a lot of people are out there, and they don’t understand.
Ok, I am going to get this appraisal. It’s $350. Right? You have a survey, to be $400 to a $1000. Title insurance, on $200,000 home might be $1600. Recording fees, tax certificates, flood certificates, homeowners insurance, underwriting fees, processing fees, origination fees, you say these are all junk fees, alright? It’s interesting because when you go to McDonald’s and you just say: “Well, I don’t want to pay the hamburgers for $1.50 I only want to pay a $1.30, the rest in that is junk fee.” Well, actually, you know, they want to make profit too, right?
Kevin: So, when you are talking to an appraiser, and here is one thing I can tell you about appraisers: 17 years ago, I started doing the mortgage business. Appraisals cost $325. There are still some appraisals that are at $325. And they haven’t had any increase, in the cost of an appraisal. So they are working just as hard now with higher cost of living expenses, and, you know, the computers are a little bit faster, but the cars aren’t driving any faster, and the gas isn’t any cheaper. So, you know, those guys are out there—some of them charge $350, some of them charge $400. So they have risen a little bit, but they haven’t doubled their price like everything else has in the last 20 years, you know? So, there is an appraisal cost there that is going to be $350. Someone’s gotta pay for that, right? And if you are not going to pay for that upfront, how is it going to get paid? Well, you are going to pay for it over time with a higher interest rate, so that someone can make it back over a period of time.
So that’s an appraisal. How about a survey? I don’t want a survey! I already got a survey! The seller of the home got a survey from 20 years ago! Yeah, but the seller of the house put in a pool. So the survey doesn’t show the pool. And you gotta make sure that the pool’s been built within the guidelines of the neighborhood. You have got to make sure that it’s not over the property lines. There is a fence now! Now someone has put up a fence where there was no fence before, right? Now they’ve put in new power lines! So there’s power lines, there is a new sewage system in the neighborhood—who knows what’s going on? So you need a survey there that might cost a $400 on the purchase.
Sometimes you don’t need one, sometimes they use the old survey. If there have not been any changes to the property, they can check the appraisal, make sure there is nothing else out there. Some title companies won’t insure that property. So, you know, there are a lot of things that go on in these closing costs. They’re not junk. And we are going to talk a little bit more about, some other things that aren’t junk,
Kevin: And why, I know you will say: “well, I don’t want to pay for that, I just want to buy the house.” We’ll talk about that. In the meantime, call our office 972-387-4600. Call us up here in the station, 888-787-5543. When we come back, we are going to say why” I just want to going to buy that house, I don’t want to pay for it. We are going to tell you why you want to pay for it, why you want to pay for title insurance all these other things, after these messages on the TexasLending.com mortgage hour on KLIF.
Jeff: I like that. That’s awesome. You know what it needs? You know what? It needs a little more cowbell. Check it out.
Kevin: I don’t know if you are on key, but you know what, I think everyone driving around out there can probably appreciate your musical styling.
Jeff: I tell, you, cowbell takes it to a whole new level.
Kevin: Yes. The mortgage show that delivers things that you just don’t get everywhere else.This is the TexasLending.com mortgage show. Delivering to you right now some thoughts and ideas about things you may not have thought about before, and so, where do we go from here? Well, if you got questions about your loan and closing costs, and how much it’s going to cost you to refinance maybe to buy a home. Maybe you want to get cash out of your home and are wondering about how you can do that without closing costs, you can maximize your cash. Maybe there are some things that you haven’t thought about before, and we can educate you. I am going to educate you now on some things, because I am going to put it in perspective you’ve never thought about before.
And that is this. When you go to get money from somewhere, a mortgage company, call it $200,000 for a house, and you say: “Oh I don’t want to pay these fees, this is stupid,” for example, one of the things I love when people decide they want to close their loan on the day they’ve scheduled to close, and then we gotta call them and say: “Well, by not closing on that day, it’s going to cost us to extend the lock. When you came to us we locked the loan for 35 days, we got to close it by this day so that the lock period stands.” So when you—we lock up $200,000. When you want your interest rate, your rate can’t float. If you want to have your rate locked so that you don’t have your rate move by 0.5% on you the rate has to be locked. In order to lock it, you have to pace an order for that money, and someone has to go out there and put a precommitment on the street that you are going to sell them that loan in 35 days. And when you don’t close that loan in 35 days, that loan doesn’t get done in the lock period. Because you decided you don’t want to close it, or maybe this someone at the other end can’t do it. We call you and say it’s going to cost you an extra $250. That’s the cost that extra 5 days or 7 days to lock that money up for $200,000. Does that make sense?
Kevin: I mean over a month, that amount, that $200,000 loan amount over 4.5% of that money is supposed to be delivered on, well, let’s call it 5%. Of $200,000, that’s $10,000 a year, that’s $833 a month, for every seven days you are talking about over $200. So if we need to extend your lock, for seven days, and we need to charge you $200, I am not going to pay for that, you guys eat it. That’s not the way it works!
Kevin: When we place a pre-order and we expect that thing to be done, and all of the sudden your home doesn’t appraise, now we got an issue. You said it’s worth $210,000, we’ve appraised it, and it came at $190,000. Now we got to redo your loan, rework it, you know? There is an issue on your income tax, because you never file them. There’s an issue with your survey, because now the survey you gave us, we’ve found out that there is a pool in the property, and no, I am not going to pay for that extension.
It’s not about being it right or wrong, it’s about time cost to money. You know when the money is ordered, to be delivered, and someone that is expecting gets paid on that, you know, someone is going to be expecting to get 4.5% interest because they’ve locked their money up. Someone says: “ok, I will give you $200,000 in 35 days.” And they’re expecting now they’ve committed that money instead of giving it to someone else, and they’re going to give it to you and they’re expecting to get their 4.5% at that time. Someone is giving you $200,000, so, here is that perspective I was going to give you. Imagine you are the one that’s going to give someone $200,000. Imagine your friend comes to you, for $200.000. Right? Your friend, your neighbor, comes around and says: “I want to buy the home next door for $200,000. Can you give me your $200,000 please? ”
Kevin: So here is you at home, with your $200,000. And your neighbor says: “Ok, what is it going to get to get $200,000 from you?” Well, here is the thing I need. I need to make sure that the home is going to appraise for $200,000, so we are going to order an appraisal, and we’re going to get a fair market value to make sure that the money I am going to give you is actually worth the collateral that I am going to have to back me up here. Right? Because I am going to give you that money, but I am going to go on title on that home with you in case you don’t pay me back, I am going to take title to the house because you never paid me back.
Kevin: People don’t think about that. And there are people politically, that use that against us in this country. They say they make us think that we don’t get to pay our home back. You don’t have to pay that back, that’s the evil lender. Right? Well, what if you are the lender? What if you are the person that gave them the money, and they don’t pay you back, and way the minute, they don’t deserve—people have a right to a house, you can’t take their house. Oh, yes you can. It is not their house.
Jeff: Not until it’s bought and paid for.
Kevin: It is your house, right?
Kevin: As well. You have equal right to it if they’re not paying you for it, it’s your money, you get the house. You only get it—it’s only their house once they’ve paid you off. But we’ve been dumbed down so much in our society. We have become so ignorant? We ignore the reality, Right? Ignorant?
Jeff: You just made a new word.
Kevin: Yes. No, I didn’t make it, I made a new pronunciation. Right? So we are ignorant, right? And negligent, we neglect to educate ourselves on what a title to a home is, what a deed is, what it means—we don’t wake up into the world and have right for someone to give us property. Our people fought for that right, ok?
So now here is you, you are me now, you are lender, and you want to give someone money, and they would say, ok, now I get the appraisal, now I want to buy the home. Wait a minute, I need to get a survey. I want to make sure where the land lines are, so that I know what amount of property I have a right to. In case the neighbor next door, at the other side, decides to put a fence half way through our property, I want to make sure I can legally defend ourselves by showing what the title company is going to commit to and insure as the property. See, the title company has to insure the property, the deed. They have to insure that—where the property lines are. And the title company has to insure that survey. And if someone has built something over their property lines, or if there is something encumbering that property that’s going to be—maybe there is mineral rights on that property, right? That’s going to show up somewhere else.
We’ve got to find out who has—where the lines are. So I am going to get a survey, to feel comfortable to give you my $200,000. There are people calling these junk fees, ok? Well then—so let’s now go into how are you going to have title insurance? I want you to make sure that this title is clear. There is no IRS lien under there they’re going to come and take that property—I am going to give you my $200,000 and now the IRS is going to come and claim the property, that I rightfully own, because I gave you my $200,000.
I own that until you pay me on it. So now we going to have a title insurance to insure that the title of the property is clean from any other liens. There might be a second lien, there might be mechanics lien, and someone else might actually own that property that you said you owned it.
Kevin: The guy who is selling that to you might not actually own that property. They might just say “I am selling it to you”. So you got to get title insurance, and you gotta make sure that that is cleaned up. So that’s important.
Now you want to also make sure that you got the title recorder, so there is a title recording fee. Right? So there is going to be a title recording fee at that county to make sure the county has record of who’s on title. Because that way no one can come in and claim it because the county is going to make sure they are, you know, watching your back to make sure that no one is going to come in and sweep it off from under you. That recording fees can cost $125 to go—someone is going to go down there, record that for you, and claim that it’s recorded for you. Right?
You also going to have a tax service fee. Someone is going to document and make sure that those taxes are current, they’re up to date, right? And you are going to get this tax service fee. You know, they’re also going to make sure—so you are going to pay the $75 for that. You gotta make sure that there is flood insurance. Do a background check to see if the home is in a flood zone. I want to make sure that home is not in a flood zone! The home is going to come and get wiped away! You are my friend, you want to get $200,000 from me, what if that home, what if there is a creeker—let’s say I live up in Idaho, and I own $200,000 you want from me. And you want to buy home here in Texas. I don’t know if there is a raging river five feet from your backdoor. You know?
Kevin: So you got to get flood insurance of what’s the likelihood of neighborhood floods. And if it’s not, I want to make sure that you are covered as the homebuyer, and we want to make sure that there is a flood insurance that covers that loan I can get back if the home gets wiped out. Because that might not be covered by homeowners insurance. I am going to make sure that I am on the name with that homeowner insurance with you. You want to make sure you get your home owners insurance. I want to make sure the taxes are paid, so we want to make sure that taxes are up to speed when you buy that property. The tax is got to be paid.
So these are all closing costs. These are the things that we are talking about when you are getting yourself into a home loan. And then, let’s say, I don’t want to be the person that checks on your taxes and insurance. I mean your income.
You want $200,000 from me, but I am working every day! I am busy! Yeah, I got money, but I am busy! So I am going to hire someone that I approve, to underwrite your income, your assets, your down payment, your credit worthiness, your liabilities, to make sure that you are capable of paying me back. So I want to hire an underwriter. And an underwriter is going to charge me money. It’s called an underwriting fee.
And the person that puts that payment forward for the underwriter, to make sure that it’s all clean and tidy in a nice, orderly fashion, not half-hazard, it’s called a processor. And that processor it’s the one who is going to make sure they verify your income. Not the underwriter, the underwriter is going to make sure it’s been verified. So the person that is verifying it it’s your processor.
We’re going to verify your down payment with the bank. We’re going to verify your taxes have been filled. We’re going to verify the appraisals come in, and that it matches the survey. And that the title insurance is clean. And then when we are done doing all that, when we feel it’s clean and ready to be approved to give you the money, the underwriter is going to verify it. So there is a processing fee.
This is what people call junk fees. These people who do this work for you to make sure that your money that you are going to give somebody is protected, people call that junk! They dismiss it because they don’t understand it.
Kevin: They dismiss it so they can make fun of it, and when you are not educated, you make these comments. So a mortgage company who says something silly like: “We don’t believe in closing costs”, is taking advantage of you. Of course they believe in them, they’re going to pay for them, if they don’t believe in them, they’re living in fantasy land. What they’re doing is saying: “We don’t want you to look under the hood, to find out what your options are if you had paid closing costs, to see what your rate would be, and actually compare that with something else.” You think that you are going to get something special, free, something that is strange to the world, when these things actually exist. They are real. And someone is going to do the work. They’re not going to get a loan that has no title insurance, or survey, or appraisal, or tax service, or flood insurance, or processed, or underwritten. And the person that’s going to take your information, and talk with you, and determine whether you are even fit to be given money from you, it’s called a loan originator. They’re going to go to you in Texas, they got a friend up in Utah who’s got $300,000, let me talk to you and find out if this is going to work. Well I’ve got a 440 score, that’s not going to work. Ok.
You don’t even have to pay for the processor. The processor is only going to get paid for the loan that gets closed, right? The underwriter is only going to get paid for the loan that gets closed. The loan officer is only going to get paid when the loan closes, but, they charge an origination fee. That origination fee gets charged to pay for these kind of people. And then there is of course, the electricity, the lights, right?
Kevin: The computers, the paperwork…. You know, the other things that come into the play. So, if you have never thought about these things before, you’ve never thought what if I was given my $200,000 on loan, it’s something that I hope that you’ve been listening if you have actually spent the time and you’re listening to us for the last several minutes.
That is giving you a different perspective. Hopefully it has given you a different appreciation of what actually goes on behind the scenes. There is a lot more by the way. There is a whole lot more to it. But we want to make sure that you are educated so that you have a piece of mind so that there is nothing gray out there. You are not all anxious and worried. When you know what these things are, you might be checking on them yourselves. You might dig into that appraisal value first. You might look in the neighborhood and find out if it’s in a flood zone. Look around, see if there is creeks around, see if there is a gas pipeline.
You know, big oil field going through your backyard. You want to know these things, so that you are educated. And you are what they call, literate. You want to be literate. And there are options to do that. And so, this is one of that options, listening to this show, we have all lines open here at 888-787-KLIF. 888-787-5543, our office, TexasLending.com, we share with you hopefully, building that trust, with our company.
That’s one of our things we want to do with you. We want to deliver that exceptional experience to you, and you are accessing your capital with a trusted, efficient, and competent source. That’s the TexasLending.com, it’s not just a platitude, that’s what our mission is. We want to do that every day, we get up in the morning to deliver that service to you, and let’s start with a phone call, and a live person that’s answering your phone call. How can you deliver an exceptional service when you are not providing service? So that’s why we have phone calls! Phone people—people answering your phone calls live. 972-387-4600, 972-387-4600. Jeff?
Kevin: You sat there and listened to all that.
Jeff: I did.
Kevin: Now, so the next part is, now we are just going to start, actually you are going to start grilling me when we come back, we are going to talk about some fun things that we’ve got going on right now.
Kevin: And, you also get to call in as well, try to stump us with your mortgage questions. Someone tried to call in with silly questions last week, we are looking for mortgage questions and we are happy to answer them for you. Call us now, or go to our office line. 972-387-4600. And we are to come back after these messages at KLIF.
Jeff: There we go. Was that a little off queue?
Kevin: I don’t know. All I know is that when the Rolling Stones start, you forget about everything else. And we are there talking about your home loan, that’s all. We’ve just talking about your home loan, Kevin Miller here, Jeff Collins, we are talking about things that happen during the mortgage process. Talking about the closing costs a little bit today.
Kevin: We just wanted to take some time out today from some heavy cowbell and some other things and just say: “you know, what, let’s talk about some things that people may not think about every day.” And there is a lot of other things like credit, how that works for you, how you can use that to your advantage. On the closing cost thing, you have a choice. And the choice is, you can search and understand what these things are, you can also decide not to have them.
And when you are buying or refinancing, there are options that reduce them, and have them paid for in your loan, and we want to help you with those decisions her. Maybe you are thinking about refinancing. Maybe you are thinking about I don’t want to pay a bunch of money for that. There are options to do that, keep your home equity, keep your principle value the same, by having your closing cost roll into your loan.
Let’s ask about those things, you can call our office right now, if you want to get a loan. If you are talking about refinancing, rates are back around 4.25, 4.38, lately, and they’re moving up-down daily. Your APR is typically on the 4.5% for the best scenarios if you are great to land them out, credit score, home equity situation, in terms of how much your home is worth.
You have some good options there. The 15 year are around 3.38, they are in that area, give or take, depending on your closing costs. And how you arrange it. Just giving you a ballpark, they’re moving around daily, and they can be half percent higher than that, if you want to look at some loans with a lover closing costs. So, call us today to find out what your options are. If you’re at5%, if you are driving around, I am going to try to make it clear,
Jeff: Talk to me like I am not smart, I mean really for me, talk to me. As if I am not help me understand.
Kevin: Why would that change? Why would I talk to you any different than I have…?
Jeff: I just want to make sure that we are on the same page. Brother, you gotta break it down for me. So really, if you are at 5%.
Kevin: Okay. And you have a—let’s call it $200,000 mortgage. And you have the opportunity to take that 1.5% lower, right?
Kevin: if you drop your interest rate by 1.5%, you are going to save about $200 a month on your mortgage—on your interest.
Kevin: So, over a year, you might be able to save $2400. I am just giving—I’m going to just say that’s about what you are going to save. So you’re going to save about $200 a month, after you get your loan done. If you have a $200.0000 loan, and it’s at 5%. If you going to take it to a 15 year, maybe you have 20 years left on this thing. Maybe you have 23 years left and you think: “Wow, what if I rook this thing to 15 years, got rid of 8 years, lower the interest rate, save myself some interest,“ Chris Johnson talked about last week how much interest you would save on a 15 year versus a 30 year, the difference right now over the interest was saving people over the term of the loan a $130,000 of interest. How much can you buy with a $130,000 instead of paying it to an interest to a house if you can make that extra option for yourself?
Kevin: Someone actually called in, I heard, and had something to say, you know, “Why you guys are trying to get people to get higher payments?” We don’t make anyone do anything. Do we?
Jeff: No. That’s an option.
Kevin: You have a choice for a 5 year, 10 year, 15 year, 20 year, 25 year, 30 year, these are your payment options. The lower options will save you interest payments over time, the higher interest rate over a longer period of time will give you a longer payment now. So if you are sitting in a situation where you don’t have extra money, your best option is probably the longest term loan, right? With the highest rate. The shorter term loan with the lower rate, because I am giving you my $200,000 and I can get it back sooner, I probably would accept a lower interest rate on it.
Kevin: And so, you as a consumers, say I can accept a higher payment. The mortgage company, it doesn’t make any difference to them. When you owe me $200,000, and we are going to make the same return because all the loans are sold [Inaudible 48:08], when loans are sold to them, mortgage companies get a stipend. Maybe it’s a 3% of the loan amount. So they might make that much money to pay off that people and personnel who do the loan. And if they’re going to make that amount of money, that 3%, they’re going to make a 3% on the 30 year loan, they’re going to make 3% on the 15 year loan, they’re going to make 3%– because the rule—if you all haven’t noticed, there has been a lot of new laws out there that have made it very challenging and—it’s uniform, mortgage companies all—they can’t charge you over 3% in closing costs, if they’re going to pay off closing costs, you know, they’re going to pay them off… so here is the point. Companies that going to charge you closing costs, they’re going to pay off those closing costs off, they’re actually going to do that with the actual costs— where those things are. If you are going to pay a title, you increase the rate to pay off that title.
Kevin: So anyway, we want to talk about our Red Carpet experience.
Jeff: We do, we do.
Kevin; What is that?
Jeff: Well, the Red Carpet experience, if I am not mistaken, it’s an opportunity for realtors, if you can hear us at this point in time and also some builders if I am not mistaken have an opportunity to be able to come meet TexasLending.com, the staff, Kevin Miller, and all the people that make this thing work. I mean absolutely work without flaw. This is an incredible event, the Red Carpet experience. Kevin is going to be happening at Three Fork if I am not mistaken, you’d like to tell us a little bit more?
Kevin: It’s up in the toll way in Dallas, North Dallas, probably Callaway County at that point. Three Forks, and I am not quite sure. It’s on the Toll Way, it’s up just pass North Trinity Mills road, north to Trinity Mills, and if you are a realtor, it is this Thursday evening, at Three Forks. We are having a drawing for a Television.
Kevin: I think it’s a 12 inch black and white with rabbit ears from 1965?
Jeff: So, a collector edition?
Kevin: Well, call it what you want. It was sitting in my house, and I got to get rid of that thing.
Kevin: So we are raffling that, and we are also raffling an iPad,
Jeff: First generation, I guess?
Kevin, yes, it’s cracked a little bit on the back….
Jeff: No problems there, excellent.
Kevin: I’ve got an old baseball bat that had some pine tar on it.
Kevin: Yes. And a skateboard that’s missing a wheel. These will be given away at our Red carpet and more.
Jeff: In addition to a brand new iPad along with a 51 inch color TV, I this plasma?
Kevin: Yeah, yeah.
Jeff: Ok, alright.
Kevin: LED, whatever they call it.
Jeff: LCD, LED.
Kevin: Somebody is going to have to teach me that stuff.
Jeff: As long as it turns on, I’m good.
Kevin: So, we’ve got a brand new television and a brand new iPad, will have that drawing and then we’ll have a 40 loan consultants there. We already have hundreds of people RSVP-ed, is it a big event. So, we are going to share with you what we are bringing to the home purchase market here in DFW. If you want to get involved, call our office Melanie Morris will take your call. If you want to call our office right now and talk to a loan consultant Melanie Morris will take your phone call.
Kevin: She is smiliest person in the world. If you look up smiles in the dictionary, you will probably see her smile. And she would take your, if you want to call her now, she will take that call for you with a smile. She can’t help it.
Kevin: It’s a DNA thing.
Jeff: She was born like it, and that’s why she is who she is. I mean, she’s fantastic! So that number is 972-387-4600. If you’d like to be able to find out about that 30 year to a 15 year, how can that fit you, that number is the same, 972-387-4600. If you are realtor, you’d like to be able to find out more about this Three Forks thing, what’s Texaslending.com all about, we are going to help you, you’d definitely want to call 972-387-4600.
Kevin: When you call a company, how many of you cringe at how that phone is going to be answered? Is it going to go to voice mail, is it going to be somebody that is just cranky? You know, they’re not going to spend any time with you, are they just not going to be sweet and pleasant? When you call our office, we have very nice people answering the phone.
Kevin: And Melanie Morris is one of them. And if you want to call now to talk to a pleasant person and talk to a pleasant loan officer, this is the place to do it. That’s how we deliver exceptional experiences here. It starts with hopefully old education here on the show, and then hopefully you get a phone call and a live person answers and they’re pleasant. Then you talk to a loan officer who is pleasant. And they give you the proper expectations, this is how an excellent experience starts. And, you know, you have Melanie out there on that side, and we’ve told her, if she doesn’t smile, then we’re going to, you know, then we just won’t feed her, you know.
Kevin: And so, you know, that’s how you got to make these people—
Jeff: Everybody’s gotta eat!
Kevin: You have to force the smiles into them.
Jeff: Yeah, not with Melanie though, I mean she is just been born with that disposition of smiling.
Kevin: It’s actually a disease. Because when she is frowning she is actually smiling less.
Jeff: Yeah. You just wouldn’t know, yeah.
Kevin: So no one ever knows, and it’s unfortunate, it’s probably like—it’s like a curse. It’s like those pretty people curses, they’re always pretty, and people are always telling them they’re pretty, like you Jeff, you’re pretty.
Kevin: You are pretty.
Jeff: I don’t know that really thanks, Kevin!
Kevin: Hey, just because you haven’t heard it before,
Kevin: Maybe Jamie and that, maybe no. maybe she finds you handsome, just because you haven’t heard it in that context.
Kevin: Pretty is usually—you know, now you are getting all red and shy. Don’t worry about it, it’s going to be ok.
Jeff: I tell you what Kevin,
Kevin: radio people can be pretty too!
Jeff: Well, yeah, they can. Not often, but they certainly can, indeed. 972-387-4600. As we wind up the show here Kevin. I think we have enough time to still be able to give away a gift card. Alright? If somebody is going to be able to call in to the KLIF radio station at the number 888-687-5543. 888-787-5543. Kevin do you want to explain the rules as to what we are doing here? Being able to ask a question about how you are smarter than a loan officer requires them to do what?
Kevin: They just have to call and ask a question, they just have to contribute to the game.
Kevin: That’s what it takes. It’s just an attempt. It is what we call a learning event on both sides.
Kevin: You know, someone can call and we can answer a question for them, and if we are right, we are of course right, and if we are wrong, they won’t know we are wrong anyway, because it’s a mortgage question, so…
Jeff: What it boils down to is you call in now, you going to wind up with a gift card. That’s just it. Courtesy gift of TexasLending.com. Giving back into the community that so richly gives in to us. That number again is 888-787-5543. 888-787-5543.
Kevin: And if you want to talk to the cursed Melanie, it’s at 972-387-4600.
Jeff: Leave her alone, man. She is awesome! There is nothing cursed about Melanie whatsoever.
Kevin: If I was always smiling.
Kevin; you know, and I couldn’t take that smile away.
Kevin: I mean, look—there are people that simply want to be that way. Look at the joker. He always wanted to be smiling. He even drew it on his face.
Kevin: Ok, clowns. You know? They always want to smile.
Kevin: They just can’t. So they have to draw on their face. Melanie, you know what? They’re just trying to be like Melanie. And those are the kind of people you want to be around. You know people that are trying- she’s an ideal person who is always smiling. And I am not kidding!
Kevin: you guys—when everyone walks in and goes: “Well you have a great smile!” And so she is always smiling, and she smiles more when you say it.
Kevin: You know? There is not enough room in the room for her to smile anymore so anyway, that’s the kind of person to call. I can’t overstate it. 972-387-4600. Ok, Mr. Jeff?
Kevin: Yes sir.
Kevin: We talked about closing costs a little bit today.
Jeff: We have. I think that we’ve dispelled the myth behind what is a junk fee, what is not a junk fee, and we certainly have established the fact that closing costs are not junk fees. It’s the cost of doing business. You have the opportunity to pay for that stuff upfront, you have the opportunity to be able to roll it into the loan and pay a little bit of interest along with it if you wish.
Kevin: A lot of companies are rolling these things into the mortgage now. Present new rules are so stringent and mortgage companies just don’t want to deal with it. And, you know, how do you pay this of, how do you pay that off, is that going to be some kind of lender credit or something to pay something? These days is usually just rolled in into the loan in most cases. We want to help you out with those decisions. You can call us, make the decision of whether you want those closing costs or not, in your refinance, on your home purchase, on your home equity loan. And we didn’t spend much time talking about home equity loans.
We have a couple of minutes here and I can just say that right now the rate is going down a little bit, and you might have a hangover from the beginning of the year still, and you might want to think about getting yourself a home equity loan. Call it a cash back refinance. Is a refinance that you can get, where you can get cash back! And so, why is that so important? Well, if you can pay out your current loan, that’s at 5 or 6%, lower your interest rate on your mortgage, you might be able to get out $20,000 and keep the same payment, and it really just depends on how much you owe and what your current rate is.
Call us at TexasLending.com. We do a lot of cash back refinance loans. And we do usually about 20% of our closings every month, in month in month out our cash back refinances. Because people always need cash.
Kevin: And some of you know how to get cash, and some of you don’t know, well what does that mean to me, you think it’s something different or crazy. It’s just refinancing your house and getting cash. The mortgage companies are held to a different rule, the home equity law rule, which means that we can only give you up to 80% of the value of the house in cash, which for you means you’ll still have 20% equity in your home when it’s done.
As long as the appraisal is valid, as long as the appraisal is a good one. I mean there have been some good companies in the old good days, or in the old bad days, depending on how you look at it, who would fake your appraisal increase the value to give you more money, because it was not sweat of their back to do that, and then all of the sudden our have home that’s upside down, and you can’t refinance it, you can’t sell it, this was happening.
Kevin: And those companies aren’t around. Those companies are gone, ok? But these days, you know, you have all these new rules, home evaluation, conduct of credit, new appraisal rules, protecting you, the consumer. You have an option to get in your cash back refinance today, potentially dropping the rate. Maybe the term. Maybe you want to say I want to get some cash, go from 6 down to 3.875,or somewhere on there on a 15 year mortgage, because it costs a bit more to get a cash back refinance.
You might be able to get into that kind of loan. Call in, and check it out. Your APR is probably going to be 4.25 for those loans for most people, depending on your loan size, if your loans are smaller, it might be higher. But it’s an option for you to get some cash to pay of your bill. We have those here at Texaslending.com.
Call Melanie, the smiley one. 972-387-4600. Jeff, we have about 20 seconds left for you to use your best talents to get us out of here.
Jeff: You want me to use my radio voice?
Kevin: Oh, yeah, sure.
Jeff: Excellent. Coming up next week we are going to talk about TSHAC program with our very special guest Christine Miller, and TSHAC is a very unique program so you definitely want to make sure you want to stick around to be able to see that. This is news and Information at 570KLIF.