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Welcome to Mortgage Talk with Mark Harston, the program that not only talks about

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mortgages, taxes, and interest rates, but Mark and his guest talk real

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estate trends and your home. He
also answers your mortgage questions to help you

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make the right financing or refinancing decisions. Now here's Mark Hairston. All right,

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everybody, welcome back, Welcome back
to Mortgage Talk with Mark Harston.

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And or every week we come to
you with some ideas to you know,

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educate you on options and strategies and
ideas to help you in your real estate

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investing and other ways to take care
property, et cetera, et cetera.

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And I'm really excited to introduce my
guest today, who I just met literally

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like two weeks ago. I was
in a CE class for my mortgage license

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and every year we have to take
some hours to continue our education for our

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licensing. And this guy spoke and
I said, man, I want to

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hear more about what John's got to
say, because the way it works.

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And a few months ago on this
show, I was talking about the different

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different not strategies so much, but
the different legs of business mortgage bankers,

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banks and brokers. As a broker, I work with different whostsale companies.

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And wholesale companies means they have a
product line to offer brokers like me to

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sell and offer to the marketplace.
And that's what John does. He represents

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a company. I'll let him speak
here to just second. But when he

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was talking at the C class,
I'm thinking, Wow, this guy really

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knows his stuff. Number one.
Number two, I need to get aligne

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with him. So I thought,
how about the radio show, so here

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he is. I wanted to introduce
my friend, new friend, John Hudson

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say Hi, Well hello everybody,
and Mark, thank you for having me.

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I've been anticipating this and been looking
forward to sharing some hot sports opinions

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on mortgage listen, home buying and
creating real estate wealth with you for for

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since we talked. Absolutely and you
don't. I've been to business thirty seven

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years and you're an old timer like
me as far as age. But you've

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been doing this for a while.
You since it's ninety eight or something like

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that. Yeah, you know.
So it's so it's funny. I like

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to tell people with mortgages, you
know, it's not the years, it's

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the mileage. So yes, so
I got into the business in nineteen ninety

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eight. Well, I was actually
still in college. Yeah you yes,

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go frogs. I know we're here
in Austin, and that could be you

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know, I'm not wearing purple today
though, so there's that good thing.

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But I kind of like that.
But but no. So I was looking

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for an internship while I was in
school and I just happened to see on

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the board, you know, North
American Mortgage Company. I mean I barely

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knew there was a tea in mortgage
and so I was like, Okay,

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well this sounds neat. Let's go
check it out. And I did in

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my first day. You know,
I really still didn't understand what what mortgages

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were. I came into be an
intern basically be an assistant for a loan

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officer there, and the first thing
that they started with was explaining what mortgages

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are. It's like, oh,
okay, so when you buy a house,

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this is how you buy a house, You get a big loan.

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Okay, all right, this is
neat. Well what else do you need

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to do? And then they walked
me through had a learning about credit,

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like saying, okay, see that
drawer over there with all those credit reports

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and needed to call those those people
and see if they fixed their credit.

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Okay, I mean I still barely
knew what I was doing. And you

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know, then I learned about okay, income and then you know, assets

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and kind of some of the basic
functions of buying a house. But it

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wasn't until the loan officer I was
working for took me to attend my first

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closing. And I'll never I can't
remember the lady's name, but I'll never

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forget her face. And she had
blonde, curly hair. She was wearing

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blue nursing scrubs that we were the
closing at. That was at a title

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company in Crowley, Texas, which
is, you know, a small town

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back then, small town south of
Fort Worth. And this woman started crying

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at while she was signing the papers. And I'm thinking to myself, Okay,

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well, what's what's happening here?
This is supposed to be a happy

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moment, right, Why is this
woman crying and and and And it turns

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out she was crying. These were
tears of joy. And this this woman

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was crying because she had she was
a single mom, and she had finally

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done something by herself and giving her
kids a backyard to play in right now.

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To me, I mean, like
I get chills just thinking about that.

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Uh, maybe it was divine intervention. My mom happened to have been

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a nurse. My folks were divorced
when I was a kid, and so

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here I just saw this, this
joy and I was like, Wow,

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this is powerful, and instantly I
was hooked. I left there, went

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and bought you know, home buying
for dummies, you know, at the

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college bookstore, how the bond market
works. And since then I became became

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a student of the business. But
just seeing the joy and the power that

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home ownership can have absolutely people.
I mean I remember my first house I

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bought nineteen ninety, and that was
already in the mortgage business, but I

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hadn't didn't own a home. I
was still renting, yea, And we

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bought a home in nineteen ninety,
my first property here in Austin, and

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I can't remember crying about it,
but I sure always felt good about it.

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Yeah, it felt like you're going
home, you know, like you

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have a place that you could call
your home. That's a huge state.

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I mean, you go back to
even you know, just the anthropology of

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humans, right every man wants his
castle and every woman wants her nest.

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There are some basic human aspects to
owning a home. Amen. And the

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thing that I think that everybody needs
to think about is everybody in this country

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puts their head down on a piece
of real estate every single night when they

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go to asleep, and I think
the difference is do you own it or

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are you renting? Right? And
that is where I couldn't agree more.

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I couldn't agree. I've owned properties
here in Austin. I have Cevil now,

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but you know for over thirty years, and I don't think quite like

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that on a deep level daily.
But now that you mentioned it, that's

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the way I feel when I go
to bed. Yeah, this is my

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place, you know whatever. But
let's fast forward a little bit because we're

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a limited on time, because I
really want to get to the media of

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the conversation, because you know,
I heard a stat the other day and

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I thought it may have heard from
you, but somebody in the industry of

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knowledge, if you will, that
that over fifty percent of the business in

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the second quarter purchase money in the
second quarter of this year is for first

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time buyers. Now, that's that's
a high high number, record record number.

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That's the highest percentage of first time
home buyers ever recorded. Yeah,

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in in normal mark I think you
said around twenty percent. It's about twenty

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twenty five percent first time home buyers. During COVID, it was probably five

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percent. There just weren't that many
out there, right, And then today

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here it is over fifty And why
is that? Well, who's buying homes

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today? You know, people that
already own homes. You know, they

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probably refinanced into a very low fixed
rate, you know, during COVID.

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And so you know, if you're
at a three percent interest rate today,

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you know you're probably not looking to
buy in the near future. So that

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leaves us back in the marketplace,
which is everybody else, everybody that's been

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renting, everybody that you know.
And this is where or relocation right right.

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But so this is where I kind
of come back to some basic tenants

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of home ownership and wealth creation and
and and yes, for the record,

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I am kind of a geek when
it comes to mortgages. Ever since attending

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that first closing, I've become a
student of the business. Uh. And

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so yes, I am filled with
with some crazy statistics. Uh. And

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and here's one that is is actually
pretty disturbing in reality, and that is

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the wealth gap by demographics in this
country. So this is based off of

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photographics of race, demographics of race, and this is from the Federal Reserve

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Boards Survey of Consumer Finances. This
is from a report. This is now,

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this is twenty nineteen data. But
this report just came out a few

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months ago, and it showed that
in twenty nineteen, the average household median

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net wealth was one hundred eighty eight
thousand dollars in this family for white families

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in this country. For Hispanics,
it was roughly thirty six thousand, and

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for black families it was twenty eight
thousand. Huge, huge gap. And

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you know, and not to get
into politics, we'll save that for another

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talk show. But you think about
all a lot of the problems that we

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have in our society and it boils
down to one thing, the difference the

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gap between the haves versus the have
nots. And when you drill down and

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you look at the data from this
twenty nineteen study, the key driver that

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gap is home ownership. It's it's
it's the wealth that was created via home

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ownership, because then it goes back
to are you renting or are you're either

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paying your mortgage or your landlords?
And that's a you know, a very

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very simple way of looking at it, but but I think it's a reality.

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And so that leads us into so
what what how do first time buyers

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buy a house? Right? It's
it's expensive, uh, to to to

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save, it's expensive to live,
it's expensive to save money, it's expensive

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to buy a home. Everything is
more expensive today. Right. So that's

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where there's some really great programs that
are available for consumers from mortgage brokers in

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today's environment. So and not you
know that come all the way around,

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and not to digress too far,
but but again, I'm John Hudson and

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I run the wholesale division for Mortgage
Financial Services HOST. I mean, you

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don't do loans yourself. I do
not do the loans myself. We are

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the underwriters. We're the ones that
are behind the scenes, I guess if

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you will, that are approving loans
and doing the under originatings. We're not

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originating, you know, you're the
one that's talking to the consumers. We're

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on the background. We're we're the
bean counters in the back of the room

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going through through a bunch of pieces
of paper. So that's a very simple

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way way of looking at it.
But so some of these programs that we've

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now rolled out to the mortgage broker
community really do help. I think a

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lot of first time home buyers get
back into the driver's seat because again,

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you know, rents have been going
up, you know, forever as far

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as as far as I'm concerned.
It's one thing. Every time I drive

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through Austin, you know, I
just I hear talking to people that,

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uh, you know, yeah,
rents continue to go up, so it's

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harder and harder for people to save
money for a down payment. Yeah,

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And and then and probably the number
one thing right now that's keeping people from

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buying a house is they think people
believe that they have to have twenty percent

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to put down. Not true at
all. It's a total myth. And

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you know, I blame the talking
head media because every time they're out there,

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Hey, the average mortgage rate on
a twenty percent down mortgage is X.

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So people just assume, oh,
I need to have twenty percent to

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put down. Well that's not true. So not at all with the products

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that we now have at your disposal
via either the Texas State Affordable Housing Corporation

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or the Texas Department of Housing and
Community Affairs. These are both nonprofit state

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agencies that provide the funding mechanism for
down payment assistance programs that you can now

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originate. And so with these down
payment assistance programs, the assistance ranges anywhere

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from two percent to five percent,
in particular with TCHE And so now you

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think, right, okay, for
a borrower that's buying a house, Uh,

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if they're doing an FHA loan,
they need to have a minimum of

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three point five percent down, not
twenty three point five. So if they're

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getting five percent in assistance, then
that covers their down payment and a little

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bit of their closing cost. It
could be a lot of closing costs,

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really, it could it, really, it could be a lot of closing

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cost you know. There's also there's
conventional loan programs offered also with Fanny May

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and Freddie Mac. As you know. Well, so if you're getting five

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percent down payment assistance with that Fanny
Ma Freddie Mac may only require three percent

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down, well, now you have
down payment and a lot more closing costs.

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And technically these programs are even available
for veterans for using VA loans and

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people that are not buying outside the
city limits that are getting USDA loans.

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Okay, so VA loans and USDA, as you know, are both one

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hundred percent financing. Sure, So
why would somebody need downpayment assistance for one

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hundred percent financing? Well for the
closing costs and prepaid items for expenses of

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taxes and insurance exactly, because yeah, there's still going to be closing costs,

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right, it could be the tunes
of six, seven, eight thousand

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dollars, depending on where you're at
and what time of year, right,

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how much are we needing to collect
for future scrows? So absolutely, it

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could be a significant number. So
I won't put a little bit of perspective

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because when I got in the Warriors
business in nineteen eighty five, our average

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loan was around seventy thousand dollars.
Now it's more like four hundred thousand dollars.

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Yes, you know, so that
adds up when you're talking about percentages

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of loans that can go toward those
fees. It could be thousands of dollars,

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absolutely, you know. Well,
so so yeah, so let's just

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let's let's we don't have to go
back that far. No, no,

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no, no, no no.
But let's but let's take a home price

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early side roll. Yeah, so
let's let's take a let's take a home

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price and we'll just we'll just break
it down into very very simple math.

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Let's take a home price of two
hundred thousand, which was viable just you

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know, sure maybe five years ago
here in the Austin area there were two

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hundred thosand our homes. So if
they were doing a three percent down product,

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that's six thousand dollars that the bar
needed for down payment assistance. Right.

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Well today, now let's take that
four hundred thousand and a sales price

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and three percent down, Well,
that's twelve thousand dollars. Right, that's

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a big it's a lot harder of
a bridge to gap for somebody that's saving

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up for down payment. Did you
know currently the forty percent, so two

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out of five of Generation Z or
millennials that are wanting to buy a home

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are working a side hustle to get
save up for their down payment. Wow,

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I didn't know that that is,
so that that number came out and

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that was that was pretty wild when
I read that, because I mean,

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you think about it. I mean, we all know ten millennials or gen

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z ars out there, and so
that means that out of that four of

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them are working a second job wow, to save up for down payment.

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And that goes that comes back to
these products. Right, they don't need

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to right, We've got the ability
to get them into a house today.

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Okay, I love that instead of
having to wait. You know, one

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of the little holmanies just suggest.
You know, back in eight nine ten,

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the most reasons because of the recession
and the housing crisis. In those

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days, most of the reasons we
couldn't get people at home was because of

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credit. Nowadays, credit seems to
be pretty stable, The scores are pretty

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good. It's the down payment that
is keeping people. That is That is

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absolutely correct. So I was really
excited to talk, you know, to

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hear more about that and and the
course of the tax credit programs and things

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like that. Yeah, no,
no, and that's and that's a that's

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a great segue right there too is
one of the other beauties. Well,

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first of all, with the down
payment assistance, let me just finish this

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up real quick. Sure you do
not have to be a first time home

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buyer to get down payment assistants.
So I don't even know that. And

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that's a that's a real uh important
myth that I think that needs to be

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dispelled out there. A lot of
people just assume that down payment assistance is

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for first time buyers, and that's
not the case, not not with particularly

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not with the t Shack product,
the Texas State a housing corporation. And

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so you know, you go back
to, well, are there move up

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buyers out there? And yes,
there still are. We did a transaction

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a year ago actually here in Austin. The borrowers owned a home, lived

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in a home, converted it to
a rental property, used down payment assistance

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to buy another house. Wow,
you do that? So you know,

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when you think, you know,
go back to owning real estate is a

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is a vehicle for wealth creation and
long term investment. There's a perfect example

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of it of a way that you
could do it. So so yeah,

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so that's one of the myths that
that we want to get out there.

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Another myth that we want to dispel. Another myth is that there's that these

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programs are also only available for low
income consumer. Okay, that's also not

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the case that it's to be at
one time, I think or maybe not,

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you know, a long time ago. And then, don't get me

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wrong, there are programs that are
designed spetifically for for low low income folks.

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But you know, with t Shack
in particular here in this in the

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Austin area, the income limit for
a person looking to get down payment assistance

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is one hundred and forty six thousand
dollars. Wow, And you might is

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that from a single person to a
family of four or per application, per

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application? Yes, So so when
you when you think about that, and

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some people might think, oh,
man, they're making one hundred and forty

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thousand dollars a year, and man, they should be able to save money

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for a down payment. Well,
you know, possibly, but then there're

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you know, other's life that happens, there's big rent, maybe they're taking

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care of their family. I mean, you never know. One thing I

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could say with certainty is that in
my you know, twenty five year career,

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I've seen tens of thousands of loan
applications, no two alike. So

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I don't judge anybody of whether or
not they have money for down payment or

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not. But nonetheless, I mean, you can be making one hundred and

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forty six thousand dollars and utilize down
payment assistance to buy your home. Wow,

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that's amazing, pretty cool. Now
now getting to the tax thing,

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this is a really really cool product, and I'm glad you mentioned this.

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So right now there's a there's a
product available that is now technically only available

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for first time home buyers, but
that's called the Mortgage Credit Certificate to MCC.

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I've done these. It's a great
product. It's a federal income tax

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credit program that's been around for a
long, long long time. Would you

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say thirty years years? At least
thirty years the MCC has been around.

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I've been doing this for a long
time, but I didn't know the new

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changes it's been modified. Yeah.
So up until recently, like in the

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last couple of years, the maximum
tax credit available was up to two thousand

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dollars. Which, don't get me
wrong. If you can get a two

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thousand dollars tax credit, awesome,
take it. Explain tax credit versus tax

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deduction, that's okay. The excellent
question so is when we follow income taxes

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every year, right, we're trying
to get pays. Well, unless you're

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really generous and you want to give
money back to the government, because for

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some reason the government thinks they could
spend our money better than we can.

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But that's another conversation I could go
down road. But nonetheless, so a

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tax deduction lowers your taxable income.
So if you know, if I donate

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ten thousand dollars to my church every
year, then you make and then make

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one hundred thousand dollars, then my
tax taxable income is ninety thousand, so

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versus a tax credit, which says
that, okay, my, you know,

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I owe ten thousand dollars in taxes
to the federal government every year,

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and so the mortgage credit certificate is
going to subtract from that ten thousand dollars

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dollar for dollar of what I what
I owe Uncle Sam every year. And

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so to put this into some mathematical
terms here, like I'm going to bust

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out my calculator, all right,
so let's just say that, and I'm

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just going to pick a number.
Let's say that we have three hundred thousand

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dollars loan amount, and I'm just
going to use eight percent for an interest

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rate. Percent That's about right,
That's is right. Actually, So that

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means that in the first year,
the mortgage interest paid on that on that

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mortgage is twenty four thousand dollars.
Now, the mortgage Credit Certificate as it

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stands today is equal to twenty percent
of the mortgage interest to barrow or pays.

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So in that example, we paid
twenty four thousand, right three hundred

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thousand our loan eight percent interest rate. So I'm going to take that twenty

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four thousand, and I'm going to
multiply by zero point two twenty percent.

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So that means that that equals forty
eight hundred dollars. So that means that

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my tax liability just lowered four hundred
dollars a month. That equals four hundred

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dollars a month. Now that's where
it gets really cool. Now, first

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of all, for that borrower,
it's great because I'm just again using the

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example for simple math, ten thousand
dollars worth their tax liability. Now,

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with the MCC the mortgage credit certificate, we'd reduce it by forty eight hundred

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dollars. So now their tax credit
is only fifty two or their tax taxes

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O douncle SAM is now only fifty
two hundred dollars. Yeah, really in

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that case, and in that example, yeah, it's about half and the

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borrower can get that money in one
of two ways. They can either wait

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until the end of the year and
get it in a big refund, or

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what they can do is they can
actually go to their employer and adjust their

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W four withholdings and the take home
more and have less taken out of their

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paycheck. Because if if we could
help a family even take home half of

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that, say two hundred dollars a
month more in take home pay, I

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mean that that makes a big difference
to that utilities of food absolutely for a

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lot of people. So that's a
gigantic benefit there. The other the second

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part of that equation now is because
I know that you qualified for this tax

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credit, as the underwriter, I'm
allowed to say that, Okay, well

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you're gonna get forty eight hundred dollars
a year, so I'm going to take

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that number divide by twelve. That
gives me four hundred dollars. So I

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can use that four hundred dollars a
month as qualifying income. Wow, to

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help you buy a house. That's
awesome. So you make five thousand a

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month, you're making fifty four correct
in that case and that example, and

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you know, for for our realtor
friends, that are out there too.

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This this really helps bridge the gap
between people not being able to buy a

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house and buy a house. Yeah, I mean, I mean you and

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I both we see scenarios where twenty
dollars can be the difference between a person

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getting a house or not. So
when we're able to go back through and

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at and add four hundred dollars to
their income, huge huge benefit, it

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really is. So now can the
MCC be a standalone or does it have

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to be in conjunction with the downpay
So right now, you can do it

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in two ways. You can use
it in conjunction with the down payment Assistance

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product, which is awesome because if
there's if you're using it with if you're

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using it with T Shack's Home for
Heroes program, Special Financing for cops,

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firefighters, teachers, veterans, if
you're using conjunction with that, then you

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can actually get the MCC for free. Now, it didn't cost a thing,

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doesn't cost the thing to them,
you know, so it makes it

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very very simple. I mean,
it's a savings of five hundred dollars for

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your bar or there now. Or
you can use the mortgage Credit Certificate by

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itself with another home so it's an
extremely beneficial product. I encourage anybody that

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is either a first time home buyer
meaning they haven't owned a home primary residents

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in the last three years, or
a qualified veteran right a non active duty

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vets in Texas can qualify as a
quote unquote first time home buyer, or

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even somebody buying a home in certain
targeted areas around Austin certain zip code zip

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codes YEP can qualify for for this
MCC. So the bottom line is be

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aware to ask the question and all
that education and and and don't hesitate to,

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you know, ask about downpayment assistance
either. Uh. You know,

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I think one of the downsides of
our industry, and I know we're coming

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short on time here, one of
the downsides of our our industry was in

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the last few years during COVID,
Uh, you know, mortgage rates were

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at historic, all time record lows, and so you know, there was

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so much refinanced business out there that
I think some of these programs kind of

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went to the wayside to a certain
they were put on the back burner,

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you know, and and and you
know it was rates were at two percent.

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It was easy to buy a house. Uh, you know, realtors.

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No, nobody wanted to mess with
down payment assistance. And so now

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you know, I'm really trying to
go out there and with your help,

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right, educate as many people as
possible that these programs are out there.

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Borrowers need to ask about them.
There's no such thing as a dumb question

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the one they were afraid to ask, that's right, and and just know

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that yeah, there's there's help.
Well, I wanted to thank you for

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your time today, and you're generous
enough to come back to one of my

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lunch and learns for relters next week
to time talk about the same thing a

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little little more and more detail,
which is exciting because I haven't done these

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programs in a long time. But
the market is begging for it. It

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is the market needs it, it
needs it, and they're saying, hey,

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and I think you've got some solutions
that people need to know about.

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So I'm really really pleased not all
you're here today, but are event next

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week because because you know, my
background is lending. Certainly is a loan

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officer, originator, broker or whatever, but I think that our main focus

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should be education. It's it's it's
educating, it's telling our story. Yeah,

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and helping home buyers, whether they're
first time buyers or even moving up

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buyers, or just anybody in general. Let's help them build, create their

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story right, and then also bridge
that gap of you know, create long

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term generational wealth through homeownership. Am
well, John, we are out of

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time. That was fantastic. I've
learned some stuff just sitting here, so

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that was good for me and I
hope very good for everybody. Ouse.

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Thanks thanks for having me, Mark, You welcome. This has been mortgage

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Talk with Mark Hairston. Mark is
a mortgage advocate with Texans Mortgage Source LLC,

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00:26:34.759 --> 00:26:41.599
offering personalized mortgage solutions, fast customized
quotes, great rates, and service

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00:26:41.640 --> 00:26:47.680
with integrity. Contact Mark at Markhirston
dot com. Mark Hairston dot com.

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00:26:47.839 --> 00:26:52.240
You can call our text Mark at
five one two seven eight nine sixty nine

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00:26:52.359 --> 00:26:56.279
sixty seven. That's five one two
seven eight nine sixty nine sixty seven and

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00:26:56.359 --> 00:26:59.960
come back next week for more mortgage
talk