So You Wanna Refinance

Speaker 1: [0:08] Hello, hello, and welcome to the Awesome in Seattle podcast. This is your host, Christian Nossum, and I am joined by my co-host today, the wonderful, as always, Charlotte Reynolds.

Speaker 2: [0:19] I'm as always today because Jason's not here.

Speaker 1: [0:22] Exactly. Jason's, you know, doing work, doing a home inspection. Geez, doesn't get to join us on the podcast, so. Uh, today, we are joined by a very special guest, the one and only Mr. Dan Keller of CrossCountry Mortgage. Dan, welcome.

Speaker 3: [0:39] Hey, hey. Good morning, you guys. I, I feel like any time you introduce me, I gotta say, uh, my MLO number is 115349. We spent, we spent so many years on the radio, and it was my cue- Mm … when you introduced me. Yep. You were like, "Dan, what is your MLO number?"

Speaker 1: [0:55] I'd say it every single time- Yeah … we were on the radio. It was fun.

Speaker 3: [0:58] Yeah.

Speaker 1: [0:59] All right. So today, we are going to talk about, and we're gonna break it down in very simple terms, but then also go pretty deep into refinances, uh, otherwise known as refis, and then also ex- talk a little bit about mortgage rates because, I mean, where are we? We're at September 3rd of 2020, and there's tons going on. Um, so let's jump right in. Dan, on a very, very basic level, what the heck is a refi, and why would you wanna get one?

Speaker 3: [1:29] Yeah. It's an in- that's a great question, too, for you. I know you guys spend a ton of time working with, and, and w- we as well, working with first-time home buyers. And we spend so much time educating first-time home buyers on the process that we forget to educate them or to enlighten them on, um, the management part of it, like the future- Mm-hmm … you know, down the road. Yep. And so the great thing about a mortgage, much like real estate, when you buy real estate, you have options. You can rent out that real estate down the road. You can sell that real estate down the road. You can pay that real estate off down the road if you have a mortgage. Um- With a refinance, with a mortgage, a refinance simply is if the market improves, meaning if rates drop down the road lower to the interest rate that you have when you purchase the home, you can re- Like, re means redo, finance, so you can get a new loan. You can refinance the existing loan that you have to a lower rate, which is awesome. And so what we're seeing right now, I mean, the last h- what was the last home buyer class we did? March? Early- Yeah … early March. Early

Speaker 1: [2:38] March.

Speaker 3: [2:38] Yeah

Speaker 1: [2:38] Right before this all hit, yeah.

Speaker 3: [2:39] Right before COVID. And we always would put up kind of a slide where rates are at and what the market was doing, and at that time, interest rates were trending right at the 4% to 4.125% range on a 30-year fixed. Well, just to give you an example of how the market has moved or improved since COVID, today, you know, we're quoting 30-year fixed rates anywhere between 2.625 and 2.875.

Speaker 1: [3:05] Uh, that is absolutely insane. I'm-

Speaker 2: [3:07] That's ridiculous.

Speaker 1: [3:08] Yeah. I'm literally shaking my head, like, in disbelief that I'm hearing that out of your mouth right now. Yeah. 'Cause that's just absolutely insane.

Speaker 3: [3:16] It's … And I'm right there with you, right? Yeah. So, um, and so think about it. If you were to, if you purchased a home in February of 2020 and your 30-year fixed rate w- is four and, uh, 4.25, I mean, you can save, depending on the loan amount, anywhere between $300 and $600 a month by reaching out to your lender or a mortgage professional like myself and saying, "Hey. I have a 4.25 rate right now. Can you do better? Can you help me save some money on my mortgage?" We'll run numbers, and then you just go right back into the same process that when you purchased a home. The lender's gonna wanna look at your credit. Your, basically your ability to repay a new loan. All right? Yeah. So you don't have to do it with your existing lender. In fact, right now, a lot of the big banks and credit unions are so busy and they're so focused on, uh, originating PPP loans for the government- Mm-hmm … they're not focusing on serving the hundreds of thousands of homeowners that want to refinance. So people are coming to me from the big banks and saying, "Hey, um, I'd like to refinance my loan. I was referred to you by my realtor, by my friend." And, and you can do that. So you're not pigeonholed to using the same lender that you had, that you took the mortgage out with, although you can do that. Um, and then you just, you, you start the process over. Pull your credit, look at your income, look at your assets, order an appraisal if needed, and, uh, and then you get a new loan, and the process takes about 30 to 40 days, just like when you purchased a home.

Speaker 1: [4:40] Yeah. Yeah, that's what I was gonna say, too. Like, timeline for closing on a refi can definitely be longer-

Speaker 3: [4:46] Mm-hmm

Speaker 1: [4:46] than, you know, when you're doing a purchase. When you're doing a purchase, at least when you're working with us and you, um, I mean, we try and make those things fly as quick as possible, but we do a lot of that heavy lifting up front before- Yeah … you're even under contract. Yeah. So with a refi, I mean, there- pretty common. I don't know, you tell me. Is it, is, isn't 45 days pretty common- Yeah … for a refinance?

Speaker 3: [5:08] Yeah. The big banks, the online lenders are quoting 120 to 180 days- Jesus … right now. Jesus. Just because, yeah, just because of volume. We're still 30, we're still 30 days. What I'm asking my clients right now, though, and you know this, and, and we're, I mean, we, we received, I think, three contracts from your team over the weekend- Yep and they were 20 to 23-day closes.

Speaker 1: [5:28] Yep.

Speaker 3: [5:28] Purchase, we're still in the peak of the purchase market. I know you talked about this on your podcast, that COVID has kind of pushed off, you know, pushed out the purchase market into September and October. So we're still in a really hot purchase market. So purchases take priority. They always do, they always will in my office because of the contract, and because of- Yeah … multiple offers. So what we're asking our refinance clients right now is to simply just be patient with us. We're still 30, 30 days, but, you know, we may ask to push you out five to, to 10 days, depending on, you know, if we have to get a, a, a purchase contract closed. But yeah- Mm-hmm … 30, 30 to 40 days in our office. But nationwide right now, it's pretty ugly. It's, I'm seeing- I had a, I had a client call me the other day and said Chase Bank quoted him 180 days. That's

Speaker 1: [6:15] insane.

Speaker 3: [6:15] And they won't lock your rate until they- What? … have an appraisal back. Mm-hmm. So I would not want to float or have an interest rate not locked for 180 days, and we'll talk about this in a minute because a lot's gonna happen in the next 180 days, and you know that. So it's gonna be crazy. So yeah, it's, it's… The, the most important thing with a refinance is that you understand your savings, and that you lock that interest rate in as fast as you can, and close as quickly as you can to guarantee those savings.

Speaker 1: [6:42] Yep, and then just be a little patient, because it's gonna be a little longer than what we're used to- Yep with a purchase potentially.

Speaker 3: [6:48] Mm-hmm. That's correct.

Speaker 2: [6:50] Well, Dan, I have a couple questions for you. Uh, my first question is a bit of a two-parter. Um, so I wanna start with where rates are at currently. I know you mentioned a couple numbers before. Um, and then can you also explain a little bit about who controls them?

Speaker 3: [7:07] Oh, yeah. I mean, that's a, a big question. I feel like I answer that a lot just on, you know, day-to-day, just day-to-day conversations with homeowners, and it's important, especially understanding, and everyone's aware of the times that we're in right now. We are in, um, a pandemic, right? I mean, it's September 2020. So if you're listening to this a year from now, um-

Speaker 1: [7:29] Hopefully it's over … Speaker 3: hopefully we're out of this. Please. Yes, uh, hopefully we're out of this. Um, but yeah, I mean, right now we're in the middle of a pandemic. Typically, you have to understand this, that money and real estate, but money more than real estate, is impacted by global economic news, both global and domestic economic news. So right now, the United States of America, um, man, I'm- Christian and I were talking about this yesterday. I read, um, some data from, uh, marketwatch.com that one-third of all Americans in August missed a mortgage payment. Okay? That's insane. And then we still have… Yeah, I mean, there's still- 20-plus million Americans, um, and, and don't, please don't quote me on this, but this is just some information that I've read over the last, you know, week or so, that are still on unemployment or filing for unemployment. Nice. So when you take those numbers, you guys, it's, um, it's, it's, it's crazy. And, and so what that does, anytime there's recession-type news or negative-type economic news, the cost of money decreases, and we've seen this with the Fed. The Fed funds rate, which controls prime, which is directly attached to, like, auto loans and credit card loans, the interest rates, um, on HELOC, stuff like that, we've seen it drop. And then if you've paid attention to any of, um, the Fed, the Fed chairman's comments lately, the Fed has committed to keeping the Fed funds rate or prime low through 2022. And what that means is they wanna keep money for Americans relatively inexpensive as we make it out of this pandemic. So interest rates, although they're not directly attached to the Fed, they move in accordance to economic news or economic stability. Mm-hmm. So as the market is, is taking a beating due to a pandemic or due to economic crisis, money tends to get cheaper. As the market continues to improve, um, rates get more expensive, okay? It's that ebb and flow, and-

Speaker 2: [9:38] Mm-hmm … Speaker 3: well, we're, we're seeing that right now. What we, what I don't understand and what I don't like, and if you talk to any financial planner or economist, and I don't really wanna get too involved in this right now, but you need to know this if you're listening, go Google the Dow. And I want you to, I want you to see, and then you can click on, it'll give you what the, what the Dow is trading at today, and you can look at it, it- its movement over the last six months. You s- … Today we're at record highs. You hear the current sitting president, President Trump, who takes a lot of pride in the economy and the Dow and in investors, you see him boasting about this all of the time that, "Hey, if it were any other president, the Dow would be crashed by now." I got news for everyone. The Dow is going to crash at some point, whether it's under, you know, President Trump or a new president, because it's trading at all-time highs during a pandemic. How are some of these companies' stocks trading where they're trading right now? And what you need to also understand is- There really are about four companies right now that are inflating the Dow, tech companies, and we've heard of them all. And so it's important to understand that, you guys, that we have negative economic news. We have, we, our GDP is down. Things that drive interest rates are down, but we have a stock market that's out of control. So what I wanna do is encourage each and every one of you that are listening to follow that. As you see the Dow, as you see, and the Dow is another word for the stock market, okay? As you see the stock market continue to lose steam, pay closer attention to interest rates because typically, um, it's, it's a sign of the economy, and right now they're working, they're very, very opposite. You have the Dow that's showing that the economy is doing quite well, which, which it's not, and then you've got Fed, you know, the Fed chairman over on the other side going, "Hey, we're gonna keep Fed funds, the Fed funds rate super low for the next couple of years," and then you see mortgage rates very low as well. So just be cautious- Mm-hmm … of that, but mortgage rates move relative to how the economy is moving, both positive and negative. Okay. So yeah, there's lots of like different factors that kind of-

Speaker 3: [11:47] Yeah … Speaker 2: play into that. Yeah. So why, why should people care about this? Yeah, I mean, I think it, at the end of the day, I ask, I would ask you this, you know, if, if, uh, what would, if you were walking down the sidewalk, um, and you saw five $100 bills on the sidewalk, well, every single month, what would you do with that $500? You know, it's, it's literally, it's a gift. It really is- Yeah … nothing short of a gift. If you have a 4.25, 30-year fixed rate and your monthly payment is $3,200 a month and you're fine making that payment, you always have been, but what if I said, "Hey, um, your new monthly payment's $2,700 a month." You, you literally just put $500 a month back into your checking account or whatever you'd like to do with it. So- Mm-hmm … that's why I think it's so important right now. There's no catch. This is an opportunity for every American, um, every homeowner and every first-time home buyer to realize a gift, realize savings, and take advantage of it.

Speaker 2: [12:52] Yeah, that's, I mean, who wouldn't want an extra $500? Mm-hmm. I mean, last night I was walking down the street and I found $40 and I was really happy- about

Speaker 3: [13:04] that, so. Yeah. Exactly. Exactly.

Speaker 2: [13:06] So all that being said, and, you know, the idea of saving money and that, who should consider doing a

Speaker 3: [13:11] refi? Mm-hmm. I- there's three reasons why I would advise someone to refinance. One, uh, if you can lower your interest rate by at least, I, uh, some lenders will say one point, some lenders will say a half a point. I kind of like to split the difference, um, at three quarters of a point. If I can save you almost one full percentage point or if someone has debt and I can save them a half a percentage point, but it's saving them $300 a month or $200 a month, and that $200 a month savings could help pay off a credit card. So normally a half a point to one point drop in your interest rate, it's worth looking at a refinance. Okay? The other thing that I'm gonna do when refinancing someone is I'm gonna show them, I'm gonna give them my opinion, but my opinion doesn't necessarily matter. Uh, I'm gonna show them the total cost of that refinance. So if we're saving them $200 a month and it might cost them $6,000 to refinance, and obviously those closing costs are rolled into their new loan, but nonetheless, it's a cost. Mm-hmm. I want them to see what that is costing them over time, how long it's gonna take them to recoup adding $6,000 to their loan amount. Okay? So- Yeah … one, if we can show a net savings benefit by dropping their interest rate. Number two, um, if we can drop your term. What we're seeing right now is 15-year fixed rates are at, like, 2 to 2.25%. I mean, it's, it's- That's insane. It's insane. It's insane. So we're seeing a lot of real estate investors calling me, going, "Hey, um, you know, I've got homes, uh, with 30-year fixed rates at 5% or 4.5%. I wanna drop it to a 2.5 to 3% 15 and just be completely debt-free in the next 15 years." Cool. So if you can drop the term and save thousands of dollars over time, that's another reason to refinance, and that's what, what this environment we're in right now is causing a lot of people to reevaluate the structure, the term of their mortgage. And then third- And I'm gonna bundle the third one up into a couple different scenarios. Um, if you have PMI, private mortgage insurance, if you bought a home in the last two years and you're paying private mortgage insurance 'cause you put down less than 20%, um, but your home has gone up in value, and you know this too, and I know you guys talk about this a lot, homes are appreciating right now because of the lack of inventory quite nicely, back to that 12 to 15% appreciation. So, hey, if your home's gone up in value and we can remove your PMI, private mortgage insurance, and save you money, that's another reason to refinance. So we're evaluating a lot of people's home equity situation right now. And then kind of combined with that is a cash out option. Um, you know, if you have some high interest credit card debt or some student loans, and because of the low interest rates you're able to consolidate other debt, that's another option, um, you know, to look into. So those are, those are- Mm-hmm … the three or four reasons why, why it would make sense to look at refinancing.

Speaker 1: [16:03] I got a, I got a question I wanna piggyback kinda off of that. Um, so when you refinance, let's say you have a, a $500,000 loan- Mm-hmm … and whatever your house is worth, doesn't really matter. Well, let's just say 750. Your house is worth 750, your loan is for 500,000.

Speaker 3: [16:21] Mm-hmm.

Speaker 1: [16:21] When you refinance, do you have to refinance for… And obviously I know this answer, but-

Speaker 3: [16:29] Mm-hmm … Speaker: not everyone understands this. Do you have to refinance for that exact 500,000 amount, or can you actually increase how much your loan balance is and get some cash out of your house- Mm like pull it out of your house? Um, is that a possibility? Yes. And what is that called? That's a good question. Yeah. So that's just cons- that's considered a cash out refinance, and you can do a lot of things with that. If… It, it all comes down to equity. So like you said, if you have a $500,000 loan balance but your home is worth, you know, 750 or 800,000, just for an example, you can pull cash out up to 80% loan to value, okay? So if you were to pull cash out, you can use that to, you know… A lot of people right now are pulling cash out to improve their house. Maybe add on that office that they wanted, or add that second floor, or do some landscaping work. Paying off, you know, credit card debt or student loan debt. Um, I don't like seeing people pull cash out to go on trips to spend money. I like, I like to see, you know, you pulling that out to put it, put it to a good financial use. Yeah. Some people right now feel kinda like I feel. I feel like the stock market is gonna correct in the next, you know, three to six months. So a lot of people are pulling money out of their home equity to, to be liquid, to have cash on the sideline so that when the, the, the Dow or the stock market drops to a certain point, they can put that money into the market and start getting that money working for them over there. So yeah. Mm-hmm. So what happens, Christian, is if you have a $500,000 loan balance, your house is worth 800- And you wanna pull $50,000 out, your new loan balance is 550, but you walk away with an extra $50,000 in your pocket. So absolutely- Yeah … you can do that.

Speaker 1: [18:14] Yeah. That's, and that's the beauty of real estate is you can kinda use your house to help you improve your house just by, you know, the market going up and, uh, and your value increasing, and- Yep then you can take advantage of that. You don't have to sell your house in order to pull some cash out and utilize the equity that you built.

Speaker 3: [18:35] Mm-hmm. Yep.

Speaker 2: [18:36] Yeah.

Speaker 1: [18:36] It's pretty awesome.

Speaker 3: [18:37] Just, just for some perspective, you guys, too, I have a chart here, and I know this is a podcast, so it's hard. But I want you to vis- visualize this. A $500,000 loan amount, okay? So you owe 500,000 and, um, I could get you a 2.875 30-year fixed rate. If that rate was, if your previous rate was 4%, so taking you from 4% down to 2.875, so basically a little over a 1% savings, that's a $300 a month savings. Let's say your interest rate was 4.5% and we dropped you down to 2.875, that's a $450 a month savings. And let's say, and I'm seeing this a lot, your interest rate was 5% or over, that's over a $600 a month savings right now.

Speaker 2: [19:22] Yeah.

Speaker 3: [19:22] So it's just, it's, it's something that I'm encouraging everyone, if you have a home, um, and you've pur- it doesn't matter if you purchased a home three months ago, six months ago, a year ago. If you have an interest rate over 3.5%, it's worth ha- it's worth having a mortgage professional like myself look into it, see if we can save you some money.

Speaker 1: [19:41] Yeah. And it doesn't cost anything to talk to you. Nope. Obviously, you make money when they refinance, if they refinance, but- Yep … you show them, this is why we love working with you, is you literally show them with your awesome software that says, "Hey, this is exactly what the numbers are showing you. Does this make sense for you, yes or no?" Mm-hmm. It's, like, very clear- Mm-hmm … once you see the numbers in front of you. So it's, it's awesome.

Speaker 3: [20:06] Sure. Yep.

Speaker 2: [20:07] So Dan, you mentioned, uh, PMI a little bit earlier. Can you explain what that is? I know that probably some of our listeners don't really understand that concept.

Speaker 3: [20:16] Yeah. Yeah. So if you've purchased a home, I sure hope you understand what PMI is if you have it. If you don't, your lender did a very poor job explaining your loan. Um, so if you purchase a house- And you buy it with less than 20% down, the lender, all lenders, are gonna require you to insure that mortgage until there is 20% equity. It's real simple. So it's a small premium that's included in your mortgage payment that you pay the lender, um, for not having 20% down. And the great thing about PMI is that it can be bought out and it, or it can be removed when there's 20% equity. And so what private mortgage insurance essentially is, is it's an insurance policy that you pay the lender saying, "Hey, I didn't put 20% down, so I'm considered a higher risk per federal regulation or regulating guidelines. And so until I have 20% equity, I'm a higher risk homeowner. But when I have 20% equity, that little premium that we pay every single month goes away, or you can apply to have it removed." Um, a lot of times, too, we do a lot of business with some, some, you know, tech employees around the Seattle area, and tech employees tend to get bonuses, you know, twice a year or annually. So let's say you get a bonus. You're paying private mortgage insurance. You get a bonus for $30,000. You can take that 30,000, put it towards your mortgage. You pay down what you owe. Your monthly payment then drops, and your private mortgage insurance is removed, and that's not necessarily called refinancing. That's called recasting, and we can have a totally separate podcast on that. But that's a big perk right now-

Speaker 1: [21:56] Mm-hmm … Speaker 3: that a lot of people are leveraging because… And it's, and it's a perk that a lot of people from this moment forward are going to leverage down the road, because you're not gonna wanna refinance 'cause you can't get a lower rate. If you were to refinance, your rate would go up if rates increase. So a feature that we offer, too, is called recasting, and that's how we're removing private mortgage insurance. Um, or if someone gets a bonus and they wanna lower their, what they owe and lower their payment, they can recast versus refinancing as well. Hmm. Cool.

Speaker 2: [22:25] It's nice that people have multiple options with that, like- Yeah … yeah. And PMI, like, people are, I… People are a little, a little bit reluctant on it, I feel like, but nowadays it's so hard to have 20% of- Mm-hmm … of a Seattle home price. So it's worth it, I think, to, to have that little extra monthly for a little bit- Well, and also- to be able to get into something … Speaker: yeah, and also PMI right now, with interest rates being so low, your PMI payment is also extremely low. Correct. They're tied to interest rates, and so when interest rates are lower, your PMI rate is lower, and it, it's really not that cost-prohibitive anymore like it used to be.

Speaker 3: [23:03] Correct.

Speaker 1: [23:03] So.

Speaker 3: [23:03] Yeah. Yeah, it's very inexpensive, you guys. On a $500,000 home- Yes … assuming you have decent credit, and you're putting down more than 5%, y- your PMI might be 120 to $140 a month. Not that much.

Speaker 2: [23:18] Worth it.

Speaker 1: [23:20] Yeah.

Speaker 2: [23:21] Um, so I also, I just have one last little question for you- Uh-huh … uh, for the minute. Um, you talked a little bit earlier about how, you know, the economy plays a big role, um, in affecting rates, so I just wanted to see if you specifically had anything else you wanted to speak to on that.

Speaker 3: [23:38] Yeah. I mean, kinda my closing thoughts coming full circle on that is, is, you know, Christian talk… Christian and I talk about this all the time, 'cause, you know, both of us have money in the stock markets and in real estate. And so it's… You know, I spend a lot of time talking to my financial planner. I spend a lot of time, you know, following certain economists that I respect. Um, and I think y- you know, moving forward, if you're listening to this, um, one, buckle up, 'cause the next three to six months are gonna be crazy. Um, listen to people that have more to lose than you. Okay? That's… I've, I've kind of made a career out of listening to people, getting advice from people that are in similar situations than I, but they have much more to lose than me. Okay? Mm-hmm. So for example, the owner of Wilson Real Estate, Christian's boss, um, if you ha- kinda have a quote, unquote boss. Yeah,

Speaker 1: [24:30] exactly.

Speaker 3: [24:31] Um, he, he owns a ton of real estate in Seattle, much more than Christian and I, and Charlotte. And so I would take real estate investment advice from him. You know, my mentor has 120 million in the stock markets. I'm gonna listen to my mentor versus a friend that I'm having a beer with that has 500K in the stock market. Yeah.

Speaker 1: [24:52] Or the stocker at Safeway, or- Correct … you know-

Speaker 3: [24:56] Yeah … the friend on social media that's- Mm-hmm … doom and gloom. Mm-hmm. And so just be cautious, you guys. The one thing that I'm telling my clients, 'cause I have to s- I do not wanna stay in, I don't wanna be in the financial planner economist ring. I'm not. I stay in my lane. I'm a mortgage professional. I get how mortgage rates move, and I'm really good at getting people closed on time with a great experience, period. Okay? So I stay in that lane. But I will tell you, I have a lot of money in the markets. I listen to people that have more to lose than me, and one of the things that I would encourage all my clients right now and people listening to this is, if you're concerned with how the markets are moving, if you're concerned about the markets falling or crashing, um, one, make sure you're getting really good advice. Because here's the thing, the market, the real estate market could crash 10% over the next year. The real estate market in Seattle could crash 20%, which it won't, and it could- And no, not one real estate agent that I know- No … believes that the Seattle real estate market is gonna drop 20%, but let's say it did.

Speaker 1: [25:59] Mm-hmm.

Speaker 3: [25:59] In the next year, if you bought a house right now at 2.875- But the market crashed 20% in the next year. A $600,000 house, that's $100,000 drop in value over the next year. You're gonna break even on that. You're still gonna make money on that transaction by buying now at a low interest rate than waiting and trying to time the market, but by that time, inflation's kicked in and interest rates are higher. Okay? So that's one thing to be cautious of. Make sure you talk to a professional and evaluate those pros and cons of your situation. The other part of it too, as we head into the end of 2020, we're gonna, fingers crossed- praying that we're coming out of this pandemic, right? But as we head to the end of 2020 and into 2021, we're hopefully exit- exiting a pandemic. Second, we have an election. A lot is on the table, and both of those things will move the market. I can't predict, nor do I even want to predict what the heck's gonna happen. So what you c- I'm just gonna tell you what I do. Watch the market. Watch the Dow. If the Dow starts to drop, that's gonna be good news for mortgage rates, probably pretty good news for real estate. If the Dow continues to go up and there's signs of inflation, that means interest rates are gonna go up. So just kind of watch those two things. I, I was telling Christian yesterday, there's two websites that I follow daily. One is called marketwatch.com, marketwatch.com. You can nerd out on that like I do, or you can literally just go there and see how the Dow is trading, up or down, and you can see what mortgage rates are doing, up or down. Okay? The other, the other I, I follow is Mortgage News Daily and Freddie Mac. So if you Googled Freddie Mac mortgage rates, I love Freddie Mac's website because what it does is it gives you an average of the top 100 lenders in the United States, and it gives you their average 30-year fixed and 15-year fixed so you can kind of see where rates are at. So follow those, and if you start to see them trickle up or trickle down, you can kind of see what the news… For example, if you see positive news around COVID and you see the Dow start to increase and rates start to drop, you can kind of see where the market's gonna trend, and that's what I would encourage you to do if you, if you care to watch it a little bit more closely.

Speaker 1: [28:23] Speaking of Freddie Mac, you… Well, not just you.

Speaker 3: [28:27] Mm-hmm.

Speaker 1: [28:27] I heard, and tell me what's going on with this, 'cause I heard that there was a, a half of a point, .5% increase on refis that were supposed to start September 1st, I think. Yeah. And then s- it got pushed back or something. Can you clarify what's going on with that- Yeah for, for the people that heard about that?

Speaker 3: [28:46] Yeah. This is a great, great way to wrap up this call on refinance. So while we were sleeping about three weeks ago, so literally while we were sleeping, the, um, the head of the FHFA, which oversees Fannie Mae and Freddie Mac, basically came out overnight and said, "Hey, Americans, it's gonna be .50% higher in cost to refinance your house starting on September 1st. So if your rate is not locked by September 1st, sorry, but your fees just went up by .50% for that rate." Well, what that equated to was about $2,000 in additional closing costs to Americans. Or if you didn't have the closing costs or you didn't want to wrap those into your loan, it's about an eighth of a percent higher in interest rate. Well, one, I'm just like the timing of that was just so poor and, and I think America spoke, and I think, you know, you, your industry is backed by the National Association of Realtors, ours, uh, the Mortgage Bankers Asso- Association. There's other, you know, special interest groups that back our industries. They were like, "This is BS." And so they went- This is- They literally went to Capitol Hill and they said, "Hey, wrong. Like, wrong timing. We are in a pandemic. We have millions of Americans out of work. We have millions of Americans that are basically just trying to get by, and you're gonna make the cost of saving money higher? You're an idiot." Yeah. And so it was really great to see what happened. Within a week it was overturned. A government entity, FHFA, was literally overturned by Congress in less than a week. So, but what they did is they pulled it off the table for September 1st, and they moved it to give everyone ample notice to December 1st. So on December 1st, the cost of refinancing is going to go up by .50%. And, you know, if you read between the lines or if you wanted to go Google what's happening, basically FHA- the FHFA, um, was put into place at the end of, uh, right before Obama got into office, and it was basically right before the or during the housing collapse, s- a government entity to oversee Fannie Mae, Freddie Mac, et cetera, oversee the mortgage industry, right? Well, the government took, basically took over the management of that. So the head of FHA- FA right now is trying to take them private Okay? So you all, you know that Fannie Mae collapsed during the- Yeah … last housing. And so the government came in and bailed them out. Mm-hmm. Well, it took them a few years and they paid back all the money, and it was… everything was good. Well, what they're trying to do is they're trying to take FHFA private, the, the head of, the head of FHFA. That's not a good thing because on one side you've got him, on the other side you've got the Fed chairman, and they're butting heads. And so really what's happening right now is the FHFA is seeing an opportunity to pad their pockets so that they can go private. What we don't want, we don't wanna see that in our industry because if FH… or excuse me, if Fannie Mae and Freddie Mac go private, you're gonna see higher interest rates for consumers, and you're gonna see reduced loan programs for consumers, and it could cripple the housing market. Well, let's say they go private a year from now. The housing market's gonna be coming or in a recession or coming out of a recession, that's the last thing that you wanna do. Yes. So you have our industries fighting against that right now, but that's kind of a little bit more information than probably you asked for, but I think everyone- … listening to this needs to know that, that they're trying to go pri- they're trying to privatize themselves, and it's not a good thing for our industries. No. And so,

Speaker 1: [32:31] you know- It's not a good thing for, for people in general. No. It's, uh… yeah, just a money grab. Yep. Trying to make some money.

Speaker 3: [32:37] That's it. Greed.

Speaker 1: [32:40] So if, let's say I wanted to refinance my, one of my mortgages. I- like, if I wanted to do that, what do I need to do to make sure that I don't get that half a point, uh, increase? Do I just need to get it started before and lock my rate before December 1st? Is it that simple?

Speaker 3: [32:58] Well, I'm pretty sure you are refinancing one of your mortgages with me. Yeah, I am.

Speaker 1: [33:00] I

Speaker 3: [33:01] am. Um, yes, absolutely. And, you know, the other thing too is, is working with someone like myself that's advising you that, hey, I mean, we've been in touch c- you know, often on your situation, and the market's continued to improve since we started talking about this a few months ago. And so one, yes, we wanna be… Uh, the, the key is not to have your rate locked by December 1st, you need to be closed. Your loan needs to be backed and insured by Fannie Mae- Mm-hmm … or Freddie Mac by December 1st.

Speaker 1: [33:30] Got it.

Speaker 3: [33:30] Okay? So that's one, that's the key. Number two-

Speaker 1: [33:33] So you need to backdate when you start this by, you know, 45 days- I would just to be safe.

Speaker 3: [33:38] I would,

Speaker 1: [33:39] yes. Which is really, what is that? So December, so that'd be November, so that'd be October. Mid-October you need to be, you know, locking in your interest rate.

Speaker 3: [33:47] I would, absolutely. So- I'd start the talks right now. I'd start gathering- Yeah … some info right now. Um, what I do for all my clients, is I put together a savings options report. What I do is I take your current situation, and then I put a 30-year fixed next to it, a 20-year fixed next to it, a 15-year, and then a cash out option, and I say, "Here are four really good options. Which one is most interesting to you?" And then what we do is we dial in on the option that fits most interesting to them, and then we go deeper on that. "Okay, so you could actually pay more points to lower that rate. Does it make sense, yes or no?" Um, and then what, what I'm trying to do with all of our clients right now is, due to COVID, due to Fannie Mae and Freddie Mac, um, and the algorithm that they have, um, relative to issuing approvals, we can get appraisal waivers. They're called property inspection waivers. So the next step would be, like, what if I could get you an appraisal waiver? That cuts our closing timeline from 40 days down to 15 or

Speaker 1: [34:44] 20. Yeah.

Speaker 3: [34:45] Um, so those are the next steps right there. Just get- Okay … this rate lock info, and then, um, see if we can get an appraisal waiver.

Speaker 1: [34:51] All right, so let's wrap this up with, uh, just your thoughts on where rates are headed. Mm-hmm. I know it's, uh, we don't have a crystal ball, but let's just… Let me get your opinion on that-

Speaker 3: [35:02] Yeah. I think, I think for the rest of this year we're gonna, we're gonna stay in the same trading range that we're in right now. Okay? So I think we're gonna be safe in the upper twos, mid to upper twos. And, you know, it's, uh, without getting into a, a political discussion and what if, what i- what if, you know, Trump, what if Biden, um, but I can tell you what, if there's a changing of the guard, if you will, from, from Republican to Democrat, um, y- you will see a disruption in the markets for sure. Yep. Just like we saw when Trump was elected in 2016.

Speaker 1: [35:34] Yep.

Speaker 3: [35:34] Um, and so just, just pay attention. I mean, the biggest thing is I don't wanna predict if rates are gonna go up or down if Biden gets elected. Hey, as we get closer to the election, if he starts to, um, really take over in the polls, watch what the markets do. Mm-hmm. If rates start to drop with him going into the lead, hello, if he gets elected, rates are gonna drop, or if they go up, you know? Yep. So that's my best advice. If you're sitting on the sidelines watching, um, if, if you're not on the sidelines and you're actually in the trenches out shopping and pre-approved with me, lean on, lean on me. I mean, I'm gonna give you my making sense of the market updates, and I'll keep you, I'll keep you informed.

Speaker 1: [36:12] Awesome. Well, if anyone is interested in reaching out to you, either to, to figure out if buying makes sense or if a refi makes sense, what's your, how can they do that? How can they reach out to you?

Speaker 3: [36:23] Yeah, I think the, the best way is, and I'm throwing my cellphone out there, but m- call my cellphone, text me. Um, and the easiest way, guys, I'm all over the internet, so just Google Dan Keller mortgage, Dan Keller mortgage advisor, um, or you can call me or text me at 425-350-7136. And, um, happy to, happy to get you some information.

Speaker 1: [36:48] Awesome. Well, Charlotte, you got any other questions? You good?

Speaker 2: [36:53] No, I think, uh, I'm good. That was really great, Dan. Thank you so much.

Speaker 3: [36:56] Thanks, Charlotte. Thanks, Christian.

Speaker 1: [36:58] Yeah. Thank you very much, Dan. And that is it for this episode of the Awesome in Seattle podcast. And, uh, as always, if you have any questions, don't hesitate to reach out to us as well. If you are thinking of potentially buying or, or just wanna, you know, explore that option, uh, you can always reach out to us right on our website. You can schedule a, you know, FaceTime, Zoom, Go- Microsoft Teams, whatever you wanna use, uh, call with us right there at awesomeinawesome.com/schedule. It's very simple to do, and, uh, it ties right in with our calendar, so you can see right when we're available. That is it. Thank you very much everyone, and, uh, until next time